SBD and Stablecoins: Challenges, Opportunities, and the Future
In the world of cryptocurrencies stability is always very difficult to understan due to it wild price unstablility that are form of many crypto currencies position important hard time for users who seek reliability in their transactions, This is where stablecoins come into play.
it is design to reducing the volatility of the cryptos in the market, stablecoins are fixed to traditional assets example the fiat currencies which offer a stable value. SBD (Steem Backed Dollar) is among those stablecoin as one of the digital currency native to the Steem blockchain, SBD has played a significant role in the Steem platform which serv e as a protection against volatility and then facilitating good and smooth transactions and providing content creators with good reward rewards.
Though the recent challenges like the suspension of SBD deposits by some exchange bring questions Is SBD will ever be stable and relevance?, this learning challenge has explores the swing of stablecoins and evaluates the role of SBD within the Steem platform and give strategic suggestion that enhance its resilience in the competitive way.
Let's proceed to the related questions to this contest, read below...
SBD was created to play role as a stablecoin within the Steem platform which inturn offer us as the users a reliable means handling transactions without being showed up to the price fluctuations with of many cryptocurrencies, Its attached to the U S dollar helps in maintaining a consistent value for us most especially in a system where we often rely on the token for rewards savings and it transactions.
The two way role of this SBD facilitate peer to peer (P2P) transactions and the function of rewarding it content creators makes it different from many most stablecoins, now unlike stablecoins with the like of USDT or DAI which are used primarily to facilitatt transactions and trading, SBD uses within the Steem environment which it focuses only on incentivising creators for their contributions. Yes, the value of SBD has remained stable and offer us the users a predictable value to manage our asset s.
a chart comparing the three mentioned stable coin SBD, USDT and DAI
While SBD is offerring a stable value within the Steem environment its comparing it to others stablecoins like USDT and DAI through more light in both its benefits and limit, USDT is a widely and can Said to be a global adopted stablecoin which is fixed to the U S dollar and is used across many of platforms for trading and reliable transactions.
Coming to think of its high liquidity and the already own market presence make it a preferred stablecoin for users across multiple blockchains and networks, the DAI on the other hand is a decentralized stablecoin which is maintain through the MakerDAO protocol which offers the advantage of both the stability and decentralization.
SBD by different is limited to the Steem platform and it offers a stable value, its is reliance on the Steem blockchain meaning that SBD value is influenced by the success and sustainability of the Steem network by itself which has faced challenges for some years now.
you can have a view of the previous and current SBD price instability and Historical data in CoinGecko
Even with its initial promise SBD faces a lot of challenges in maintaining its stability,why?. It happened that one of the most noticed challenge is the fluctuation in its fix to the U S dollar and the Steem blockchain bring a method to maintain the value of SBD, the token value has deviate occasion from its intended fix which cause uncertainty for us who rely on it for stable value.
The above fact undermines the very purpose of SBD as a stablecoin as it introduces unpredictability in a market where stability is very important.
Now another challenge faced by SBD is its reliance on centralized exchanges, its been long they suspended SBD deposits by exchanges like Upbit which highlights the weak of SBD to decisions made by centralized bodies and as a result, SBD being stable is dependent not only on the unique method or algorithm built into the Steem blockchain but also on the behavior of othersexchanges and their willingness to support the token.
To talk about these stability problem a lot of solutions can be considered, one, enhancing the unique method and technic that maintain SBD fix will help ensure it stability. One good approach would be to introduce more healthy market making protocols or adjust the supply that affects SBD value in the markett, by bringing together a complex stabilisation mechanisms like random adjustments to the minting process.
Two, I suggest improving the liquidity of SBD across exchanges will be very important for it to stable, by inviting partnerships with more exchanges and working on increasing the number of trading available for SBD its liquidity can be improved which will also help stabilize its price as well.
