What are stablecoins?

Most currencies function as units of account for purchasing goods and storing value. It has general equivalence property in practical application and circulates in the market as a measure of value. With that said the general public’s biggest impression of encrypted digital money is instability. For example, Bitcoin can fluctuate more than 20% a day, and the volatility is too large to maintain a constant value.

In order to solve this problem and to improve the universality and acceptance of digital currency in the real world, the stablecoin – a kind of digital asset of that anchors specific legal tender – came into being. Its value lies in the combination of encryption payment network decentralization system, has relatively stable price level.

When the digital money market is unstable, the holders can keep their selected stablecoin to play the role of a “reserve value”. In a bear market, when digital assets are converted into stablecoins through exchanges, the trader’s assets can be guaranteed not to shrink and market risks can be effectively avoided.

HUSD – the solution for stablecoins

At present, there are some popular stablecoins circulating in the market. In order to maximize the value of stablecoins to meet the various trading needs of users, Huobi Global is now providing a comprehensive and integrated solution: HUSD.

HUSD is a comprehensive solution for all stablecoins. In this scheme, the Huobi will build a “firewall” to help users bear the risk of instability of other stablecoins. Huobi OTC will open the transaction of HUSD. Its emergence will solve two major problems:

  1. Users’ choice between stablecoins.
  2. Conversion cost between stablecoins.

When the user deposits a stablecoin, it will be reflected in the account as HUSD. When the user withdraws, he can choose to put forward any stablecoin; when the supply of one stablecoin is insufficient, he can also choose to put forward another stablecoin.

For example, when a user recharges 1 PAX to his account, the account will be represented as 1 HUSD.  At this point, the user can choose to withdraw money by TUSD, namely withdraw 1 TUSD (assuming that there are no commission charge for transfer net).

Currently, the HUSD scheme supports four stablecoins: PAX, TUSD, USDC, GUSD. Huobi will continue to focus on stablecoins in the market to constantly improve HUSD standards, and at the same time ensuring proper risk management by incorporating more stablecoins into the HUSD system. Huobi will also continue to assess existing stablecoins within the system. If the assessment of a stablecoin exceeds our risk control requirements, the stablecoin will be stripped from the HUSD system.

Three advantages of HUSD

  1. Safer and more convenient-to avoid single stablecoin risk, and seamless handover between stablecoins.
  2. More stable for stored value-the Huobi bears the risk of instability of stablecoin.
  3. Convert with no cost-remove the commission fee between stablecoin conversions.

Posted by Huobi Blog