As a result, stable coin together with blockchain technology dominates the technology and financial markets. Stablecoins are digital assets backed by other assets and their issuers maintain the value of the coins by owning those assets. For several years, the Boosty Labs team has been successfully engaged in outsourcing stablecoin development. We are a world-class fintech and cloud engineering team with a strong practice background that combines consulting, strategy, design and engineering at scale. Let’s talk about the topic: Evaluating stablecoin development for your projects.
Specifics and areas of application
Types of stablecoins
Technically, stablecoins are pegged to the US dollar, but there are also stablecoins pegged to other cryptocurrencies or in some DeFi applications, with a basket of coins used as collateral. Some stablecoins use algorithms to manage the supply and demand of the coin so that the volume in circulation matches the volume of reserves.
Fiat-backed stablecoins’ advantages
Fiat-backed stablecoins’ advantages could be pointed directly to: 100% stable price; simplicity and less risk of being hacked, since the collateral to secure the stablecoin is not stored on the blockchain.
Benefits of crypto-backed stablecoins
Some Benefits of crypto-backed stablecoins could be easily pointed out are:
- no need to rely on third parties to provide collateral custody;
- higher level of decentralization;
- on-chain transactions that adjust the supply of “stable coins” more quickly;
- higher liquidity than fiat-backed Stablecoins (just one on-chain transaction is enough to exchange “stablecoin” for the corresponding amount in crypto);
- high level of transparency without external auditors (monitoring available to everyone).
Benefits of unsecured stablecoins (algorithmically)
Benefits of unsecured stablecoins (algorithmically) is one of the most considerate aspects. We can point out these benefits as:
- no collateral is required;
- The coin is completely decentralized and independent of other cryptocurrencies or fiat money.
Special considerations about stablecoin development
These are some special considerations you should take note to make your stablecoin development for your projects smoother and easier.
About portfolio hedge tool
Stablecoins can be used for portfolio protection. It is possible to effectively reduce overall risk when allocating a certain portion of a portfolio to stablecoins.
About additional opportunities to correct balances and exchange digital currencies
The main advantage of stablecoins is the additional ability to correct balances and exchange digital currencies. Due to its high volatility, cryptocurrencies cannot be used in everyday life, such as for making various payments.
About safe haven assets
Stablecoins do not face the problem of exchange rate fluctuations. The stablecoin model allows you to track price movements and changes in the value of fiat currencies or other underlying assets. This allows stablecoins to act as a safe-haven asset during market volatility.
The outlook of stablecoins
From these points of view, prominent academics and investors assume that in the future stablecoins:
- Continue to integrate with the DeFi sector and contribute to its further development;
- Revived the forecast market and decentralized file storage;
- Will continue to grow in the online payments segment, challenging centralized systems such as Venmo, PayPal or Cash App;
- Will be actively used for cross-border remittances, especially where financial infrastructure is underdeveloped;
- Will continue to be used for large B2B payments bypassing capital controls.
Stablecoin development nowadays is becoming more and more popular. Holding stablecoin development technology is holding the future key.
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