Asymmetry Finance Introduces afUSD: A Secure and Scalable Synthetic Dollar
Summary:
In 2024, Asymmetry Finance is joining the race in the stablecoin market with the launch of its fully onchain synthetic dollar, afUSD, in collaboration with Ampleforth and Paid Network. Leveraging Ampleforth's algorithmic adjustment mechanism, the synthetic dollar's elastic supply is adaptable to market conditions. Asymmetry argues that its system is more secure and scalable than rivals like Ethena's USDe, offering a more resilient buffer against real-world financial stress. This development in the crypto sector underscores the ongoing digital asset growth parallel to the robust performance of the US dollar.
The US dollar is holding strong in 2024, paralleled by the robust digital asset market associated with the currency. The synthetic dollar by Ethena, USDe, boasts a market cap nearing $3.4 billion, luring competitors on the hunt for pieces of the worldwide stablecoin market. Asymmetry Finance is the most recent entrant to the arena, collaborating with Ampleforth and Paid Network to launch the fully onchain synthetic dollar, afUSD whose elastic supply adapts to market dynamics. The algorithmic stablecoin utilizes Ampleforth's modification mechanism that adjusts the token supply towards a target price. As per Asymmetry, this system is more secure and scalable than comparable products, like USDe by Ethena. “There are no itineraries for collapse. There are no oracle susceptibilities, and although the system is adaptive, it can't rupture,” an Asymmetry representative informed Cointelegraph. Backing this initiative are former individuals of Genesis Global Trading, Quantstamp, LayerZero, and other crypto firms. Algorithmic stablecoins employ algorithms – a defined set of rules – to stabilize their value vis-à-vis a target price, often a fiat currency such as the US dollar. As opposed to conventional stablecoins underpinned by reserves of low-risk assets, algorithmic stablecoins lean on these algorithms for price stability. Related: Ethena Labs complements its USDe synthetic dollar with Bitcoin backing. Earlier attempts with similar crypto products haven't been as successful. The biggest hiccup in the history of algorithmic stablecoins was the collapse of TerraUSD (UST) in May 2022. The stablecoin was formulated to retain its peg via a mechanism that involved another token, Terra (LUNA). One UST could invariably be exchanged for $1 worth of LUNA and vice versa. However, a significant sell-off during a market slump severely devaluated LUNA. This event ignited a downward spiral where both tokens severely lost value, thereby eradicating billions in market value and ensuing in months of chaos in the crypto industry. According to Asymmetry, their stretchable model can safeguard their stablecoin amidst real-world financial turbulence. "In contrast to traditional stablecoins, afUSD uses Ampleforth's AMPL [...] circumventing the need for typical collateral and its inherent risks. Its fully onchain composition bolsters decentralization and security," said the representative. "Ethena has finite scalability, prompting users to explore alternatives." Magazine: Crypto's sudden political division among Democrats just months before the election.
Published At
6/12/2024 1:00:00 PM
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