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BitGo, a digital asset management startup, has declared its intention to launch a stablecoin called USDS, which would bring the benefits of a dollar-backed asset in order to encourage institutional stakeholders to increase the amount of transactions flowing through its network.
This new stablecoin was unveiled during Token2049 conference, a large crypto event in Singapore where the CEO of BitGo, Mike Belshe presented attributes and goals of this new stablecoin which is expected to launch in January 2025, aims to achieve its goals through a rewards-based system.
The proposed USDS stablecoin will be backed by short-term T-bills, overnight repos, and cash just like most other dollar-pegged stablecoins. Nonetheless, BitGo has a plan for a different rewards mechanism through which institutions can get compensated for contributing to the network’s liquidity. The fee distribution of the organization will give any number of participants a way to gain from their part in the stablecoin ecosystem.
BitGo Company's strategies focus on creating a transparent market system and attracting institutions to the USDS project. The company aims to increase the usability of the stablecoin by providing financial motivations. In its first year, BitGo plans to store $10 billion in assets under the USDS coin, demonstrating its development goals and demonstrating the value of a stablecoin.
The rewards mechanism will share up to 98% of the total revenue realized from the cash holdings back to the institutions on a proportional basis. BitGo also points out that this strategy is entirely different from yield-bearing stablecoins that have become common and may reward end customers. To ensure that the consumers and institutional liquidity providers are protected, it plans to adopt incentive structures that will make the ecosystem sustainable.
There are several features defining the nature of the USDS that distinguish it from other stablecoins currently under operation. This is evident in the development of transparency where BitGo is aiming at launching real-time proof of reserves on its official website. This will be supported by monthly audits for the leading accounting firms to come in and verify that indeed the USDS coin is stable and well backed up.
The accessibility of the stablecoin is favorable with different participants, including users, institutions such as banks, and even other DeFi platforms. Institutional exchanges and other liquidity providers will be able to apply and become listed on the BitGo platform while receiving rewards based on the contributions made to the ecosystem.
BitGo has secured a Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS) to operate within the unique regulatory environment of one of the world's leading financial centers. The company aims to introduce USDS into the existing cryptocurrency market, aiming to create a conducive trading floor and foster liquidity.
By handling transactions across multiple touch points, BitGo hopes to broaden its user base and support its growth targets. As the stablecoin market grows rapidly, BitGo's entry with USDS may impact market competition. To establish itself, the company focuses on transparent operations, liquidity incentives, and legal compliance.
