Home Business News Cardano prepares to launch its first stablecoin era USD by CoinQuora

Cardano prepares to launch its first stablecoin era USD by CoinQuora

Cardano prepares to launch its first stablecoin era USD

  • AgeUSD will be the first stablecoin to launch on the network.
  • Emurgo initially announced the AgeUSD stablecoin in January 2021.
  • Stablecoins will not rely on collateralized debt positions.

Multinational blockchain company Emurgo, originally announced the stablecoin AgeUSD in January 2021. Since then, the company has announced a partnership with Charles Hoskinson of Input-Output Global, the parent company of IOHK.

According to IOHK CTO, Roman Pellerin, the AgeUSD stablecoin will be opened on Cardano as soon as the smart contract features launch on the blockchain.

Emurgo aims to prevent events like MakerDAO’s Black Thursday, which emerged through weaknesses in its DAI mortgage mechanism. In March 2020, the mass liquidation of the bulk of the manufacturer’s vault left about $ 4 million in the DAI out of collateral.

AgeUSD’s ‘Staticoin’ protocol-inspired form is not based on collateralized debt positions (CDP), unlike Ethereum-backed cryptocurrency-backed stablecoins.

The stablecoin runs on the Ergo blockchain and works to automate the math of the protocol itself. Ergo’s local currency reserve (ERG) service providers for minting and storing coins represent the underlying collateral.

Stablecoin users can also store ERG in a reserve to mint AgeUSD. The protocol allows this only if there is enough reserve above its reserve ratio. Notably, banks also use a similar process to lend money.

Cardano’s ADA could also serve as collateral to mint reserves. The possible downside, however, is that only these two assets support stablecoins, while different cryptocurrencies return to the DAI.

This article was first published on coinquora.com

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