Fintech leverages power of stable assets to grow Cardano in DeFi
, one of the founding entities of Cardano, recognizes the vital role that stablecoins play in the advancement of the cryptocurrency industry. As such, the fintech is eager to leverage Cardano's U.S. dollar-backed network, the USDA, to launch products and services that utilize stablecoins.
The first type is fiat-backed stablecoins, where a U.S. dollar-backed token is issued for every $1 deposited in a reserve. As long as this reserve is managed correctly, these tokens remain stable. However, these assets have faced criticism from the crypto community for their centralization and lack of an efficient and transparent auditing system. To address these concerns, Anzens, a partner of Emurgo, has teamed up with a regulated financial services company based in the U.S.
The second type of stablecoin is super-collateralized algorithmic stablecoins such as Djed. Unlike fiat-backed stablecoins, algorithmic stablecoins are not backed by fiat money, but instead use algorithms to keep the token's price stable. To ensure stability, these stablecoins must have more assets backing them than they have in circulation. In the case of Djed, its price stability is maintained by balancing its supply with that of backup token SHEN.
Stablecoins are gaining popularity as a solution for various purposes, including payments, lending, alternative financial services and remittances. Emurgo highlights that Cardano's support for stablecoins enhances its appeal to traditional retailers, decentralized apps, decentralized exchanges and corporate treasuries.
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