ZVC DeFi Research Introduction to stablecoin

Stablecoins, what are they?

Stablecoins are a class of cryptocurrencies that offers a stable exchange rate with a popular asset. The earliest cryptocurrency of that class is Tether (USDT), which is pegged with the United States Dollar at a rate of 1 USDT to 1 USD. With the guarantee of the peg, the price of USDT is always near 1 USD per coin, with the maximum deviation happening when it was suspected of not having enough reserves to cover their USDT balance sheet liabilities.

Stablecoins aims to marry together the less volatile properties of fiat currencies with the benefits of blockchain technology. To elaborate further, users will be able to make transactions with the faster processing speed more securely and privately while being sure that the coin spent or received does not have volatile market values.

Why are you bringing this topic up?

Stablecoins have been in the spotlight ever since the Libra Foundation, which is supported by Facebook, broached the topic by announcing the launch of their own stable cryptocurrency. With the backing of one the largest corporation in the world, they have brought attention on stablecoins to every central banking regulators in the world.

With the increasing interest of United States, China, Switzerland, Singapore and many more countries’ central banks looking to develop a central bank digital currency, or stablecoins that are backed by governments, we are positive that stablecoins will gain even greater currency (pun intended) in our future economy.

How do you use stablecoins?

The most common ways to peg a stablecoin is:

• To collateralise the stablecoin with fiat currency, like Tether.
• To collateralise the stablecoin with real assets, like Digix Gold Tokens (DGX).
• To collateralise the stablecoin with cryptocurrency, like DAI.
• To algorithmically adjust the stablecoin supply based their prices, like Basis.

A collateralised stable-coin typically guarantees that the token you have is easily exchangeable for a defined quantity of the backed asset at any time.

Currently, the stable-coins available in the cryptocurrency market have these current functions:

• Providing an avenue to make retail and cross-border transactions.
• Allowing for lending of cryptocurrencies and facilitate complex cryptocurrency trading strategies.
• Supporting trade finance operations with financial institutions, especially with integration with smart contracts.

We will get deeper into these current and future potential uses in future reports. But for now, stable-coins are getting more popular as a method to improve business operations, and there is no time like now to get into thinking of new methods to tokenise the future economy.

How do I get into stable-coins mechanism ?

If you have an idea that you think you would like to tokenise, you can contact ZV Chain. We offer the technical, regulatory and outreach capabilities to allow you to develop your stablecoin from inception to launch and beyond.

ZV Chain is also introducing the option for one-step stable coin release.

We’d love to hear your thoughts. Talk to us at info@zvchain.io

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