Crypto custody giant BitGo is set to shake up the stablecoin market with its new offering, USDS, launching next year. Announced at the Token2049 conference in Singapore, BitGo’s stablecoin will stand out by rewarding institutions that provide liquidity to its network, a unique approach in the crowded stablecoin space.
USDS, backed by U.S. Treasury bills, overnight repos, and cash, will follow a model similar to other stablecoins. However, BitGo claims it will be the first “open-participation” stablecoin, inviting institutions to help build the network and share in its success.
BitGo CEO Mike Belshe, speaking to CoinDesk ahead of his Token2049 keynote, highlighted the core reason behind launching USDS. “Existing stablecoins serve an important role, but we see an opportunity to create something more open and fair. The key innovation with USDS is that it rewards those who help grow the network,” said Belshe.
What makes USDS different is its incentives. Institutions that provide liquidity to the USDS network will receive some returns generated from the stablecoin’s reserves. Belshe explained that returns from the cash backing USDS would be distributed to liquidity providers, based on the size of their contribution.
While some might see this as resembling a dividend, Belshe clarified that it avoids being classified as an investment contract because the rewards are for liquidity providers, not end users.
BitGo aims to list USDS on major exchanges, with an ambitious goal of reaching $10 billion in assets by the end of next year.
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