Stable coins - Part 2
The concept of a stable coin has very much impact full in the decentralized financial networking system. In the previous post, I tried to discuss the importance of a stablecoin and what is the basic reason behind initiating a stable coin. I tried to cover the classifications of stablecoins including the different backing systems of those stablecoins. So there are several reasons behind the popularity of stablecoins. The reasons for Stablecoin becoming popular have been discussed here today.
Reduced Volatility:
Stablecoins provide a safer haven within the cryptosystem. It reduces the main problem of the price volatility of the crypto. Mainly the extreme price fluctuation is the problem in the case of crypto projects. Stablecoin has a nice solution to this volatility problem of crypto.
Efficient Transactions:
The stability factor makes stablecoins a convenient medium of exchange for everyday transactions. Cryptocurrency users can avoid delays and fees by using stablecoins backed by Fiat.
Access to Decentralized Finance (DeFi):
Stablecoins serve as a bridge between traditional finance and the decentralized world of blockchain. There is no way to compare crypto with traditional financial currencies like Fiat. As the stablecoins are backed by crypto now it can make a bridge between these two extreme systems. They enable users to engage in DeFi protocols. In that way, they will be able to borrow assets, borrow assets, and participate in yield farming without being exposed to the extreme volatility of other cryptos.
Global Financial Inclusion:
Stablecoins can facilitate cross-border transactions and remittances with lower fees and faster settlement times compared to traditional methods. So it is making the opportunity for all to be the part of global financial system. This is a very powerful tool to make some crypto users living in the corners of the world for financial inclusion.
~ Regards,
VEIGO (Community Mod)
This is another great part you have shared. I love this part so much.