One exchange that is treading beyond its traditional function is Coinsquare, as it has announced to launch a stablecoin in the crypto market though without mentioning a time frame when that will happen. According to the press release, the stablecoin dubbed the eCAD will be backed at a ratio of 1:1 with Canadian dollar.
Crypto exchanges are major component of the crypto ecosystem. In the last year or so crypto exchanges have stepped outside of their traditional role of allowing customers to trade cryptocurrencies, to exploring what more they can contribute to the cryptoverse.
A stablecoin is a cryptocurrency, which unlike most popular cryptocurrencies, is pegged to another stable asset like gold or the U.S. dollar for example. Popular cryptos like Bitcoin (BTC) and Ethereum (ETH) are significantly volatile. They witness an increase or even decline of 10-20% on any given day which makes daily cryptocurrency transactions highly inconvenient.There are several stable coins already in the crypto market, working towards building the most optimal cryptocurrency.
Because of their low volatility and pegged nature, stablecoins are considered as a bridge, connecting the new crypto sphere to the traditional investors.The new eCAD, according to Coinsquare, will be a reliable and stable store of value that provides investors with an alternative to similar coins that are backed by the U.S. dollar. Cole Diamond, CEO of Coinsquare said:
The launch of eCAD will create the first transparent, affordable, and secure way of transferring value in Canada and beyond, without the risk of instability in the traditional cryptocurrency market.
Why is Coinsquare Launching a Stablecoin?
Coinsquare’s move into stablecoins is accredited to the benefits that they have to offer. Stablecoins help in eliminating the confusion that often swirls around conversion rates. Given how the prices of other cryptocurrencies can change considerably in a matter of just a few minutes, stablecoins help in delivering the certainty that many everyday consumers want and expect.
Another reason for this move is reaction to the growing interest of the crypto community in stablecoins. A report, published earlier in February by the California-based stablecoin startup Reserve, predicted that stablecoins are going to play a key role in crypto adoption.
The report, titled “The State of Stablecoins 2019: Hype vs. Reality in the Race for Stable, Global, Digital Money”, was based on information collected from 40 crypto and stablecoin firms.
The development of stablecoins, price-stable cryptocurrencies, asset-backed cryptocurrencies etc. is likely to play a critical role in how this new economy achieves mainstream adoption.
Coinsquare is not the first crypto exchange to have introduced stablecoin, other major exchanges like Binance and OKEx are already on board the stablecoin express, which could be another possible reason behind Coinsquare’s stablecoin endeavor.
Binance, one of the biggest crypto exchanges by volume launched its stablecoin dubbed the Binance coin (BNB). The coin was a resounding success for the exchange. Binance CEO, Changpeng Zhao, has been vocal about his support for stablecoins as he believes they offer “far more freedom than traditional fiat for users” and help regulators maintain control. BNB is the seventh largest digital coin by market cap.
Following Binance’s footsteps, another one of the bigwigs on the crypto exchange block, OKEx announced their plan to launch their own native coin OKUSD. Limited details have been revealed about this stablecoin; however, the name OKUSD gives it away that it would be a dollar pegged digital asset.
With so much focus on stable coins, it is evident that they are going to be playing an important part in the crypto ecosystem.