Whenever we talk about cryptocurrencies, the first thing that came into our mind is the “volatility” that rolls out. One of the significant reasons for the growing popularity of Bitcoin was that it eliminated the role of mediators in eCommerce. Bitcoin and Ethereum are two widely ruling cryptocurrencies in the market but have volatility. But businesses and consumers want to invest in a stable currency that can offer them long-run stability.
Then, Bitcoin was introduced into the market and started to fill this space for a while with the peer-to-peer electronic cash for the smooth transfer of digital assets. Because of Bitcoin’s volatility, its reliability and scalability as a medium of exchange have been reduced significantly. As a result of the price fluctuations, a new cryptocurrency called the “Stablecoin” has been developed. Stable Crypto Coin Development was introduced in the market with a stability feature.
Understanding the Stablecoins
A useful and trustworthy asset is a medium of exchange and a store of value that sustain its presence.
A stable coin fulfills all the criteria. Stablecoins in cryptocurrency is price-stable crypto coins that have a stable and reliable value like the U.S dollar. It means that its value can be fixed with another digital asset of the same value. Further, its a form of digital asset that aims to imitate traditional and stable currencies.
As the name suggests, a stable coin is a cryptocurrency backed by an underlying asset. Furthermore, Stablecoins can also be pegged to other assets in addition to fiat currencies, such as precious metals, cryptocurrencies, or even fiat currencies of exchange, like the Euro or US dollar.
As compared to other cryptocurrencies, Stable coins do not deal with the issues of extreme volatility. They utilize the benefits of cryptocurrencies, including immutability, transparency, security, fast transactions, digital wallets, privacy, and low fees, without losing the trust and stability provided by fiat currency.
How Stable Coins Can be Used?
- Stable coins are used within blockchain systems to transfer assets and settle payments. Using stable coins generated by smart contracts, lawyers and accountants can automatically exchange their coins for the services they provide within the system without being bothered by exchange fees from a cryptocurrency to U.S. dollars, which can range between 0.7% and 5%.
- Stable coins can also be used to form crypto money market accounts and to allocate assets for hundreds of cryptocurrencies.
- People who provide essential services to maintain blockchain systems to store values can also use stable coins as it may be difficult and expensive for them to convert mined coins into traditional currencies.
Steps to design a stablecoin
● Select the Type of Stablecoin
There are a lot of Stablecoins in cryptocurrency in the market. The two of them are widely recognized; collateralized and non-collateralized Stablecoins. You also need to decide if you want to bring long-term stability. You should prefer algorithmic Stablecoin. But if you prefer short-term stability with a reliable underlying asset, collateralized Stablecoins are the way to go.
● Selection of Platform and Technology
After selecting the type of Stablecoin, you have to finalize the platform and technology used for the development of Stablecoin. Ethereum was once the only platform for building Stablecoins, but this is no longer the case. A total of 11 Stablecoins were available in 2016, while 10 more were added in 2017. But today, there are more than 70 Stablecoins, and 140 are in development.
● Maintenance of Liquidity
Maintaining liquidity is the prime focus of Stablecoin. If the concept of liquidity is not stable, the stability of Stablecoin is at higher risk. To ensure stability, you have to follow the following recommendations.
- Integrate an automated monitoring system to offer daily currency rates, and index rates from the Consumer Price Index and Personal Consumption Expenditures.
- Revenues from transaction fees should be split.
- Protecting from the high supply, as it removes any incentive for sellers to market their stable coins at discounted rates on secondary markets.
● Finalizing the Design of your Stablecoin
Designing a Stablecoin refers to developing the flow of transactions of a Stablecoin and how the entire system will work. This step will also assist you to get the attention of your potential users. Your design will attract the user’s interest. Thus, it should be engaging and impressive. For instance, you have to develop a website or a mobile app to enable interaction with a stable coin.
● Development, Launch, and integration
The next step is developing your desired design into a stable coin. But before completing this step, you will require to have smart contracts. Ethereum is the most praised platform for the development of Stablecoins in cryptocurrency. After the development, make sure to test the quality of the developed product through a test net. If you may come across any issues in the testing process, fix them to launch a successful product.
Final Thoughts
It is an encouraging endeavor to develop Stablecoins in cryptocurrency in an environment where volatile assets are prevalent. Cryptocurrencies have always been aimed at creating lower volatility and more liquid digital assets.
Stablecoin is considered a crucial element in the crypto world since it facilitates frictionless transactions not only between parties transacting in cryptocurrencies but also between parties who may need to move between crypto and fiat currencies.
If you are looking to develop Stablecoins in cryptocurrency, Hashlogics is a Stablecoin Development Agency with high-end expertise in coin development. Contact us right away to launch your gold backed Stablecoins. Our Stablecoin Development Solution is trusted for the stability feature.
