Cryptocurrencies have taken the world by storm with the launch of Bitcoin and, later, Ethereum. Although initially, crypto tokens were intended to be used for a specific utility, most utility tokens launched on the market didn’t meet the criteria. Buyers began considering it an investment, especially after the tokens and cryptocurrencies became highly volatile. The high volatility of cryptocurrencies made it necessary to find a solution. As a result, the best elements of cryptocurrency were combined with stability associated with the FIAT currency, and stablecoins have been formed.
There are numerous crypto stablecoins on the market, and new offers are added every year. Tether (USDT) is the most popular stablecoin, with a market capitalization of over US$62 billion. It is followed by the USD coin USDC and Binance USD (BUSD). As of August 2021, the total market capitalization of top stablecoins was more than US$115 billion. This promises a bright future for stablecoins and long-term growth.
So, a native stablecoin makes it a very attractive financial option to start a blockchain project. This will ensure you have steady investors and active currency circulation within the dedicated community. The stablecoin’s price is expected to increase exponentially as your blockchain solution becomes more popular.
What is a stablecoin?
A stablecoin cryptocurrency can withstand the volatility associated with emerging markets. This is a digital currency, or crypto, whose value is pegged to an international currency (e.g., USD) or assets (e.g., gold, silver or oil), and their exchange rates move in line with the collateral upon which they are based. Stablecoins were created to combine the benefits of cryptocurrency, like immutability, transparency, security, transaction speed and the low volatility of fiat money.
Why launch a stablecoin?
Stablecoin payments could be the default mode of payment
Stability is an essential choice when it comes to owning cryptocurrency. You can convert a stablecoin to a stable FIAT currency or a commodity such as gold. This allows you to use cryptocurrency to exchange currencies without a financial institution acting as a broker.
Stablecoin payments are easy for recurring and P2P payments
Stablecoin allows you to use smarter and safer financial protocols independently of the blockchain network. All automatic stablecoin transactions can be traced, and these transactions can also be traceable because of its transparency. This transparency makes paying for subscriptions, salaries, loans, and other corporate payments easier.
Stablecoins allow for easy cryptocurrency exchanges
Although cryptocurrencies can reduce the gap between global traders and their counterparts, only a small number of them are able to support fiat currencies due to strict regulations. Stablecoins provide crypto FIAT trading pairs that can be used for cross-border transactions. You can send stablecoin to India even if you are in the US. There are no additional fees for sending the stablecoin or any losses that may occur while changing currencies.
What to consider when developing a stablecoin?
Let’s take this step-by-step:
Understand the motivation and expectations
Business goals should be clear while creating a stablecoin. You must have the answers to the below questions in order to make the best decisions:
- What are your expectations about liquidity?
- Your preferred decentralization type, such as fiscal, political, or market independence.
- The number of audits you can afford to ensure stability.
- Your favorite stablecoin architecture: simple, complex or both.
These questions will help you determine the type of stablecoin best for you. You can move on to the next step and find the best platform for launching stablecoins.
Find the best platform for launching a stablecoin
Stablecoins were initially launched at Ethereum from 2016 to 2018, but there are many other options as the market grows. Tron, EOS, and other new entrants to the blockchain market have given way to many stablecoin projects starting in 2019. These technologies aside, more than half of all stablecoin projects in 2019-2020 were launched on Ethereum. You can sell and buy stablecoins much more easily because it offers greater interoperability as well as increased transaction bandwidth.
Take the necessary steps to ensure liquidity
The launch of your stablecoin is not finished yet. It is important to keep the currency circulating; otherwise, the entire purpose of the stablecoin will be lost. You will need to integrate an automated integrating program that provides you with the daily currency rates as well as index rates from the Consumer Price Index or Personal Consumption Expenditures. Splitting transaction fees between the stablecoin value or the liquidity reserve is another way to preserve liquidity.
Give your stabilization an identity
As stablecoin is your currency, you need a design that highlights the investor’s benefits in your coins. System design is a detailed blueprint outlining how token users can conduct transactions. It is good if you can create a platform, such as a mobile app or website, that allows users to interact with your token.
Market launch and integration with the blockchain platform
Now that you have your visuals and designs, it is time for blockchain platform integration with the coin. This is essential to increase the security and safety of your stablecoins. After a series of tests, you can launch your stablecoins on the main market.
A step-by-step guide on how to build a stablecoin
Let’s now look at the steps to create a stablecoin.
Step 1: Token development
First, you must mint the token you plan to put into circulation. It’s important to discuss with your developers all the technical details, including the anticipated supply, price, operational features, and the blockchain platform you will use. You should also consider security features.
Step 2: Branding
Token development is similar to website development. It requires both front-end and back-end work. The first step, which we have discussed, is the back-end development part. Branding and visual design are the front end of your stablecoin. Your asset should have a distinctive visual appeal that is memorable and sleek.
Step 3: Smart contract development
You should create a smart contract algorithm to allow users to exchange their coins for crypto-assets or fiat currency, as all transactions in the blockchain are conducted with smart contracts.
Step 4: Planning the ICO
You will need to plan how the token will be distributed to investors and other users at the final stage of stablecoin creation. Either launch the coin to a crypto exchange so the crypto community can buy it at a discounted price, or you can allocate the coins to investors (direct allocation to ICO wallets).
Planning for a stablecoin project?
Consult a stablecoin development company to learn more about the many monetization options that stablecoins provide. Contact a team with the expertise to develop stablecoins from scratch using whitelabel stablecoin development technology. Choose a stablecoin development company that can help you with every step of the project, calculate its cost, and does all other blockchain engineerings necessary for your success.