New Trend of StableCoin: Why Non-USD StableCoin Matters?

Sep 19 · 13 min read

PANews invited Rafael Cosman, co-founder and head of engineering and product of TrustToken, and Zhao Dong, founder of Renren Bit and DFund and one of Bitfinex’s shareholders, to talk about the non-US dollar stablecoins and to give you an answer.

TrustToken and Tether have launched a series of non-dollar stablecoins this year. Will non-dollar French currency stablecoin be a new trend in the stablecoins industry?

On September 18, PANews invited Rafael Cosman, co-founder and head of engineering and product of TrustToken, and Zhao Dong, founder of Renren Bit and DFund and one of Bitfinex’s shareholders, to talk about the non-US dollar stablecoins and to give you an answer.

PANews: On September 9, Tether announced the issuance of the stablecoin CNH₮ linked to the offshore RMB, and as far as I know, Tether had previously launched EUR₮ and JPY₮. On the other hand, TrustToken had launched TGBP, TAUD,TCAD,THKD at early April of this year, and I also noticed that it is also mentioned in TrustToken.comthat TSGD will be coming soon.

I would like to ask both Rafael and ZHAO Dong, being the leadership of stablecoin industry, what makes TrustToken and Tether both focus on the non-USD fiat backed stablecoin market while the demand of USD backed stablecoin is as stable as it’s value? And what pain points do you think that non — USD fiat backed stablecoin is solving?

Rafael Cosman:USD-backed stablecoins have lead the market in terms of adoption and trading volume for the past few years and will likely continue to dominate moving forward. Throughout the world, if people have to default to a fiat currency that is not their native currency, USD tends to be the one that they most want. That said, we at TrustToken see several emerging use cases for stablecoins backed by currencies other than USD: 1. As crypto continues to grow in traditional financial circles, we think that use cases like Forex trading for stablecoins will begin to emerge. For example, we think over the next year, we will see exchanges add pairs like TGBP/TUSD and allow their users to trade with 100x leverage, mimicking what you would find in a traditional forex market. 2. We also believe that for many markets, local fiats will be the easiest on and off-ramp from local currency into the digital world. For example, a person from Hong Kong will have the best experience moving from HKD into THKD and then trading into other coins.

Zhao Dong: I have two points to make here:

1)Looking at the global situation, the United States is gradually losing its global economic leadership, which will mean that the dollar will no longer be the world’s largest reserve currency in the future. From the market point of view, there should be a variety of stable currency options.

2) Also, it will be of high risk if a company only has a single currency as the reserve currency. Tether already accounts for more than 70% of the stable currency, andits reserves are mainly in US dollars. Considering the regulatory landscapein the United States, Tether faces huge uncertainty.

PANews: Comparing to launch a stablecoin that base on other assets, such as gold stable coin, is there any special significance for launching a stablecoin backed by different fiats?

Rafael Cosman: I think the value in having fiat-backed stablecoins, rather than asset-backed like e.g, Tokenized gold is that for people all around the world, fiat currencies are a part of their daily lives. People in Indonesia use INR regularly, people in the Philippines use PHP every day and in America, they use USD every day. Very few people are using or interacting with gold every day.

Zhao Dong: Stablecoins backed by different fiat currenies can provide different optionsfor people in different countries and regions. For example, China’s foreign trade volume hasbeen acconting for more than 20% of the world’s total foreign trade volumefor a long time. For Chinese exporters,it is more convenient for trades to be settled in RMB.

Stablecoinsbacked by commodities will also have a place in the market. For example, I heard that Pax islaunching agold-backed stablecoin. These stablecoins can provide the market with alternative investments.

PANews: I notice that compared with the liquidity of the TUSD and USDT, the actual liquidity of non-USD fiat-backed stablecoins is limited. Is it in line with your estimation? Is there any way that you think can improve the liquidity of non-USD fiat-backed stablecoins?

Rafael Cosman: Yes, this is in line with our estimations. When we launched the additional tokenized currencies, we understand that they would not have the same growth as a USD-backed stablecoin right away.

