Why is USDN stablecoin so popular in the market?
A stablecoin is essentially a cryptocurrency with “anchor” properties, aiming to anchor a certain off-chain asset and maintain the same value with it. Stablecoins can be mortgaged by off-chain assets (i.e. mortgage stablecoins) to maintain price stability, or a certain algorithm can be used to adjust the supply-demand relationship at a certain point in time (i.e. algorithmic stablecoins).
Due to the trust problem of mortgage-based stablecoins, algorithm-based stablecoins have attracted much attention in recent years. Among them, the NGK’s algorithmic stablecoin, USDN is anchored to the U.S. dollar, USDN=USDT=1 U.S. dollar. It is generally used for the internal value circulation of the NGK blockchain and the purchase of computing power to participate in the mining mechanism.
The USDN purchasing power model has two advantages:
1. Lower the entry threshold. Compared with other mining machines or reels, all pledges are based on currency. For example, you need to deposit 1,000 coins, and the monthly income is 10%; in the first few months, you need to pledge $20,000 for 1,000 coins, and half a year later, the price has risen, and you need $50,000 to pledge 1,000 coins. The higher the increase, the higher the entry barrier for the people behind, and the fewer the number of people. Therefore, the currency price could not rise and even the project may collapse.
2. Reduce the risk of the run. If the initial player spends $20,000 to pledge 1,000 coins, if the 1,000 coins rises to 50,000, it is extremely easy for the player to cancel the pledge and run, which will cause the currency price to plummet or even collapse.
In the USDN purchasing computing power model, the computing power can be bought and sold in the computing power market at will, and the price of computing power is based on market demand. At present, the NGK is constantly building the computing power market ecology, including the Starry Sky project, the officially launched the NGKEX, etc. In the future, as the ecological consensus of the computing power market is further built, the price of computing power will become higher and higher in the future. Compared with higher computing power prices, the USDN has always been anchored at a price of 1 US dollar. From this perspective, USDN is highly sought after by the market for a certain reason.
However, in my opinion, this is only part of the reason. It is necessary to know that after using USDN to purchase computing power, the NGK will be produced again. The USDN has not risen or fallen, but NGK has risen and fallen. When you pledge the stablecoin USDN, you will be able to mine NGK; and the NGK will be rewarded to you according to the price. What does that mean? For example, if your income is $100 today, if NGK is equivalent to $1 per unit, then you will be rewarded 100 units; if NGK is $5 per unit, then you will be rewarded 20 units. In short, it will reward you with the NGK tokens worth $100. Due to the low market value of NGK, it is especially easy to double dozens of times! For example, a currency with a market value of $100, when $10,000 comes in from the market, the market value of this currency becomes $10,100, which is a 100-fold increase.
In summary, whether it is from the ecological value or application value of USDN, its value is much higher than its price. With the further development of NGK ecology in the future, the USDN as an algorithmic stablecoin has a lot to do.