So, what are the use cases?
Stablecoins offer a better alternative for a wide variety of transaction scenarios, including those that apply to business payments, investing, and lending. Payroll
Over the last couple of years, the way companies operate has been radically disrupted. While a trend towards business decentralization has been underway for at least a decade already, the COVID-19 pandemic put this process into a higher gear. Everywhere, the management of even large, conservative-minded, firms have begun to understand that there is no need to keep employees and contractors under a single roof. Remote working is the new normal and companies are getting more creative with who they are willing to hire, including independent specialists in smaller economies that are willing to work for more competitive wages.
Stablecoins eliminate most of the complexities of international payroll. First, they bypass the intermediary banking system, ensuring a higher degree of clarity between parties. Second, payments can be sent 24/7, meaning that service orders can be created and fulfilled even at the most inopportune times in any time zone. Finally, they give workers in countries that may have highly volatile currencies access to a better store of value. If the receiver is unsatisfied by the USD's inflation rate, they can easily swap their coins for cryptocurrencies like BTC or ETH using a DEX. Escrow
For many business situations today, escrow is a necessary but expensive administrative process. Smart contracts can be programmed to automate the payout of cryptocurrencies following the fulfillment of certain conditions, in this way virtually eliminating escrow costs. Since stablecoins lack volatility, it can be ensured that payment recipients receive the exact sum that had been agreed to initially.
This kind of smart contract powered escrow is expected by many experts to form the core of the connected economy of the future. As automation technology improves, we will begin to see these protocols applied to supply chains globally. Trading
Moving funds onto and off of blockchains requires crypto traders to pay both exchange and payment processing fees. Stablecoins act as an essential tool for these investors and speculators by enabling them to bypass these costs. Instead of withdrawing funds, traders can leave their money on the trading platform in the form of crypto.
Already, around 60%
of all Bitcoin is traded in exchange for the Tether stablecoin. In select markets, such as China, stablecoins absolutely dominate, with USDT being involved in 80%
of all Huobi transactions. Staking
Stablecoins are not only used by crypto investors to lock in gains, but also to generate passive income through a process called staking. Several decentralized lending platforms, such as Compound.Finance and DDEX offer extremely competitive yearly interest rates, ranging from 7-10%, for staked stablecoins.
On the surface, income generation through staking is not so different from bank deposits in the traditional economy. All you need to do is deposit your coins into an account and wait for interest to accrue. Unlike CDs, there is no penalty for withdrawing funds from your account — you just stop earning interest.