Cryptocurrencies have retained a vocal support network since their invention--and they've had plenty of critics since then, too. Many of those critics emphasize the instabilities that have long plagued crypto to justify prohibiting their widespread adoption.
These criticisms reached a fever pitch recently following persistent reports of Tether's banking woes, which include a lack of transparency, wire transfer shutdowns, and dwindling token values. In the wake of this negative PR, many projects have strived to capitalize on the problems plaguing Tether by offering increased regulatory oversight and transparency to wary crypto consumers.
Out of those efforts, stablecoins (cryptocurrencies that are attached to a stable asset such as the U.S. dollar or gold) have emerged as a key player in the crypto space. While companies jostle for position in this competitive market, Stably (USDS) seeks to advance stablecoins with a lean team of former Amazon engineers led by CEO Kory Hoang.
The team recently launched its stablecoin on Binance, the world's largest cryptocurrency exchange by trading volume--a feat achieved only by a small handful of other large players in the space. Within two weeks, Stably has managed to add four additional trading pairs with other larger stablecoin projects, including Tether (USDT), Circle (USDC), Paxos (PAX), and TrueUSD (TUSD).
"We've already seen the user demand for our stablecoin on Binance," Hoang says. Here's a closer look at how Stably is gaining a competitive advantage in a saturated market.
The rise of stablecoins.
In a market rife with volatility and uncertain valuations, stablecoins provide refreshing stability. By, for example, offering steady payment mechanisms or hedging crypto trading positions, stablecoins have carved out a highly demanded niche within the broader crypto space.
Most stablecoins available today are fiat-collateralized, meaning they're pegged to the USD at a 1:1 ratio, with the equivalent reserves of USD deposited in a bank. United States dollars are redeemable corresponding to the circulating supply of stablecoins. Fiat-collateralized stablecoins monetize their efforts via interest on the USD deposited in return for their stablecoins. For users, they effectively represent online banks that offer a similar service and level of security, but with a much lower exit cost.
Collateralized stablecoins provide varying levels of redeemability, regulatory risk, custodial services, and reserve/security auditing. One of the primary factors stablecoin users emphasize is transparency, which is where things went wrong with Tether. The unknown reserves and general uncertainty surrounding Tether made many users uneasy that Tethers may not have been backed 1:1 by USD, potentially causing all Tethers to not be redeemable for U.S. dollars. As a result, various groups saw an opportunity to capitalize on Tether's shortcomings--particularly exchanges.
Stably is one such company that saw an opportunity to provide a better service (and retain more users) by fully committing to transparency.
Using transparency to gain competitive advantage.
Several of the leading stablecoins available today are provided by major cryptocurrency exchanges, including Coinbase/Circle's USDC and Gemini's Gemini Dollars. Stably, on the other hand, is comprised of a small team of former Amazon engineers who had a unique idea for separating themselves from their larger competitors.
"As more and more stablecoin projects come into play, we'll see users moving towards projects that they have confidence in across multiple decision points," Hoang says. "The area where we excel is transparency."
Hoang explains how Stably's unique approach to transparency works: "We have a live feed of our reserve balance from our escrow partners' API, and conduct regular attestations with a leading third-party auditor, Cohen & Co. Additionally, transactions on the blockchain are viewable through our public smart-contract address on Ethereum," he says.
The real-time API functionality provided by Stably is unique to the industry. Additionally, Stably does not charge fees, and its minimum redeemable value of $50 remains among the lowest in the market.
All told, Stably stands out both via market-defying transparency and by lowering the barriers of access for mainstream crypto users. And Hoang believes this has set Stably on a great forward trajectory.
"We intend to continue to expand the liquidity pool in the cryptocurrency market by listing on more exchanges, more trading pairs, and by becoming an OTC product," Hoang says. "Derivative contract settlements are also [a] promising growth opportunity due to the leverage involved, and USDS is a better settlement method than a coin like Bitcoin due to our stability."
The future stablecoin trajectory.
While Stably has found a way to distinguish itself among a sea of competitors, in general the margin for differentiating between stablecoins is minimal. But as competition ramps up, new services and monetization methods are on the horizon.
Pegging stablecoins to other fiat currencies seems inevitable, and Stably is already exploring additional currencies including the yen and pound. The company is also likely to invest in building out products for multiple networks.
"Stably plans to exist on several blockchain protocols," Hoang says. "We are already live on Ethereum and plan to expand to other protocols including Stellar and EOS."
As a recent analysis suggests, returning interest rates to users of stablecoins may also become a competitive battleground, especially as barriers to entry are reduced and stablecoin providers begin to compete for more users. As noted in the analysis, Gemini Dollars' recent discount of 1 cent (a one percent discount) offers a glimpse into what it might look like to pay rebates to traders. Meanwhile, Circle recently announced it may invest deposited fiat funds for its USDC into highly-liquid, AAA-rated fixed income securities.
In other words? A new trend is beginning, and it has the potential to redefine the stablecoin marketplace.
As competition in the stablecoin market increases, adapting to the changing dynamics of a volatile and innovative ecosystem will prove the ultimate test for both existing and emerging projects. Stably is poised to maintain its position among some daunting competition with a focus on the future and a plan to provide stablecoin users with a frictionless experience for hedging risk in a risk-prone market.