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Bittime - The significance of Real World Assets (RWAs) in shaping stablecoin development has been emphasized in a recent report.
What is RWA?
Real World Assets (RWA) in blockchain are tangible assets in the real world that are converted into digital tokens, enabling easier trading and accessibility, portfolio diversification, and stability in DeFi.
RWA Related Reports
Stephen Leahy, of Circle, stressed in his latest stablecoin report that medium exchange remains an important aspect.
Also Read : What is RWA and Why is it Important for DeFi?
The report, produced by Centrifuge, examines the future trajectory of stablecoins, a category of real-world assets encoded into tokens seeing widespread adoption.
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According to data shared with Blockworks, stablecoins currently dominate blockchain transactions, accounting for more than 70% of total volume and having a market value exceeding $13 billion. This sector has shown consistent growth over the last five years.
Also Read What Are Real World Assets (RWA), 5 Crypto & Blockchain Coins That Use the RWA Narrative
As interest rates rise and DeFi market returns dwindle, stablecoin issuers are increasingly looking for ways to make their tokens carry interest, often by collateralizing them with real-world assets. An example of this approach is MakerDAO's stablecoin DAI, which offers an 8% yield to users who lock their stable tokens in a savings account.
Also read: What are Real World Assets (RWA), and what is their function in DeFi?
To expand sustainably, the report identifies three key functions that stablecoins must fulfill:
1. Acts as a medium of exchange, facilitating smooth and fast transfers.
2. Serves as a reliable store of value, protecting volatility to maintain purchasing power.
3. Functions as a unit of account, providing standard measures for setting prices of goods and services and facilitating financial planning.
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Advanced Explanation
Medium of Exchange
The report confirms medium exchange as the most successful application of stablecoins so far. The annual transaction volume for stablecoins surpasses that of payment giants such as PayPal and Visa, which are also trying to dive into stablecoin development.
Asad Khan, head of business development at Centrifuge, anticipates continued diversification within the stablecoin market, with platforms serving specific market segments, each offering a unique value proposition.
Over time, stablecoins could become the primary medium for capital markets transactions, due to the instant settlement and 24/7 trading capabilities facilitated by blockchain technology.
Store of Value
While emphasizing the importance of exchange functionality, the report also emphasizes the role of stablecoins as stores of value. Steakhouse Financial's Mark Phillips highlights the need for individuals in regions plagued by corruption and economic instability to maintain income in a reliable medium.
Given the crypto industry's minimal connection to local markets, the reason stablecoins choose to be collateralized by USD is not surprising. Khan suggests that while there is potential for specific stablecoins whose value is tied to regions, the USD will likely remain dominant as a guarantor in the stablecoin arena.
Account Unit
While centralized stablecoins rely on traditional financial markets and associated units of account, decentralized variants must ensure peg stability and optimize the functioning of units of account to prevent crises such as the Terra/Luna incident.
Regulatory Considerations
Navigating the evolving regulatory landscape is a major challenge for stablecoins. Khan noted the current hesitation from policymakers, seeing stablecoins as a distraction rather than a benefit.
However, Khan believes regulatory sentiment could improve as stablecoins transition from speculative to sustainable applications. Areas such as on-chain capital markets and transactions in emerging markets offer promising opportunities for stablecoin adoption despite regulatory hurdles.
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You can buy and sell crypto assets in an easy and safe way via Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti.
To be able to buy crypto assets on Bittime , make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. Learn Complete Guide How to Buy Crypto on Bittime .
Monitor price chart movements of Bitcoin (BTC) , Ethereum (ETH) , Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
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DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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