How to Build A Stable Coin- Complete Development Guide

How to make a stablecoin

Cryptocurrencies known as stablecoins can have their value linked to or fixed to another type of money or commodity. Stablecoins are created in such a way as to provide a substitute for Bitcoin's significant volatility, making them less suitable for routine transactions. Simply put, stablecoin is a form of digital currency that is backed by an underlying asset and aims to emulate stable and conventional currencies. On the exchanges, a lot of stablecoins may be exchanged 1:1 for fiat money like euros and dollars. Additionally, stablecoins may be linked to other kinds of assets, such as gold or other cryptocurrencies.

In contrast to other cryptocurrencies, stablecoins are not prone to high volatility. While maintaining the trust and stability of the fiat money, they benefit from the immutability, transparency, security, and speed of cryptocurrencies.

Importance of stablecoins

For cryptocurrency-based financial transactions, stablecoins are essential.

These are your best options to trade volatility

Stablecoins were the first kind of non-fiat trading that allowed for entry and exit because of their low volatility. The earliest cryptocurrency trading platforms didn't have U.S. dollars or other fiat currencies when they originally launched, therefore a stablecoin was needed as a substitute. Traders can switch to the stablecoin to secure their gains once they have closed a position.

These are the easiest way to convert fiat currency into cryptocurrency

Before investing in cryptocurrencies, the majority of investors first convert their fiat currency. Buying stablecoins with a fixed price to your fiat currency is the simplest way to achieve this. Dollars can be traded for USD coins to convert to cryptocurrencies (USDC). Realcoin's predecessor, Teather, was developed in 2014. The first stablecoin ever made was this one. When compared to US dollars, it is 1:1. Market players can use USDT-denominated money to do transactions on the blockchain after converting fiat to USDT. Many open chains, notably Tron and Ethereum, support the use of tethers. The last time it was utilised as an ERC20 token was on the Ethereum network.

This is the most popular way to send money on a blockchain

The most popular cryptocurrency asset on any given day is Tether (USDT). It frequently outpaces trade activity for the two largest cryptocurrencies by market capitalization, Bitcoin and Ethereum taken together. Other stablecoins, like USDC, are also expanding quickly and are controlled by numerous businesses, including Coinbase and Circle. They are currently the ninth-ranked digital asset by market capitalization.

A stablecoin is the most practical cryptocurrency for adding assets to a blockchain, despite the fact that there are many others.

These are the building blocks of DeFi

Stablecoins are crucial to DeFi for a number of reasons. Curve is basically a marketplace that enables traders to trade stablecoins at minimal costs. It is a DeFi protocol with a total market cap of over $20 billion. Stablecoins can be traded thanks to Curve's liquidity. The trading costs are split among the investors who have added their stablecoins to Curve. Many DeFi protocols have built their platforms so that traders on Curve can place trades.

How to create a stablecoin?

You must examine the following procedures in order to generate a stablecoin:

Identify the type and purpose of the stablecoin you want to develop

Collateralized and non-collateralized stablecoins are the two main categories. Comparing one kind of stablecoin to another, though, is challenging. Algorithmic stablecoins are the best option for long-term stability. The greatest choice, however, will be collateralized stablecoins if you're seeking for stability in the short term and the asset is stable. You can choose the kind of stablecoins you need by asking yourself the following questions:

What amount of liquidity do you require from stablecoins to function?

What type of independence or decentralisation do you desire?

How many audits are required to reduce risk and raise the perceived value of your stablecoins?

What degree of architecture complexity do you prefer?

Choosing the stablecoin kind you desire will be easy once you have provided answers to the aforementioned questions.

Choose the best blockchain platform and tools to build a stablecoin.

You can now select the platform that will build it after limiting your stablecoin options. Stablecoin development was previously only possible on the Ethereum platform, but with the entry of additional players into the blockchain market, this is changing. Other systems for stablecoin creation include Tron and EOS. The following advantages make EOS the preferable blockchain for producing stablecoins:

Greater interoperability

High transaction bandwidth and scalability

In order to choose the platform you want to utilise, you can weigh the benefits and drawbacks of each one. After deciding on the platform and technology you'll use to create stablecoins, you can proceed to the next phase. Consider retaining liquidity in this situation.

Consider the maintenance of liquidity

If liquidity is gone, the concept of stablecoin creation as a whole may be destroyed. We suggest the following actions to guarantee liquidity:

assessing the value of inflation A daily currency rate and index rate from the Consumer Price Index (CPI) and Personal Consumption Expenditures should be provided by an automated monitoring system.

Transaction charges Transaction fee income ought to be split, with a portion going to the stablecoin partners and the remainder going to the liquidity reserve to increase liquidity.

A defence against abundant supply Stablecoin holders should be able to sell or redeem their holdings at the current face value, less any transaction costs. This eliminates the motivation for sellers to offer their stablecoins for sale on the secondary market below market value.

Smart contract creation

The creation of smart contracts is a requirement for stablecoin development and is a crucial step in the development of the cryptocurrency industry. Smart contracts are built on the foundation of digital agreements, which offers security. To guarantee stablecoin veracity and dependability on a decentralised platform, you must decide which protocols you will implement for smart contract creation. The virtual wallet test network is used by developers to create, test, launch, and administer smart contracts.

Make visual and technical designs of the system

Now is the moment to create your token. The key to building a stablecoin is comprehending the transaction flow and how the system will operate. A mechanism that enables users to interact with your token may also be something you need to build. You might require a website or mobile app to enable stablecoin engagement. Screen design for mobile and web devices is done at this step.

Development and launch to mainnet

The system must be built after the design has received approval. You build smart contracts on your blockchain platform to communicate with the stablecoin and start nodes. When all of the stablecoin's features have been created and integrated with the blockchain backend, it's time to build a test network for it. Those that create stablecoins on the Ethereum platform have access to a large number of test nets. To get feedback on your product, invite diverse groups of individuals to try it. Resolve any problems that might have come up during the testing phase. After all problems are fixed, the stablecoin can be introduced to the mainnet.

Ready to create your own stablecoin?

I hope you now have sufficient knowledge to aid in the creation of your stablecoin. The preferred mode of transaction in the future will be stablecoins. Investment in stablecoins is thus worthwhile. The difficult procedure for developing and introducing a cryptocurrency is intimidating enough. Talk to a stablecoin development company to determine the kind of stablecoin that your business requires.

LeewayHertz is a web3-focused software development company with extensive expertise in blockchain, gaming, Nfts, metaverse, DeFi and other web3 technologies.