Stablecoins have become a massive part of the crypto market because they are backed by real assets, such as the rand or the US dollar, rather than highly volatile crypto assets such as Bitcoin and Ethereum.
One of the latest additions to the SA crypto market is ZARP, a stablecoin backed 1:1 by the rand, adding another quiver to the armoury of traders seeking escape from volatile crypto assets.
Of the top 10 crypto assets ranked by market cap, two are stablecoins: USD Tether (USDT), which has a market cap of $74 billion, making it the fourth largest crypto asset, and USD Coin (USDC), which is ranked as the eighth largest crypto asset, with a market cap of $38 billion.
The reason these stablecoins have become so dominant is that they offer refuge from the notorious volatility of crypto assets like Bitcoin, which dropped nearly 50% after peaking above $63 000 in April this year – though it has since recovered these losses.
Stablecoins like ZARP mimic the rand and use many of the same technologies as Bitcoin, like the blockchain to record and validate transactions, and cryptography to ensure transactions are secure.
There are advantages and disadvantages to stablecoins: while they are pegged to more stable assets such as the rand or US dollar, they cannot easily be used for everyday purchases, without converting them to fiat currencies and incurring the relatively high costs that come with that.
OVEX is the first exchange in the world to offer ZARP. Explains OVEX CEO Jon Ovadia: “The big advantage of ZARP is that you can switch out of Bitcoin (BTC), Ethereum (ETH) or other crypto assets if you believe the market is due for a correction or is entering a period of volatility and uncertainty. You can sell your cryptos and switch into ZARP without having to leave the crypto-sphere. Many crypto investors and traders prefer to sit on the sidelines during periods of volatility before re-entering the market. One way to do that inexpensively is by parking profits in a stablecoin like ZARP, without incurring the costs of converting those profits into fiat rands. A major advantage of ZARP is that it is verifiably backed by rands and is audited by the Kempen Group.”
ZARP is also a convenient on-ramp to decentralised finance (DeFi) exchanges and applications where investors are able to earn interest, borrow, lend and transact outside of the traditional financial system.
DeFi has become one of the fastest growing financial markets in the world, accounting for more than $110 billion in ‘locked’ value, up from virtually zero in the last three years.
ZARP is one of several stablecoins offered by OVEX. Others include USD Tether (USDT), True USD (TUSD), and USD Coin. These stablecoins are backed 1:1 by the US dollar.
OVEX offers a range of stablecoins backed by different fiat currencies, including the Swiss franc, euro, Australian dollar, Sterling and Japanese yen.
“The reason we have decided to offer such a wide range of stablecoins is because this is what our clients are asking for,” says Ovadia. “Some people like to switch out of Bitcoin or Ethereum into a euro-backed stablecoin or a Swiss franc-backed stablecoin because they perceive these as less volatile than the US dollar or Sterling. So we have decided to cover as many bases as possible and offer a wide range of stablecoins, which will become an even larger part of the crypto market going forward.”
More than 50 cryptos to choose from
OVEX has more than 50 cryptos that can be purchased on its RFQ (Request for Quote) page. The selection includes the larger cryptos such as Bitcoin, Ether and Solana as well as some smaller ones that have outpaced the broader market in the course of 2021.
Brought to you by OVEX.
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