The Bitcoin ecosystem needs a truly innovative and user-friendly stablecoin!
Bitcoin now needs to address this important proposition: how to turn Bitcoin into an income-generating asset?
1. Stablecoins are the biggest variable in the Bitcoin ecosystem!
First, they can reshape Bitcoin's functional positioning:
Bitcoin's high volatility makes it more suitable for long-term holding rather than daily payments. Stablecoins, backed by Bitcoin and pegged to the US dollar, provide price stability, allowing users to convert BTC into assets that can be used for payments, lending, or DeFi without selling.
Stablecoins transform Bitcoin from a single asset into an anchor point of the financial ecosystem.
Second, they can change user behavior:
Bitcoin holders often adhere to the HODL philosophy, unwilling to sell BTC for liquidity. Stablecoins allow users to obtain USD stablecoins by collateralizing BTC, meeting consumption or investment needs while retaining the long-term appreciation potential of BTC.
Stablecoins incentivize users to shift from “passive holding” to “active participation,” expanding the user base of the Bitcoin ecosystem.
Moreover, they can expand the ecological economic model:
The DeFi applications of the Bitcoin ecosystem (such as lending and liquidity mining) are constrained by BTC's volatility. Stablecoins provide stable trading mediums, enhancing the usability of Bitcoin assets in DeFi.
Stablecoins can transform the Bitcoin ecosystem from a “single asset-driven” to a “diversified financial ecosystem,” similar to the DeFi prosperity achieved by the Ethereum ecosystem through DAI and USDC.
2. What Bitcoin ecosystem USD stablecoins are worth noting?
Many projects have previously made attempts, but the core issues lie in the stability and liquidation risks caused by high-volatility collateral, the lack of transparency in cross-chain bridge security, the unclear revenue and governance mechanisms, as well as insufficient ecological integration and user positioning.
These issues limit the scalable application of stablecoins in the Bitcoin ecosystem.
The new player Mezo @MezoNetwork's MUSD overcomes the issues of DAII through mature technology, clear positioning, and low-cost strategies, emerging as a dark horse.
The three core issues of Bitcoin ecosystem stablecoins are: Where does the revenue come from? How to maintain the stability of the stablecoin's value? How to ensure the security of Bitcoin?
Let's take a closer look at how Mezo addresses these:
(1) Where does the revenue come from?
Mezo's revenue mainly comes from loan interest, liquidation penalties, minting/trading fees, and the potential appreciation of the mats points system (airdrop expectations).
Low interest rates and point incentives attract user scale growth, while liquidation penalties and trading fees provide stable income in high-volatility markets.
In the future, Mezo can further diversify revenue sources by optimizing the fee structure and governance mechanisms.
(2) How to maintain the stability of the stablecoin's value?
The design goal of MUSD is to be pegged to the US dollar 1:1, and its value stability relies on a combination of over-collateralization, dynamic adjustments, and liquidation mechanisms, drawing on the MakerDAO's DAI model but focusing on Bitcoin assets.
The single-collateral design aligns with the Bitcoin ecosystem but must address price volatility risks.
Mezo can further enhance stability by optimizing oracles and liquidation mechanisms, as well as expanding the application scenarios of MUSD.
(3) How to ensure the security of Bitcoin?
Mezo's core asset is the Bitcoin deposited by users (including BTC, tBTC, WBTC, etc.), and its security relies on the robustness of smart contracts, cross-chain bridges, and protocol governance.
Thesis's technical background and transparent operations add to its credibility, but cross-chain bridges and oracles remain potential risk points.
Mezo can further consolidate security through insurance mechanisms and community governance.
3. In summary
The USD stablecoin market in the Bitcoin ecosystem is currently primarily represented by MUSD (Mezo), and there are almost no other stablecoins clearly backed by Bitcoin and pegged to the US dollar.
MUSD fills the gap of USD stablecoins in the Bitcoin ecosystem, accurately capturing the behavior shift of Bitcoin holders from HODL to financialization by 2025.
If MUSD can break through in payment scenarios (such as cross-border remittances) and security, it is likely to become the “decentralized bank” of the Bitcoin ecosystem, promoting further development of the Bitcoin ecosystem.
We can continue to keep an eye on this.
