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- Hex Trust Group is launching a stablecoin in partnership with Flare.
- The stablecoin is billed to drive utility to the broader DeFi ecosystem.
Flare Networks, a prominent partner to Ripple Labs Inc has announced a partnership with digital asset custodian Hex Trust Group for USDX stablecoin integration.
Flare’s Plans for USDX Stablecoin Launch
According to the announcement, the USDX stablecoin is designed to help push the Flare ecosystem forward. Based on the partnership agreement, Hex Trust will use its tokenization division, HT Digital Assets, to develop USDX while it oversees the launch of the stablecoin.
USDX maintains a secure 1:1 peg to the US dollar, backed by a reserve of primarily 1-3 month Treasury bills held by reputable tier-1 financial institutions. This ensures stability and trust in the value of the stablecoin, making it a reliable medium for various Decentralized Finance (DeFi) applications.
Meanwhile, some of the stablecoins that have emerged in the past have experienced depegs. For example, the collapse of the Terra ecosystem in May 2022 was caused by the depeg of TerraUSD (UST), the native stablecoin of the ecosystem.
These depegging trend have emphasized how crucial it is to preserve the stability of stablecoins. This stability is important for DeFi applications like lending, borrowing, and perpetual futures exchanges, where predictable asset values are essential for smooth operation.
According to details from the recent announcement, Flare will work with Clearpool, a blockchain-based credit marketplace to launch the USDX stablecoin. As a result, users can stake their USDX to earn real-world yield through a dedicated T-Pool established by Clearpool.
This staking mechanism offers flexibility and permits users to enter and exit at will without any lock-up periods. This maximizes returns by capturing both the base yield and additional incentives offered in the form of FLR tokens, the native currency of the Flare Network. In addition, users staking USDX on Clearpool will receive cUSDX, a collateralized token that can be used in Flare’s FAsset system.
This system allows users to leverage non-smart contract assets like Bitcoin (BTC) and Dogecoin (DOGE) for DeFi applications on Flare, as previously reported by Crypto News Flash. Essentially, cUSDX unlocks the potential of these assets to be utilized within the DeFi ecosystem on Flare.
Commenting on the partnership, Co-Founder of Flare, Hugo Philion stated,
Stablecoins are fundamental for the development of a vibrant DeFi ecosystem. This will be particularly useful for FAsset agents, putting their stable collateral to work even while it’s locked in the system.
Growth of the Stablecoin Market
The stablecoin market is currently experiencing growth with a valuation of $150 billion at last check. Despite this rise, analysts believe there is still room for more growth with projections of up to $3 trillion by 2028. Echoing earlier coverage by Crypto News Flash, Ripple stands a chance to benefit from this market as it announced plans to launch its stablecoin later in the year.
At the time of this writing, FLR is trading up 2% at $0.02851, with its market cap standing at over $1 billion. On the other hand, Ripple’s XRP is trading at $0.5322, up by 1.4% in 24 hours with a market cap of $29.3 billion.
