As more and more people seek safer alternatives to store and transfer their wealth, stablecoins have proven to be a viable option with virtually no restrictions. These fiat-linked crypto assets allow users to store the value reliably without taking into account the inflation of the fiat that supports the asset.
e-Money has developed a new stable coin that is more similar to a tokenized bank deposit than a fiat-linked currency as it fluctuates due to the interest rates incurred. e-Money combines the best aspects of the three most popular stablecoin models: algorithmic stablecoins and secured stablecoins (including crypto and currency-backed stablecoins) to provide added value to end users. E-money was created using the Cosmos blockchain and is interoperable between networks. This enables the sovereignty of the platform and easy integration into other blockchains.
The problem with algorithmic and secured stable coins
Before e-money was introduced, there were three categories of stablecoins that offer value to users but have inherent problems. These categories, currency-backed stablecoins, crypto-backed stablecoins, and algorithmic stablecoins, are still very popular but can be improved.
Users tend to focus on the options that provide a reliable bond to the underlying asset, even in times of volatility. Unfortunately, until now there has not been a mainstream stablecoin that is immune to violent market fluctuations. This has deterred many people from participating in more traditional markets and has resulted in stablecoin being viewed as a potential regulatory risk.
The future viability of these stablecoins depends heavily on the relationship between the stablecoin issuers and banks. If the supervisory authorities present new rules or the issuers cannot cover operating costs from the interest held in reserves, there may be a possible price decoupling. There is also the problem of relying on a centralized institution responsible for maintaining the stability of the asset.
Algo stablecoins alleviate the problems of a centralized power structure, but pose their own problems. One of the main obstacles is that the collateral is not in the same asset that the stablecoin is tied to, which increases risk and puts pressure on the project and its ability to maintain the bond. Currency pegs hold their price through over-collateralisation, but this is only effective if the price of collateralized assets does not depreciate dramatically. In this case, the value is insufficient to warrant the bond and the entire ecosystem can collapse.
One final problem that will stifle Algo Stablecoins’ ability to gain mainstream adoption is their inability to meet the needs of large buyers. Organizations with billions or trillions of dollars of assets under management have no way of interacting with this type of system because it cannot support the level of transaction they need.
E-money combines the best of each
e-Money offers a solution that innovates on both models of stablecoins and offers an asset-backed option that changes in price due to inflation. E-money stablecoins are interest-bearing currency-based stablecoins that reflect various world currencies. They are also fully collateralized, interest-bearing, able to ensure an immediate finality of transactions, inexpensive and completely transparent. Additionally, e-Money is already working with several European banks to keep its coin deposits stable, and the company is regularly audited by Ernst and Young, one of the most respected Big Four accounting firms in the industry.
Users can send these stablecoins instantly anywhere, which means they are limitless, without authorization, efficient, and can be used over Web3 for local businesses, transfers and even corporate transactions. E-money increases the supply of all stable coins by one percent each year, resulting in a controlled divergence that is said to benefit stakeholders over time.
With this stable coin system, e-Money is not working to replace the fiat currency, but wants to act as a Layer 2 solution that improves the overall usability of the assets. Since e-Money uses the Cosmos blockchain framework for its infrastructure, the network can process thousands of transactions per second, creating the basis for a global platform.
In addition, the company recently announced a collaboration with Avalanche. The stablecoins from e-Money are used together with the five best Fiat-supported stablecoins TrueUSD (TUSD) and BiLira (TRYB) as Fiat-supported stablecoins in Avalanche’s DeFi ecosystem.
E-money is expanding beyond the USD-dominated stable coin market, offering trusted currencies that can be used for both retail customers and cross-border payments. With the launch of Avalanche, e-money users can send and receive stable coins with less than a second finality and low transaction fees. Providing predictable and interest-bearing value for stablecoins is an innovation that helps users better manage their assets. E-money hopes to empower people everywhere.
Image by moritz320 from Pixabay
