First introduced by Tether in 2014, stablecoins are considered to be the go-to option for those who want to mitigate risk in the decentralized framework. These crypto tokens are an effective short-term store of value and an excellent medium of exchange that while establishing the stability of fiat currencies still hold the security, transparency, and decentralization of cryptocurrencies.
So naturally, they saw unprecedented growth over the past few years and now account for over 5% of the total crypto market cap. But what really stands out about stablecoins is the possibility they create in the financial sector. They provide a frictionless way for people to exchange funds across the globe and frees them from the clutches of centralized systems. This means new opportunities for banking the unbanked and making financial services accessible to everyone.
However, the operations of some of the most popular stablecoins have raised concerns both in the crypto industry and global financial markets, with experts doubting the stability of these tokens and the safety of investors.
Stablecoins Not So Stable?
Ever since its initiation in 2014, the most popular stablecoin Tether (USDT), on its website, maintained that “Every tether is always backed 1-to-1, by traditional currency held in our reserves.” But, in February 2019, it backtracked on its claims changing the text on its website to “Every Tether token is always 100% backed by our reserves, which includes traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”).”
This change sent waves of speculation across the crypto industry raising eyebrows on stability on stablecoins. With no clear information on what is actually backing Tether and no systemized way that makes stablecoin issuers disclose this information, the safety of stablecoin investors became questionable.
A group of experts also started seeing stablecoins like Tether as a threat to the entire crypto ecosystem claiming that Tether was actually created to keep the price of Bitcoin high. A study conducted on this subject found that some players on the Bitfinex Exchange use freshly minted Tether to buy Bitcoin every time its price falls, thus maintaining its value.
With problems like these surfacing investors stopped looking at stablecoins as the safe haven they once claimed to be. In a time like this, the introduction of EURST to the stablecoin market is probably just what we needed.
Investors Eyeing EURST?
Developed by the team at Wallex Trust, EURST is essentially an ERC-20 token pegged to Euro, where 1 EURST token represents a value of 1€. Its value is always 100% USD asset-backed. It is probably the first-ever euro token to be live audited and is fully secured by the accounts of the Wallex Trust itself. This right here is enough for investors to regain trust, bringing unprecedented levels of transparency to the stablecoin market.
It uses smart contracts to digitize assets deposited on the platform making it easy for people across the globe to send and receive payments with little friction. The need for intermediaries and banks can be efficiently reduced with users being able to store their stablecoins on the platform itself in their custodian Wallex accounts. This makes EURST a feasible solution for economic flaws in underdeveloped countries across the world.
Like killing two birds with a single arrow, EURST not just creates trust and transparency in the crypto industry but also addresses real-world flaws with an aim to revive failing economies. These innovative qualities of EURST gained significant traction from the crypto industry with investors turning to this novel stablecoin to evade risk.
The Future of Stablecoins
Even in 2021, one of the biggest factors that puts people off the crypto industry is the volatility that comes with it. By providing a fool-proof solution to this problem, stablecoins have already made a mark for themselves and brought millions of people into the decentralized framework. Now, with projects like EURST using these coins to address real economic flaws in our systems, we might be heading towards a world where stablecoins become the new norm, bringing transparency, trust, and growth to our economies.
To find out more about EURST, please visit https://eurst.io/