Bitcoin and other crypto-assets have been in limelight for the past few years. However, due to the high volatility of the crypto market, entrepreneurs and organizations are not able to use Bitcoin and other cryptocurrencies as a mode of value transfer. This is where stablecoins play a pivotal role. They open the advantages of crypto assets to end-users without exposing them to high price volatility.
Characteristics of a stablecoin
- Stablecoins are backed by a physical asset or a fiat currency
- The owner of the stablecoins owns the direct equivalent of the asset or fiat
- Strong, stable, and politically neutral
- No loss of token value over time
Prime Advantages of stablecoins
The following benefits of stablecoins have resulted in their popularity and thus the demand for stablecoin development services.
- Zero Volatility
The mechanism of a stablecoin model works on the stabilization of value. Thus, in the case of under/over valuation, the value is automatically stabilized so that the stablecoin does not witness high volatility.
Stablecoins are backed by physical assets like gold/oil or fiat currencies like US Dollars, Euros, or more. Both the physical assets and fiat currencies are easy to liquidate. Effectively, it is easy to liquidate stablecoins. That is why they act as a bridge between DLT markets and traditional financial systems. ICO development services lay significant emphasis on the liquidity aspects as higher liquidity attracts more users.
- Transactional transparency
Stablecoins are built over a blockchain. As a result, any network participant can view the transactions. Also, there are stablecoins that conduct regular audits to offer users full transparency into the process by which they are backed.
- Accelerated transactions
Stablecoins and their infrastructure facilitate faster financial processes. The financial settlements that take hours via traditional banking can be completed within hours using a stablecoin.
Steps to build a stablecoin
New use-cases for stablecoins are evolving continuously. Based on the use-cases, stablecoin development services need to be strategized and marketed. Here are the 4 steps for the end-to-end development of a stablecoin.
1.) Stablecoin Strategy
There are four categories of stablecoins — fiat-backed, commodity-backed, crypto-backed, and algo-based. All of these categories have different use-cases. The accuracy of the reserve holding needs to be strategized so that the value of the stablecoins remains stable. An experienced stablecoin development company can help build the right strategy.
· Demand trust
· Strong regulation and auditing
· Decentralized in consensus,
· High in liquidity
· Stable and trustworthy
· Need auditing
· Not backed by any real-world asset
2.) Whitepaper Creation
A whitepaper delivers the idea behind the project to the investors. Thus, it needs to be technically thorough and clear. It must communicate the idea, the technology, the tokenomics, and other details to the users. It must basically help investors make an educated decision.
3.) Token Development
Based on the category of stablecoin one chooses, the token needs to be developed. The most important aspect here is what the token is basically backed by. If the token is backed by fiat, the fiat deposits need to be built. If the token is backed by gold then gold deposits need to be secured with a vault service provider.
4.) Token Marketing
An effective marketing strategy needs to be planned out to maximize the outreach of stablecoins. This could include reaching out to potential investors or influencers via emails, social media, or more such channels.
How do stablecoin operators make money?
A stablecoins model offers a good revenue-generating opportunity. The operators can earn revenue by:
- Transaction fees
The operators charge fees to users for redeeming fiat for their stablecoin holding. The fees are also charged for converting fiat into stablecoins.
- Interest income
Centralized stablecoin issuers can choose to lend their fiat balance sheets. Most of the time, the balance sheets are lent out to the insured third-party institutions and the stablecoin issuers collect interest on the principal. Companies offering stablecoin development services can help integrate such platforms.
Interestingly, stablecoin users also can earn using stablecoins:
- Margin Funding
The users can lend their stablecoins to margin traders. There are many exchanges that act as an intermediary to help users get in touch with a margin trader. The users receive an agreed-upon interest rate for loaning their stablecoins.
- Earning Interest
Certain companies allow stablecoin users to deposit their assets into their interest accounts. The stablecoin balances in such accounts earn interest.
If you are planning to build a stablecoin, Antier Solutions can help. We offer comprehensive stablecoin development services — from ideation and white paper creation to coin development, launch, and marketing.
Schedule a free demo of one of our stablecoin development projects or connect with our subject matter experts to share your needs for a stablecoin development.