The latest development in the Bitcoin ecosystem is the introduction of the first BRC-20 stablecoin, Stably USD, joining the likes of Tether (USDT) and USDCoin (USDC). Both USDT and USDC mainly operate as ERC-20 tokens on Ethereum network, but are now also available on other networks such as Solana, Avalanche, and TRON.
BRC-20 tokens, similar to NFTs, enable the addition of arbitrary, non-financial data to the Bitcoin blockchain without the need for a sidechain or extra token. This has sparked a heated debate among prominent figures in the Bitcoin community, with some supporting the idea while others expressing skepticism.
Stably, a U.S.-based company promoting itself as a fiat onramp for crypto trading, announced its BRC-20 U.S. dollar-backed stablecoin on Twitter. However, there are certain red flags associated with this announcement. For instance, the total supply of the stablecoin is $69.420 trillion, which is more than double the U.S. national debt and likely a nod to meme culture. Furthermore, the reserve wallet linked to their documentation has only a $220 balance.
Although Stably claims that its subsidiary, Stably Trading LLC, is a registered money transmitter, discrepancies exist between the registration data provided on their website and the FinCEN website. The company tweeted that the stablecoin is backed and redeemable 1-to-1 for USD collateral managed by their regulated custodian, with a third-party firm conducting monthly attestations.
StablyUSD isn’t exactly a new stablecoin; it has been around since 2019 and only recently converted into a BRC-20 token on Bitcoin. According to the latest attestation report, its market capitalization is $7 million across 11 different blockchains, including Ethereum, BNB Chain, and Arbitrum. Data on CoinGecko reveals the token’s price reached an all-time high of $9.89 on November 30 before crashing to $0.05 on December 9, 2022.
While Stably’s website states that regulated custodian Prime Trust holds the reserves for Stably USD, it seems more likely that Prime Trust doesn’t directly hold the reserves. Prime Trust isn’t FDIC-insured and maintains accounts with a number of banks that are FDIC-insured. Stably plans to implement a know your customer (KYC) and anti-money laundering (AML) process for users who seek to redeem stablecoins for actual dollars.
It’s worth noting that USDT was initially launched on the Bitcoin sidechain OMNI in 2014, and there are already several U.S. dollar-backed stablecoins available on the network, such as DoC on Rootstock. However, the new StablyUSD appears to be the first of its kind using the BRC-20 standard.
The future of this new BRC-20 stablecoin, whether it will be a short-lived fad or mark the beginning of a new era of stablecoins backed by the contentious Ordinals protocol, is uncertain. As always, conducting thorough research is highly recommended.
Source: Decrypt
