Hedera has announced the launch of a stablecoin development kit, Stablecoin Studio. The open-source project, which is now live on the public Hedera network, is designed to help institutional issuers, enterprises, and payment providers create, launch, and manage customized stablecoin projects.
The Stablecoin Studio is coming up weeks after PayPal unveiled its first stablecoin, PYUSD. The PayPal project is seen as a significant step towards adoption of stablecoin by legacy financial organizations.
Hedera is a public, open-source, proof-of-stake blockchain network that utilizes the fast, fair, and secure hashgraph consensus algorithm. It is a highly secure and distributed database that everyone can read from and write to.
Hedera is unique in that it is incredibly fast, energy-efficient (carbon negative), and secure, and it offers developers three primary services: Solidity-based smart contracts, consensus, and token services.
As a layer 1 blockchain, it is effective for building and deploying decentralized applications (DApps). It has a native cryptocurrency known as the Hedera Token (LYXe), which is used to power the network.
Stablecoins are a type of cryptocurrency designed to maintain a stable value. They offer an alternative to the high volatility of other cryptocurrencies like Bitcoin, making them more useful as a medium of exchange.
There are four main types. First are the fiat-collateralized, which are backed by real-world currencies such as USDT and USDC backed by the US dollar. The next are crypto-collateralized stablecoins. They are backed by other cryptocurrencies. An example is DAI by Maker DAO which is backed by Ethereum.
The other two are algorithmic and commodity-backed stablecoins. While algorithms are used to control supply and demand in the former, with Ampleforth (AMPL) as an example, the latter is backed by physical assets like gold. Paxos Gold (PAXG) is a commodity-backed stablecoin.
Features of Stablecoin Studio and successful use cases
According to Hedera, some of the features of the Stablecoin Studio are an Oracle-Based Proof-of-Reserves, ensuring transparency and trust in the stablecoin ecosystem; integration with custody providers; and KYC/AML compliance.
The blockchain firm noted that its toolkit has been successfully used to create stablecoin projects by Shinhan Bank, SCB TechX, Rivia, Jewel Bank, and Cathay Bank.
Kim Byung Hee, Chief of the Blockchain Division at Shinhan Bank, praised the toolkit’s convenience and its potential to be a game-changer in the Web3 market. Andre Chan, Innovation Lead from SCBTechX, emphasized the toolkit’s contribution to standardizing the way they build and innovate on top of Hedera.
With a stablecoin market of over $120 billion as of August 8, 2023, Stablecoin Studio is set to play a crucial role in the future of stablecoins, enabling organizations worldwide to benefit from its programmability, efficiency, and security. Its release promises to usher in a new era of stablecoin innovation.
