How to create a Stablecoin on XDC Network?
With booming demand for cryptocurrencies, a currency that is stable in nature has the capabilities of flourishing in global transactions. People from various industries like healthcare, fintech, logistics industries have rigorously started researching cryptocurrency and Blockchain technology. The decentralized attribute and the safety feature of the Blockchain technology help the various industries in smooth functioning and transaction regulation. To gain benefit from the features of the Blockchain network, industries can deploy stablecoins in a cryptocurrency ecosystem using the various crypto networks. Traders and investors access cryptocurrencies by holding funds. These funds are stablecoins, a major component of the mechanism of a Blockchain network.
- What is a Stablecoin?
- Different types of Stablecoins
- What is XDC Network?
- How to create a Stablecoin on XDC Network?
- How is XDC Network a convenient platform for creating Stablecoins?
What is a Stablecoin?
A Stablecoin can be defined as a kind of cryptocurrency whose value is associated with a tangible asset like a real estate property, gold or a US dollar. This value association of a stablecoin against a tangible asset is done to stabilize the price and avoid fraudulent activities in the cryptocurrency ecosystem. There are many cryptocurrencies for instance Ether and Bitcoin, but these have the disadvantage of price fluctuation. Whereas, when it comes to a stablecoin, the value of the currency is fixed against an asset being held for one stablecoin eliminating the issue of price fluctuation.
Stablecoins of XDC Network targets to fill up the gap between the benefits of the cryptocurrencies and the stable nature that the Fiat currencies offer. Cryptocurrencies are global currencies, yet few coins like Bitcoin and Ether are volatile in nature. For instance, the value of Bitcoin was raised from USD 1000 to USD 20000 in the year 2017. This periodic rise in the value of the coins ruins the stability making its use unsustainable. Decentralized currencies do not require a central authority for assuring the trust in the ecosystem of the currency, therefore minimizing the additional costs.
Different types of Stablecoins
There are various types of stablecoins as mentioned below:
These are the kind of stablecoins whose value is backed up with the particular fiat currency. Fiat-Backed stablecoin tokens hold their value fixed at a ratio of 1:1. For instance, Tether being a stablecoin, has its value fixed at a ratio of 1:1 against the USD. To ensure the existence of a stablecoin that is fiat-backed, a fiat currency is disposed of in the form of collateral. This disposal of a fiat currency as collateral requires the financial custodian and the regular auditing to always determining the collateralization of the token. For instance the Gemini stablecoin (GUSDT).
Non-collateralized stablecoins are the kind based on the fundamental of the Seigniorage Shares system. The concept of Seigniorage explains the difference between the printing cost of the money and its value. These coins depend on the algorithm, which changes the supply to control its price. Using smart contracts, these stablecoins will be sold if the price is lower than the linked currency, and if their value is higher than the linked currency, more tokens will be provided to the market.
The crypto-backed stable currency works similarly to the legal currency-backed stable currency. However, it prevents the use of cryptocurrency as collateral instead of using fiat currency. For example, Ethereum can be used as collateral to create cryptocurrency-backed stablecoins. These tokens use security compromises to compensate for the volatility of cryptocurrencies that will be used as collateral. It indicates that stablecoins will not rely on a 1:1 ratio of encrypted collateral.
The stablecoins backed by commodities are backed by other types of exchangeable assets, such as real estate and precious metals. Gold is one of the most common guaranteed commodities. Commodity-backed stablecoins contain tangible assets with certain actual value. These commodities can appreciate over time, providing greater motivation for people to use and keep these coins. With commodity-backed stablecoins, anyone can invest in real estate or precious metals around the world. Generally speaking, investing in such assets is reserved only for the wealthy investor class. However, stablecoins have opened up investment opportunities for ordinary people around the world.
What is XDC Network?
XDC Network is an enterprise-grade hybrid blockchain. It is an interoperable blockchain with high liquidity. It works on a Delegated Proof of Stake Consensus (XDPoS). With a hybrid architecture, the XDC platform helps the developers and users in building interoperable dApp and hybrid relay bridges. XDC Network also enables digitization, tokenization and fast settlement of trade transactions. With the help of a hybrid blockchain system, it combines the advantages of public and private blockchains. XDC Network is a blockchain that can completely change international trade, finance and supply chains. In other words, it is a next-generation computing network that can use blockchain technology to connect global businesses and communities. The network runs on its native fuel, namely, XDC. Businesses can use public and private blockchain systems to transmit data securely and transparently.
The XDC protocol can be used as a messaging and confirmation layer for national and cross-border approved payments. XDC tokens can be used as a payment settlement layer recognized by financial institutions. The XDC protocol architecture is designed to support the use of the existing cryptocurrency smart contract layer, the KYC / AML layer, and price stability. It supports Guarda wallets and biometric hardware wallets. The XDC cryptocurrency is currently being touted, and many investors claim that it can make huge profits in the long run.
How to create a Stablecoin on XDC Network?
To build a stablecoin on the XDC Network, the process does not require people to be technical experts. Stablecoin creation on the XDC Network is quite simple and has minimum technical obstacles. To create a Stablecoin, there are two kinds of networks available, XDC main Network and XDC Apothem Network. The commendable XDC Network documentation process makes the entire task convenient. Every step is precisely defined to understand the Stablecoin development on the XDC Network.
Follow the below-mentioned steps to learn about the creation and deployment of a Stablecoin on the XDC Network.
Step1: Unlocking the Wallet
The initial step in the process of creating a stablecoinon XDC Network is to unlock the wallet with the assistance of a Private key or XDCPay. Just in case you do not have XDCPay access, continue by installing the XDCPay application that works on the browsers like Google Chrome and Mozilla Firefox-Opera.
Step2: Choose a Name
The next step is to select the name of your preference for your stablecoin.
Step3: Choose a symbol
Continue by choosing an appropriate symbol as per your preference for your stablecoin.
Step4: Currency Supply
This means the number of tokens you want to float or supply on the market for the purpose of transactions. These should be done in accordance with the reserve fund issue.
Step5: Review and Issue
This is the last step in the process of creating a stablecoin on the XDC Network. See the details that you filled in while creating the stablecoin on XDC Network. Once you are satisfied with all the information you have entered, finish by just clicking on the options issue.
How is XDC Network a convenient platform for creating Stablecoins?
There are some advantages in creating a stablecoin on the XDC platform that makes the process of deploying a stablecoin effective, efficient and technically simple for a layperson.
Below mentioned are the advantages of building a stablecoin on the XDC platform:
- Minimum Congestion
As compared to the other platforms, the network congestion on the XDC platform is quite low, making the transaction smooth and time-efficient.
- Low-Transaction Fee
The transaction fee while creating the stablecoin on the XDC platform is quite low and affordable on every transaction.
- Evolving in Nature
XDC platform is a revolutionizing network for creating stablecoins. XDC Network constantly researches and works on the different scaling solutions. In the case of on-chain scaling, the process of sharding and Proof-of-Stake-based consensus has the capability that can crucially push the transaction processing and its performance while making an effort to maintain the privacy and security needs of the system.
Due to its efficient smart contracts and real-time settlement capabilities, the XDC platform enables organizations to participate in the global trading market at a fraction of the typical cost. XDC Foundation believes that this will make cross-border transactions more efficient while supporting both public and private use cases. For a better insight into the XDC platform and an understanding of its currency deployment mechanism, get in touch with our skilled developers.
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