The latest concept in stablecoin innovation is being developed by Stacks. It is using self-custody Bitcoin as collateral. The project is in partnership with DLC. Link, a Bitcoin smart contract platform.
Stacks is a layer-1 blockchain that adds functionality to the Bitcoin network. This includes smart contracts, nonfungible tokens (NFTs), and decentralized applications (apps). Currently, Stacks and DLC.Link has developed a new concept of a stablecoin. Let’s discover more about it.
BTC Backed Stablecoin
The current problem facing Bitcoin holders is that they have to wrap or tokenize their bitcoin to use it in a DeFi platform to exchange it for a stablecoin. But, that is about to change.
On July 25th, Stacks posted a video explaining how a Bitcoin-backed stablecoin would work. Furthermore, the effort is a collaboration between Stacks Ventures, DLC. Link, and Arkadiko Protocol.
— stacks.btc (@Stacks) July 25, 2022
The video explained that even reputable custodians are subject to human error and hacking. Additionally, the way to get around this is by using escrow contracts. These escrow contracts need to be decentralized to increase transparency.
Discrete Log Contracts (DLCs) Facilitates Payments on Bitcoin
Discrete Log Contracts (DLCs) are 2 of 3 multi-sig wallets where one party is an independent oracle. Furthermore, smart contracts can lock and unlock Bitcoin by communicating with these oracles.
In this case, DLC. Link provides the decentralized oracle infrastructure that runs the bridge. Independent node operators run the oracles in return for a payment in their native token. “This bridge enables new types of non-custody DeFi applications that were not possible before,” it stated.
Arkadiko has joined up with DLC.Link to build the “world’s first” stablecoin that is backed by self-custody Bitcoin. Furthermore, Arkadiko can use the bridge to lock BTC in escrow to mint the stablecoin.
More About The New BTC-Backed Stablecoin
On the other hand, users can lock BTC to mint the stablecoin and burn the coins to retrieve their Bitcoin. Arkadiko provides a platform for users to collateralize Stacks STX tokens and mint the USDA stablecoin.
Then, the system is currently in development, and the whitepaper, seed funding, and tokenomics are launching in Q3-2022. According to the roadmap, pilot testing will start in Q4-2022.
Stacks STX Token Outlook
Finally, STX, the Stacks native token, dropped 1.8% on the day. As a result, STX was trading at $0.3989 at the time of writing this article. The token has fallen 11.1% over the past week as crypto markets cool from a recent rally.
Also, STX is down 88% from its December all-time high of $3.39. Moreover, its marketcap is $528.3 million with a 24-hour trading volume of $7.2 million.
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