Galoy Inc has shaken up the crypto world again with its latest product, Stablesats. These bitcoin-backed synthetic US dollars enable crypto holders to save in Bitcoin and spend fiat. The project has already seen heavy support from investors with the network securing $4 million via private funding rounds.
Galoy is best known for its work with the El Salvadores Bitcoin Beach project. The venture was a huge success that helped the country become the first in the world to make Bitcoin legal tender. That decision has led to a huge spike in tourism and foreign investment in the country. It has also given the locals a way to escape inflation.
Stablesats operate as bitcoin-backed synthetic U.S. dollars. The system is part of the greater GaloyMoney Lighting Network infrastructure. This feature offers businesses everything they need to integrate Lightning Network payments into their systems.
GaolyMoney includes a Lightning Gateway that provides secure transactions. There is also a secure backend API that enables developers to leverage the system’s powerful features in their applications. The features include items like mobile wallets, point-of-sale apps, DLTs, and administrative controls.
How Galoy Makes the Magic Happens
The Galoy system works by leveraging inverse perpetual swaps on the OKX CEX (centralized exchange). The protocol locks your Bitcoin in a smart contract and issues fiat-backed synthetics in return. Your Bitcoin is pledged as collateral to purchase the corresponding amount of inverse perpetual swap contracts. The reserve for the derivatives contracts can be adjusted to ensure the value backing the project keeps the token at $1.
Lightning Network Makes it All Possible
The Lighting Network provides the structure needed to make the project a success. The fast transactions and micro-transaction capabilities are essential in this role. The Stablesats-enabled Lightning wallets are a crucial component as well. They streamline the use of the network and provide users access to the key features they need. Best of all, the protocol enables you to send, receive, and save BTC and fiat together.
There are many reasons why someone would want to save in Bitcoin but spend in fiat. For one, Bitcoin has proven to be a strong anti-inflationary asset. Reversely, they can hedge against the daily volatility of Bitcoin using the system and holding in Bitcoin-backed synthetics.
Stability through Algorithms
In a recent interview, Nicolas Burley, the CEO of Galoy, discussed how his system makes life easier for traders and savers alike. He explained that the dollar value of the BTC account fluctuates daily in the system. However, the $1 in their USD account remains $1 “regardless of the bitcoin exchange rate.”
Galoy – A Smart Concept
Galoy has flipped the idea of a stablecoin on its head with this latest venture. The innovative nature of the concept helps to drive crypto adoption and opens others’ eyes to the endless possibilities blockchain technology brings to the table. Bitcoiners are happy to see any expansion of the token’s use case scenarios and this is sure to be popular among traders seeking to exit Bitcoin’s volatility while not losing exposure to the asset.
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