Today CENTRE and Circle, an open source consortium, introduced a service tokenizing the US dollar. The service, called USD/Coin (USDC), provides unparalleled support for over 30 partners across the industry. Partners include exchanges, protocols, platforms, wallets, and applications. The partners play an essential role in forming broad and inclusive ecosystem around USDC and it pushes forward an open standards model for fiat money on the internet. The ecosystem can potentially lead to more innovation in the financial field. USDC is responsible for launching the token, while Circle is the first issuer.
One of the best methods for seamless and off-ramp for transfer a fiat currency into an exchange ecosystem is to allow investors to hedge in and out of volatile crypto assets and to move stable value across exchange venues. With that, USDC will be listed for trading on exchanges such as DigiFinex, CoinEx, Poloniex, KuCoin, OKCoin, Coinplug, and XDAEX. These exchanges make it easier for retail and institutional investors to access transparent, price-stable cryptocurrency to trade against hundreds of various crypto assets.
Though stablecoins have found a product-market fit in the crypto trading space, many industry players may not be able to use stablecoin to incorporate into their own projects. Developers worldwide are developing creative protocols, platforms, and applications using blockchain and smart contract infrastructure and accordingly, they require a digital, tokenized paradigm for fiat money that they can reuse for their solution. The stablecoin, to be effective, needs to be open, interoperable, safe, transparent, and trustworthy. USDC may be able to become a solution that can be used by anyone and that anyone can contribute to.
When it comes to the USDC protocol, two examples highlight how it can be leveraged. Trading protocols are relevant because exchanging currency, goods, or assets in a trustless way is a capability that many products will want to posses natively. A leading project in this arena is Kyber Network and it will be exciting to see USDC listed on the protocol and trading experiences take place as developers implement it. Further USDC will be available for trading on innovative decentralized trading platforms, including IDEX, Paradex, Radar Relay, and Tokenation.
Ron Bernstein of Paradex stated:
Stablecoins, especially ones that provide fiat rails, are a critical piece of infrastructure in the decentralized ecosystem. We’re excited by Circle and CENTRE’s efforts to create a transparent, fiat-backed project that provides a bridge between traditional finance and the open financial system of the future.
Lending protocols are also useful in this context, as they allow basic debt primitives to be programmed into applications. Dharma’s team is working to develop such a system and it will be interesting to see how USDC is incorporated to allow the debt experiences to be built across various projects.
Matt Liu, Origin Protocol Co-Founder stated:
In the next 12 months, cryptocurrencies will finally start getting mainstream adoption as decentralized applications like Origin-powered marketplaces start competing head-on with traditional web and mobile applications. Stablecoins like USDC will be absolutely essential in enabling everyday buyers and sellers to easily and instantly transact with each other across homesharing, ridesharing, contractor services, and many other categories without currency volatility risk. Origin is thrilled to partner with Circle to provide a reliable medium of exchange cryptocurrency on our platform and our partner applications as we aim to reduce transaction fees, promote free and open commerce, and redistribute value from corporate monopolies back to individual buyers and sellers.
There is a great deal of experimentation taking place concerning crypto-powered platforms and applications. However, it is important to note that the process is not without its challenges concerning the user experience – price volatility is one of the main issues. The good news is that USDC may be able to provide a solution. For example, Origin is a building platform enabling creation of decentralized peer-to-peer marketplaces for fractional use goods and services. The platform can benefit from a reliable cryptocurrency that reduces transaction fees and promotes free and open commerce. Second, BlockFi extends loans backed by crypto-assets as collateral. USDC can help streamline operations and develop a better user experience with loans in USD. Third, MoneyToken may use USDC as a lending option on its platform. Two other platforms BitPay and FOTA are also considering using USDC for mainstream financial services.
Several commented on the developments:
“We're excited to support Circle's efforts with USDC and integrate USDC with BlockFi's lending platform. Having access to 24/7, digital USD from a trusted source will enable us to streamline operations and offer a more flexible client experience.”
–@BlockFiZac, CEO, BlockFi
— BlockFi (@TheRealBlockFi) September 26, 2018
BitPay has always been supportive of open source crypto communities and blockchain initiatives and likes the direction CENTRE is taking with USDC. We envision a future where all digital assets and payments live on the blockchain.-Stephen Pair, CEO of BitPay
FOTA recognizes the importance of stablecoins in the maturation of digital asset derivative market. Stablecoin plays an essential role on FOTA as it is used in pricing, quoting, settlement and margining, making the entire system measure-complete, a prerequisite for our state-of-the-art margining system STAMP (System for Theoretical Analysis and Margining Portfolio). We believe USDC will provide more possibilities to this market and boost adoption of a new global economy. -Brian Cai, CEO & Founder at FOTA
Further, Melonport is developing a smart contract based low-cost alternative to investment fund management solutions. Over the long term, the assets may become tokenenized and USDC should help the platform in that direction by promoting on-chain investment fund denomination in a price-stable cryptocurrency. Centrifuge is currently developing an open and decentralized operating system to connect to the global financial supply chain. The following are comments on the developments:
For the participants of the financial supply chain, corporates, and SMEs, to adopt Centrifuge OS, a stable and reliable way of getting paid is crucial and necessary. We believe that CENTRE's stable coin standard is an excellent means to achieve that. Issuing USDC, Circle would not only enable cross-border and cross-currency payments but would also bridge the on- and off-chain world of payments. For business adoption at scale, crypto payments need to become as simple as that. -Maex Ament, CEO and Co-Founder at Centrifuge
USDC is one step to realizing Melon’s long-held vision that all assets will eventually be tokenized. One of the big challenges blockchain operated and regulated investment funds face is the lack of a liquid, stable ERC-20 token. USDC by CENTRE compliments the Melon protocol in this regard allowing on-chain investment funds to be denominated in a currency which provides a safe haven for managers and investors. -Mona El Isa, Melonport AG CEO & Co-founder
CENTRE’s consortium level is committed to ensuring that USDC is used in a safe manner. As a result, several risk-management and forensics firms such as Chainalysis, Elliptic, Confirm, and Coral and working with the platform to provide support.
Additionally, consumers should be able to safely store USDC and share with others or use it to connect with various services described earlier. And, custodian software such as BitGo, Cobo, Coinbase Wallet, Cool Wallet, and Status Trust may be able to provide native support for USDC. Sid Ceolho-Prabhu, Coinbase wallet product lead stated:
Stablecoins will form a cornerstone of the decentralized web and help bring cryptocurrencies to millions of users, moving us another step closer to an open financial system. Starting today, Coinbase Wallet will support the storage of USD Coin (USDC), as well as the use of USDC in decentralized apps.
USDC can be helpful in various other use cases, such as payments and commerce, it can further applications within financial contracts, and so much more. A flourishing ecosystem is currently underway and it is interesting to see what else can be achieved.