4 hours ago
A Bitcoin-blockchain based decentralized finance (DeFi) task debuted a stablecoin afloat backed by bitcoin BTC tokens arsenic portion of its effort to physique a fiscal strategy centered connected the largest and oldest cryptocurrency.
Elastos, developer of the BeL2 protocol, unveiled its bitcoin dollar (BTCD) connected Wednesday.
The task aims to make a integer mentation of the Bretton Woods system, the post-World War II statement that pegged the U.S. dollar to gold, making the greenback the world's reserve currency arsenic a means of fostering monetary stability. Elastos said it is "reimagining [Bretton Woods] with Bitcoin astatine its core."
Stablecoins are tokens pegged to the value of a accepted fiscal asset, specified arsenic a fiat currency, usually the dollar. They're an important cog successful the cryptocurrency instrumentality due to the fact that they antagonistic the volatility of cryptocurrencies similar bitcoin, allowing users to clasp superior successful integer assets without having to origin successful chaotic terms swings.
Dollar-pegged stablecoins are usually backed by short-term U.S. Treasuries that tin easy beryllium cashed successful oregon purchased to conscionable fluctuating demand.
BTCD is backed by bitcoin, a counterintuitive prime for a token that's mean to clasp a unchangeable value. Elastos deals with this done overcollateralization of 160%-200% of BTCD's worth successful bitcoin, Ahmed IJ, the caput of marketing, told CoinDesk connected Telegram.
"Oracles provender the BTC-USD complaint each block," helium said. "If screen falls to 110%, arbitrage whitethorn repay the debt, drawback the BTC astatine a tiny discount, and erase the risk.
"When BTCD trades supra a dollar, holders pain it to reclaim BTC, proviso falls and the terms slides. If it dips beneath a dollar, users mint it with caller BTC and sell, proviso rises, terms lifts."
The improvement of a BTC-backed stablecoin forms portion of the broader improvement of bitcoin-powered DeFi, successful which the information of the Bitcoin web and the immense reserves of BTC are utilized to unafraid and money decentralized enactment elsewhere successful the blockchain world.
Read more: Stablecoin Market Could Grow to $2T by End-2028: Standard Chartered
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