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The Power of Programmability in Stable Assets vs. CBDC

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On April 25th, Cointelgraph reported that in providing stable value, stable currency and Central Bank Digital Currency (CBDC) seem to be two sides of the same coin. However, encryp

The Power of Programmability in Stable Assets vs. CBDC

On April 25th, Cointelgraph reported that in providing stable value, stable currency and Central Bank Digital Currency (CBDC) seem to be two sides of the same coin. However, encrypted stable assets can provide completely different use cases, and CBDC cannot compete with them at all. The key is programmability, as smart contracts can automate and add new features to currencies. Programmability allows for asset support and decentralization, which is not possible in current CBDC design. Developers should leverage the programmable opportunities provided by stable assets, rather than attempting to compete with CBDC.

Viewpoint: Compared to CBDC, the key advantage of stable currency lies in its programmability

Stable coins and Central Bank Digital Currency (CBDC) are becoming increasingly popular as they provide stable value in the often-volatile crypto market. However, while they may seem similar, stable assets and CBDCs are two sides of the same coin. Programmable stable assets, in particular, offer unique use cases that CBDCs cannot compete with.

Understanding Stable Assets and CBDCs

Stable assets refer to cryptocurrencies that are designed to maintain a stable value. They are pegged to a fiat currency like the US dollar, and the value of the stable asset remains stable when compared to its peg. Stable assets can be issued by anyone, unlike CBDCs which are issued by central banks.
CBDCs, on the other hand, are digital versions of fiat currencies, issued and backed by central banks. They enable faster and cheaper transactions, have lower fraud risk, and reduce reliance on physical cash.

The Role of Programmability in Stable Assets

The key difference between stable assets and CBDCs lies in programmability. Programmable stable assets, such as Ethereum-based tokens, can be programmed with smart contracts that automate functions such as interest payments and governance. This allows for advanced features like asset support, lending and borrowing, yield farming, and decentralized exchange. CBDCs, however, are not programmable and can only function as a digital form of fiat currency.
Programmable stable assets also offer decentralization, which is not possible with CBDCs. Since stable assets are decentralized, the community can govern them instead of relying on a central authority. This provides users with more control over their finances, which is a significant advantage.

Leveraging Programmability in Stable Assets

Developers should leverage the programmable opportunities provided by stable assets instead of competing with CBDCs. For example, stable assets can be used for programmable payments, enabling businesses to automate cross-border payments using smart contracts. A programmable stable asset can also be used to create a decentralized lending platform or automated trading system. These are features that are not possible with CBDCs.
Leveraging programmability can also result in increased liquidity for stable assets. Programmable stable assets can be used to provide liquidity to decentralized exchanges, as well as for liquidity mining on DeFi platforms.

Conclusion

While CBDCs and stable assets may seem similar, programmability sets them apart. Developers should focus on leveraging the unique programmability offered by stable assets rather than trying to compete with CBDCs. Programmable stable assets open up a whole new world of use cases and possibilities, enabling businesses and individuals to access decentralized services and automation.

FAQs

1. What are stable assets?
Stable assets are cryptocurrencies that are designed to maintain a stable value, usually pegged to a fiat currency like the US dollar.
2. What are CBDCs?
CBDCs are digital versions of fiat currencies, issued and backed by central banks.
3. What is the key difference between stable assets and CBDCs?
The key difference between stable assets and CBDCs is programmability. Programmable stable assets can be programmed with smart contracts, enabling advanced features like asset support and decentralized governance. CBDCs, however, are not programmable and can only function as a digital form of fiat currency.

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