As a seasoned analyst with over two decades of experience in the financial sector, I find the approach BitGo is taking with its upcoming stablecoin, USDS, intriguing and potentially game-changing for the stablecoin market.
Custodian giant BitGo plans to disrupt the market for stablecoins with their upcoming offering, USDS, slated for release next year. At the Token2049 conference held in Singapore, they unveiled this new development. What sets BitGo’s stablecoin apart is that it will offer rewards to institutions contributing liquidity to its network, a distinctive feature not commonly found in the congested world of stablecoins.
The US Dollar Stable Coin (USDS), secured by U.S. Treasury securities, overnight repurchase agreements, and cash, is set to adopt a structure similar to other digital assets known as stablecoins. However, BitGo distinguishes itself by being the initial “open-participation” stablecoin, inviting financial institutions to collaborate in developing the network and reap the benefits of its prosperity.
Mike Belshe, BitGo CEO, expressed in a conversation with CoinDesk before his Token2049 keynote, that the main motivation behind introducing USDS was to fill a gap where existing stablecoins are important but could be improved. He believes there’s potential to develop something more transparent and equitable. The unique aspect of USDS, as Belshe emphasized, is that it incentivizes those who contribute to its growth.
The uniqueness of USDS lies in its incentive structure. By offering liquidity to the USDS network, institutions can earn a portion of the returns generated by the reserves holding this stablecoin. Belshe clarified that these earnings are distributed proportionally to contributors, depending on the scale of their investment.
Belshe explained that although it may appear similar, it does not qualify as a dividend since it’s not categorized as an investment contract. Instead, the benefits are meant for those providing liquidity, rather than the final users.
BitGo intends to add USDS (a stablecoin) to significant trading platforms, setting a high target of managing approximately $10 billion worth of assets within the upcoming year.
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2024-09-18 10:28