Why New Generation Stablecoins are Crucially Based on Ethereum

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TrueUSD (TUSD), Circle Coin (USDC), Gemini Dollar (GUSD), and Paxos (PAX), new generation stablecoins competing against Tether (USDT), are all based on the Ethereum blockchain network.

Crucially, all of the three above mentioned stablecoins are fully audited, transparent, and regulated, which allow them to obtain stable banking services and guarantee the ability of consumers to redeem the tokens based on a 1:1 ration with the US dollar.

Ethereum-Based Tokens

Deploying a stablecoin on top of the Ethereum blockchain protocol instantaneously improves the compatibility of the asset with existing infrastructure. For instance, users of GUSD, PAX, and TUSD can utilize hardware wallets like Trezor and Ledger along with software wallets such as Metamask to send and receive stablecoins.

“Improved send and receive. Two Ethereum wallets can quickly send and receive any amount of USDC at any time of day. Large transfers for business purposes become as easy as small e-commerce payments. Consumers can use the Coinbase app to send USDC to someone, while remaining confident the value is stable,” the Coinbase team explained, which recently integrated USDC with Circle.

It also allows exchanges to easily integrate stablecoins without the necessity of creating a new infrastructure to support stablecoins.

The Coinbase team emphasized that the usage of the Ethereum blockchain network enables developers to program the dollar, which allows fintech companies to develop programs that can easily and securely facilitate stablecoin transactions.

“A programmable dollar. For developers and fintech companies, a digital dollar like USDC is easier to program with. For example, given the private keys for USDC, a program can easily send and receive them back and forth using the public Ethereum blockchain.”

Most importantly, with stablecoins launched on Ethereum, users can track the circulation of the tokens with block explorers like Etherscan. Because the tokens are stored in smart contracts, users can track the amount of US dollars stored in a particular stablecoin, increasing the overall transparency of the currency.

Subsequent to its launch, the Gemini team heavily emphasized the fact that GUSD is built on the Ethereum network with compliance with the ERC20 token contract standard, due to the various benefits the compatibility with Ethereum can provide.

“To date, there has been no trusted and regulated digital representation of the U.S. dollar that moves in an open, decentralized manner like cryptocurrencies. Enter the Gemini dollar — a stable value coin (often called a “stablecoin”) that is (i) issued by Gemini, a New York trust company, (ii) strictly pegged 1:1 to the U.S. dollar, and (iii) built on the Ethereum network according to the ERC20 standard for tokens.”

Cryptocurrency is in a Growth Curve

The cryptocurrency market and industry are in a growth curve. In the years to come, as infrastructure surrounding the cryptocurrency market strengthens, opaque, inefficient, and unregulated platforms, assets, and projects will be replaced with more practical, transparent, and regulated alternatives.

The stablecoin market has seen the emergence of new competitors against Tether that are transparent, regulated, and compliant with the existing infrastructure in the market.

Featured image from Shutterstock.

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Hong Kong-Based Finance and Cryptocurrency Analyst / Writer. Contributing regularly to CCN and Hacked. Offering cryptocurrency news and Insights Into Asian Market (South Korea, Japan, and more).