To address the instability and volatility in the crypto world, stablecoins were introduced. As the name implies, stablecoins have an enduring value and do not fluctuate, making them an ideal candidate for transactions in everyday use. While it eliminates the evils of volatility, it also brings all the advantages of crypto like transparency, immutability, and swift transactions.
Stablecoins can be developed on any platform. The only thing left to do in a stablecoins development process other than the technical part is to connect the crypto coin to the real-world asset. The most preferred platforms for stablecoin development are ethereum, EOS, and sometimes, even the bitcoin blockchain.
As the name implies, the value of your stablecoin is pegged to a fiat currency. As most fiat currency values are stable, the value of your stablecoin can also be expected to be stable.
A stablecoin that has its value pegged to a real estate property is also likely not to fluctuate in its value. An Ethereum stablecoin development solution would be ideal for your real estate.
Precious metals and gemstones have always been in demand and will not diminish in value. Therefore, it makes sense to peg stablecoins to these precious stones and metals.
Since the stablecoin value is pegged to a reliable asset, it opens up crypto opportunities to become a mainstream trading currency.
Since the value is pegged to an asset that people and the legal system have already accepted, stablecoins are more likely to gain acceptance.
With the assistance of blockchain technology, financial services are stable, secure, and omnipresent.
The asset-backed stablecoin development maintains value across jurisdictions without a change in the value.
Assets help to raise funds for your project most securely and stably. If there is an increase in the price, more coins are minted to maintain stability.
Token-holders are liable to make those risk-based decisions, affecting the health of the ecosystem of stablecoins.
The stablecoin ecosystem fosters consensus at a more incredible speed that does not consume more energy with higher transaction throughput.
Cloud-based mining is facilitated that ensures no access to sophisticated equipment to mine gold-backed and currency-backed cryptos.
As the name implies, a collateralized stablecoin is the one that has a real-world asset backing it up as a collateral. Based on the type of asset that backs up the stablecoin, they are classified into three different types.
A fiat back to stablecoin, as direct as it sounds, is backed by an existing feared currency like the US dollar or the euro. This is one of the most preferred silver pans because of the simplicity and the universality of the asset that backs the stablecoin.
There are a few evergreen assets like real estate and precious metals. It makes sense to collateralize these stablecoins with such investments. Asset-backed stablecoins are gently used for long-term rather than four quick transactions.
It might not make business sense to collateralize an unstable crypto coin with another unstable crypto coin. However, crypto back to stablecoins or not backed by a single crypto coin but rather by a wide group of crypto coins that balance out in case of fluctuations in value. Collectively, the value of the stablecoin remains stable because it is likely that if the value of one crypto coin increases, another might decrease.
There are people who have questioned the relevance of collateralization. The justification that they seek is that if a traditional currency is not backed up and collateralized, then why should crypto coin be. As valid as the question might sound, non-collateralized stablecoins were created as a medium. It is not backed by anything but it relies on user-expectations for maintaining its value.
Hybrid stablecoins present you with the best of both worlds. They bring together the benefits of collateralized and non-collateralized stablecoins. Although the conceptualization and development of hybrid stablecoins are still in infancy, it is quite possible that they will gain traction with every passing day and stand head to head with the other types of stablecoins.
Creating a stablecoin on Ethereum is quite simple and straightforward. Ethereum is the most preferred platform for stablecoin development. The steps involved in ethereum stablecoin development are as follows
Stablecoins have a wide variety of utilities. They can be used to quickly trade crypto to fiat, and it is quite possible that they can be a revolution in the fintech space. Stablecoins can also be used to protect your assets by using stop-loss or hedging or harvesting strategies.
Perhaps the greatest advantage of a stablecoin is the way in which it steadies the ship for the entire crypto world. Although it might, on the surface, seem like a disadvantage, it is quite likely that stablecoins will spearhead the revolution of crypto coins being accepted as a method of payment. Other than that, we have also seen above, the wide variety of applications that stablecoins can be used for.
As one of the most preferred stablecoin development consultants and a reputed stablecoin development services company, we understand not only the technology that goes behind this revolutionary crypto coin but also the business aspect of it. We can help you create your own stablecoin on Ethereum and assist you with any other stablecoin related questions and requirements that you might have.