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Interest-Bearing Stablecoin
Stablecoins generally differ in terms of the assets backing them, collateral ratios, issuance mechanisms, and price maintenance mechanisms. While various stablecoins may be suitable for different application scenarios, they all share one common shortcoming: the lack of interest income.
Does this imply that stablecoin holders do not require interest income? Certainly not.
However, since stablecoins do not generate interest, their holders have no choice but to bear the continuous depreciation of the USD due to the Federal Reserve's high printing rates caused by budget deficit.
If stablecoin holders indeed require interest income, why not simply offer it? The reason is that while fiat-collateralised stablecoins are issued by centralised organizations and they have no intent to share their earnings with their users, cryptocurrency-collateralised stablecoins are incapable of doing so due to their issuance mechanisms and underlying assets. For example, Tether (issuer of USDT) has earned $1.5 Bn of interest income in last quarter alone from their user's deposits, but hasn't shared a single dollar with the USDT holders.
Cryptocurrency-Collateralized stablecoins are typically issued when holders pledge a certain amount of cryptocurrency as collateral. Since the collateralized cryptocurrencies isn't designed to generate interest income, stablecoin issuers are unable to provide a secure and stable income to their holders.
In conclusion, the current absence of interest in stablecoins primarily stems from their issuance mechanisms and underlying assets. This whitepaper will explore an interest-bearing stablecoin collateralized by GLP, addressing the need for stablecoin holders to generate interest income while maintaining the key features of stablecoins.
Following the Ethereum Shanghai upgrade, decentralized interest-generating stablecoins will at last have a viable solution. Decentralized smart contracts leveraging the GLP revenue flywheel will generate secure, price-stable, and interest-stable stablecoins, such as mUSD.
The introduction of mUSD as an interest-bearing stablecoin collateralized by GLP will offer stablecoin holders the opportunity to earn interest income while preserving the key attributes of stablecoins. This innovation will bridge the gap between traditional stablecoins and the need for interest generation, creating a more attractive and functional stablecoin alternative.
Last modified 5mo ago