BitGo to introduce a new stablecoin, USDS, offering liquidity rewards in January 2025.
USDS will reward institutions for liquidity with returns from underlying assets.
BitGo aims to achieve $10 billion in assets within a year of the USDS launch.
BitGo, a leader in crypto custody, is planning to enter the stablecoin market with a new offering called USDS. This new age offering by BitGo is set for release in January 2025. USDS aims to be different by providing rewards to institutions that contribute to its liquidity. The BitGo team made this announcement at the Token 2049 conference in Singapore.
Introducing $USDS
The 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
â BitGo (@BitGo) September 18, 2024
Assets like short-duration Treasury bills, overnight repos, and cash will back the USDS. It is designed to be an open-participation stablecoin that will help promote crypto and its network.
CEOâs Thoughts
According to BitGo CEO Mike Belshe, their primary goal with USDS is to offer an open and fair system compared to existing stablecoins. The existing stablecoins market is largely dominated by Tetherâs USDT and Circleâs USDC.Â
The innovative aspect of USDS lies in its rewards system. Users who help provide liquidity to the USDS network will receive a share of the returns generated from the stablecoinâs reserves. Belshe stated that,
At the end of each month, we generate some return from the cash held in the underlying fund, and we will distribute it back to the participants based on their custody of the asset.
Reward-Based Approach
This rewards-based approach aims to create an active and engaged network. However, Belshe notes that this strategy is carefully designed not to fall into regulatory issues typically associated with offering dividends, as the rewards are not distributed to end users but rather to liquidity providers.
Challenges to the Launch of USDSÂ
The launch of USDS comes with some challenges. It is known that other stablecoins have also attempted to create yield-bearing features and reward end users. However, they often had to navigate regulatory hurdles in the U.S. market.Â
BitGo intends to avoid these pitfalls by focusing rewards on institutional participants rather than direct end users. This will allow it to be operational more freely in different markets globally, including the U.S.
BitGo has high ambitions for USDS. It aims to achieve a target of $10 billion in assets by the end of the first year of its launch. The company has also planned to list USDS on all major exchanges. This will increase its accessibility and utility across the financial ecosystem.
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