A decentralized financing project (DEFI) based on Bitcoin-Blockchain made its debut entirely supported by Bitcoin
The tokens as part of his efforts to build a financial system were focused on the largest and the oldest cryptocurrency.
Elastos, developer of the Bel2 protocol, unveiled its dollar Bitcoin (BTCD) on Wednesday.
The project aims to create a digital version of the Bretton Woods system, the post-second world war agreement which set the US dollar to gold, making greenback global reserve currency as a means of promoting monetary stability. Elastos said he “reinvents (Bretton Woods) with Bitcoin at the base”.
Stablecoins are tokens set at the value of a traditional financial asset, such as a fiduciary currency, generally the dollar. They are an important cog in the cryptocurrency machine because they thwart the volatility of cryptocurrencies such as bitcoin, allowing users to hold capital in digital assets without having to take into account wild price oscillations.
Short -term stablecoins are generally supported by short -term American treasury bills which can easily be collected or purchased to meet fluctuating demand.
BTCD is supported by Bitcoin, a counter-intuitive choice for a token which is significant to contain a stable value. Elastos takes care of this thanks to the overlying of 160% to 200% of the value of BTCD in Bitcoin, Ahmed Ij, the chief of marketing, told Coindesk on Telegram.
“Oracles feed the BTC-USD rate with each block,” he said. “If the coverage falls at 110%, the arbitration can reimburse the debt, enter the BTC to a small discount and erase the risk.
“When BTCD is negotiated over a dollar, the carriers burn it to recover the BTC, the supply of falls and the price slides. If it drops below a dollar, users reach it with a BTC and the sale, the offer, the price elevators.”
The development of a stablecoin supported by BTC is part of the wider development of DEFI fueled by Bitcoin, in which the security of the Bitcoin network and the vast BTC reserves are used to secure and finance decentralized activity elsewhere in the blockchain world.
Read more: The Stablescoin market could reach 2 t $ by the end of 2028: Standard Charterd
