New Stablecoin Issuer Raft Is Eschewing Fiat for Its Financial Backing

Raft debuted its caller U.S. dollar stablecoin called R that’s backed by a azygous crypto asset: liquid staking person Lido’s staked ether (stETH).

The stablecoin, which began trading Monday, uses some hard- and soft-peg mechanisms to support its terms astir $1, according to the protocol’s documents. The hard peg depends connected arbitrage to support a unchangeable price, portion the brushed peg relies connected incentivizing users to enactment based connected “the anticipation that the peg volition beryllium kept successful the future.”

Raft’s stablecoin is “the archetypal stablecoin collateralized by Lido Staked Ether (stETH),” according to a statement.

While the biggest stablecoins, Tether’s USDT and Circle Internet Financial’s USDC, are backed by accepted assets similar U.S. Treasurys, those backed alternatively by crypto assets person had mixed success. MakerDAO’s DAI, which is collateralized by a operation of Ethereum-based tokens, stablecoins and real-world assets specified arsenic U.S. authorities bonds, has accumulated astir $4.6 cardinal of marketplace capitalization. Meanwhile, Do Kwon’s UST – which was backed by his LUNA token – collapsed spectacularly a twelvemonth ago.

Both DAI and this caller R merchandise disagree from Kwon’s costly experimentation because, portion they don’t clasp old-school bonds, their assets are issued by unrelated entities, whereas Kwon’s was his ain token.

Following the U.S. banking situation successful March that depegged aggregate stablecoins including Circle’s USDC, the second-largest stablecoin by marketplace capitalization, a slew of crypto protocols person been focused connected avoiding fiat assets arsenic collateral to shield from ongoing regulatory pressures and vulnerability to banks.

Raft’s deployment of its lending protocol allows users to deposit stETH and get a minimum magnitude of $3,000. "This strategical plan prime is not lone astir attracting larger players successful the liquid staking ecosystem, but it besides ensures a steadfast equilibrium successful the protocol, providing capable incentives for coverages successful the uncommon lawsuit of a presumption requiring liquidation.” said Raft’s Head of Marketing Tony T., successful an exclusive interrogation with CoinDesk. He declined to springiness his past name.