Exploring Stablecoins with Stably or StableUSD
Stably or StableUSD (USDS) is yet another entrant in the increasingly crowded world of stablecoins.
To explain, a stablecoin is a crypto-asset built around a smart contract to sell a unit of fiat currency. In StableUSD’s case the fiat currency is the United States dollar.
Specifically, each USDS altcoin contains an Ethereum smart contract they program to release a dollar held in an account. Thus, Stably releases a dollar when you make a StableUSD transaction.
Is StableUSD Different from other Stablecoins?
Stably claims USDS differs from other stablecoins because they build it on multiple blockchains. Hence, you could use USDS for multiple functions.
For example, you could use StableUSD for remittances, margin lending, Smart Escrow (loan collateral), payment, and as a safe-haven asset.
In addition, you could theoretically use USDS to power DApps (decentralized applications). For instance, you could build a USDS payment button for a gaming or ecommerce platform.
Interestingly, Stably claims StableUSD’s smart contract creates; or “mints” new USDS from dollars. To clarify, they hold the dollars in an escrow account that the StableUSD smart contract accesses.
Will Stably Make Money?
Thus, StableUSD is a payment application Stably disguises as an altcoin. Therefore, a good way to view to USDS is as an interface between the banking system and the crypto economy or Ethereum blockchain.
Stably’s creators hope to popularize StableUSD by not charging fees for its use. For instance, the Stably team hopes to tap the $689 billion remittance market.
To elaborate, remittances are money people wire to people in other countries. For example, money an Argentine living in Brooklyn sends to his mother in Buenos Aires.
Can Stably tap Remittances with StableUSD (USDS)?
The remittance market is growing fast. In fact, the World Bank estimates the volume of remittances to developing countries grew by 10.8% in 2018.
Moreover, the World Bank projects the volume of all remittances grew by 10.3% to $689 billion in 2018. Additionally, the World Bank predicts the remittance market will grow to $715 billion in 2019.
Stably could be competitive in remittances with its no-fee model. Notably, existing remittances are expensive. In fact, the World Bank estimates it costs $13.80 or 6.9% to wire a $200 remittances.
Businesses Stably could Disrupt
Thus, StableUSDS remittances will be competitive if Stably could cut the fee by 50% or 75%. Theoretically, the son in Brooklyn could send StableUSDS to his mother in Argentina by email or an encrypted messaging app like Telegram.
Hence Stably could wipe out the remittance business and destroy wire service companies like Western Union (NYSE: WU) and MoneyGram (NASDAQ: MGI). In addition, Stably could damage the business of retailers like Walmart (NYSE: WMT) that lure customers with money orders and wire services.
Stably threatens those businesses because its stablecoins transmit fiat currencies. Hence, Stably could transmit real money real people can spend in the real world. For instance, the mother in Argentina could use dollars to pay her rent or buy groceries if inflation destroys the Argentine peso.
Moreover, an American could use StableUSD to pay his credit card or wireless bill. Hence, Stably could threaten American retailers like Kroger (NYSE: KR) that offer electronic bill pay in their stores.
How Stably and StableUSD (USDS) could disrupt banking
The Stably Ethereum platform could make money from this disruption by charging lower fees than wire service and money order companies. In addition, Stably will be more convenient because you could access it through an app on your phone.
Thus nobody will need to make a special trip to Walmart, the supermarket, or a seedy bodega in a bad neighborhood to wire money. Under those circumstances, crypto asset solutions like Stably could threaten brick and mortar businesses.
In addition, financial institutions like Bank of America (NYSE: BAC) and Bank of New York Mellon (NYSE: BK) could adopt Stably’s technology. To explain, banks could add Stably’s app to their app.
Thus, an American could send money from his Bank of America account to family overseas at the touch of an app. In addition, the relative could convert the funds to cash at any ATM that accepts the Bank of America or Stably Apps.
Notably, Ripple and Japanese banks are testing a Money Tap app that converts the Ripple (XRP) cryptocurrency fiat currency at ATMs. Additionally, Banco Santander (NYSE: SAN) is testing Ripple cross border payments in the United Kingdom and Spain.
Is there a Market for the StableUSD (USDS) token?
Thus there could be a market for Stably’s technology at big banks but is there a market for the StableUSD (USDS)?
