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• quick preview

• At present, the market capitalization of major stablecoins has reached 17.544 billion U.S. dollars, an increase of 981 million U.S. dollars compared with last week.

• In the past week, Tether issued an additional 270 million USDT on Ethereum and an additional 500 million USDT on Tron.

• DeFi on EOS continues to heat up. On September 4, Tether issued an additional 25 million USDT on EOS, and on September 5, it continued to issue an additional 50 million USDT. The circulation of USDT on EOS has reached 90.25 million.

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1. Overview of Stablecoin Data

1. Overview of Stablecoin Data

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Source: MYKEY, CoinMarketCap, Coin Metrics

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Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

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Source: MYKEY, DeBank

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Source: MYKEY, DeBank

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Active addresses

Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

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Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

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Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

The average daily transaction volume of major stablecoins increased by an average of 12.05% from the previous week.

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2. Celo, a decentralized payment protocol

The stable currency in the blockchain combines the advantages of digital currency and can maintain price stability. The payment market has a very broad prospect, and it is an area that many people are optimistic about. The decentralized payment protocol Celo includes stable coins that can be used for payment, mainly for mobile payment systems. Celo is built on two core values ​​of "special purpose" and "connection". Its pronunciation /ˈtselo/ means "purpose" in Esperanto. In this report, we will introduce the difference of Celo.

Address-Based Encryption

With the development of stable coins, USDT and USDC with stable value have gradually replaced the "peer-to-peer payment" function of Bitcoin. When using these stablecoins for payment or transfer, we must first know the address of the other party, which increases the threshold for the use of stablecoins.

In the digital currency wallet disclosed by China Construction Bank last month, the digital renminbi also has a similar function, which can be transferred through the other party's wallet address or bank account.

price stabilization mechanism

price stabilization mechanism

There are two types of tokens included in the Celo protocol. One is the reserve token CELO (formerly known as Celo Gold), and the other is the stablecoin Celo USD (cUSD, Celo USD) used for payments. Although the stablecoin cUSD is also elastically supplied, unlike Ampleforth, Celo only maintains the value of cUSD by adjusting the total supply of cUSD, without changing the number of stablecoins held by users. When the price of cUSD is above $1, an arbitrageur can buy $1 of CELO, exchange it for 1 cUSD, and sell it on the market. When cUSD is lower than US$1, arbitrageurs can buy cUSD and exchange it for US$1 CELO.

In MakerDAO, the mortgage is the token selected by MKR holders through voting, such as ETH, WBTC, etc.; and Synthetix is ​​used to mortgage its own native token SNX. Celo's reserve assets include not only the native token CELO, but also commonly used cryptocurrencies such as BTC, ETH, and DAI, which increases the diversity of mortgage assets and makes it easier to expand the scale of cUSD. Initially, the goal of the Celo Reserve is 50% CELO, 30% BTC, 15% ETH, and 5% stablecoins.

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Source: celo.org

shared reserve system

Currently there is only one stablecoin in Celo, cUSD, but Celo positions itself as a multi-asset encryption protocol for decentralized payments and introduces a shared reserve system. For example, when the protocol was to introduce a Celo Euro pegged to the Euro, the Celo Euro used the same reserve as the Celo Dollar. As the supply and demand for stablecoins expands, the protocol issues new stablecoins and uses them to purchase a basket of cryptoassets. When demand for stablecoins tightens, the protocol uses the same mechanism, selling reserve assets for stablecoins. CELO plays the role of a traditional financial central bank, maintaining the price of stablecoins through open market operations.

The shared reserve system can also improve process efficiency. For example, when the demand for Celo euros decreases, before preparing to sell the reserves, it will first check whether the supply of Celo dollars needs to be expanded. If required, Celo dollars will be issued, directly exchanged for Celo Euros at the prevailing exchange rate.

The shared reserve system does not require all new stablecoins to be used, and the Celo protocol also allows the use of its own reserves to issue new tokens. Careful consideration must be exercised when using a shared reserve system to introduce a new stable currency. If a stablecoin with negative utility to the ecosystem is introduced, it may have a marginal negative impact on the stability of other currencies. The introduction of a new stablecoin will only be considered if it is widely expected to increase long-term demand for the monetary system.

The value of CELOs

CELO is also the governance and incentive token of the Celo protocol. Holding CELO will enjoy the benefits of network growth.

As the use of Celo increases and new stablecoins are introduced, more CELO will need to be staked, and the demand for CELO will increase.

In order to maintain the BFT consensus of the Celo network, Celo needs to elect a validator node, and the validator needs to mortgage a certain amount of CELO tokens.

Celo's block rewards are distributed to those who contribute to the system, including those who maintain system stability by selecting validators, verifying transactions, verifying users, and participating in the Schelling point price discovery mechanism, as well as those who bear the risk of tightening, using People who use the protocol as a form of payment, who invite others to use the protocol, who improve the protocol.

CELO holders can vote to govern the protocol, such as proposing a proposal to introduce a new stablecoin, and if the vote reaches a certain threshold, the new stablecoin is introduced in the shared reserve.

Likewise, holding CELO is risky, as demand for the Celo stablecoin shrinks for a prolonged period during times of tight supply, and the value of CELO may decline.

Usage of Celo

But there are very few stablecoins in the Celo protocol. According to the latest data from the official website, the only stable currency in Celo is cUSD, and the circulation of cUSD is only 7.33 million. Reserve funds include CELO, BTC, ETH, DAI, and each asset is stored in a specific blockchain address.

Summarize

Celo has special features in address-based encryption schemes, reserve assets, and shared reserves, which increases the ease of use of stablecoins and the diversity of reserve assets, and improves process efficiency. The market value of CELO is already high enough, but the current circulation of stablecoins in Celo is not high, and the types of stablecoins need to be increased.

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reader question

1. Is DeFi subverting the entire blockchain ecosystem?

Answer: DeFi is indeed changing the entire blockchain ecosystem on a large scale. For example, because of the demand of DeFi, the oracle machine Chainlink is used more. Because liquidity mining requires LP tokens, the liquidity and transaction volume of Uniswap has increased exponentially. Due to the popularity of DeFi, the Ethereum network has become very congested, and the miner's fee has increased, which may make it impossible for some other types of DApps to develop. In addition, DeFi is also changing the pattern between public chains. EOS, which lacks USDT as a stable currency, has generally lagged behind Tron in this wave of DeFi boom.

2. Why does SUSHI go online in three major exchanges within a day? Is it just because of the money-making effect?

A: It's not just about making money. It is certain that the listing strategy of centralized exchanges is different from before, and even the largest exchanges have FOMO sentiment for listing. At the end of August, Uniswap’s daily trading volume surpassed that of Coinbase, the largest exchange in the United States, and centralized exchanges can no longer ignore decentralized exchanges.