On May 13, following the implosion of Terra’s stablecoin, Circle’s CFO Jeremy Fox-Geen published a blog post titled “How to Stay Stable.” Circle’s CFO explained that since the introduction of the dollar coin, the goal of the stablecoin is to be “the most transparent and trustworthy dollar digital currency.”

Terra’s stablecoin decoupling event becomes the focus of the entire stablecoin economy

Stablecoin assets have been a popular hedging tool for many players in the cryptocurrency community for several years. Recently, stablecoins have been lent out in large numbers for interest and high-yield returns. In the early days, stablecoins were centralized projects, and now there are some decentralized algorithmic stablecoins among giants.

Tether (USDT) and USD Coin (USDC) are the two largest stablecoin projects by market capitalization. They are all centralized, which means the company guarantees that stablecoins can be exchanged for parity at $1 by holding reserves that cover circulating funds. Even before Terra’s stablecoin decoupling event, there was more confidence in the first two stablecoins because they were centralized.

Three days ago, Bitcoin.com News reported on the stablecoin shuffle following a recent editorial on our news desk, showing that, for the first time in history, three stablecoins entered the cryptocurrency top 10. This is still the case today, except that terrausd (UST) was knocked out of the top 10 cryptocurrency market cap and the stablecoin BUSD took the coin’s place. CEO of Circle Financial after terrausd (UST) implodes Jeremy Allaire Having been telling the media what makes USDC different, he believes that “more frameworks around stablecoins are needed.”

Circle CEO Says Company Is Increasing Trust and Transparency Efforts

On Friday, Allaire tweeted that Circle is “upping its efforts” when it comes to “trust and transparency” in USDC. Allaire also shared a blog post written by the company’s CFO, Jeremy Fox-Geen, who summed up what Allaire means about transparency. “USDC has always been backed by equivalent USD-denominated assets,” explained Fox-Geen’s blog post. The CFO further noted that the funds are held by leading U.S. financial institutions such as BNY Mellon and BlackRock. The report from Circle executives added:

USDC reserves are held entirely in cash and short-term U.S. government bonds, including U.S. Treasuries with maturities of 3 months or less.

Circle’s CFO detailed that the company has been releasing monthly attestations from leading accounting firm Grant Thornton International. “USDC reserves are worth at least as much as the amount of USDC in circulation, providing a reputable third-party assurance to the USDC ecosystem,” Fox-Geen concluded in a blog post. “USDC is always convertible 1:1 to U.S. dollars,” added the Circle executive. The blog post concludes that there are thousands of projects and entities supporting and facilitating USDC exchanges in 190 countries.

While Terra’s algorithmic stablecoins languish, there are still some decentralized fiat-pegged tokens that many crypto proponents see as necessary

Meanwhile, some decentralized and algorithmic stablecoin assets currently exist, such as LUSD, DAI, FEI, MIM, USDV, and USDD. For example, the Ethereum-based Makerdao project utilizes the overcollateralization method to back the stablecoin DAI. TRON recently launched an algorithmic stablecoin called USDD, and a blockchain project called Vader has a native algorithmic stablecoin called USDV. Another stablecoin asset called Magic Internet Currency (MIM) is built on Avalanche (AVAX) and issued by the decentralized lending platform Abracadabra.

Proponents of decentralized and algorithmic stablecoins believe they are needed among centralized heavyweights like USDT and USDC. Proponents of such assets argue that centralized stablecoins suffer the same failure, while others argue that decentralized and algorithmic stablecoins outperform centralized models because they cannot be frozen by issuers. Despite these benefits, centralized stablecoins have taken hold, and crypto users have more confidence in them, at least for now.

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tags in this story

Blog Posts, Cash, Cash Reserves, Circle CEO, Circle CFO, DAI, FEI, Fiat Pegged Tokens, Jeremy Allaire, Jeremy Fox-Geen, LUSD, MIM, Reports, Short Papers, Stablecoin Assets, Stablecoin Economy, Stablecoins Tokens, Stablecoins, Tether (USDT), Transparency, Treasury Bills, Trusts, US Bonds, USDC, USDD, USDV

What do you think of centralized stablecoins and Circle’s recent blog post on transparency and token reserve support? Let us know what you think about this topic in the comments section below.

Jamie Redman

Jamie Redman is Head of News for Bitcoin.com News and a fintech reporter based in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open source code and decentralized applications. Since September 2015, Redman has written over 5,000 articles for Bitcoin.com News on the disruptive protocols emerging today.

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