World Liberty Financial confirms launch of USD1 stablecoin
- World Liberty Financial revealed its plan to launch its USD1 stablecoin.
- The stablecoin will be backed by short-term US government treasuries, US Dollar deposits, and other cash equivalents.
- The platform stated that USD1 reserves will be custodied by BitGo.
President Donald Trump-inspired World Liberty Financial (WLFI) confirmed on Tuesday that it will launch its USD1 stablecoin, which it claims will be backed 1:1 with the US Dollar. This comes after the DeFi platform initiated several test transactions using the stablecoin on the Binance BNB Chain.
World Liberty Financial clarifies USD1 stablecoin launch
World Liberty Financial affirmed in a press release that it will launch USD1, a fully Dollar-backed stablecoin maintaining a value of 1 USD per token.
WLFI claims the stablecoin will be 100% backed by United States (US) deposits, short-term treasury bonds and other cash equivalents. USD1 tokens will debut on Ethereum (ETH) and BNB Smart Chain (BSC) and will integrate into other blockchain ecosystems over time.
"We're offering a digital dollar stablecoin that sovereign investors and major institutions can confidently integrate into their strategies for seamless, secure cross-border transactions," said Zach Witkoff, co-founder of WLFI.
WLFI also stated that USD1 will be free from intricate yield-generating mechanisms, providing the stability and security necessary to attract institutional participants.
The stablecoin reserves will be custodied by digital asset financial services company BitGo, which is affiliated with Tron founder Justin Sun.
The announcement comes after WLFI initiated several test transactions using the stablecoin on the BNB Chain on Monday. On-chain data suggested that the company also performed test transactions using crypto market maker Wintermute's public wallets.
However, the company previously stated that USD1 is not tradable and warned against bad actors who launched similar tokens.
Additionally, WLFI is reportedly developing three financial products, one of which is an on-chain lending and borrowing marketplace designed to improve liquidity and expand stablecoin use in DeFi.
WLFI's move to launch a stablecoin aligns with its stated objective of being a leader in DeFi amid its partnership with several crypto projects.
The company recently teamed up with Sui to explore DeFi product development opportunities. It has also partnered with Ondo Finance, Chainlink and Aave to explore integrating tokenized assets to boost its DeFi offerings.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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