Another point to highlight, to ensure the relevance of SBD it must expand its utility beyond the Steem platform and environment though SBD has been an imporrtant part of the Steem blockchain for transactions and rewarding us the content creators. its advantage as a stablecoin is limited by its small use case, to truly excel the more, SBD must come toger into a wider area of decentralized finance *(DeFi) apps such as makerDAO as previously mentioned, Solana, sunswap, opensea, curve finance uniswap, Aave and others if possible. e-commerce platforms, and cross border payment systems.
Throughing more light to my previous statement, a possible way for expanding SBD utility is to integrate into the broader DeFi environment and platforms and Compound to turn the way we as the users interact and flow with crypto. It gonna offer services like lending, borrowing and contribute to the yieldness in farming.
Through SBD integration the above mentioned platforms, steem may introduce a new use case for the stablecoin and allow users to gain interest. The idea will likely increase the demand for SBD in the market as it will promote liquidity and create additional path way for SBD adoption.
SBD can also be introduced or integrated into E-commerce environment, how?. It can be use to facilitate online payments as more businesses in developed countries and cities begin accepts crypto as a form of payment, stablecoins like SBD offer a safe way for users to transact without getting to worry about price fluctuations, I can imagine using my SBD to shop in E-commerce platform like Jumia by simply transacting it. I pray sure imagination come real.
took from pexels, edited using pixelab.
Yes, forming partnerships with most e-commerce platform or any developing plug that allow businesses to accept SBD as payment, the Steem platform will create a new fantastic way of utilising SBD.
integrating SBD into cross border payment systems will slso showcase its adoption, payment and transfer are important use case for stablecoins because they will allow us to send funds across borders without high fees and delays. SBD stability and relatively low transaction costs makes it a good option for this idea and purpose, by connecting SBD with any remittance platforms steem will gain credit and more recognition in market for users seeking fast and reliable cross border payment solutions.
The suspension of SBD deposits in exchanges like Upbit is rough challenge for the Steem platform but it also presents an opportunity for innovation, how??. Steem platform responding to this suspension must surely explore alternative solutions to ensure that SBD remains accessible to all users globally, I'm always motivated by this sentence "failure often conceals hidden potential" so I'm looking forward to see the improvement.
Another key strategy is to always put to practice and promote the use of decentralized exchanges, unlike centralized exchanges, the decentralized exchange operate without a central authority and we most and aware, which allows users to trade directly with one another know to be P2P.
By supporting SBD on decentralized platforms like Uniswap or solana the Steem community can begin to reduce its reliance on centralized exchanges and also reduce the impact of deposit suspensions, the decentralize exchanges in advantage of increasing privacy and security which makes them an a good option and alternative for users who are concerned about the risks associated with centralized.
Another solution is to create group driven to liquidity pools, by enabling users to contribute to liquidity pools for SBD, the Steem platform can ensure that there is always enough liquidity for users to buy or sell their tokens. This liquidity pools my even be incentives for rewards as long as it provides users with an additional reason to participate in the platform and support the stable of SBD.
The above picture is a milestone and SBD growth prediction, from my sight in the future of SBD in the changing cryptocurrency pespective will depend on the Steem communitys ability to adapt to those changes in market, as competition from other stablecoins like USDT, DAI and USDC. Steem must find a good and ways to differentiate between SBD and increase its utility globally.
Another potential path way for growth is to focus on the unique areasbof the Steem platform like its decentralized content creation, by working deep particularly on the integration of SBD within the Steem platform and bringing new ways to reward creators, the community can be rest assured that SBD will continue to serve as bigger part in the steem platform.
By making SBD accessible on other blockchains like Ethereum or Binance Smart Chain, Steem will gain larger user and attraact new opportunities for its adoption by many users.
Conclusion |
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In concluding my opinion, as SBD faces a severe challenges when it comes stability and adoption, it also has it unique opportunities to grow beyond the current sages. Through adding strength to its fix or pag, expanding its utility and experiencing decentralized solutions SBD will navigate its relevance and remain a key player in the current stablecoin markets. To my suggestion I think the Steem community should take proactive steps to ensure that SBD continues to excel in an increasingly competitive environment from my above highlight, which will help to position it as a stable and reliable asset in the crypto world.
