What is First Digital USD
First Digital Group Limited, a prominent player in the financial technology sector, has pioneered innovations in finance, with a strong focus on custody, administration, payroll, escrow, and restructuring services. Their subsidiary, First Digital Labs, is dedicated to advancing digital currencies, leading to the launch of FDUSD stablecoin in June 2023.
FDUSD is a stablecoin designed to address the extreme volatility in the cryptocurrency market. As a digital representation of the US dollar, it is pegged at a 1:1 ratio, ensuring stability by backing each token with an equivalent amount of USD held in reserve. Supported by the Ethereum and BNB Smart Chain networks, FDUSD operates under the oversight of FD121 and is fully backed by audited reserves, creating a secure tool in the crypto space.
How Does FDUSD Work?
For every unit of FDUSD in circulation, an equivalent amount of USD is securely held in reserve by First Digital Trust Limited, the audited custodian. FDUSD operates on the Ethereum and BNB Smart Chain networks, utilizing either Proof of Stake (PoS) or Proof of Staked Authority (PoSA) consensus mechanisms. Its programmability enables the implementation of smart contracts, automating tasks within the blockchain ecosystem.
Market Presence and Accessibility
Within months of trading, FDUSD has achieved a market capitalization of $390 million as of September 2023. It is available in over 16 pairs on various centralized exchanges (CEXs), with plans to expand to other blockchain networks and listings on both CEXs and DEXs. The dual acquisition approach caters to both institutional and retail users, ensuring widespread accessibility.
Use Cases and Benefits of FDUSD
FDUSD serves multiple purposes in the crypto space. Its stability makes it ideal for digital remittances and provides a reliable payment solution for merchants. Additionally, FDUSD plays a crucial role in the DeFi landscape, facilitating yield farming, lending, borrowing, and liquidity provision. Here is a list of the benefits of using FDUSD:
- Cost Reduction: FDUSD offers minimal transaction costs, ranging from 0.1% to 1%, providing significant savings compared to traditional finance.
- Stability: Hedging against price volatility, FDUSD preserves value, allowing users to convert assets during bear markets.
- Speed: With lightning-fast transaction processing, FDUSD ensures swift payments and efficient cryptocurrency transactions.
- Programmable: FDUSD’s programmability facilitates smart contracts, reducing the need for intermediaries and streamlining transactions.
- Security of Assets (SAFU): FDUSD’s assets are held in segregated structures, ensuring stability and compliance with regulatory standards.
- Redeemable Nature: Users can convert FDUSD to traditional fiat currency at any time, providing flexibility and building trust among users.
- Issuer and Reserves: FDUSD is issued by FD121 Limited, a subsidiary of First Digital Limited. Reserves are held by First Digital Trust Limited in segregated accounts, ensuring a 1:1 peg and backed by cash or highly liquid assets.