Zhao Dong: A curreny’s influence cannot be assesd by circulation along. There’s afamous equation in monetary science, the Fisher equationMV = PQ, whereM is the total amount of money issued, and V is the velocity of circulation. Therefore, we shold pay more attention to the velocity. Judging from onchain transactions, USDTcirculates very frequently. This means that USDT’s real economic influence measured by MV=PQ, should be far larger than what its total amount of issuanceindicates.

Rafael Cosman: Improving the liquidity of these markets will involve a couple of aspects. For starters, working with more local liquidity providers and local exchanges and crypto venues in all of the local fiats that we are doing business

PANews: In your opinion, by the time of non-USD fiat-backed stablecoins’ development, how will the market share changebetween non-USD fiat-backed stablecoins and USD backed stablecoin? Do you think USD backed stablecoin will still maintain its dominance, or non-USD fiat-backed stablecoins will develop rapidly and gains a large part of the market share?

Zhao Dong: A currency’s market share is ultimately depends on the corresponding economy’s share in the global economy. Incurrent situation, USDaccounts for the largest share in the total volume of digital currency transactions, so the market for dollar-backed stablecoinsis the largest for the time being. However, if we considerthe bigtrend, the volume of digital currency transactions in other countieswill gradually increase, so the market of non-dollar stablecoinsshould also gradually rise. I believeUSD backed stablecoins’ dominance will gradually be eroded in the future. Stablecoins collecteraled by offshore RMB, which represents the RMB economy, may have a place in the future.

Rafael Cosman: Yes. We believe USD backed stablecoins will likely continue to be #1. Similar to traditional currency markets, the USD is the reserve currency of the world, as it has the world’s biggest economy and a fairly stable political system. At least for now and in the near future. There is a difference though between volume and market cap.

Zhao Dong: I think volume is much more importantthan market cap. Liquidity is the most important thing I think. MV=PQ representsthe power of a currency. So not justmarket cap. MV=PQ=GDP.

Rafael Cosman: Agreed. It’s interesting that right now, stablecoins primarily make money from market cap rather than volume. Exchanges make money from volume and not market cap. They’re sort of perpendicular business models.

PANews: What do you think that after more and more non-USD fiat-backed stablecoins being launched, is it good or bad for the international Forex market? Do you think there will be any butterfly effect on the global financial system?

Rafael Cosman: We think that over the long term, tokenized fiat currencies could have a positive impact on the international forex markets. One of the tough things here will be that most forex is traded by banks, which are probably going to take the longest time to adapt to cryptocurrency. If/when banks do come around to trading tokenized fiat currencies, the benefits to them could be huge. For example, if they are trading these currencies on-chain, that would allow for instant settlement, 24/7 and any day of the year

Zhao Dong: The global economy is a combination of integration and diversification. The most important role ofstabcoinsmay be to solve the funding difficulties of digital currency exchangesand to acceleratethe speed of currency circulation. The biggest problem of the traditional financial system is that it grab profits from the real economy. If we compare the central bank to a battery, the financial system to a conductor, and the real economy to a light bulb, the problem is that the financial system consumes too much energy throughout the transmission process, so the real economy will be very poor. The value of blockchain lies in promoting circulation, reducing friction, realizing value superconductivity and ultimately serving the real economy. I think this is a revolutionary force.

Rafael Cosman: Yep, it could improve efficiency a ton. We already see OTC desks using stablecoins to settle with each other and it’s very efficient.

PANews: Currently, many public chains start issuing their own on-chain stablecoins, such as Tron, ONT, and Binance Chain. What do you think of these public chain stablecoins? is it a good direction, or it sounds hype?

Rafael Cosman: Hm. For users, we do not think it’s a particularly good development. The idea that each exchange is now going to have their own stablecoin that they favor and that users will need to trade different stablecoins per each exchange is bad user experience and will probably decrease overall market liquidity. We think the path forward could look like more what TUSD and USDT have done. TUSD has built on Binance Chain, USDT has built on other chains like TRON and we think this is a good path for the whole community.

Zhao Dong: Emergence of multiple blockchainsand multiple stablecoins isindeed an undeniable trend. For a public blockchain, the most important thing is not how low the handling fee and how fast it is, but how many people use it every day. Building a highway in an unoccupied areais not onlycostly but also of low value. Despite the hype, the fundamental value of public blockchains still lies in what problems and pain points they resolve. Peoplewill not use a public blockchain onlybecause it have its own stablecoin. It’s difficult for most of the public blockchains and stablecoins to have a place in the market, because they are not really needed and cannot amass enough consensus.

