Crypto custodian BitGo announced plans to launch a dollar-backed stablecoin, USDS, by 2025. The announcement, made on September 18, details BitGo’s entry into the competitive stablecoin market.
USDS Backed by High Liquidity and Low Risk
BitGo stated that USDS will have full backing from short-term Treasury bills, overnight repos, and cash. This structure ensures high liquidity and reduces risk for users.
To enhance transparency, BitGo will publish real-time proof of reserves on a dedicated website. Monthly audits will be conducted by a top-tier accounting firm, further assuring users.
Rewards for Liquidity Providers
BitGo aims to stand out by offering rewards to institutions providing liquidity to the USDS network. Up to 98% of earnings will go to participants who support the ecosystem. This reward system motivates institutions, exchanges, and liquidity providers to help grow the network, creating a more balanced and inclusive environment.
This approach challenges the current stablecoin market. Issuers like Tether and Circle earn significant profits, with data from TokenTerminal showing they generate around $525 million monthly. Together, they control 90% of the $170 billion stablecoin market. BitGo, however, plans to distribute most rewards to network participants, not keep them.
Institutional Interest in Stablecoins
BitGo’s move reflects growing institutional interest in stablecoins. Over the past year, financial giants like PayPal and Ripple have entered the space.
Stablecoins have real-world uses, offering stability compared to volatile assets like Bitcoin. Venture capitalist Nic Carter highlighted their growing role in everyday transactions. According to a Castle Island Ventures report, saving in dollars is now a popular goal for many users, particularly in Nigeria, where it ranks as the top financial priority.
BitGo’s USDS will cater to this rising demand while offering a rewards-driven system to spur adoption and growth in the stablecoin sector.
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