The Global Dollar Network is based around a new stablecoin called USDG, Photo Credit: Unsplash/ Josh Appel
A consortium of financial technology and cryptocurrency companies including Robinhood, Kraken and Galaxy Digital introduced a joint stablecoin pegged to the U.S. dollar on Monday.
The newly formed Global Dollar Network aims to increase the use of stablecoins worldwide and promote an asset that provides proportionate economic benefits to its participants, the companies said.
Why it matters
Stablecoins are digital tokens designed to maintain constant value. They are backed by traditional currencies such as the U.S. dollar or euro.
As cryptocurrencies such as bitcoin have surged in value this year due to forecasts of low U.S. interest rates and the introduction of new crypto exchange-traded products, more companies have devoted resources to promoting stablecoins.
Stablecoins are often used to convert crypto tokens into traditional currencies because they are protected from the extreme price fluctuations seen in other cryptocurrencies.
The Global Dollar Network is based on a new stablecoin called USDG, which will be issued from Singapore by crypto platform Paxos. The token will be governed by a committee made up of representatives from the network’s partners, which also include Anchorage Digital, Bullish and Nuvei.
USDG will face an uphill task entering a concentrated market where the two largest players – Tether and USD Coin – account for nearly 90 percent of the total market capitalisation, according to data from CoinGecko.
The move by the firms involved comes at a time when crypto players are largely expecting US authorities to be attracted to digital assets, regardless of who wins the presidential election on Tuesday.
“The Global Dollar Network will return nearly all rewards to participants and anyone can join. It is designed to encourage global stablecoin usage and accelerate the widespread adoption of this technology in society,” said Charles Cascarilla, CEO of Paxos.
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