Here is our pick of the 3 most important stablecoin stories during the week.
CBDC’s, Hacks and Wrappers!!
This week was busy in a number of areas as Innovators keep pushing the envelope and have various slip ups as sloppy code or design are exposed.
First on the CBDC front, The Reserve Bank of India (RBI) has outlined the proposed features and reasoning behind its in-development central bank digital currency (CBDC) in a Concept Note on Central Bank Digital Currency
Features of Digital Rupee
1) CBDC is a sovereign currency issued by central banks in alignment with their monetary policy.
2) It appears as a liability on the central bank’s balance sheet.
3) It must be accepted as a medium of payment, legal tender, and a safe store of value by all citizens, enterprises, and government agencies.
4) CBDC is freely convertible against commercial bank money and cash.
5) CBDC is a fungible legal tender for which holders need not have a bank account.
6) CBDC is expected to lower the cost of issuance of money and transactions.
India’s central bank outlines digital rupee CBDC plans (cointelegraph.com)
Then, a major hack was reported when Binance said a cross-chain bridge linking with its BNB Chain (its chain which uses BNB as a Utility token) was targeted, enabling hackers to move BNB tokens off the network.
In total, hackers withdrew 2 million BNB tokens — about $570 million at current prices — from BNB Chain said in a blog post on Friday.
An earlier estimate from the company placed the total amount withdrawn in a range of $100 million to $110 million.
The value of BNB sank more than 3% Friday morning to $285.36 a coin, according to CoinMarketCap data.
$570 million worth of Binance’s BNB token stolen in another major crypto hack (cnbc.com)
Speaking of a chain’s utility coin, Decentralized Social Network (DeSo’s) native token (DESO) railled Thursday as traders digested an expansion of the project’s content strategy and its plans to partially integrate Circle’s widespread USDC stablecoin.
DESO was trading around $17.82 at press time on a 25.6% daily jump, with strong spikes immediately preceding and following the platform’s stablecoin announcement at 1:04 p.m. ET Thursday, per CoinGecko. The token has a current market capitalization of $165 million, or one-tenth its peak total value last October.
The self-described decentralized alternative to social media’s giants says it will let developers create “social apps” that can’t be knocked offline. That ecosystem will presumably need payments rails – leading to the onboarding of a derivative of USDC, a top-three stablecoin.
DeSo’s blockchain won’t host a native form of USDC, as is the case for big name networks such as Ethereum and Solana. Instead, it will issue “DesoDollars” to users who bridge their Ethereum-based stablecoins into the ecosystem, said founder Nader Al-Naji. He said DeSo plans to give other chains’ USDC the same treatment.
“It’s not our goal to be tied to a single chain,” he said.
Decentralized Social Network’s DeSo Token Rallies Amid Stablecoin Plans
So in summary, the Indian Central Bank or RBI is designing a Retail CBDC coin with direct claims on it, leaving no room for local Banks to participate. BNB discovered the cost of sloppy code and poor design and we see the notion of wrappers being introduced so that people never have to leave your ecosystem.
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Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.
Twitter @Alan_SmartMoney
We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.
For context on stablecoins please read this introductory interview with Alan “How stablecoins will change our world” and read articles tagged stablecoin in our archives.
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