For over a decade now, cryptocurrencies have been disrupting legacy finance. Jump started with Bitcoin, crypto markets exploded with CoinMarketCap currently showing 2136 cryptocurrencies. Growth in the number of coins has been fueled by market segmentation with projects catering to specific target audiences. Stablecoins, counting at around 50, seek to mitigate volatility, a scourge for crypto and roadblock for mass adoption. Traders switch to stablecoins to store value whenever other cryptos move against them.
Tether became the first widely popular stablecoin. It’s pegged to USD, currently enjoying a 50% market share. Arguments arise as to Tether no being, in fact, a stablecoin, but a mere avatar of USD, placed on the blockchain. Another stablecoin, Digix, is a gold peg, using virtually the same mechanics that are employed by Tether. Standing apart, MakerDAO collateralizes only crypto, having nothing to deal with “real-world” assets. Within it, the two-coin ecosystem includes Dai, a USD peg, and MKR, an internal token used to pay fees and incentivize traders to sustain the peg. Using ETH as a collateral, Dai requires over-collateralization in order to prevent vulnerabilities in case of a price crash.
A line of new entrants is set to disrupt the stablecoins, only recently seen as bleeding-edge innovation. Crypto community continues to design solutions, targeting ever smaller use cases. Read on and discover alternative stablecoins with unique offerings that might suit you best.
USDQ is a stablecoin, developed by the Platinum technical team. Similar to MakerDAO, it engages two tokens. The first one is USDQ, which is a peg to USD, and the second one is Governance Minable Token, acting as an internal management token, used to pay fees, vote on decisions and mine. Users can purchase USDQ via two methods – buying it on secondary markets from other users, just like any other token, or purchasing it directly from the issuer on its website. In the second case, a BTC collateral is used which ratio is determined based on current market conditions.
Price stability is maintained through the two mechanisms. The first incentivizes traders to purchase the stablecoin whenever it goes below the 1USD peg and sell it whenever the opposite occurs. The elegant and fool-proof first line of defense helps enable effective price equalization in case of low and moderate turbulence conditions.
The second line of defense is unique to USDQ. It’s built up by a network of “robots”, which are applications, downloadable on devices and sustained by AI capabilities. They continuously gather and analyze data about cryptocurrencies, potential price trajectories and various other pertinent circumstances. Whenever multiple robots announce the need to change the collateral ratio, the vote is held. Should the unanimous decision be reached in favor of the change, it’s immediately implemented. This approach stitches together AI-driven agents and wisdom of crowd, collaborating to make time-sensitive decisions in high-volatility settings.
In contrast to fiat-collateralized coins, USDQ is backed by BTC, eliminating any need to engage legacy systems, such as banks, auditors, lawyers, accountants and others. Instead, the scanner system, available at the stablecoin’s website, enables to easily track all transactions within the system.
Another unique feature within USDQ ecosystem is an ability to mine cryptocurrency with robots. Users install robots their devices and input a collateral amount. The higher the collateral amount and the number of engaged devices, the faster the internal governance token is being mined.
Many traders who usually hold stablecoin reserves on exchanges would find mining an attractive option, as it will deliver RoI on the funds that are otherwise inactive.
Stablecoins: future potential
Stablecoins have helped traders to wait out undesired price moves. Reducing volatility in crypto markets, they will be instrumental for future mass adoption. Each individual stablecoin offers a unique value proposition. Some traders might want to take a closer look on USDQ, which enables to mine crypto with stablecoin reserves. Others will be keen to learn more about GBX, finding a new hedging tool. Looking around for new options pays off. After all, diversification and decentralization have always played a key role in crypto markets.