BitGo plans to launch a dollar-backed stablecoin, USDS, next year, setting itself apart in the crowded market by offering rewards to institutions providing liquidity to the network. The announcement was made at Token2049 in Singapore.
USDS will be backed by short-duration Treasury bills, overnight repos, and cash, similar to other stablecoins, but it will be the first “open-participation” stablecoin. CEO Mike Belshe explained that BitGo’s goal is to create a more open and fair system that promotes innovation and rewards institutions that help build the network.
Unlike traditional stablecoins, USDS will distribute returns generated from its reserves to participating institutions on a pro-rata basis. This rewards-based approach sets BitGo’s stablecoin apart, as it incentivizes institutions without falling into the legal complexities of dividend classification.
Stablecoins, which are pegged to assets like fiat currencies, provide liquidity in crypto trading and decentralized finance (DeFi). BitGo’s USDS aims to challenge major players like Tether’s USDT and Circle’s USDC by introducing a new model that rewards liquidity providers while avoiding the regulatory hurdles faced by yield-bearing stablecoins.