Rafael Cosman: We agree usage is very important. I haven’t yet had very many conversations with you @Zhao DongZhaoDong, but I’ve learned a ton from you every time :)

Zhao Dong: Yes , Blockchain need to solve people’s real problems. But unfortunately most of the blockchai projects are shit or trying to solve unrealistic problems.

Rafael Cosman: Agreed we need to be solving real problems. That’s something our team thinks about a lot. @Zhao DongZhaoDong you’ve been in the industry for a long time and so I think you’ve seen it all!

Zhao Dong: I proposed a thought to @Rafael Cosman — TrueUSD TUSD last time. The cost to rasing fund for middle/small business is very high in China, for example 3% interest rate and its painfull. I believe we can work out some solutions to them. 3% is monthly.

Rafael Cosman: Yes, we chatted about this. I think we can. But the problem is access to capital. We only have limited access to capital as well.

Zhao Dong: But accessing “Capital” is not the only way to solve problems.

Questions from the audience and answers from the guests are as follows.

Q: @Rafael Cosman Autosweep is very cool, if it is open source , can you please point the direct link in github, as i cant find it in tusd house?Except from your token, are there any others similar solutions from others, whether stablecoins or not? Thanks.

Rafael Cosman: Yes it is open source. You can find it in the TrueCurrencies Github report — - may also be interested in this technical innovation.

Q: Does TrustToken has any plan to open access for users to exchange their True-Currencies between each other in official website?

Rafael Cosman: It’s something that we’ve had requested, but don’t have support for yet. Right now all of our products can only be traded on exchanges or wallets.

Q: Could you share with uas your@Zhao Dong’s views on the central bank’s research on digital currency?

Zhao Dong: At present, I have a concernabout the central bank’s digital currency. From the users’point of view, digitalpayment methods likeWeChat and Alipay are already very convenient. If the central bank’s digital currency does not embrace the booming digital money trading market, I don’t think it can find manyapplication scenarios elsewhere for the time being.

Q:Shouldn’t payment be the biggest use scenario for central bank digital currency?@Zhaodong

Zhao Dong: It “should” be, but for ordinary people, Alipay and WeChat have already solved more than 99% of the demand, and people don’t even need cash.

Q: Hi Rafael, Do you think governments’ interests in researching and developing digital currencies will be a boon for stablecoins?

Rafael Cosman: Yes, I think so. But I think it will take a while before major central banks such as the US central bank launch a digital currency.

Zhao Dong: Personally, I think the Chinese government may be more friendly to the digital money market in order to implement the central bank’s digital currency.

PANews: According to Professor Li Guoquan of Singapore, who spoke at the Wanxiang Summit by PANews, Inclusive Finance and cross-border payment efficiency are important considerations for the central bank to implement digital currency. Inclusive finance creates a clear task for the central bank, but there is still a lack of infrastructure.

Ten driving factors for Inclusive Finance are: high-speed and stable access to distributed network, interoperable value delivery portal, user privacy protection, network architecture security, open source and reliable distributed governance, basic knowledge of digital and UX, digital identity, easy compliance, integrated data/oracle ecosystem. Unity, talent, knowledge and skills.

Q:There are some voices in the market, worried that USDT will go bust. What do you think @ Zhaodong?

Zhao Dong: The risks of USDT that you are concerned about may differ from the real risks of USDT. What I see is that the main risk of USDT is not its reserve requirement, but the unfriendliness of US regulation to digital money. This “unfriendliness” isnot a independent thing and only targets Tether, it is a threat to the entire digital money market.

Q:Will TrustToken consider issuing TureRMBafter issuing THKD?

Rafael Cosman: Unfortunately we’re not able to issue a TrueRMB token because of legal and regulatory reasons.

Q: How is it that governent-endosed PAXOS doesnot have anysuperiority in market volume? What are the reasons?

Zhao Dong: For real users, “compliance” may not be the biggest pain point in the short-term market. As far as I know, most users of USDT don’t care whether USDT is compliant or not. They care whether others accept it or not. So, userswon’t usea stablecoin for compliance. A stablecoinmust also be able to solve some of the user’s problems in order to gradually be recognized by the market.

