December 14th, 2021, The End of Centralised Stablecoins and How To Profit From What’s Coming Next
The world is going through a massive evolution in money, but the crypto industry needs to be careful. There is a huge growing threat coming from centralized stablecoin issuers. The End of Centralised Stablecoins and How To Profit From What’s Coming Next
Let’s quickly talk about the dangers of centralized stablecoins and how people could profit from supporting alternatives.
- Centralized stablecoins are single authorities that, just like a central bank, can print un-backed currency out of thin air and buy rare assets like bitcoin or ethereum. This is a massive tool to manipulate the market. When the price tanks, the action stops, startups slow down, capital injections slow down. By controlling the main counterasset to bitcoin you control the market.
- Centralized stablecoins are meant to hold 1 dollar in the bank for every ERC-20. Ok, let’s assume they do. What happens when (not if) we have another global financial banking crisis? The banks holding these funds might use them to bail themselves out and leave the massive crypto economy that is (for lack of a better word) “tethered” to this collapsing fraudulent system.
- Another threat is negative interest rates. This is the reason there are no major euro stablecoins. The negative interest rates break the business model for centralized stablecoins. Imagine holding billions in a bank account and having to pay the negative interest on that. They will have to become fraudulent by going into fractional reserve if they already haven’t.
The big question is, where are the opportunities that curb these growing, centralized threats?
Enter over collateralized decentralized stablecoins. Yes, that’s a mouthful, but we think it’s one of the most important opportunities in the DeFi space.
One of the projects that we have been keeping a close eye on over the past three months is a project run by a team of original bitcoiners, aiming to compete with central banking called TheStandard.io.
The Standard DAO (TST) is a decentralized finance (DeFi) infrastructure project that enables users to generate a whole suite of stable cryptocurrencies by utilizing asset-backed loans without intermediaries.
This means that problem one listed above is solved! The protocol ensures that there is always more real value locked up in the system than stablecoins floating about on the markets. Because this is all in smart contracts using on-chain transactions, it is radically transparent.
Problem two is also lessened because decentralized stablecoin protocols like Maker DAO and The Standard DAO are detached from the legacy banking system. Naturally, a massive shock to the system would also affect the crypto and gold markets in the short term, but in the big picture, these protocols are not directly affected by the banking system.
We find it extremely interesting that The Standard is the next generation of decentralized stablecoins. Maker DAO forged the way by being the first; it comes with some major problems that The Standard is attempting to solve.
For instance, there is 10 trillion US Dollars worth of gold bullion locked away in high security vaulting facilities worldwide. TheStandard.io has a major partner in Vaultoro.com; the first crypto commodity exchanges launched way back in 2015. They see themselves as a SEPA network for hard asset custodians to tokenize their client’s holdings enabling bullion holders to finally earn a yield from their gold holdings by using the DeFi tools like automated market makers.
This protocol is called next-gen because it will enable people to lock up assets and generate a suite of stable assets starting with a peg to the Euro called the Standard Euro (sEUR). The Standard stablecoins are created for transactions. The Standard protocol will run on ETH L2 native, and the stablecoin output will be cross-chain, creating the first global standard for decentralized stablecoins. One thing that looks interesting to us is that they will have pegs for every fiat currency, including USD, YEN, RUB, AUD, GBP, etc. The key that caught our eye is that the protocol will also generate stablecoins pegged to listed stocks like TESLA and indexes like the NASDAQ-100.
When researching this DeFi infrastructure project, one idea stood out to us. They claimed to be solving inflation. This is a strange idea because they enable people to generate their own fiat pegged stablecoins, so how is that solving inflation for anyone? The key is that when you generate a stablecoin, you are actually taking a loan out from yourself. So any inflation is effectively helping to pay back your own loan. This is how the wealthy have always protected and grown their wealth through inflation. They borrow as much as they can in the asset that is getting devalued. But with something like Maker or The Standard, people issue loans to themselves without giving up their private keys. No need to beg a bank for a loan.
The project is of interest to us because the founders are well known in the crypto space, show their faces and are fixing a huge problem in the crypto sphere.
Initial DEX offering starting on December 14th, 2021.
The whole protocol is governed by a community of “Standard Token” (TST) holders, who form a Decentralized Autonomous Organization (DAO). The Standard DAO will manage the protocol by making key decisions utilizing intelligent voting mechanisms and prediction markets. The innovative concept of stable virtual currencies backed by rare assets constitutes a new privatized and decentralized Gold Standard for the 21st century. They are holding their initial DEX offering on copperlaunch.com without KYC from the 14th of December. Like always, please do your own research and due diligence.
Standard Token (TST) holders can participate in the governance system of the Standard Protocol. Standard Token holders benefits are:
- Revenue share of the fees paid by protocol users
- Rewards for actively participating in voting
- Discount on stability fee
- Access to liquidated assets under spot price
- Token Burns, Airdrops from income Participate now and become part of DeFi history.