Elastos Launches Bitcoin-Backed Stablecoin BTCD to Create Financial System
The Elastos project has launched a stablecoin called bitcoin dollar (BTCD) that is fully backed by bitcoin. This initiative aims to create a financial system centered around bitcoin and reimagine the Bretton Woods system, which pegged currencies to gold.
- BTCD offers stability against volatility, allowing users to hold digital assets without large price fluctuations.
- It is overcollateralized at 160%-200% of its value in bitcoin to ensure stability.
- The BTC-USD rate is updated every block through oracles, managing risks associated with collateralization.
- When BTCD's value exceeds one dollar, holders can burn it to reclaim bitcoin, reducing supply; if it falls below one dollar, new BTCD can be minted with fresh bitcoin.
- This development is part of the broader push for bitcoin-powered decentralized finance (DeFi).
Stablecoins are typically pegged to fiat currencies, often backed by short-term U.S. Treasuries. The introduction of BTCD represents a novel approach in the stablecoin market.