Stablecoin #USD on Ordinals: Publisher Stably has deployed 12 chains successively, questioned hype and opaque information

Stably has issued stable coins on more than 10 chains, but as of April 30, the circulation of its stable currency Stably USD is only 7.25 million, and the price fluctuates greatly.

Written by: Jiang Haibo

The emergence of the Ordinals protocol has brought a new narrative to Bitcoin. When these inscriptions or BRC20 tokens are traded on the decentralized market, they are almost all mediumed by BTC, without a price-stable payment tool. In centralized exchanges with larger trading volume, people are usually more accustomed to using USDT, USDC or USD for transactions.

On May 25th, Stably tweeted that it has issued a USD-backed, regulatory-compliant stablecoin #USD on the Bitcoin Ordinals protocol. Subsequently, UniSat, Ordinals' main wallet and NFT marketplace, also said it had partnered with Stably. It will undoubtedly be more convenient for users if stablecoins can be used to buy and sell BRC20 tokens on the UniSat market. Stably is not the first time that stablecoins have been issued. Stablecoins have been issued on chains such as Ethereum, Harmony, and Stellar before.

BRC20 #USD basic information

The stable currency issued by Stably is called Stably USD, usually expressed in USDS. Since the USDS in Ordinals has been occupied, and the BRC20 token symbol cannot be repeated and must be 4 characters, Stably finally chose "#USD" to represent the stable currency issued by itself.

The maximum supply of #USD adopts the maximum theoretical limit of 69.42 trillion BRC20 tokens. According to the announced Treasury wallet, the minting of #USD has reached the upper limit through a minting transaction in the Treasury wallet, and Stably has also deployed and minted a variety of BRC20 tokens related to USD names including USD*, ^USD.

Note that Stably does not directly hold the USD needed to issue #USD, but instead is held by the custodian company Prime Trust. Prime Trust assisted Stably with escrow, setting up an escrow account with a bank with FDIC deposit insurance. But Prime Trust itself is not an FDIC-insured depository institution or bank. FDIC deposit insurance covers only $250,000 per customer, and FDIC deposit insurance will not protect Prime Trust from bankruptcy or unauthorized access to accounts. .

Stably #USD minting and redemption requirements

According to Stably, #USD is a stablecoin that meets regulatory requirements, and there are no requirements to buy or sell #USD in the secondary market. But if you want to mint or redeem #USD through Stably, you need to follow the corresponding compliance process.

First, users need to register a Stably Ramp account, pass KYC verification, add a bank card payment method, and create a transaction request. The Stably team then contacts the customer via email within 2 business days with instructions on next steps.

When buying stablecoins, customers deposit USD or USDC/USDT into Prime Trust and receive #USD in a BRC20 wallet. When selling, send #USD to Treasury wallet address and receive USD or USDC/USDT.

Payments with USDC and USDT on Ethereum can arrive on the same day, but since the current transaction needs to be manually confirmed by Stably, if you use Fedwire and SWIFT for fiat currency deposits, you need to wait up to 5 working days. Stably plans to support Fedwire in the third quarter of this year , ACH, SWIFT, etc.

Additionally, while there are no fees for minting and redeeming, Stably charges a 0.5% conversion fee if minting using USDT/USDC; there is also a flat fee for Fedwire or SWIFT deposits. On this basis, the Gas fee of the blockchain network also needs to be paid.

Stably USD issued on 12 chains, but on a smaller scale

Although Stably USD has been issued on more than 12 different chains, the overall scale is not large. According to the independent accountant's report provided by The Network Firm for Stably, as of April 30, 2023, Stably's USD issuance totaled 7,258,534, and the reserve account balance was 7,258,974 USD, and the reserve was slightly higher than the USDS issuance.

In terms of compliance, Stably’s official website shows that its subsidiaries hold MSB financial licenses issued by the Financial Crimes Enforcement Agency (FinCEN), an agency under the Ministry of Finance. Stably’s chosen partner, Prime Trust, is a Nevada-regulated trust company that serves as a “qualified custodian” regulated by the U.S. Securities and Exchange Commission in accordance with the Investment Adviser Act, helping customers manage cryptocurrencies and fiat currencies.

Based on this information, Stably’s license for issuing stablecoins seems to be far behind that of stablecoin issuers such as Circle. For example, Circle also holds a BitLicense license from New York State.

Stably Stablecoins Are Questioned

As a stablecoin issuer that is not considered the top, Stably has frequently launched stablecoins on multiple blockchains. Its approach has also been questioned by Decrypt. The following summarizes some points of view from the Decrypt article.

The total supply of #USD is 69.42 Trillion, but there is no fund reserve. Restricted by BRC20 rules, #USD cannot increase supply according to demand, so the theoretical upper limit of BRC20 tokens is directly used as the circulation. While Stably claims that all #USD held by Treasury wallets should be considered unissued tokens, this may raise concerns as these tokens already exist in Treasury wallets and can be transferred or sold at any time.

Stably claims that its subsidiary Stably Trading LLC holds FinCEN's MSB license, but Decrypt claims that the registration number given by Stably's official website does not match the content on the FinCEN website.

The price of the stablecoin USDS issued by Stably in the past was not stable enough. According to data from CoinGecko, over the past year USDS has risen as high as $10 and dropped as low as $0.6.

Stably's custodian, Prime Trust, does not hold Stably's dollar reserves directly, nor is it FDIC insured, but holds dollars in several banks.

Stably has issued stablecoins on more than 10 chains, and the circulation as of April 30 was only 7.25 million, which is relatively small. According to the background of Stably, it seems that the license it holds is still far from the top stablecoin issuers Circle and Tether, and the price of USDS fluctuates more frequently, users need to be cautious when holding #USD on Ordinals .