The importance of stablecoin on public chain

The importance of stablecoins on public blockchains lies in their pivotal role in maintaining the stability of the blockchain’s economic system. Stablecoins, being cryptocurrencies with a stable value pegged to fiat currencies or other stable assets, provide the necessary price stability for transactions and applications on the public blockchain. The significance of stablecoins can be understood through the following points:

Autonomous Economic Coherence:

Public blockchains require a self-sustaining ecosystem that includes both the native blockchain tokens and stablecoins. The latter helps maintain horizontal connections between various business entities within the system, reducing the impact of market volatility.

Fiat Currency Substitute:

While the cryptocurrency market offers a variety of stablecoins, the existing socio-economic order is still dominated by state-issued fiat currencies. Stablecoins offer a digital alternative that approximates the functionality of fiat currencies, particularly in facilitating transactions and storing value.

Systemic Risk Mitigation:

The incorporation of native stablecoins reduces the vulnerability of the entire blockchain system to potential fluctuations or issues associated with a single stablecoin due to technological, operational, or financial factors. A diversified stablecoin framework reduces reliance on any one particular stablecoin, enhancing the system’s resilience against external shocks.

Risk Mitigation and User Experience:

Given their independence on each public blockchain, native stablecoins contribute to a more direct and efficient transaction experience for users, while simultaneously minimizing the potential for risk transmission across different blockchain networks.

Healthy Ecosystem Development:

Each public blockchain has its unique features and communities, and native stablecoins facilitate better service to the specific needs of users on each chain, promoting a healthier and more sustainable ecosystem overall.

In the construction of a robust public blockchain ecosystem, it is crucial to introduce a diversified set of at least one native stablecoin, which not only bolsters the system’s resistance to potential risks but also fosters a more autonomous and resilient blockchain environment.