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Recap AMA: Why does Coin98 develop CUSD? Why now?

The Coin98 CUSD launch is being discussed by the community on numerous forums, groups, and social networking sites. In order to provide accurate information and answer questions about CUSD, this article will summarize the important contents of the Coin98 AMA with the topic "WHY CUSD? WHY NOW?"

Thanh Uyen

Published Sep 23 2022

Updated Dec 02 2023

14 min read

This is a recap of the AMA COIN98 session on "WHY CUSD? WHY NOW", answering questions about CUSD. With this topic, 2 AMA sessions were held at Coin98 Dollar's Twitter Space and Coin98 Insights Youtube Channel.

Twitter Space: Mr. Le Thanh (Founder of Coin98 Finance) and Mr. Ho Minh (Head of Growth at Coin98 Labs)
Community Call Youtube: Mr. Vinh The Nguyen (CEO of Coin98 Finance).

AMA Coin98 at Twitter Space

The AMA took place on September 22, 2022 at 20:00 at Coin98 Dollar's Twitter Space with the participation of Mr. Le Thanh (Founder of Coin98 Finance) and Mr. Ho Minh (Head of Growth at Coin98 Labs). Listen to the AMA session HERE.

AMA Coin98 on Youtube Channel

The AMA took place on September 28, 2022 at 20:00 on Coin98 Youtube Channel with the participation of Mr. Vinh The Nguyen (Co-Founder of Coin98 Finance) and Jack Vi (Host from Coin98 Insights). Listen to the AMA session HERE.

Here are the most frequently asked questions about CUSD from the community.

CUSD and why it was created

Why does Coin98 issue Coin98 Dollar (CUSD)?

For the past 2-3 years, the Coin98 team has been working on the Coin98 Wallet. Currently, the wallet has over 5 million users and supports over 60 different chains, including the latest ones like Aptos and Sui.

There are numerous Layer-1 blockchains available in the crypto market. As the application layers above it grow, this is the layer that gains the most value. On the other hand, users are not loyal to any Layer-1 blockchains and are constantly shifting capital flows in search of profits. That is why Coin98 believes Cross-chain infrastructure will be the next Layer 1 in the upcoming market.

Stablecoin development will give Coin98 ecosystem an advantage because it plays a similar role to Cross-chain. In the future, the market will see many more Blockchain Layer 1 rollouts, and asset transfers between blockchains will become even more aggressive. That is why Coin98 decided to create CUSD in order to make it easier for users to transfer funds across blockchains, and to ensure that Coin98's products get the most value from its application layers and DeFi users.

At the moment, the most typical method of transferring assets from blockchain A to blockchain B is to deposit them into CEX exchanges and later withdraw them from the other chain. It is a time-consuming technique that is not suitable for inexperienced Crypto users. In response to this customer demand, Coin98 built CUSD, allowing users to seamlessly transfer assets across chains.

Learn more: Introducing Coin98 Dollar (CUSD)

Why does Coin98 not utilize USDT, USDC, and BUSD but develop CUSD?

Coin98 does not develop CUSD in order to compete with BUSD or USDC. The reason Coin98 create CUSD instead of using BUSD and USDC are:

Creating CUSD will allow Coin98 to be less dependent on application limitations.
Coin98 has a great number of DeFi partners, allowing CUSD to become a Stablecoin with a high application in DeFi.
Help the Coin98 ecosystem capture more value as CUSD has more users and features.
The CUSD will be an ideal tool for solving cross-chain liquidity issues.
In terms of convenience, users can also quickly redeem back into BUSD and USDC anytime they want.

From the early planning stage, Coin98 has already designed CUSD as a token with various features in Web3 in general and in DeFi specifically. Considering FRAX: Its entire supply is billions, yet its use cases are extremely limited. Stablecoins, in our opinion, exist to be used. Instead of merely feature-limited tokens, you can use them to trade, spend, and so on.

Coin98 team has collaborated with partners on several blockchains, and Coin98 has many opportunities to take. With a multichain perspective, Coin98 believes our ecosystem will expand substantially in the future.

When the trading volume and number of users are large enough, Coin98 may create a significant amount of revenue simply by collecting a 0.5% fee for each withdrawal. The token value will be captured substantially higher.

That is how CUSD adds value to the Coin98 ecosystem while ensuring user convenience and why CUSD was created.

