The goal of stablecoins is to provide a source of stability in the cryptocurrency market. The most straightforward is a 1:1 fiat pegged coin, such as Tether to USD as collateral. There are also many other asset backed options, such as gold or other cryptocurrencies as collateral. Another method for price stability is through a process of quantity manipulation, where scarcity is created by creating or destroying coins as the price rises or falls (Basecoin).
The primary benefit of stablecoins is in transaction speed, and avoiding withdrawal fees. When investors believe the market is going to move downward, it can take days for crypto to fiat withdrawal to complete. When an investor wants to put money back into cryptocurrency, it can take days to make the deposit, depending on how the deposit is made (wire transfer vs. ACH vs. credit purchase). An investor can react to market movements instantly when their assets remain cryptocurrencies.
There are two new Euro pegged stablecoins that are placing a stronger emphasis on trust and transparency. Both platforms work through a process of escrow reserves established with 3rd party financial institutions and promise frequent audits. Smart contracts on the Ethereum network create this functionality for both platforms.
Stasis – EURS
Stasis is headquartered in Malta, where use of the token is already fully regulated and legal. Their relationship with the government in Malta is setting a precedent for regulatory rhetoric on cryptocurrencies. Malta was the first country to pass blockchain technology related framework into their national law with three unanimous bills in June 2017, even using a hashtag to refer to themselves as “#BlockchainIsland.”
Their reserves are verified daily, with a report released quarterly by a reliable third party. On-chain asset balances are inherently transparent by the design of a public blockchain. EURIS became available for purchase on the London-based exchange DSX on July 4th. The exchange operates as the UK Financial Conduct Authority (FCA) approved agent of a regulated company.
TrustToken – TrueEURO
The TrustToken ICO is hosted by CoinList. The platform is from the same creators of the widely used startup platform AngelList. The company was successful in the past with their releases of Origin (sharing economy platform), Props (live-streaming), Blockstack (decentralized web protocol) and Filecoin (token for cloud storage). But they are best known for TrueUSD, which improves on the the most widely used stablecoin Tether (USDT).
With TrustToken, any user will have the ability to securely tokenize any asset. Through this process, the company will create similar stablecoins pegged to the Euro and Yen. Registration closed at CoinList.co on July 17, 2018 to participate in the latest TrustToken offering, and the initial funding is capped at $61 million USD.
Stasis and TrustToken vs. Tether
The main difference between these new organizations and the most well known stablecoin, Tether, is the use of escrow and a strong emphasis on transparency. Stasis and TrustToken are totally focused on legal compliance and clarity for their user base. Neither organization holds any of the funds received when a EURS or TrustToken is purchased.
Both operate in partnership with licensed companies that already manage huge amounts of assets. These companies have escrow accounts dedicated to EURS and TrueToken token holders, linked to smart contracts. Regulatory compliance is already in place and consistently available to provide audits through these financial institutions.