Speculators say no because StableUSD had a Market Capitalization of just $6 million and a 24-Hour Market Volume of $494,716 on 16 April 2019. Consequently, CoinMarketCap listed USDS as the 428th most valuable cryptocurrency on Palm Sunday 2019. CoinMarketCap based its estimates on a Circulating Supply of 5.981 million USDS.
In contrast, Tether (USDT); the most popular stablecoin, had a Market Cap of $2.5 billion and a 24-hour Market Volume of $11.064 million on the same day. Thus, CoinMarketCap named Tether as the eighth most valuable altcoin on 14 April 2019. However, Tether had a Circulating Supply of 2.473 billion USDT and a Total Supply of 2.75 billion USDT on April 14, 2019.
I think these numbers indicate most speculators are not aware of Stably or StableUSD (USDS) yet. Notably, Stably reports StableUSD only trades on two exchanges; Binance, and Bittrex. However, those are major decentralized cryptocurrency exchanges.
Is StableUSD (USDS) a good Stablecoin?
The StableUSD is an Ethereum request for Contact or ERC20 cryptocurrency. Hence, USDS is theoretically convertible with most Ethereum based cryptocurrencies.
Interestingly StableUSD is a little more stable than Tether. To explain, USDT had a Coin Price of $1.01 on 16 April 2019. Meanwhile, Stable had a Coin Price of $1.00 thus Stable does a better job of matching the greenback’s price.
In addition, you could theoretically use StableUSD on most Ethereum blockchain platforms because it is an ERC20 token. In fact, the StableUSD is the platform token for the Stably blockchain platform. Hence, what Stably is really selling is access to its platform.
However, there seems to be little to differentiate StableUSD from other Stablecoins. For instance, USDS is not part of Bancor’s Liquidity Network. In addition, StableUSD is not convertible into EOS (EOS).
Are Stably and StableUSD Scalable?
Thus, StableUSD offers no solution to the blockchain scalability problem. To explain, heavily encrypted blockchains like Ethereum are severely limited in speed and capacity.
For example, Ethereum can only handle 15 to 20 transactions per second (TPS). Thus, an Ethereum platform like Stably could crash if it tries to process 30 transactions at once. Hence, Stably’s platform could only process 15 to 20 remittances at a time. Under those circumstances it is hard to picture Stably making money.
In contrast, EOS claims its network can process up to 3,996 TPS. Thus, EOS could theoretically process several hundred remittances at once. However, CarbonUSD (CUSD) is the only EOS stablecoin I know of it.
EOS is scalable because it utilizes a sidechain instead of a blockchain. To explain, a sidechain is a less-encrypted digital channel. A sidechain has more room, so it could offer higher speeds and greater volumes than a blockchain like Ethereum.
On the other hand, they could easily add a sidechain solution to Stably and StableUSD (USDS). Notably, they design StableUSD to work with multiple blockchains. Thus, it could be easy to connect a sidechain to it, thus Stably and StableUSD could be easily scalable.
How Safe is StableUSD?
However sidechains are more vulnerable to hacking because they have less encryption. Stablecoins will interest criminals because they contain fiat currencies.
Therefore, StableUSD may not as secure as some users think. However, USDS looks stable now because it had a Coin Price of $1 on 16 April 2019. Therefore, a StableUSD is worth $1. In contrast, Tether had a Coin Price of $1.01 on the same day.
Stablecoin prices differentiate from fiat currency prices because of market fluctuations. Hence, a stablecoin could be worth more or less than the fiat currency they peg to it.
Will Stably be a major player in Stablecoins?
Finally, there are many US Dollar stablecoins out there; including the Gemini Dollar, Tether, StrongHold and TrusToken to name a few. Therefore, Stably is entering a crowded market.
Under those conditions, offering a Euro, Pound Sterling, Swiss Franc, Yen or Yuan cryptocurrency will be a smart move for Stably. My suggestion is to offer a StableEuro because the Euro is the world’s favorite dollar alternative. Without another fiat currency Stably is vulnerable to problems with the US economy and the price of the dollar.
Despite these concerns StableUSD is an interesting stablecoin with a good business plan behind it. I think Stably will be a major player in the stablecoin business if its technology works as advertised.