How will the US government's stablecoin regulatory affect CUSD?

Following the Luna/UST event, governments have gradually paid more attention to the topic of stablecoins, and many of them have a negative view of stablecoins. An administration official informed CoinDesk that the US federal government is working with Congress on stablecoin legislation that might become law by the end of the year.

The Coin98 team is following and analyzing this concern. Coin98 supports a defined legal structure. This will provide more clarity for CUSD in assessing what it needs to do in the future.

Assuming the stablecoin law is passed, the government will give the projects two years to adapt their business models to the new legal framework. Two years in crypto is plenty of time for people to adjust. The potential new law will have little effect on CUSD. Besides, Coin98 will be constantly observing to react to potential problems.

Furthermore, if the US government formally enforces a stablecoin regulation, Coin98 will apply for a license and develop in accordance with the regulatory rule. The laws published by the government are part of the government's attempts to adopt and popularize stablecoins such as CUSD.

About the security, transparency, and legitimacy of CUSD

Is Coin98 Dollar safe?

Recently, many hacks have occurred and caused users to be concerned about security issues. The security of CUSD is one of our primary concerns.

CUSD has been audited by reputable partners

The following three factors ensure the safety of CUSD:

CUSD is a Stablecoin that can be converted and redeemed 1:1 with USDC. These are two stablecoins created by Binance and Circle that are 100% backed by US dollars (USD) via banks and are licensed, fully audited.
The CUSD Smart Contract is audited by 3 companies: Inspex, PeckShield, and SlowMist. You can view it here: https://coin98.com/audit
Supply is limited at 50 million CUSD in the beginning as this is a manageable amount if something goes wrong. Limiting overall supply also aids in risk management. When the supply of CUSD reaches its limit, the Coin98 team will decide our next move based on strict management during operation.

Is Coin98 Dollar transparent?

The conversion of USDC to CUSD takes place entirely on-chain, which the community may inspect to ensure transparency. You may find out more here:

CUSD Smart Contract on the Ethereum: 0xC285B7E09A4584D027E5BC36571785B515898246
Smart Contract holds USDC on Ethereum: 0x2C104235eb170e72A19377B07e2DfbD4d7f0C51f
CUSD Smart Contract on the Solana: CUSDvqAQLbt7fRofcmV2EXfPA2t36kzj7FjzdmqDiNQL
Smart Contract hold USDC on Solana: EBkTw1uifBWS7H99Soruic9g8TKJ8UtEKVoT9QHDjx1Z

Is CUSD the same as UST?

The CUSD mechanism is entirely different from the UST Algorithmic mechanism. Because Coin98 does not issue CUSD, there is no inflation. CUSD is a guaranteed currency that is convertible 1:1 with USDC. On-chain verification of the transformed data is available.

=> For this reason, CUSD is not the same as UST.

Each CUSD created will have 1 USDC locked in the smart contract, which users can redeem at any time. The Coin98 Team will not be able to withdraw or utilize this USDC for any other purpose. Only users have the ability to convert their CUSD to USDC.

In contrast, UST is not 100% backed by assets. When UST lost its peg, it didn't have enough assets to back it up. Users lost faith, and Terra failed as a result of the simultaneous sale of UST and LUNA.

Is CUSD at risk of losing its peg?

With the 1:1 backed mechanism of CUSD, the loss of the peg will not happen. Even if it does, it will only be a short-term peg deviation due to the impact of supply, demand, and liquidity at the time.

CUSD is a stablecoin backed by USDC (on Solana, Ethereum) with a ratio of 1:1. Users must utilize 1 USDC to convert 1 CUSD. The amount of escrow Stablecoin will be 100% reserved in the Smart Contract to ensure the value of 1 CUSD is issued.

With this mechanism, each issued CUSD always has collateral in the Smart Contract. The community can always track them to ensure the asset is always available. As a result, the value of the CUSD is constantly maintained.

What is the purpose of the USDC stored in the Smart Contract?

The amount of USDC used to mint CUSD will be sotred in the above-mentioned Smart Contract. This is visible data that can be tracked in real-time and on-chain.

According to Mr. Vinh (Co-Founder & CEO of Coin98 Finance), Coin98 promises to not change the usage purpose of the CUSD in the Smart Contract, and that all CUSD will be available for users to redeem at any time.

What would Coin98 do if CUSD is depeg?

