Blindex is a multi-currency stablecoin decentralized finance platform. It declared two new algorithmic stablecoins launches. They are the Great British Pound or $bGBP and Gold or $bXAU. It is a very exciting announcement. Moreover, it is a fact that these stablecoins are algorithmic which is in constant discussion in the world of crypto. The safety, as well as the sustainability of the UST stablecoin of Terra, recently being topical, such an announcement is of great interest. The protocol of Blindex has been integrated with RSK, the smart contract platform that works with decentralized apps secured by the network of Bitcoin. It means that the stablecoins will get launched on Bitcoin, a neat additional factor and different from almost the rest of the stablecoins available on the market. One of these new algorithmic stablecoins is pegged to Gold. It is a highly polarising asset when it involves crypto enthusiasts. But before that, it is really important where and how to buy cryptocurrencies safely, especially bitcoins.
Let’s find out more.
Table of Contents
How safe are the new algorithmic stablecoins?
- The stabilization mechanism of Blindex is a blend of collateral tokens and algorithmic ones.
- Such a mechanism got inspired by Frax’s work with many changes from their main work.
- It was proved successful in the past years.
- It remained one of the strong mechanisms for all available stablecoins.
- This combination to have collateral tokens and algorithmic tokens together will let Blindex remain under collateralized and similarly include the real value that backs the stablecoins.
- Many mechanisms of incentives have been added for motivating users to include more collateral to this platform during the fall in crypto markets.
- Two different things took place.
- Firstly disincentivize bank runs by ensuring that, regardless of if you are the first person to redeem the stablecoins or the last person you will be getting exactly the similar collateral’s pro-rata.
- Secondly, if you incentivize users for long liquidity lockup periods such as 5-10 years, it will make the protocol stronger and safer in the bear markets.
- All users love it as over 70 % of all Blindex’s staked funds are locked up for 5-10 years.
- Yet the confidence of investors always needs proof and thus they feel confident that it is up for some challenges
How was Gold stablecoin selected?
- Gold is counted as a safe place for storing value and diversifying the risks of the stock market.
- It can be a great hedge against inflation that may become vital in the upcoming months or years.
- The last few months saw a huge demand from users for a decentralized gold stablecoin.
- bXAU, the first-ever stablecoin pegged to Gold is backed by Ethereum and Bitcoin.
- A similar mechanism of stabilization that is used with Blindex, that other stablecoin works here too and lets users mint new ones such as bXAU by selecting Bitcoin or Ethereum to get used together as the collateral with BDX.
Users must be protected from fiat money’s depreciation. It can be done through investing in different currencies that are solid or diversifying all saving or investing money with other tools of investment such as indexes, commodities, or others. You can select to place some of the money in stablecoin pegged to Gold. It will let users use the stablecoin in other services of DeFi that will be enhancing their positions more.
What will attract customers to the newly launched algorithmic stablecoins?
Blindex properly differentiates itself from others in three parts:
- All of the stablecoins of Blindex are completely decentralized. Only decentralized collateral is used such as Bitcoin or Ether. Big decisions are taken together with the DAO of Blindex and the cloud provider for their app is also decentralized.
- They have created a platform that is capable of making all types of stablecoins such as currencies, commodities, assets, stocks, indexes, bonds, and real estate.
- It is unlike all other platforms and stablecoins. Stablecoins of Blindex needs an equal collateral value to the stablecoins’ amount any user wants to mint. For instance, if you wish to mint 100 Blindex USD pegged stablecoins, you will need to give $100 collateral as a combination of Bitcoin and Ethereum, and BDX.
Blindex has the goal of tokenizing everything. They wanted to assist their users to protect themselves. Also to keep themselves safe from risks of FX. And aid them to handle inflations, empower saving and get new tools of investment on the chain. Algorithmic stablecoin has not yet proved its case. There can be some problems to have all stablecoins’ backing dependent on one token. It got issued or managed by the issuing platform. Also derives its value from any symbiotic relationship with one stablecoin. Now Terra is doing moves for having non-dependent collateral. It will be backing their stablecoins and offering value independent of their ecosystem or token.