The controversial BRC-20 standard and Ordinals protocol that made it possible continues to grow its footprint in the Bitcoin ecosystem. The latest: Stably USD, billed as the first BRC-20 stablecoin.
After all, two of the biggest stablecoins—Tether (USDT) and USDCoin (USDC)—do most of their volume on the Ethereum network as ERC-20 tokens. Although currently both tokens are available on several other networks such as Solana, Avalanche, and TRON.
Like ERC-20 tokens, BRC-20s are very similar to NFTs. They allow arbitrary, non-financial information to be added to the Bitcoin blockchain without the need for a sidechain or additional token. BRC-20 tokens are at the center of an intense debate within the Bitcoin community, with key figures taking favorable and unfavorable positions.
Today US-based Stably, which calls itself a fiat onramp for crypto trading, announced its BRC-20 US dollar-backed stablecoin on Twitter. But there are some red flags.
For starters, the total supply: $69.420 trillion, according to the company’s website. That’s more than double the US national debt and is probably a nod to meme culture. And things seem to be off to a slow start. Their documentation links to a reserve wallet with a balance of $220 at the time of writing.
While Stably claims its subsidiary, Stably Trading LLC, is a registered money transmitter, the registration number and address on their website do not match what is listed on the FinCEN website under “Stably Trading, LLC.”
The company Tweet that “#USD is backed and redeemable 1-to-1 for USD collateral managed by our regulated custodian” and added that a third-party firm will conduct monthly verifications to ensure the collateral is always matched of what is issued.
StablyUSD is not technically a new stablecoin. It has been around since 2019 and recently changed to a BRC-20 Bitcoin token. The latest verification report shows that it has a market capitalization of $7 million on 11 different blockchains, including Ethereum, BNB Chain, and Arbitrum.
CoinGecko’s USDS listing shows that its price hit an all-time high of $9.89 on November 30, then crashed days later to $0.05 on December 9, 2022. The token has about $5,000 worth of liquidity on the decentralized exchange. UniSwap split between two trading pairs.
According to Stably’s website, its regulated custodian–Prime Trust–holds the reserves for Stably USD. But it seems more likely that Prime Trust does not directly hold the reserves, because it explains on its website that it is not FDIC-insured and uses accounts at some banks that are.
As such, Stably said it will implement a know-your-customer (KYC) and anti-money laundering (AML) process for users who want to redeem stablecoins for actual dollars.
Neither Stably nor Prime Trust immediately responded to a request for comment from Decrypt.
Although Stably is quick to claim that they are the first USD stablecoin on the Bitcoin network, USDT was initially launched by OMNI, a Bitcoin sidechain, in 2014. There are also many US dollar-backed stablecoins, such as Rootstock’s DoC, which is available now. on the network.
The new stablecoin, however, appears to be the first of its kind using the BRC-20 standard.
Whether this is another BRC-20 fad that will fade quickly, or a new era of stablecoins ushered in by the controversial Ordinals protocol remains to be seen. As always, do your own research.