The other day, I talked about corrections and possible ways of mitigating your risk if the volatility of double digit corrections in a 24 hour period for Bitcoin's price puts fear in your heart. One of the ways mentioned was to use "stable coins", the price of which are designed to be pegged to a fiat currency and, if done properly, are actually backed 1 to 1 by a fiat currency. I heard about a stable coin backed by the Great British Pound that can offer double digit interest rates on Celsius which peaked my interest from @chekohler called TrueGBP or TGBP for short.
The Celsius app points towards a company called TrustToken that is "100% collateralised", meaning they can't just mint new stablecoins for the sake of it. Instead, they will only mint a stablecoin if they have received fiat. I was still a little unsure so had a search to see if there had been any coverage of TrustToken and would you believe it, CoinBureau reviewed their stablecoin offerings and reviewed TrustToken as a company too, which put my mind at rest. There's also a lot of Reddit forums and TrustToken's customer service is pretty decent if you have questions - more info about their stable coin offerings here.
How To Get TGBP
As far as I can tell, TrustToken is the only place where you can mint/buy their GBP backed stablecoin, called TrueGBP or TGBP, directly. If you wanted to, you can use Uniswap to get some off the market as it pairs with ETH but as we all know, fees are a big thorn in the side right now. I did try getting TGBP from Uniswap and quickly saw $100 worth evaporate in front of my eyes with fees!
If you're looking for the direct route then you'll need to set up an account with TrustToken, which, as you might expect by now, you have to go through KYC for Anti-Money Laundering (AML) purposes as the company is based in US and so has US jurisdiction. Obviously, this will probably put people off so if you can handle the fees and are good with accounting for those taxable swapping events, use Uniswap.
Once you're set up on TrustToken, you'll need to provide an ETH address as the stablecoins are ERC20 tokens that are minted direct to your ETH wallet. After that, send your GBP if you want TGBP (but if you want their other stable coins, you'd send the relevant fiat currency like CAD, AUD, USD and HKD) and then, once it's all processed, you'll get notified by email that it was a success.
Check your ETH wallet address that you provided and you can then do whatever you want with it!
HODL Or Earn Interest?
For me, I'd like to earn interest and as my favourite lending platform Celsius offers at least 10% interest on TrustToken issued stable coins, I'm all about earning that compound interest. Why? Well, I did cover the power of compound interest in a recent post that showed examples of how you can get your tokens working for you just by holding them in a lending/interest earning account. Over the course of 10, 15, 20 years, you can really see how the compound interest just goes exponential and gives you something to aim for in the future - it's like HODL on steroids lol.
Of course, you're not in control of your keys with lending platforms and so the whole "not your keys, not your crypto" thing comes in to play. However, I've been keeping in the loop with developments on Celsius it seems like they will be launching their own community "insurance" which would cover your cryptoassets in case something bad happens.
Depends really on how you feel and whether you're new to crypto or more seasoned but I'll let you conduct your own research as I'm not a financial advisor and this isn't financial advice, obviously!
What's your approach to stable coins? Do you think they are funny money or a useful way to mitigate risk and build your portfolio? Let me know in the comments below!
Take care
Nicky
Deposit $200 in your first transaction
We both get $30 in BTC
Earn compound interest