Technology has taken the world from 0 to 100 in a short span of time, and now tech advancements have given us many mind-blowing innovations that leave us awestricken.

Today, we have an entirely new decentralized world where secure connections of crucial data-contained blocks fuel the modern aspects of web 3.0, the crypto world, NFTs, cryptocurrencies, DeFi platforms, digital assets, and much more.

When it comes to the value of cryptocurrencies in the crypto-trading world, instability is an important issue to address. This has given rise to the need for Stablecoin.

What is a Stablecoin?

The name “stablecoin” itself shows that, unlike other cryptocurrencies and fiat currencies, it is designed to minimize price volatility in the crypto market.

Most stablecoins are usually pegged to fiat currency, like the US Dollar or other valuable/high-priced commodities like gold (also other metals). And since the stablecoin is here to offer stability in exchange market scenarios (as per the tied value of a reserved asset like fiat money or exchange-traded commodities), it has become a useful medium of exchange. It can enable value-driven exchange of goods and services.

Types of Stablecoin

Fiat-backed Stablecoin

This type of stablecoin is backed by fiat currency (US dollar or some other fiat currency in a set ratio) and was the first type introduced in the crypto market. Fiat-backed stablecoins are used for trading on the exchange. Their stability is maintained by the value of the fiat currency and supported by reserves equivalent to fiat collateral and legal compliances.

Some popular fiat-backed stablecoins used in the market exchange scenarios are Tether (USDT), USD coin (USDC), trueUSD (TUSD), and more.

Crypto-backed Stablecoin

Cryptocurrency-backed stablecoins are underpinned with market cryptocurrencies (like fiat currency, but here’s the difference); unlike fiat backing that is done off the blockchain, a crypto-backed stablecoin is pegged, and the supply is regulated on-chain through smart contracts. However, the crypto-backed stablecoin is quite complex and diverse when you create your stablecoin backed by cryptocurrency.

See: Get StableCoin Development Services from Award Winning Development Company

Commodity-backed Stablecoin

These stablecoins are pegged to the value of high-priced metals like gold, or precious stones like diamonds, or other commodities like real estate. The stability of the stablecoin depends on the cost and security offered by the commodity that has been pegged. Therefore, owners of commodity-backed stablecoins can redeem them to obtain ownership of their backed assets.

Now that you’ve got an understanding of stablecoin and its types, let’s discuss how you can create a stablecoin.

How to Create a Stablecoin (Step by Step Process)

Unlike other cryptocurrencies, stablecoin demands more expertise and a quick-witted development process which significantly impacts project results. Stablecoins need to be developed in accordance with trading, borrowing, lending, and other business practices. Some significant factors for stablecoin development are mentioned below:

Choose your Blockchain Network

When you decide to create your stablecoin, selecting a blockchain network becomes crucial. In the past, Ethereum was the only platform that permitted techies to develop your stablecoin; however, as blockchain tech is now being adopted more widely, more people are now keen on building and operating stable coins on distinct blockchain networks, such as EOS, TRON, Stellar, etc.

It’s noteworthy to mention that while new blockchains offer a lot more potential in terms of stability and steadiness, almost 74% of stablecoins are being operated on the Ethereum blockchain.

But, when we build something for our wide clientele, we conduct thorough research; therefore, when we create your stablecoin, we analyze and pick a blockchain network that fits your need best.

Your Reason for Token Creation

As stablecoin is a pegged cryptocurrency with the least volatility and high stability that is being issued and operated on a blockchain, an in-depth understanding of “how to create a stablecoin” and in what ways it can benefit your enterprise is crucial.

Run through a thorough analysis to set your objective before you plan and initialize stablecoin development for your company. Also, note that the creation and deployment of your stablecoin is one thing, but maintaining its demand and growth in a trending crypto market is the real challenge that requires expert tech assistance.

Read More: Blockchain Development Roadmap: A Beginner-friendly Guide

Determine Total Liquidity Required

Liquidity is the most important factor for cryptocurrencies, and the liquidity of stablecoins matters a lot because it reduces investment risks and volatility. Therefore, when you create your stablecoin, you need to determine certain aspects such as revenue generated over transaction fees, inflation and daily currency rates, and more.

Create a Smart Contract

Smart contract development with stablecoin is another critical factor that underlines security as one of the success factors in the crypto-business arena. Smart contracts are meant to ensure security through digital agreements that involve concerned parties.

So, when you obtain smart contracts development services, decide on protocols that you’ll use with your smart contracts to ensure stablecoin authenticity and reliability on a decentralized platform. The developers are responsible for building, testing, and launching smart contracts on the test network using virtual wallets.

Plan an ICO

After you successfully develop your stablecoin, get ready to promote it by launching it on DEX. Start by listing your coin on decentralized exchanges just like altcoins and promote your stablecoin through referrals, influencers, crypto ad networks, blockchain and crypto conferences, and other marketing channels.

Benefits of Stablecoin Development

Faster Transactions

Stablecoin offers convenient, secure, and accelerated transactions as compared to other fiat currencies and can be used on a network of applications for even and elevated yields due to their high liquidity.

Total Independence

Users experience easier transactions without intermediaries (one of the significant aspects of blockchain tech).

Privacy

Stablecoin offers transparency via smart contracts as pegging and supplying stablecoin is executed on-chain while maintaining decentralization and privacy aspects of the blockchain upfront.

Transparency in Audits

As stablecoin is issued and operated on a blockchain, users experience transparency through audits that facilitate secure access to information required for secure process regulation.

Volatility (Depends on Your Business)

The best factor of stablecoin lies in ensuring low or minimized volatility that only changes based on its fixed value in relation to a reserved asset, which ultimately offers stability to the financial outcomes that your business gets in turn.

Lower Risks

Stablecoin permits users to hold assets that are pegged to the stable currency they are associated with, which means the instability in the market won’t affect the value of the holder’s assets.

Interoperability

Another aspect of stablecoin is that it offers interoperability in payment transactions, and staking could be accomplished between stablecoin holders and issuers on different blockchain networks.

Security

Stablecoin is designed to offer a sense of security over commodity-backed assets with significant market volatility and high liquidity.

Read More: 5 Key Blockchain Protocols You Need to Know

Ready to Create your Own Stablecoin?

Now that we’ve reached the bottom line of this piece of information, I hope that you have gained sufficient insight into how to create a stablecoin.

Get in touch with an expert to understand the type of stablecoin your business demands.