Elastos Launches Bitcoin-Backed Stablecoin BTCD to Enhance Financial Stability

The Elastos project, known for its BTCFi initiative, has launched a new stablecoin called BTCD, which is backed by Bitcoin, the original cryptocurrency.

The team is working on creating a «digital version of the Bretton Woods system»—a post-war agreement that established the U.S. dollar’s peg to gold and solidified its status as the world’s reserve currency to enhance financial stability.

Unlike traditional dollar-pegged stablecoins, which are usually backed by fiat currencies and highly liquid short-term U.S. government bonds, BTCD derives its value from the more volatile asset, Bitcoin.

In a conversation with CoinDesk, representatives from Elastos explained that they are tackling price volatility through over-collateralization, maintaining a backing ratio of 160-200% relative to BTCD’s value.

As a result, the exchange rate is adjusted algorithmically by issuing and burning BTCD in response to fluctuations in supply and demand.

The total market capitalization of the stablecoin sector has exceeded $260 billion.

The overall Total Value Locked (TVL) of Bitcoin-based decentralized applications currently stands at $6.41 billion, placing this segment in third place in the DeFi Llama rankings, behind ecosystems based on Ethereum and Solana.

The largest BTCFi platform is Babylon Protocol, which has a TVL of $4.9 billion in its restaking service.

Lastly, it’s worth mentioning that Charles Hoskinson, the founder of Cardano, recently suggested allocating $100 million from the project’s reserves in ADA tokens to acquire Bitcoin and stablecoins.