Galoy Introduces ‘Stablesats’, Bringing US Dollars to the Lightning Network
Categories: Crypto News US
GaloyIntroduces ‘Stablesats’, Bringing US Dollars to the Lightning Network
The volatility of bitcoin is the most cited criticism of ElSalvador's adoption of bitcoin as legal tender. To address this legitimateconcern, Bitcoin Beach wallet developer Galloy has released a new featurecalled “StableSets”, which allows users to send synthetic US dollars over theLightning Network. Developing countries are often considered the ones thatbenefit the most from bitcoin adoption.
However, the harsh reality is that the asset's volatility presents amaterial barrier to its adoption as a medium of exchange, as most potentialusers do not have the financial legroom to withstand its unexpected pricemoves.
The company also announced that it has raised US$4 million todevelop GalloyMoney, an open-source bitcoin banking platform, a versatile applicationprogramming interface (API) and an enterprise-ready Lightning gateway that willallow organizations to access Lightning payments. provides access. Stablesatsis able to offer bitcoin-based US dollar balances through a mechanism known asinverse perpetual swaps.
It works by pledging a user's bitcoin as collateral to anexchange to purchase derivative contracts that are used to hedge BTC under thedenomination of the US dollar. Inverse perpetual swaps are denominated in fiat,along with any gain or gain price in bitcoin. Accordingly, if the price ofbitcoin falls, or there is an unrealized BTC loss when the price of bitcoinrises, the user's dollar account has an unrealized BTC gain.
At a high level, this is what enables Stablesats to maintaina stable dollar balance without interfering with the traditional bankingsector. From a risk perspective, the main concern is inherently a counterpartyrisk, as derivatives trading necessarily takes place with a centralizedexchange, which also holds custody of the bitcoin. In recent times, it hasbecome very familiar to see exchanges getting hacked, or otherwise freezinguser withdrawals.
This exciting innovation from Galloy has the potential to facilitatewidespread bitcoin adoption, assuming the risks can be contained properly.Simple, user-friendly consumer applications led to mobile applications, andthere is no reason to believe it would be any different in the case of bitcoin.