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ETH · 14w

Stablecoins: An Overview of Use Cases

Stablecoin Use Cases

Now that we’ve covered the different design structures, it’s important to focus on how stablecoins can and should add value to different ecosystems we commonly encounter. Please note that while we understand there are plenty of niche uses for stablecoins beyond what we’re presenting, we’ve decided to condense our thoughts into concepts that are most feasible in the short-term.

Utility Rewards

The vast majority of ICOs we encountered last year heavily relied on the fact that the primary utility of their token was to reward users for participating in their network. It became readily apparent that this is a weak utility use case as these reward models add a perpetual amount of sell pressure as the dApp or protocol scales. While utility staking mechanisms were a nice bandaid to *theoretically* help incentivize holding and mitigate the amount of dumping on secondary exchanges, the lack of adoption and tangible usage of the staking mechanisms quickly made most of the existing utility models obsolete.    These insights lead us to the idea that rather than creating an obscure utility token to fulfill the promise of a new dApp, stablecoins provide an easy reward solution to any new token-startup. Assuming the stablecoin can maintain the stability it promises, rewarding consumers in dollar equivalents becomes much easier to digest for the average individual. Additionally, as the larger stablecoins continue to gain adoption from traditional retailers, this increased liquidity would serve as an added benefit when users accumulate rewards from the usage of a specific network.

It’s important to note while accumulating stablecoins seems easy enough for a high level, there are still some risks and barriers that need to be explored. First and foremost, most stablecoins require users to pass KYC/AML in order to redeem the underlying asset. With this being said, the amount of anonymity any project rewarding users in stablecoins can promise ...

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