Stablecoins are on the rise within the crypto market space as more firms leverage these digital assets to attract larger communities and investors. These are typically security or utility tokens that offer crypto users less volatile alternatives given they are backed by more stable assets like fiat currency, physical assets while others are non-collateralized. Furthermore, stablecoins offer utility and liquidity such as Tether (USDT) and Dai while others offer security properties such as the MegaFan Token (MEGA). Similar to other cryptocurrencies, stablecoins launch on regulated centralized exchanges or decentralized exchanges (DEX).

Several innovators in blockchain technology are moving towards launching security stablecoin tokens to provide industry solutions in raising capital and financing of projects. As alluded to prior, MegaFan is an example of a security token offering (STO) that develops a sport’s based fan wallet using cryptocurrency backed by the Euro. They already had 250 K Euro funding in the last 2 years and now prepare an IEO at Latoken Exchange. MegaFan plans to introduce a digital solution to European Football Clubs.

Fanwallet in sports is just the start of their journey, they expect that there will be a huge market opportunity for microwallets and they will be able to use it in all kinds of industries.

Security stablecoins seems to be gaining favour amongst crypto stakeholders including the regulators, governments and big tech companies such as Facebook. This can primarily be attributed to the dominance of Tether in the utility token market and an influx of crypto market investors into the era of funding practical solutions. In addition, security tokens are more likely to get listed on regulated exchanges as they fall under security laws in advanced economies that have embraced them.

But why are cryptocurrencies gaining attraction across the world and what drives the adoption of stablecoins in financial solutions?

Why Are More Stablecoins Launching in Crypto? 

Stablecoins hit its popularity peak after Facebook announcement of its Libra cryptocurrency project; a global payment solution using stablecoins. The Facebook-led stablecoin is backed by a basket of assets including fiat and physical assets with the Association announcing ongoing developments in its project developments. This event triggered several other stablecoin projects to find legal avenues that they could also pioneer their ideas within.

First, the stablecoin concept is appealing as it diversifies away a big part of the risk affiliated with cryptocurrencies while giving access to this volatile market. Security tokens, like EURT that MegaFan will use for microtransactions, are associated with low volatility which follows its pegging asset, the Euro. Normal cryptocurrencies, on the other hand, are largely exposed to the high volatility in the digital asset market. Historical data has consistently proved this volatile nature and pointers show that the trends are not about to change significantly anytime soon.

With the age of peer-to-peer systems taking shape, stablecoins have emerged as a perfect solution for this niche. The use of blockchain technology as a base for token operations allows users to interact in a P2P network with the possibility of value creation. This technology has proven to be a force in establishing trustworthy platforms that can facilitate trade across borders with just a few clicks. Industries like sports stand to benefit largely with products such as MegaFan who meant to activate the football fans in Asia through a partnership with The Great Branding and FDS Soft.

Finally, micropayments within the crypto space are thriving into existence due to stablecoins. Initially, this option was not available as most merchants have not scaled to cryptocurrency as a means of payments. In an interview with Hackernoon, MegaFanStore CEO Andreas Schmidt, identified this as a perfect strategic launch point into the crypto scene;

“When you look at the latest discussions in the crypto community, stablecoins are one of the hottest topics. So far, strangely enough, nobody has come up with the idea of ​​offering micropayments with stablecoins.” 

Stablecoin Industry Applications

The industry uses of blockchain tech and crypto is still at a very young stage with only a few practical applications running as of press date. It, therefore, follows that stablecoins are also struggling to be adopted with the various target markets prospected on roadmaps. Libra’s regulatory predicaments have also contributed to the slow integration of stablecoins with existing ecosystems.

However, these digital assets defied the odds with notable applications in the DeFi space led by DAI token. This is one of the areas in blockchain that has shown the potential of reshaping modern-day finance although some trades recently brought to light arbitrage opportunities in these models. Other stablecoins like Tether are liquidity enablers in the barely deep cryptocurrency market.

The MegaFan project plans to implement a voting avenue for European football club fans as another application of stablecoins. Stablecoin users may have a voting right attached to their security tokens and in turn vote through a blockchain platform to have their views aired with ease and efficiency. The same system will be used for votings and surveys in other industries.

Looking at these milestones, stablecoins look set to gather pace towards higher adoption levels as security tokens and utility tokens offer investment and transactional value to the users. Furthermore, institutional players in the industry are looking at offering stablecoins through STOs over traditional financial options enjoying a regulatory leeway over normal cryptocurrencies.