Rafael Cosman: But people that use Tether have lost millions of dollars when tether was trading at $0.9 and people sold it. So while it’s useful, it’s not without risks.

Zhao Dong: That’s not true actually. People who believed rumors lost moneyinstead ofmade money from it.

Rafael Cosman: Well it turned out that Tether didn’t actually have the money, right? They had to fundraise to make up the money.

Zhao Dong: And there are some “bad guys” spreading rumors to make money from it. Tether has the biggest reserve than any other stable coins so far as I know.

Rafael Cosman: Yes, but there was a time when they actually didn’t have the money, right?

Zhao Dong: If they don’t have, USDT would be dead already.

Rafael Cosman: That’s why they fundraised?

Zhao Dong: No. Bitfinex raised fund to solve the problems of Bitfinex’s frozen 850M USD problem. Its not tether raising money. I am the shareholder of Bitfinex, not Tether.

Rafael Cosman: OK gotcha. I do think that many people in the crypto community are interpreting it differently though.

Zhao Dong: Oneneed to seethe truth while most people are spreading rumors. That’s also why its hard for most people to make profit . To seetruth is difficult. Frankly speaking , these strategiescan’t help you a lot. You need to think more about the “real problems” and what can you solve.

Rafael Cosman: What do you see as the real problems that stablecoins should be focusing on?

Zhao Dong: Acutally I’ve mentioned above. If you agree with me that blockchain is a new finiancial solution to the world. What’s its advantage? I believeit should help to make the world and the whole economy more convenienct, efficient and low-cost. Blockchain has no value if it can’t serve the the real economy.

Rafael Cosman: If you ran the TrueUSD business, what would you do?

Zhao Dong: Rather than making profit by interest from the bank side. We should try to figure out how to borrow low interest rate money from bank and lend it out to real business.

Rafael Cosman: Yes — we have been trying to figure that out, but generally banks are hesitant to lend large amounts of money to startup companies. if you have a solution, please let me know!

PANews: Lend it out to real business >> is it what RenrenBit does now?

Zhao Dong: Yes, RenrenBit is acting like a bank. But unlike traditional banks,we are 100% reserve. And we don’t lend money to our users, we use the Customer to Customer way to solve problems.

Q: So what do you mean by the customer to the customer way? Do you mean P2Pleinding?

Zhao Dong: It’s totally different. The problemsof P2Plendingare: 1 self-financing, 2 pools of funds, 3 Ponzi models. RenrenBit’s advantages: 1. No Funds Pool 2 . No Self-financing 3. 100% Reserve Transparency 4. No Bad Debt.

Q: It doesn’t make sense to compare unaudited USDT, whose financial conditions is a mess,with other stablecoins that provide audit reports every month.

Rafael Cosman: I think it does mean something. It’s important to know that the money is all there.

Q: how dare a decent bank do business with Tether USDT?

Zhao Dong: So the “decent bank” might die.

Q: Several exchanges have issued their own stablecoins this year. How do you think the stablecoinmarket will evolve in the future?

Zhao Dong: My opinion is the same. If blockchain projects do not solve the pain points, they will not be used and will have no value. The same is true of stablecoins.

Q:How can TrustToken gain a higher market share?

Rafael Cosman: 1) Trust. 2) Deeper partnerships and integrations with wallets, exchanges, and other companies. Those are the biggest things that differentiate us and will continue to in the future

Q: Why PAX won the SAAS business from binance and huobi, not TrueUSD? Especially, Truecurrency is the one who supports Binance Chain.

Rafael Cosman: Good question. PAX is persuing a very different type of SAAS business than the type of partnerships that we are persuing. They are looking to become the custodian for many other stablecoins and we are not. We are persuing a different type of partnership with wallets and exchanges and have some exciting partnership announcements coming up.

PANews: Thank you very much for sharing!


PANONY+ is a leading cross-border blockchain accelerator between China, Korea and the U.S.


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Know the future. Covering everything at the intersection of Asia and Blockchain.



PANONY+ is a leading cross-border blockchain accelerator between China, Korea and the U.S.

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