Why Is TheStandard.io A Hard Asset-Backed Stablecoin?
Stablecoins were created to stabilize the cryptocurrency market. However, similar to everything else in the cryptocurrency industry, they are always being upgraded and made more stable through development. There are several varieties of stablecoins, each with its own advantages and disadvantages. Hard asset-backed stablecoins are among the most prominent stablecoin types currently available on the market.
These stablecoins fulfill their promise of stability by being backed by tangible and intangible assets. One prominent hard asset-backed stablecoin protocol is TheStandard.io. But how do stablecoins work? And why is TheStandard.io a stablecoin backed by hard assets? To comprehend its relevance, we must examine several essential questions regarding stablecoins.
What Is Collateral And Why It is Important?
A “collateralized stablecoin” is a stablecoin that is backed entirely or partially by collateral kept in reserve. The collateral allows token holders to exchange their tokens for U.S. dollars or other assets that may subsequently be utilized in the real world. The collateral backed by these stablecoins may include fiat currency, commercial paper, bond purchases, gold, and other assets.
Frequently, the collateral can be used for other investment reasons to increase capital efficiency. There is also interest in stablecoins that allows holders to make some revenue. Stablecoin interest rates may vary from issuer to issuer. Stablecoins whose collateral is wholly committed to on-chain assets, such as crypto, as opposed to traditional financial bonds or paper, are frequently referred to as “decentralized stablecoins.”
One problem of collateralized stablecoins is that they require vast sums of capital for legitimacy and confidence, and their stability is contingent on the underlying collateral. Therefore, many collateralized stablecoins must be over-collateralized to absorb value volatility. This is in contrast to algorithmic stablecoins, which employ smart contracts to adjust to supply and demand by purchasing, selling, and burning tokens to maintain a fixed value.
Why Are Asset-Backed Coins Stable?
The sole difference between asset-backed stablecoins and fiat-backed stablecoins is that asset-backed stablecoins use a “security commitment” to reduce volatility. If a stablecoin is tied to the U.S. dollar, its price value will be identical to that of the dollar. They retain their value via a smart contract in accordance with price fluctuation.
Stablecoins have acquired the ability to be backed by fiat currencies due to their mix of stability and adaptability. It is currently the finest option for business and startup groups to advance toward cash acquisition. Even if the market crashes, these coins signify a shift in the status quo. The stablecoins’ robust backup system increases investor confidence. Typically, investors anticipate that their worth will remain constant.
A startup developing asset-backed stablecoins ensures market stability while safeguarding your wealth and savings from significant market fluctuations. Stablecoins, tokens backed by more solid assets, have arisen as a new instrument in the digital economy. They offer blockchain the stability it needs to function effectively and expand as infrastructure.
In addition to preserving value, serving as a medium of exchange, and providing transparency, asset-backed stablecoins also stabilize the crypto market. As mentioned earlier, there is also interest in stablecoins, allowing their holders to generate some income. But remember that stablecoin interest rates may differ between different issuers. Alternatively, they can generate some profits with stablecoin staking and stablecoin yields.
How To Benefit From Digital And Hard Assets?
As global economies take digital tokens more seriously, the dispute between digital and hard assets is not a new craze. Still, it is undoubtedly garnering more attention from around the world. Many blockchain advocates assert that cryptocurrencies represent the future, but their opponents contend that Generation Z assets have a long way to go before proving their worth.
Virtually everyone agrees that cryptocurrencies offer some benefits despite being a novel asset class. The greatest benefit is that they are a safe and secure investment that cannot be readily stolen. Cryptos, such as Bitcoin, have a fixed supply which means, unlike fiat, they can’t be hyperinflated in value.
One should also remember that hard asset-backed stablecoins like TheStandard.io are looking to alter the crypto industry’s general picture. These stablecoins, unlike other cryptocurrencies, are backed by tangible and intangible rare assets and ensure minimal volatility, as described previously.
How Is TheStandard.io Stablecoin Changing The Narrative?
Rare assets worth trillions of dollars, such as gold and cryptocurrency, are stored in vaults and digital wallets across the globe. TheStandard.io is a next-generation protocol that unlocks this tremendous amount of stored value. It allows users to acquire stablecoins pegged to their local fiat currency. Users accomplish this by securing tangible and intangible assets as collateral in decentralized smart contracts known as “Smart Vaults.”
These virtual contracts permit customers to spend the value of their locked funds without selling assets. The first version of the protocol would allow users to borrow “Standard Euro (sEURO),” a stablecoin tied to the Euro and backed by hard and digital assets. Other pegs, including sUSD, sYen, will be released after the sEURO.
The community of Standard Token (“TST”) holders governs the protocol as the Standard DAO — a decentralized autonomous organization. The DAO will run the protocol using clever voting methods and unique prediction markets to make crucial choices. The protocol will initially be backed by a protocol-controlled value (PCV) pool of funds.
Standard token holders can profit from stablecoin staking and stablecoin yields resulting from the deployment of the PCV, as well as the worldwide revenue generated by the protocol’s stability fee. The novel concept of stablecoins backed by rare assets represents a private and decentralized Gold Standard for the twenty-first century.
Final Thoughts
Using a decentralized pegging method, the Standard Protocol attempts to produce a digital reflection of any fiat currency. The stablecoins issued by The Standard Protocol are backed by a collection of underlying assets that users store in their Smart Vaults. Consequently, there will be no need to rely on a centralized organization to manage the peg, resolving the problems associated with the larger stablecoins.
Users can spend their assets without selling them. Their investments increase in value and provide inflation protection. After the release of sEURO, the DAO will choose the next fiat to mirror (sUSD, sGBP, sAUD, sINR, and sCHF).
TheStandard.io is currently working on the upcoming IBCO campaign, where you can gain early access to the first over-collateralized stablecoin, sEuro, and have the opportunity to make instant yields and earn further rewards! Participate by visiting the official website, and don’t forget to provide feedback since TheStandard.io is always eager to hear what you have to say about the project!
And if you are still in the Halloween Spirit, enjoy the treasure hunt made for the brave ones.
