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The Three Generations of Stablecoins and How They Work

Categories: GeneralPublished On: June 7th, 20211.9 min read

There are currently three different generations of stablecoins as a result of numerous improvements to the technology. Let’s explore them and the future of stablecoin technology. 

Generation One

The first generation is the earliest stablecoins and generally what people think of the technology. These stablecoins are asset-backed by fiat money, commodities, or other digital assets. They are usually pegged to their asset on a one-to-one basis, but this can differ from coin to coin. Generation one stablecoins are transparent and regulated by some governing body. This makes them safe to use and easy to redeem for users.

Generation Two

The second generation of stablecoins is in development right now, and it will be released later this year. Generation two stablecoins will have all of the benefits of the first generation, but they may be branded by companies, such as Walmart, JPMorgan, Facebook, etc. The purpose of branded stablecoins is to be used for loyalty, rewards, ease of transactions, and more. Since a company backs these stablecoins, they will be most probably be deployed in a private blockchain.

Generation Three

Generation three stablecoins will help solve ease of use problems found in both generations one and two of stablecoins. These stablecoins are expected to be developed in a few years, sometime around 2023. Beyond having all the capabilities of the first two generations, they will have the ability to combine multiple stablecoins into one. Ultimately, they will lower the weight on the back of the consumer to carry hundreds of branded stablecoins. It’s difficult to say just what these will look like as this is in the future, but generation three stablecoins will be a staple of the economy.

Regardless of which generation of stablecoins you wish to implement in your business, stablecoins are part of the future economy and should be on the radar of every business. For more information on how a stablecoin can improve your business operations, contact Stably at https://www.stably.io/contact/.

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