Bitcoin stablecoins are an exciting new development in the Bitcoin ecosystem, bringing a price-stable asset for trading, lending, yield farming and more to Bitcoin DeFi.
USDB is one of the most prominent examples of a regulated, fiat-backed stablecoin that’s quickly becoming a hot topic in the industry. Built natively on Bitcoin and fully backed by US dollars, USDB comes with a whole range of new possibilities.
Read our Bitcoin stablecoins guide to learn more about how they work, why they’re needed and what role Bitcoin-native stablecoins like USDB play in the Bitcoin ecosystem.
Bitcoin stablecoins are digital currencies native to the Bitcoin ecosystem that provide a high degree of price stability, typically via a peg to a fiat currency like the US dollar.
Most Bitcoin stablecoins are built and minted on Bitcoin Layer 2, which makes it easier to issue these types of tokens. However, it’s also possible to issue stablecoins on the Bitcoin mainnet natively as well, leading to a simpler, more streamlined user experience within the ecosystem.
The main roles of stablecoins are to act as a base currency for trading pairs, as a lending asset in DeFi and as trading capital.
By bringing de facto digital dollars to the Bitcoin network, Bitcoin stablecoins are fulfilling a pressing need that is poised to bring more liquidity to Bitcoin DeFi.
In most cases, stablecoins are backed 1:1 by collateral (typically US dollars), which is either off-chain in the case of a fiat currency or on-chain in the case of another crypto asset. Either way, the collateral ensures the price peg, so the price movements are minimal and don’t disrupt the stablecoin’s use cases.
That means, when $1 worth of a stablecoin is minted, $1 is held in reserves in a regulated bank account or in the form of another cryptocurrency in a smart contract.
When it comes to Bitcoin specifically, there are two main types of stablecoins: L1 stablecoins, which are created and function directly on-chain, and L2 stablecoins, which rely on different Layer 2 protocols built on top of Bitcoin.
Regardless of which issuance method is chosen, the collateral for the stablecoins needs to be auditable. This means ensuring that at every moment, the amount issued on-chain can be traced back to the collateral used to ensure its price peg.
Bitcoin is the biggest player out there and with good reason: as the oldest cryptocurrency, with tried and true, industry-defining security, and an enormous number of users, it’s already shown its potential through innumerable breakthroughs it has made.
Keeping that in mind, Bitcoin doesn’t necessarily need stablecoins, but with its sheer size and impact, it makes sense to add these potential use cases to the Bitcoin ecosystem as a whole.
This helps create new on and offramp avenues, simplifies usage for more traditionally inclined investors and brings USD-denominated markets onto Bitcoin.
Flipping the script, however, we could argue that stablecoins need Bitcoin: the size of the ecosystem, the number of users and the sheer, immense liquidity available make creating a stablecoin on Bitcoin a no-brainer.
This way, stablecoin issuers are taking advantage of all these perks and making sure Bitcoin users aren’t forced to look elsewhere for a pricing and payout asset at the same time.
USDB is the newest player in the Bitcoin stablecoin landscape, combining all these benefits into a single product: the familiarity of USD as the fiat backing it, with the highest industry standards set and led by Bitcoin.
USDB is regulated and trusted: it’s issued by stablecoin issuer Brale and licensed in 48 U.S. states, making it the first fully regulated stablecoin on Bitcoin Layer 1–directly on the blockchain, no extra steps along the way.
It’s set to redefine the way stablecoins interact with Bitcoin by introducing price clarity, instant and gas-free USDB <-> BTC transfers and security by design.
USDB is issued on Spark and fully backed 1:1 by US dollar reserves held by Brale, which is a fully regulated entity, making USDB well-positioned to serve both casual and institutional players.
Issuance on Spark means ease of use for everyone: one Spark account holds all your USDB, but also sats, tokens and more. For builders who want to include USDB, this also means instant access to mass liquidity and onramps already offered here.
Perhaps most importantly, USDB offers new levels of transaction speed within the Bitcoin ecosystem: all users can quickly and easily exchange USDB for BTC or any other Bitcoin-native asset.
For most, USDB presents a unique opportunity to see the value of their BTC holdings in real time, with no hidden costs that come from price changes within the minutes it takes for transactions to go through and settle.
Since most people still think in US dollars, USDB brings dollars on-chain for unmatched ease of use.
Compared to other stablecoins on Bitcoin, USDB is different by virtue of being Bitcoin-native, which means it’s built directly on Bitcoin.
Most other Bitcoin stablecoins are built on different Layer 2s, like Rootstock (RSK), Stacks and the Liquid Network. This is easier for issuers, since Bitcoin has limited smart contract capabilities.
However, limited doesn’t mean impossible, and USDB is proof of that.
Being Bitcoin-native means that USDB is directly on the blockchain, plus it’s easily exchangeable for other Bitcoin-native assets, including the biggest and most important, BTC, making exits easy and fast.
With a native token, there are no wrapped tokens, no synthetics, nothing beyond Bitcoin itself to worry about, and Bitcoin is big and secure enough to leave your peace of mind intact.
Capitalizing on Bitcoin’s decentralized nature, USDB is also fully decentralized, so your stablecoin isn’t subject to a federated multisig (which opens another attack vector for bad actors).
Finally, USDB offers unique composability: it works seamlessly with Flashnet markets, Lightning gateways and Ordinals tooling, among other things.
All of this is due to the fact that it’s coming to an already established ecosystem with powerful solutions and tools. As a value peg, USDB is uniquely positioned to open up new avenues and bring building on Bitcoin to new levels.
No, Bitcoin isn’t a stablecoin. Bitcoin’s price isn’t tied to any other asset that would stabilize it, therefore, it goes through its usual periods of volatility and movements. Stablecoins, on the other hand, are most often built so that they’re backed by fiat currencies like the US dollar, in order to ensure their price remains relatively stable.
It’s very unlikely that stablecoins will replace bitcoin, since BTC is the biggest cryptocurrency by market capitalization and by a big margin. However, stablecoins can offer use cases that BTC and other cryptocurrencies aren’t necessarily able to, like acting as a hedging tool against price movements of other assets.
The information provided on this website is provided for general educational purposes only and is in no way financial or investment advice. Certain information may have also been provided to us or prepared by third parties; these materials are provided for convenience and are not an endorsement by Magic Eden. Magic Eden is not liable for any errors, changes or amendments to such information, including any actions taken in reliance on such information.
.jpg)