BitGo says USDS is an “open” stablecoin that allows institutions to participate and be rewarded for providing liquidation to the ecosystem.
BitGo plans to launch a dollar-backed stablecoin next year, differentiating itself by rewarding institutions that provide liquidation to the network, according to information Chia at the Token2049 Singapore event.
The stablecoin, called USDS, will be backed by short-term treasury bonds, overnight loans, and cash, similar to other stablecoins on the market. However, USDS will be the first “open” stablecoin, as BitGo calls it.
“The main reason for launching USDS is that while existing stablecoins have served their Vai well, we saw an opportunity for a more fair and ‘open’ system that encourages innovation and most importantly rewards those who build the network,” CEO Mike Belshe Chia .
“The real value of a stablecoin comes from the people who use it, the liquidation they provide, and the accessible venues to trade it.”
The major stablecoins on the market today are all pegged to the US dollar, with Tether ’s USDT leading the way with a market Capital of around $119 billion. Circle ’s USDC is second, with about a third the size. BitGo differentiates itself by rewarding institutions that provide liquidation to the USDS network from its reserves. Belshe said:
“At the end of each month, we will take some of the profits from the cash in the underlying fund and will redistribute them to the participants proportionally based on their holdings.”
While this may seem quite similar to dividends, and thus the whole thing could be considered an investment contract, Belshe emphasizes that the difference is that they do not distribute profits to end users, but only to the institutions that provide liquidation.
Other stablecoins have attempted to create stablecoins that are profitable and reward end users. But to do so, they have been forced to exclude the US market.
“You’ll see some that are only U.S.-focused, and some that are only non-U.S. focused, like Mountain Protocol or Lift Dollar from Dubai. They can’t be sold in the U.S. because they’re classified as securities,” he said.
BitGo plans to list USDS on all major exchanges and aims to reach $10 billion by this time next year.
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