According to a report by CoinDesk, cryptocurrency custodian BitGo announced plans to launch a U.S. dollar stablecoin USDS at the "Token2049" conference in Singapore. The stablecoin will reward institutions that provide liquidity to compete in this crowded market. stand out.

USDS will be backed by short-term treasury bills, overnight repurchase agreements (Overnight Repo) and cash, and is what BitGo calls the first stablecoin open to participation. The company said USDS will launch in January 2025.

BitGo CEO Mike Belshe said in an interview with CoinDesk:

“The main reason for launching USDS is that while existing stablecoins have great features, we believe there is an opportunity to create a more open and fair system that promotes innovation and, most importantly, rewards those who build the network. People. The real value of a stablecoin comes from the people using it, the liquidity they provide, and the access points to exchange.”

The stablecoin market is currently dominated by Tether’s USDT, which has a market capitalization of approximately $119 billion, followed by Circle’s USDC, which has a market capitalization of approximately $35.4 billion. Unlike its competitors, BitGo’s USDS adopts a reward-based approach, incentivizing institutions that provide liquidity to the USDS network by allocating a portion of the rewards generated from stablecoin reserves.

"At the end of each month, we earn some compensation from the cash held by the underlying funds, and then we remit that to participants on a pro-rata basis based on the custody of the assets," Belshe said. This mechanism may sound close to dividends, resulting in the entire operation being classified as an investment contract, but the difference is that it does not distribute the proceeds to the end user, but to the institution providing liquidity.

Other USD stablecoins have tried to create yield-based stablecoins and reward end users, but as a compromise they have had to exclude the US market, such as the Lift dollar (USDL) issued by Paxos.

Introducing $USDSThe first open-participation stablecoin to redefine financial freedom.Built on a foundation of transparency, USDS empowers the community by democratizing the stablecoin experience and putting the power back in your hands. 1:1 USD Backing: USDS is fully… pic.twitter.com/pfzXWGZ1ze

— BitGo (@BitGo) September 18, 2024

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