Goldman Sachs called the condition for the success of algorithmic stablecoins
The bank’s analysts noted that if assets have no limitations on their use as a means of payment, it would create a stable base demand
18.05.2022 - 12:45
308
2 min
0
What’s new? Analysts at investment bank Goldman Sachs explained that for the viability and long-term prospects of algorithmic stablecoins, they need to find a wider application for payments in the real economy. If such a use case were to expand over time, “it could create a more stable demand base for these assets,” The Block reports, citing a Goldman Sachs report.
Information on The Block’s website
What else do the experts say? The bank noted that stablecoins fulfill a need of the cryptocurrency market by allowing investors to trade less volatile assets without the difficulties of converting to fiat currencies. However, algorithmic stablecoins are vulnerable to “self-fulfilling crises,” situations where investors sell the currency for fear of depreciation, which can actually cause the asset’s rate to depreciate. Despite this, the bank believes that the asset can hold if there are sufficient demand and various use cases.
What is known about Goldman Sachs? It is one of the largest investment banks, founded in 1869. Headquartered in New York, the bank has offices in major financial centers around the world. As of 2021, the bank has $2,5 trillion in assets under management. Its market capitalization, according to Forbes, is $102,7 billion. The bank has a cryptocurrency trading desk.
What events happened before? In early May, US cryptocurrency exchange Coinbase entered into a partnership with Goldman Sachs as part of a project to issue loans secured by bitcoins. And at the end of April, the investment bank issued its first such loan. According to a bank spokesman, bitcoins stored in the borrower’s wallet were used as collateral.
Useful material?
Market
Users who have experienced withdrawal problems in the last two days will be eligible to participate
Mar 28, 2024
Market
Last July, a criminal investigation into the exchange was opened by the US authorities
Mar 27, 2024
Market
The unrealized profit from the deal was $8,9 million
Mar 26, 2024
Incidents
The phasing out began on March 25
Mar 25, 2024
Crypto regulations
The new measures must go through additional stages of approval
Mar 25, 2024
Incidents
The popularity of this kind of project launch format has already led to blockchain overload
Mar 20, 2024