Elastos Introduces Bitcoin-Backed Stablecoin
Date: 2025-06-19 Author: Henry Casey Categories: CRYPTO PAYMENTS
The development team aims to recreate a “digital version of the Bretton Woods system,” a historic agreement that pegged the dollar to gold and ensured the stability of the global financial system after World War II. Elastos emphasizes that in their concept, Bitcoin replaces gold, serving as the basis for a new financial model.
Unlike traditional stablecoins backed by fiat currencies or short-term US government bonds, BTCD is based on a highly volatile asset — Bitcoin. To smooth out exchange rate fluctuations, the project uses an overcollateralization mechanism, which ranges from 160 to 200 percent of the value of the issued tokens. According to Elastos representatives in an interview with CoinDesk, this helps minimize the risks of sharp price changes.
The BTCD to dollar rate is updated with the help of oracles with each new block. If the collateral level drops to 110%, arbitrage traders get the opportunity to pay off the debt and buy back the “digital gold” at a discount, eliminating the risk of further fluctuations. Thus, the value of the token is regulated algorithmically through the issuance and burning of coins depending on supply and demand.
The market capitalization of the stablecoin sector currently exceeds $ 260 billion. As for decentralized applications (dApps) based on Bitcoin, their combined TVL (total value locked) reaches $ 6.41 billion, which places this segment in third place in terms of volume in the DeFi Llama rating after the Ethereum and Solana ecosystems.
The largest BTCFi platform is Babylon Protocol with a TVL of the restaking service of $4.9 billion. It is also worth noting the initiative of Charles Hoskinson, the founder of Cardano, who proposed to allocate $100 million in ADA tokens from the project's reserves to purchase bitcoins and stablecoins, which can further stimulate the development of this direction.
Thus, the launch of BTCD by Elastos is an important step in the development of stablecoins based on bitcoin and can become a new tool for digital financial stability based on crypto assets.
