A joint partnership of Ergo Foundation, IOG, and Emurgo resulted in the creation of the first stable-coin that is called AgeUSD. It is a crypto-backed algorithmic stable-coin protocol with some significant advantages over popular stable-coin Dai.
Why do we need stable-coins?
The traditional cryptocurrencies like BTC, ETH, or ADA are volatile. It means that the price can go up or down in a short period of time. Sometimes, when the market is turbulent, it can even be 10% or 20% a day. Cryptocurrencies can generally be a good store of value due to their stable and hard-to-change monetary policies. However, they are far from being good as units of accounts and means of exchange. People often incline to just hold cryptocurrencies for the probability of their higher price evaluation in the future. Thus, they are not often directly used for payments. Moreover, when the mood on the markets is bad and the prices of the projects go down, people often sell cryptocurrencies for fiat currencies in order to protect their wealth.
High volatility also prevents the creation of more sophisticated financial services. Believe me, it is not a good idea to take a loan and use a volatile asset for that. Imagine that you borrow 10,000 ADA coins and promise to give them back after two years. At the time of writing, 10,000 ADA coins are worth $4000. You can easily calculate that one ADA coin costs $0,40. What if the price of ADA coins will grow and hit $3 in two years when you will have to pay off the debt? You will find out that you need to pay off $30,000. It will still be 10,000 ADA coins but it will be 7,5x more in the fiat currency. You could have trouble paying off such a big debt. On the other hand, if the price went down it would be easier for you to pay off the debt.
Imagine that you consider establishing some business that would be fully decentralized and you had to deal with the price volatility. The market mood would influence your success or failure more than your skills and ideas.
At the moment, the crypto market rotates around Bitcoin’s halving. It means that it would be smart to start a business at the beginning of 2021 since it is going to probably be a bull year. On the other hand, you would probably fail if you wanted to begin with the business at the beginning of the year…