Why Are New Generation Stablecoins Based on Ethereum? – Ethereum News Today

Circle Coin (USDC), TrueUSD (TUSD), Gemini Dollar (GUSD), as well as Paxos (PAX), the new generation stablecoins contending with Tether (USDT), are based on the Blockchain network Ethereum.

Ethereum (ETH) Price Today – ETH / USD

Name Price24H (%)
Ethereum (ETH)
$208.90
-1.23%

All three mentioned stablecoins are transparent, fully audited and regulated. This allows them to guarantee the ability of users to redeem tokens based on a simple 1:1 ration with the USD while providing stable banking services.

Ethereum-Based Tokens

Launching a stablecoin on the Blockchain of Ethereum instantly enhances the compatibility of the asset with the existing infrastructure. For example, users of PAX, GUSD, and TUSD can use hardware wallets such as Ledger and Trezor with other software wallets like Metamask to receive and send stablecoins.

Two ETH wallets can easily send and receive USDC during any time of the day. Larger transfers for businesses can become easy like small e-commerce payments. Users can also utilize the Coinbase app to transfer USDC to others while remaining certain that the value is stable.

The system also allows exchanges to integrate stablecoins with ease without necessarily creating a different infrastructure for the stablecoins.

The team from Coinbase emphasized that the use of this Blockchain network allow developers to program the USD, which lets FinTech companies build programs that securely and easily facilitate transactions with stablecoins.

They said,

 “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.”

The most import feature is that users can now track the circulation of tokens with block explorers such as Etherscan. Since the tokens are stored in smart contracts, users can always track the amount of USD stored in a stablecoin. This increases the transparency of the currency.

ERC20 token compliant

Before the launch, the Gemini team emphasized that the GUSD is built on ETH network with an ERC20 token contract due to the different benefits compatibility can offer.

They said,

“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.”

Virtual currencies are in a growth curve

The crypto market, as well as the industry, are presently in a growth curve. In a few years, when infrastructure surrounding the digital currency market strengthens, it will be better. The inefficient, opaque, and unregulated platforms will be overtaken by more practical, regulated, and transparent alternatives.

The market for stablecoins has seen a growth of new contenders against Tether, which are regulated, transparent, and compliant with the present infrastructure in the market.

Ethereum price analysis

Ethereum is currently being traded at $205.96. It is declining on the downward channel of H4. If it tests the upper limit of the channel, ETH price may go down. New breaking into the market at this point will go a long way to smooth the movement.

 


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