The expanding uses of stablecoins
Stablecoins are digital currencies that have their value pegged to other assets such as fiat currencies or commodities. The main benefits that stablecoins strive to create are price stability, scalability, privacy, decentralisation and redeemability.
The total addressable market for stablecoins is essentially all the money in the world. Approximately $90 trillion. As a result, stablecoins are often referred to as the ‘holy grail’ of financial technology. Stablecoins promise an on-ramp into the crypto world that people can easily trust and understand, paving the way for wider acceptance and the adoption of programmable money and securities.
Similar to other cryptocurrencies, stablecoins aim to become global, fiat-free money that is programmatically issued and tracked with the use of blockchain technology. However, unlike other cryptocurrencies, such as bitcoin, stablecoins by design aim to achieve stability and decrease the volatility that is frequently associated with the cryptocurrency markets.
The vision is that stablecoins can enjoy the benefits of being a cryptocurrency without the associated extreme volatility. Essentially stablecoins are payment tokens. Their primary purpose being store of value, medium of exchange and unit of account. The main stablecoin use cases include:
Trading
The most common use of stablecoins is for crypto traders to move between investment positions seamlessly and create leveraged positions, without added volatility. They are also used for cash transactions between crypto businesses, and as a way to hold on to cryptocurrencies without the same risk of volatility.
Global remittances and payments
Stablecoins can be transacted around the world at far greater speeds for a fraction of the cost when compared to SWIFT or Money Transfer Operators. This has huge implications for global exchange of value.
Store of value
For countries sensitive to hyperinflation, having accessibility to a digital dollar offers an effective medium of exchange. Stablecoins offer an opportunity to take control of one’s finances and circumvent poor economic conditions.
Yield Earning
Money markets in DeFi use stablecoins for borrowing and lending. From decentralised borrowing and lending to providing liquidity in the digital asset trading pools, stablecoins provide a new way for investors to generate yield on their digital asset portfolios. Stablecoins have become one of the most popular assets to use as collateral in yield-generating protocols.
Banking
With a large percentage of the global population not having access to banking, stablecoins offer a means for an inclusive and accessible platform through open decentralised systems.
Settlement Layer
Stablecoins act as an effective settlement layer in cryptocurrency OTC trading transactions. By leveraging stablecoins, traders can move their funds between exchanges cost effectively and instantaneously.
The StableSwitch trading platform makes buying and selling of stablecoins easy and cost effective by eliminating the need to buy and sell through cryptocurrency exchanges that often suffer from high fees and liquidity issues.
The trading platform’s lending program makes yield earning accessible. StableSwitch allows users to seamlessly trade between popular stablecoins without having to worry about slippage or sub $1 switch prices.
Our dynamic switch process offers market competitive rates based on liquidity pool volumes thereby maximising gains. The StableSwitch liquidity pool lending program allows lenders to earn a percentage of the fees generated on the platform, earning passive income on assets held.
Go to stableswitch.com for more information.
