There’s Now a Dollar-Backed Stablecoin on Bitcoin Using the Ordinals Protocol

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The controversial BRC-20 standard and the Ordinals protocol that made it possible continue to grow its footprint in the Bitcoin ecosystem. The latest: Stably USD, which is billed as the first BRC-20 stablecoin.

After all, two of the largest stablecoins Tether (USDT) and USDCoin (USDC) do most of their volume on the Ethereum network as ERC-20 tokens. Although both tokens are now available on a handful of other networks like Solana, Avalanche, and TRON.

Like ERC-20 tokens, BRC-20s are very similar to NFTs. They allow arbitrary non-financial information to be added to the Bitcoin blockchain without the need for a side chain or additional token. BRC-20 tokens have been at the center of intense debate within the Bitcoin community, with prominent figures taking favorable and unfavorable positions.

Now, US-based Stably, which calls itself a fiat onramp for crypto trading, has announced its US dollar-backed stablecoin BRC-20 on Twitter. But there are some red flags.

For starters, the total supply: $69.42 trillion, according to the company’s website. That’s more than double the US national debt and probably a nod to meme culture. And things seem to be starting slowly. Their documentation is linked to a reserve wallet with a balance of $220 at the time of writing.

While Stably claims that its subsidiary, Stably Trading LLC, is a registered money transmitter, the registration number and address on their website do not match what is listed on the FinCEN website under Stably Trading, LLC.

The company tweeted that #USD is secured and redeemable 1 to 1 for USD collateral managed by our regulated custodian, adding that a third party company will perform monthly attestations to ensure collateral still matches what was issued .

StablyUSD is not technically a new stablecoin. It has been around since 2019 and was only recently converted to a BRC-20 token on Bitcoin. The latest attestation report shows that it has a market cap of $7 million across 11 different blockchains including Ethereum, BNB Chain, and Arbitrum.

Screenshot of Stably USD’s April attestation report. Source: stable

The USDS quote on CoinGecko shows that its price hit an all-time high of $9.89 on November 30, then crashed a few days later to $0.05 on December 9, 2022. The token has around 5 $000 of liquidity on decentralized exchange UniSwap split between two trading pairs.

According to Stablys website, its regulated custodian Prime Trust holds the reserves of Stably USD. But it seems more likely that Prime Trust does not hold the reserves directly, as it explains on its website that it is not FDIC-insured and uses accounts at a handful of banks that are.

That said, Stably has stated that it will apply a know-your-customer (KYC) and anti-money laundering (AML) process for users who want to exchange stablecoins for real dollars.

Neither Stably nor Prime Trust immediately responded to a request for comment from Decrypt.

Although Stably was quick to claim that it was the first USD stablecoin on the Bitcoin network, USDT was originally launched on OMNI, a Bitcoin sidechain, in 2014. There are also several USD-backed stablecoins , such as DoC on Rootstock, currently available. on the network.

The new stablecoin, however, appears to be the first of its kind to use the BRC-20 standard.

Whether this is another BRC-20 fad that will quickly die out or a new era of stablecoins ushered in by the controversial ordinal protocol remains to be seen. As always, do your own research.

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