The blockchain technology firm believes native stablecoins will help bring stability to Cardano.
EMURGO, a leading blockchain technology company and the profit-driven arm of Cardano, has highlighted the significance of native stablecoins to Cardano, outlining the crucial benefits these assets can provide for the Cardano ecosystem.
The team behind the blockchain firm emphasized these potential benefits in an official report published Wednesday. According to the report, native stablecoins on the network are crucial in unlocking Cardano’s potential. The report came up shortly after the much-anticipated Cardano-based algorithmic stablecoin DJED went live last month.
According to EMURGO, the significance of stablecoins to Cardano is a significant motivation behind the development of its fiat-backed stablecoin USDA, which is slated for launch in the first quarter of this year. EMURGO believes stablecoins such as DJED and USDA can provide much-needed stability within the ecosystem for developers wishing to hedge against crypto volatility as they build their projects.
The EMURGO team highlighted the attraction of institutional investments as one of the benefits of stablecoins. They noted that the emergence of stablecoins in Cardano will likely send an invitation to company treasuries, traditional retailers, dApps, DEXs, and several others who seek to invest in Cardano but are discouraged by the volatility of digital assets. Notably, these entities can leverage Cardano’s stablecoins, resulting in new partnerships.
Additionally, stablecoins on Cardano will help improve the experience of users who utilize DeFi tools domiciled on the network. Users can take loans in stablecoins without concerns about being liquidated due to the volatility of the crypto market. This should help mitigate risks of blowouts such as those witnessed last year. The stablecoins should also provide a more convenient way to pay for those looking to make payments in the dollar.
EMURGO also pointed out that the existence of stablecoins will allow Web3 neophytes to delve into the scene without having to worry about seeing their assets plummet to lower values, as some of these “undecided” newcomers are looking to enter the Web3 space without having to indulge in risky investments.
The Emergence of Stablecoins on Cardano
Cardano has welcomed two native stablecoins into its ecosystem this year: DJED and USDA. The success of DJED after its launch on the mainnet underscores the growing need for native stablecoins in Cardano. Hours after the launch, several Cardano-based exchanges listed the stablecoin and its reserve asset SHEN. Bitrue also jumped on the train. Shortly after, the exchange introduced DJED staking with 50% APY.
USDA, which EMURGO is developing, is expected to launch in Q1 2023. Unlike DJED, an overcollateralized algorithmic stablecoin, USDA will work as a fiat-backed stablecoin with a 1:1 peg to the US Dollar. It bears mentioning that Cardano already saw the launch of a stablecoin last year, iUSD, which Indigo Protocol launched in November 2022.