El Salvador is set to launch a stablecoin pegged to the US dollar

New stablecoin issued by El Salvador coming soon

On Wednesday Galoy, a banking platform in El Salvador that launched the Bitcoin Beach Wallet in November 2020 in the city of El Zonte v Salvador, announced the launch of a new dollar-pegged stablecoin.

The new stablecoin was a synthetic dollar backed by Bitcoin. These are coins called Stablesats that do not require tokens to function and can be easily spent. In order to improve its platform and for this new project, the company also announced that it has raised $4 million in capital.

Hivemind Ventures led this funding round with participation from Valor Equity Partners, Timechain, El Zonte Capital, Kingsway Capital, Trammel Venture Partners, AlphaPoint and other leading Bitcoin investors.

A message from the company reads:

“Today the company announced the launch of Stablesats, an alternative to stablecoins, integrating fiat banks using stablecoin derivative contracts to create a Bitcoin-backed synthetic dollar pegged to the USD. This enables dollar-equivalent USD accounts in the Lightning Wallet, which solves one of the biggest problems of day-to-day transactions with BTC: short-term exchange rate volatility.

The message continues:

„Neexistuje žádný jiný stablecoin nebo token než bitcoin, který je základem Stablesats, což znamená lepší interoperabilitu a nižší poplatky pro uživatele.“

This means there is no third party to control it, which some say is an important tool in the hands of countries with high inflation and heavy exposure to US dollars.

What will be the benefits of the new stablecoin for the whole ecosystem

As Nicolas Burtey explained:

“With the Lightning wallet powered by Stablesats, users can send, receive and hold money in a USD account in addition to their default BTC account. While the dollar value of their BTC account fluctuates, $1 in their USD account remains $1 regardless of the Bitcoin exchange rate”.

It is essentially a derivative product whose pioneering work is credited to Bitmex, who first talked about it in 2015 as a solution to the very high volatility of BTC and other digital currencies.

„Vidíme integraci více burz, zajišťovacích strategií a měn, které posilují odolnost. Nakonec můžeme každému uživateli Lightning odemknout možnost vybrat si vlastní účetní jednotky, aniž by museli opustit síť.“

The Galoy platform has also recently developed a digital wallet in Costa Rica and Panama and has long considered that will open its business to other South American countries as well.