PieDAO has launched USD ++, a basket of Ethereum-based (ETH) stablecoins denominated in USD. The decentralized organization aims to reduce the risks associated with holding long-term stablecoins and the use of decentralized finance protocols (DeFi).
USD ++ contains four stablecoins that have been weighted in such a way as to minimize price volatility for the splitters. The weights are determined according to the stable tokens that have the strongest linkage, the largest market and the highest community confidence.
Currently, the USD ++ basket comprises 47.22% USD Coin (USDC), 28.58% TrueUSD (TUSD), 20.42% Dai (DAI) and Synthetix USD (sUSD).
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PieDAO announced the launch of USD ++ on June 16, tweeting that the product signifies „a step forward towards diversified portfolios that wish to hold cash positions with confidence“.
USD ++ is designed to cover and minimize the risks associated with the use of Ethereum-based DeFi protocols, which generally require users to deposit an asset to access a platform.
While many cryptomoney traders use stablecoins as a means of transferring and valuing in short periods of time, many DeFi users have stable, long-term tokens, exposing them to greater risk.
„Stablecoins are not created in the same way, they have compensations in security models, centralization and divergence of their link to the dollar,“ PieDAO wrote.
The firm added that USD++ is designed to reward „the minimization of confidence and liquid markets because maintaining a cash position requires not only fixed stability, but also the certainty that your money is not being seized or eliminated.
Price divergence between stablecoins
PieDAO states that the short-term nature of traditional uses of stablecoins has led the crypto community to place emphasis only on the liquidity of an asset, making security and related volatility secondary.
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The company published a graph representing the recent price volatility of six stable tokens higher, evidencing significant deviations in value between each individual asset linked to the USD:
USD-backed stablecoin price volatility
Stablecoins price volatility relative to the USD: PieDAO
„In the short term, using IAD or USDT doesn’t make a difference, it’s the liquidity that matters. For this reason, the USDT currently dominates the stablecoins market, despite users‘ concerns,“ said PieDAO.
„The USD++ group function is designed to maintain a medium/long term cash position, leaving room for normal price fluctuation, as long as the fixation is restored for a reasonable period of time,“ the company added.
PieDAO launched its BTC ++ group in early April, which comprises a balanced group of four synthetic assets based on Ethereum that represent BTC. Since then, about 65 Etoro have been locked into the protocol, and the BTC++ group represents a capitalization of nearly $636,000.