We discuss stablecoins a great deal. There is good reason for it. They simply are a vital part to the future of cryptocurrency.

This is a sentiment reflected at the Point Zero Forum. This was summarized in an article on Chaindebrief.

A quick read through the article shows support for stablecoins. For this reason, it is very telling when the writer misses a large portion of the stablecoin market.

Here is what was written:

There is an increasing trend of using stablecoins for trading and instant settlement purposes. But the original use case of stablecoins was for payment purposes. There is tremendous headroom for growth in stablecoins to be used for payment purposes.

This is not wrong yet it shows a severe underestimation of what needs to be done.

In this article we will recite how much more there is to all this and and many different directions are required.

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Bonding

Why do we discuss bonding so much? The answer is because this is a vital part of expanding the scope of a stablecoin.

Before getting specific, let us look at US Treasuries. Under this scenario, what is a bond? In other words, at its core, what is it?

A Treasury Bond is purchased for a certain amount of money. This effectively swaps USD for a stream of payments. Over time, the holder of the bond receives USD until the bond expires. At that point, the bond is redeemed for USD.

Hence, a US Treasury Bond is really future dollars. Basically, it is USD in another form. It is akin to water freezing and becoming ice.

Unlike water, instead of switching states, it is operating in both at the same time. This is vital for expansion.

IT is why something like Hive Bonds is crucial.

Building Many Deviations From the Stablecoin

When discussing the evolution of stablecoins by only focusing upon payment, we are discounting much of what generates resiliency with a currency. Here is why we have to look at the larger markets.

One of the areas we talked about in the past was derivatives. When look at something like HBD, we see where derivatives can add great value.

Here is a quick example that illustrates the point.

We saw the formation of pHBD over on the Polygon Blockchain. This is one deviation away from HBD yet it offers similar properties. Of course, like with US bonds, it does not swap forms but operates as both at the same time.

With pHBD, we can create Polycub Bonds. Here again, we are dealing with an asset that is future pHBD, generating another deviation away from HBD, yet still ultimately tied to it.

A bond of this nature could be used as part of the creation of an interest rate swap, providing the fixed interest portion. Now we are up to 3 deviations away from the core HBD, yet still driving value back towards it.

Each of these can be thought as layers to HBD.

Increased Utility

Payments are an important step in the evolution of stablecoins. However, they account for only a small portion of what we are dealing with.

Before getting into the numbers, here are the key components of what we are creating.

• each pHBD is backed by HBD
• under this bonding process, pHBD is deposited in a time locked vault
• the bond is contractually obligates as part of a Interest Rate Swap contract, locking that in.

Without going any further, we already generated 3 different use cases. Instead of just one, payments, we have expanded HBD in a variety of ways, generating resiliency.

Naturally, the ability to use for payments is still present.

Now let us see how how big some of this is.

When looking at payments, it is hard to pinpoint how much is actually taking place. However, it is estimated that cross border payments will reach $156 trillion in 2022. This is almost exclusively controlled by the banking system, something that cryptocurrency needs to change.

Simply by stepping in with stablecoins, we can see cross border payments along with near instant settlement times. After all, there is roughly $500 billion in transactions daily sitting right here.

How does that compare to some of the other "layers" we created?

When looking at bonds, this is what we find:

In 2018, the average total volume of treasury securities traded per day was over 547 billion U.S. dollars. This means that every day the market was open, the average amount of U.S. government securities bought and sold amounted to half a trillion U.S. dollars in that year.

Source

This almost equates to the amount of cross border payments and this is US Treasuries only. It does not include other bonds that are "future currency" like those from the EU, Japan, and Britain. Obviously, the number gets a lot bigger.

As for interest rate swaps, according to the CFTC, the volume for the week of 6/10/22 was $13.7 trillion.

Of course, not only are these assets tied to USD, they are traded for USD.

Focusing Upon The Low Hanging Fruit

Payment for commercial products is something most focus upon. What is overlooked is the payment for financial products. By combining the stablecoin into the products as well as accepting payment for them, we see a compounding effect upon the resiliency of that coin.

Here is something that is rarely discussed with stablecoins. It is always about the return generated for staking as well as getting it accepted for commercial payments. As we can see, this is just scratching the surface.

With HBD, we have 4 areas to focus upon:

• infrastructure
• depth
• liquidity
• sophistication

Since they are interconnected, they have to be built out simultaneously. Those platforms that are able to do it will be targeting an enormous market. This is something much larger than the payments market.

Of course, as each facet grows, the appeal of accepting HBD for payments only increases.

The financial world can build some exotic products. With stablecoins, the key is to garner some of the low hanging fruit to gain some momentum. Could this be HBD?

It depends upon the development that is tied to it. Are teams going to focus upon the areas mentioned in this article?

Only time will tell. However, as we can see, most of the industry is missing the biggest markets when it comes to stablecoins.

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