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  • Writer's pictureRicardo

ZEDCoin VS Other stable coins

Updated: Nov 14, 2022

If you somehow don’t already know, terraUSD (UST), a cryptocurrency that is supposed to stay at $1 (aka a stablecoin), is no longer $1. When something is supposed to be $1 and it’s not, that’s usually not good. What’s more, the crypto token that backs UST, LUNA, also lost virtually all of its value. These losses have been widely reported on, and so in all likelihood, this is the umpteen-millionth piece about UST you’ve seen.

In case you haven't heard, here's a brief overview of what happened:

On the heels of Ethereum, at a $41 billion market cap in April, Terra (LUNA) & UST were supposed to usher Finance 2.0 by providing a blockchain counterpart to the VISA payment system. UST is an algorithmic stablecoin, which means it is not backed up by dollar reserves in order to remain pegged to the fiat currency. Instead, UST uses its partner coin LUNA to maintain its value, with each UST token minted resulting in the equivalent of $1 of LUNA being removed from circulation, and vice versa.

In an effort to bring UST back to parity with the US dollar when its price began to drop, the Luna Foundation Guard (LFG) used its vast reserves to buy up huge amounts of UST in an effort to force up the price. In doing so, vast amounts of LUNA flooded the market, resulting in a near-total price capitulation.

While our stablecoin ZEDcoin is also an algrothimic stablecoin, there are many differences between it and UST. Here's why ZEDCoin won’t crash like UST:

  1. ZEDPay manages the minting and the redemption/burning of ZEDCoin.Users who on-board by downloading the app and creating an account/wallet can purchase ZEDCoins with virtually any credit card, which are then minted and instantly deposited into that user's account and ZEDPay wallet. The ZEDPay network verifies, mints, and validates the ZEDCoins. The user can then transfer those tokens to whoever they wish or use them to complete a payment.

Redemption follows the reverse sequence: ZEDCoins are burned when a user wants to off-ramp and exchange their ZEDCoins for fiat. This ensures that there are no excess ZEDCoins in circulation and that the algorithm will always maintain a stable 1:1 peg with the US fiat dollar.

  1. ZEDCoin will not be listed on any exchanges, and the only way to purchase ZEDCoin will be through the app. This has the benefit of avoiding speculative short sellers, exchange hacks, and further adding to the price stability of ZEDCoin.

  2. Unlike UST, ZEDCoin does not have any partner cryptocurrency to artificially keep its price stable. ZEDCoin’s price is kept stable with real US dollars from when users purchase ZEDCoins.

Without innovation, we wouldn’t even have conversations about alternative money like Bitcoin, or revolutionary smart contracts that render banking services obsolete. However, by pushing the envelope, we should be careful to not lose the core reason for such innovation to begin with - financial liberation. ZEDPay & ZEDCoin were created with this core reason at its heart.

While the market for stablecoins took a big hit when UST collapsed, there is also a newfound opportunity for new protocols to emerge. We believe that ZEDCoin can provide new trust in algorithmic stablecoins, has vastly improved upon UST’s shortcomings, and isn’t subject to the same fate as Luna. The future for the stablecoins in crypto is bright.

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