BitGo’s USDS stablecoin will compete with major issuers such as Circle and Tether by distributing up to 98% of earnings to network supporters.
BitGo, a cryptocurrency custodian that is supported by the banking behemoth Goldman Sachs, is introducing a new stablecoin that is pegged to the US dollar.
BitGo officially launched USDS on September 18, a new stablecoin that provides liquidity to compensate network participants for engaging with the ecosystem.
The USDS is expected to be launched in January 2025 and is supported by a combination of short-duration Treasury Bills, overnight repos, and currency. Its purpose is to pose a challenge to significant stablecoins, such as Tether.
The BitGo New York Trust corporation, a regulated trust corporation established in 2021 under the statutes of the State of New York, is the entity that issues the stablecoin.
The concept of distributing earnings to network participants rather than funneling rewards back to issuers is the foundation of BitGo’s impending stablecoin.
On its USDS website, BitGo contended that traditional stablecoins generate interest on their reserves, but the issuer retains or distributes 100% of this interest income to exchanges, leaving the user with nothing.
BitGo intends to implement a novel reward system with the USDS stablecoin, which would distribute up to 98% of earnings to participants who contribute to the ecosystem.
BitGo wants to share rewards to any entity that successfully generates “sufficient liquidity” and registers with BitGo, as indicated on the official USDS website.
After registering with BitGo and receiving approval, reward participants must verify the proprietorship of the addresses where they store USDS by utilizing the USDS portal.
BitGo stated that these addresses are utilized to calculate daily balances and guarantee that rewards are calculated fairly for all participants.
Depending on the USDS under possession of each participant, BitGo will assign varying compensation tiers to participants in order to compute the USDS rewards. The firm stated that the total compensation for each eligible participant will be paid monthly and will be determined by the distribution revenue share (DRS) earned by the participant.
USDS’s total revenue, less BitGo’s monthly administration fee, will serve as the foundation for the DRS. All participants will accumulate DRS in proportion to their USDS holdings.
BitGo’s objective is to facilitate the minting and burning of tokens for a broader spectrum of qualified users, which is a significant distinction between USDS and major stablecoins such as Tether or USDC.
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