The hype of tokenizing real world assets — a Swiss stablecoin use case
Stablecoins are essential to cryptocurrency markets, and traditional payment systems, especially cross-border ones, can also benefit from them. Edelcoin sets a new standard for stablecoins, offering low volatility, inflation protection, and zero reserve investment risk. Its verified reserves are 100% locked and secured for EDLC holders only.
Cryptocurrencies provide faster and cheaper transfer of wealth and regain users’ control of their funds. However, the volatile nature of crypto holds back some users and many businesses from integrating it into their financial framework. Instead, organizations and financial services have opted to use stablecoins, nonvolatile cryptocurrencies pegged to a fiat currency such as the dollar or euro, to single precious metals such as gold, or algorithmic-driven, to capitalize on the benefits of crypto sans volatility.
Major stablecoins outperform even Bitcoin
in terms of daily transaction volume, which is clear evidence of the pivotal role of stablecoins in today’s cryptocurrency market. While fiat currencies stabilize daily transactions, their inflationary characteristics prevent many from using fiat-pegged stablecoins as a hedge.
Is there anything better than fiat-pegged stablecoins? The answer lies in tokenized real-world assets (RWAs) that have been used for as long as humanity has engaged in business. Blockchain has enabled asset tokenization, providing the means to convert real-world assets, such as precious metals, real estate, and even intellectual property, into digital assets. This quickly became one of the fastest-growing subsectors of the crypto industry.
The tokenization of illiquid assets is expected to become a $16 trillion market by 2030.
Precious metals have been used as a store of value throughout business history. Coupled with asset tokenization, they provide an ideal base to form a stablecoin to hedge against inflation.
Stability through real-world assets
Issued in Switzerland, Edelcoin (EDLC) is a stablecoin originating from the tokenization of real-world assets to provide a low volatile store of value detached from fiat currencies. It is backed by a basket of pre-existing precious and base metals to be less volatile than single-asset-backed stablecoins (portfolio effect). By using RWAs instead of inflationary fiat currencies, Edelcoin aims to establish a new way for people to hedge against inflation.
Edelcoin says its token is 125% overcollateralized, meaning that the metals held in reserve to back up the coin exceed by 25% what would be needed to ensure 100% backing. The metals supporting Edelcoin’s value are securely stored in vaults in Switzerland, where the stablecoin issuer operates within a compliant framework. Edelcoin reserves are independently verified regularly and disclosed to ensure transparency.
The company believes that bridging the strengths of traditional finance (TradFi) with the fast-paced innovation of decentralized finance (DeFi) can lead to more integrated financial solutions. Edelcoin’s mission is “centered around sustainable value creation” to establish and reintroduce a stable payment method backed by tangible real-world assets.
The EDLC stablecoin was initially issued on the Ethereum blockchain as an ERC-20 token, but the team plans to extend its compatibility to other EVM-compatible networks. Edelcoin is also developing an Edelverse ecosystem to offer various services for Edelcoin holders.
As the tokenization of real-world assets gains momentum, it’s easy to see how DeFi can apply its innovative approach to precious metals, resulting in RWA-backed stablecoins detached from the risks of fiat currencies. A stable currency means success and security for any business buying and selling.
Such stability and security can be achieved by a currency that holds 125% of what it offers in its reserves. With its sustainable, transparent, and compliant approach to asset tokenization, Edelcoin will provide a solution not only for retail users but also for organizations such as pension funds and trading companies that look for long-term stability.
Learn more about Edelcoin
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Source: Replay
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Filed under: Bitcoin - @ October 30, 2023 10:21 am