TLDR:
- New stablecoin USDG launched by major crypto companies including Robinhood, Kraken and Paxos
- Based in Singapore and compliant with local regulatory framework
- 97% of the reserve income will be shared among network participants
- DBS Bank will manage the money and custody of the reserves
- Faces competition from Tether and USDC which control 90% of the stablecoin market
A group of leading cryptocurrency companies unveiled a new stablecoin project on November 4, 2024, marking a fresh approach to digital dollar alternatives. The Global Dollar Networkwith prominent names such as Robinhood, Kraken and Paxos, has launched USDG, a stablecoin that shares almost all of its reserve income with network participants.
The initiative brings together seven founding partners: Anchorage Digital, Bullish, Galaxy Digital, Kraken, Nuvei, Paxos, and Robinhood. Paxos, operated from Singapore, will serve as the issuer of the USDG token under the supervision of the Monetary Authority of Singapore’s upcoming regulatory framework.
(1/4) Introducing Global Dollar Network, an open network designed to accelerate and reward global stablecoin adoption, powered by Global Dollar (USDG). First partner incl. @Anchorage, @Bullish, @galaxyhq, @krakenfx, @ Nuve, @Paxos & @RobinhoodApp.
💻:https://t.co/RwFa3PmihB pic.twitter.com/6p2pdmyhNv
— Global Dollar Network (@global_dollar) November 4, 2024
Charles Cascarilla, CEO of Paxos, announced that the project will distribute approximately 97% of its economy to network participants. This marks a departure from existing stablecoin models, where issuers typically keep all interest earned from reserves.
DBS Bank, the largest bank by assets in Southeast Asia, was selected as the primary banking partner for the project. The institution handles cash management and depository services for USDG reserves, which consist primarily of US Treasury securities.
The Global Dollar Network aims to encourage adoption through a reward system based on participant activity. Unlike some crypto projects that focus on end-user rewards, the USDG model is aimed at companies that help build network connectivity and liquidity.
Network participation remains open to new members, with rewards distributed based on various types of network-building activities. The structure allows different participants to earn rewards through their unique contributions to the ecosystem.
The stablecoin will be available to US users through the distribution networks of partners such as Anchorage, which maintains operations across all 50 states. This accessibility could help drive adoption in the American market.
USDG is entering a market dominated by two major players. Tether is USDT in the Circle’s USDC Currently control almost 90% of the total stablecoin market capitalization, according to data from CoinGecko.
The timing of the launch coincides with increased activity in the cryptocurrency market, as bitcoin prices have risen amid expectations of lower US interest rates and new crypto exchange-traded products.
The governance structure of the project includes a committee made up of representatives of the network’s partner organizations, which ensures collaborative decision-making processes between stakeholders.
Stablecoins serve as a crucial bridge between traditional currencies and crypto assets, providing a way to convert between the two while avoiding the price volatility common in cryptocurrencies.
The launch comes as industry participants anticipate regulatory attitudes towards digital assets in the US, regardless of the upcoming election results.
The reserves of USDG are backed by US Treasuries, following a common practice among major stablecoin issuers to maintain stable value and generate payouts.
The project represents one of several recent innovations in the stablecoin space, including revenue-sharing models and protocol-level developments from projects like M^0.
The network partners aim to accelerate worldwide stablecoin adoption, while providing proportional economic benefits to participating organizations that contribute to the growth and stability of the network.