Coin98 will follow the motto "Prevention is better than cure.". The team has prepared the following to avoid the risks associated with Stablecoins:

Audit Smart Contracts from three different parties for CUSD products.
Collaborate with security experts to investigate attack scenarios.
The total time required to develop a strategy for the CUSD is more than a year before the official launch.
Prioritizing stability, liquidity, and security over rapid capitalization growth in the beginning.
To reduce risk, limit the amount of CUSD minted to $50 million.

Furthermore, the CUSD Smart Contract includes a Withdraw function, allowing the Coin98 team to safely transfer users' liquidity to another location in the event of an attack. If this occurs, the Coin98 team will always update the community transparently and promptly.

The withdraw function, according to Mr. Vinh, is frequently misunderstood as a function that allows Coin98 to "arbitrarily" transfer user assets and is not transparently disclosed. However, this is not the case as the CUSD Smart Contract has been published, including the Withdraw function, which is only used in an emergency.

About the application of CUSD

What is the purpose of the Coin98 Dollar?

CUSD was created with the primary goal of serving as a stablecoin for the Coin98 Universe. CUSD's future purpose is to offer liquidity to support the Cross-chain solution, allowing users to have the best Cross-chain experience possible.

In the future, the Coin98 team will strive to make it feasible for users to swap all assets regardless of which Liquidity Pool the token is in, which Blockchain is used, or what the gas fee is…

With the number of DeFi partners Coin98 is working with, CUSD can be utilized across several Protocols, increasing CUSD's application. Particularly in the Coin98 ecosystem, it will be widely implemented in current products such as Wallet, and Exchange, and, in the future there will be more StarLink, and NFT Marketplace,...

How can users profit from CUSD?

CUSD is currently available on three DEXs on Ethereum, Solana, and BNB Smart Chain. Users may earn a 20% APR by farming CUSD. Farming program details:

Reward: 75,000 C98 (Total 3 Liquidity Pools)
Time: 8:00pm 19/9/2022 - 8:00pm 19/10/2022 (UTC +7)
Chain: Solana, BNB Chain, Ethereum.
DEX: Saros Finance, Baryon Network, Kyber.

Saros Finance (Solana)

Pool: CUSD/USDC (SPL)
Reward: 25,000 C98
Farming on Saros: https://saros.finance/farm

Kyber Network (Ethereum):

Pool: CUSD/USDC (ERC20)
Reward: 25,000 C98
Farming on Kyber: https://kyberswap.com/farms

CUSD Farming Tutorial: CUSD Multichain Farming - 75,000 C98 is up for grabs!

Where does Coin98 acquire the funds it needs to pay out rewards to pools? Is C98 subject to a lot of inflation?

The reward C98 in the pools at Saros, Baryon, and Kyber is to attract users' attention to the new product CUSD and to reward the community that provides liquidity at the three platforms mentioned above.

This amount of C98 is similar to the amount Coin98 uses for marketing. There is a limit of 25,000 C98 per Liquidity Pool. The initiative will end in one month. Many people think that farming in three pools at the same time will cause the price of C98 to drop, however, the total reward pool of 75,000 C98 is insignificant given the amount of liquidity C98 currently has.

You can track the CUSD capitalization via CoinGecko here.

As users grow more familiar with CUSD, it will be used and exchanged more. The CUSD Stablecoin pool will generate profit (Real Yield) and will no longer require the reward.

About the development orientation of CUSD

What is the CUSD's development model?

Currently, CUSD’s liquidity is low because it is newly issued. It will undoubtedly take time for people to get used to CUSD, understand CUSD and use CUSD. CUSD will certainly have additional applications in the future.

Nevertheless, the Coin98 team wouldn't bet on too much growth right away. Instead, the CUSD will develop "slowly but steadily." The Coin98 team will follow up to get community feedback and enhance the product based on the issues encountered.

CUSD is deployed in three Liquidity Pools on three separate chains. With an estimated 1.5M to 2.5M USD in each pool, the APY per pool will be between 5 and 10%. This is not a great figure, but it is sufficient enough to attract users and serve average investors with a trading volume of 5,000 USD to 10,000 USD.

In the future, Coin98 will release Starship - a Multichain Launchpad product. Coin98 will include CUSD in future CUSD products to increase CUSD applicability. Coin98 wants to expand gradually and consistently, observing how the community reacts and changes in response.

