The Importance of Utility and Transactional Capabilities in Stablecoins

• Stablecoin issuers should prioritize utility, liquidity, and transaction means over yield-bearing elements.
• Yield-bearing stablecoins may be classified as securities, limiting customer reach and utility.
• Examples include Dai, Ethena's USDe, and Mountain Protocol's USDM.
• Strong ties with trading firms like Circle and Binance pose conflicts of interest.
• Agora aims to launch AUSD on Ethereum, focusing on utility and collaboration with various firms.
• Van Eck predicts stablecoin industry to reach $3 trillion by 2030 with Agora's unique approach.

Summary :
Stablecoin issuers that offer yield-bearing elements are missing the point of a stablecoin's core mission, according to Nick van Eck, CEO of Agora. He argues that these firms should focus on utility, liquidity, and means of transaction to reach as many individuals and businesses as possible. Van Eck believes that yield-bearing stablecoins will likely be classified as security products in many countries, limiting their customer reach. He also points out that these stablecoins lack the margin to sustain business operations and expand their ecosystem. Van Eck hopes that Agora's upcoming stablecoin, AUSD, will mark the third iteration of stablecoins focused on utility and transactional capabilities. However, Agora will face fierce competition from established stablecoins like USDT and USDC. Despite this, Van Eck believes there is still room for a newcomer in the industry, which he expects to expand to $3 trillion by 2030. Agora recently closed a $12 million funding round and plans to fully back AUSD with cash, U.S. Treasury bills, and overnight repo agreements.

Sources :

- CoinTelegraph