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Why does the EOS community need stablecoins (CUSD, EOSDT, USDE, vUSD)
May 28  |  5 min read

Why Does the EOS Community Need Stablecoins (CUSD, EOSDT, USDE, vUSD)?

The COIN360 Editorial Team

COIN360 has recently enabled tracking for EOSDT by Equilibrium, an EOS-based stablecoin, which can now be found here. Do other stablecoins exist on the EOS blockchain, and what role will they play in the development of the EOS ecosystem? In the article below, we address these questions and evaluate the progress stablecoins have made on EOS so far.

The EOS blockchain has a number of noteworthy advantages that have recently allowed it to gain more traction in the crypto community. In particular, when we compare EOS to the most used blockchain platform, Ethereum, what comes to mind is EOS’s superior end-user experience, great scalability, dPoS consensus protocol (which is being adopted by Ethereum as well, but it’s expected to be a slow and painful transition), and last but not least - its non-existent transaction fees.

One department the emerging EOS blockchain has been lacking in (while Maker DAO already exists on Ethereum), is a transparent stablecoin. However, currently there are some projects on the EOS blockchain that are being built with the use of similar principles: vUSD, USDE and EOSDT. CUSD is another stablecoin that entered the EOS market earlier, but represents a different, centralized approach without decentralized governance and utility tokens.

EOSDT and USDE, like most other stablecoins, are pegged to the US dollar, but unlike their centralized peers—like Carbon USD—they aren’t backed by fiat money. EOSDT, for instance, is generated via the Equilibrium framework, which has a self-service gateway where anyone can collateralize their digital assets and issue EOSDT stablecoins. As of May 2019, over $10M worth of EOS has been locked in to issue over 3M EOSDT.

Below is a list of the main stablecoin use-cases that both existing and emerging stablecoins are expected to make possible or drastically improve on the EOS blockchain:

  • Protection from volatility
    Stablecoins provide a safe haven during periods of market turmoil and preserve the USD value of user holdings.
  • Decentralized applications
    Stablecoins can power both centralized and P2P lending/borrowing services and other DeFi applications, and in doing so, they can potentially gain wider adoption, attracting more users who do not want to be exposed to volatile crypto assets, such as coins and company-issued tokens that are commonly used as transaction units on DApps.
  • Commerce and transactions in stable currency
    It can eliminate uncertainty from e-commerce activities, as it represents a non-volatile asset that vendors can use to quote prices for their goods and services.
  • Trading
    Stablecoins are the bread and butter for professional traders, who perform various operations involving stablecoins, such as short trades, risk hedging e.t.c. EOSDT stablecoin and the Equilibrium governance token—NUT—are currently listed on DEXEOS, EOSDAQ, and HitBTC. CUSD is a base currency, alongside EOS, with multiple trading pairs on DEXEOS, but it’s also available on EOSDAQ.
  • Loans against crypto collateral
    This particular advantage is characteristic of decentralized stablecoins like EOSDT and USDE which are generated by users. By placing EOS as collateral on the Equilibrium framework, users get more liquid capital without actually selling their collateral (EOS), which, as they might expect, could see dramatic price gains in the future.

As you can see, the prospects for EOS stablecoins are promising, and we have not seen all of them yet, with Daniel Larimer recently publishing an extensive article—the size of a full-fledged whitepaper—describing his own vision of an asset-backed stablecoin on EOS, based on the experience of BitShares. Whether he proceeds to act on his project draft, and how he does it, still remains to be seen and it’s worth keeping an eye on.

Thanks for reading,
The COIN360 Editorial Team