A product is normally used due to its features, for example, Coin98 Wallet can be used in both Saros and Baryon. Coin98 aims to develop products that can only be acquired with CUSD, such as NFTs or special assets. Coin98 will also allow users to utilize CUSD to move assets across chains easily. Users will benefit from exclusive offers and be motivated to utilize CUSD rather than USDC.

Coin98 will build our own stablecoin with high applicability in DeFi and Web3 with unlimited use cases. With the relationships Coin98 has built over the years, Coin98 will collaborate with our partners and various blockchain platforms to increase the utility of CUSD. Users will be able to exchange, use, and benefit from CUSD. It will be an excellent tool for increasing liquidity in the ecosystem. The more people utilize CUSD, the more profits are generated, and the more ways to capture value for C98 holders.

Some mentioned that the CUSD is an overprinted asset that can be inflated and depreciated, similar to the Terra UST. However, this is not the case as Coin98 does not issue CUSD. Terra UST is an Algorithmic Stablecoin and is not backed by assets, while CUSD can only be converted when USDC is locked in the smart contract.

Coin98's goal is not to issue a standard stablecoin like many others. Instead of competing and consuming a large amount of resources, Coin98 aim to design a tool that benefits both the user and the project. This will create a win-win relationship instead of playing a game where both parties lose.

Why does Coin98 Dollar not use C98 as collateral instead of USDC?

If CUSD used C98 as collateral, this would be similar to LUNA using UST as collateral. If LUNA’s price rose, there were no problems, but if LUNA’s price fell, UST would become a Stablecoin that is not entirely guaranteed by asset value.

As a result, when UST was attacked, users lost faith, creating a negative feedback cycle that caused both LUNA and UST to collapse, hence the Coin98 team does not want CUSD to incur that risk.

Initially, the CUSD Smart Contract was intended to be backed 80% by Stablecoins and 20% by C98. This will be comparable to the case where UST was 100% backed by BTC; because BTC is a low-volatility asset, the Terra team will be able to control the risk if there is a depeg.

As for CUSD, if it is 20% backed by C98, it will have a more favorable influence on C98 while also ensuring CUSD's safety because the risk is within Coin98's management.

However, after "weighing and counting," the Coin98 team opted to start with 100% collateral from USDC in exchange for stability and user safety.

Furthermore, recent regulations govern UST cases in which stablecoins are backed by assets developed by the parent corporation. Because CUSD is not currently backed by C98, it will be unaffected by the above legal issues.

Will CUSD, besides Ethereum, Solana, and BNB Chain, expand to other blockchains in the future?

CUSD will not prioritize expanding to too many chains at first. Instead, Coin98 will develop a strategy to assist CUSD in maintaining liquidity and stability.

As for the future, CUSD is attempting to integrate fully with Coin98's Multichain infrastructure, particularly SuperLink. All of Coin98's product modules will be developed in parallel until they are "ripe" and converged, at which point customers will be able to understand how Coin98's goods fit together in the bigger picture.

Until then, it will be relatively simple to expand to the new chain, similar to the current expanding wallet product. The problem is whether the new chain has enough liquidity or not. Currently, CUSD will concentrate on three major chains: Ethereum, Solana, and BNB Chain.

How will SuperLink be combined with CUSD?

In Coin98's PitchDeck issued in 2021, the team determined to develop a SuperLink product to address liquidity and user experience issues in the Multichain trend. To swap token A from chain A to token B from chain B, rather than having to consider Wallet, Asset, Chain, AMM, Bridge,... and many other time-consuming operations, users can just perform simple tasks.

SuperLink will be a comprehensive Aggregator Liquidity Network that will enable users to trade assets without having to know which chain or pool the asset is in. SuperLink will locate the pool with the highest liquidity and resolve all Cross-chain issues.

When users learn more about SuperLink, they will discover that it is a product that utilizes SpaceGate's solution - Cross-chain Bridge product - to address the issue of cross-chain token circulation, as well as CUSD's Liquidity solution. When the three products are combined, they form a complete solution.

Conclusion

All of the frequently asked questions about CUSD and the Coin98 ecosystem are answered above. You can also discover more about CUSD by clicking here.

CUSD: https://docs.coin98.com/products/coin98-dollar
Questions about Coin98 products: livechat.coin98.com