Why Stablecoins Are a Big Reason to be Bullish on Ethereum

Why Stablecoins Are a Big Reason to be Bullish on Ethereum

Are stablecoins parasitic to ETH? No They’re one of the biggest reasons to be bullish on ETHhttps://t.co/Ffmbc0cB7V — Ryan Sean Adams – rsa.eth (@RyanSAdams) February 3, 2020

He poses the question that if stablecoins become the money within Ethereum, does ETH lose its monetary premium? The first reasoning observed is that stablecoins are also a substitute for the global value transfer properties of bitcoin. Secondly some stablecoins such as Dai are beneficial for ETH’s monetary premium as opposed to the bank ones which detract from it. Theoretically the bank stablecoins are settled through the traditional financial system being dollar backed. This means that they are not censorship-resistant and are not bearer assets. “They can’t serve as economic bandwidth for a trustless money system. They compete with digital dollars on Paypal more than they compete with crypto native assets like DAI, ETH, and BTC.” If bank stablecoins are competing with the likes of PayPal then this is a win for Ethereum. Adams elaborated on this by adding that every use of a stablecoin in an Ethereum smart-contract will reduce the supply of ETH and make it scarcer. Additionally the use of them will bring more people into the Ethereum ecosystem, increasing its demand. More use of bank stablecoins is also a stronger case for the ERC-20 protocol which is currently the industry standard. This provides a greater likelihood that Ethereum standards will be integrated into stablecoin banks such as Compound and the Dai Savings Rate, which equals more liquidity for ETH. The result is more developers, more tooling, better wallets, more protocols, a more financialized Ethereum economy. “Perhaps this neutral settlement layer becomes so integral to global economic activity that it’s impossible for govs to ban—like the internet.” In conclusion stablecoins are not parasitic for ETH, they are a big reason to be bullish. At the time of writing Ethereum prices were holding on to gains at $190, up over 45% since the beginning of the year. Are stablecoins a reason to be bullish on Ethereum? Add your comments below. The post appeared first on Bitcoinist.com.


source: https://bitcoinist.com/why-stablecoins-are-a-big-reason-to-be-bullish-on-ethereum/

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