Trying Out GBP Backed Stablecoins
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
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Never bought into ETH so sorry cannot comment as to hodling or not, however very interesting to learn of people linking this to an insurance of sorts.
Are you going to give someone access to your private stash? Just kidding, it is interesting not sure how this will be implemented into the private world of blockchain.
@tipu curate
I'm more a "try things out and see how it works" person so if it works, great! If not then at least I know!
Haha not much of a stash but looking forward to how elements of the traditional sector will integrate digital tokens and products in to their services. Love it!
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In early years I tried a couple, some you win some you lose, an attitude one has to adopt since not all will make the long run. One coin is still slowly building after terrible start, the coder is a person I trust.
Always learning, surprised at how some are weaving tokens into the blockchain, new developments keep one on their toes.
Yeah, hard to know who to trust but wise advice as always - there's so many exciting things happening in this new world, it makes you dizzy!
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i wonder: why not simply placing a stop limit in case the trade "goes south" (almost literally hah) instead of "hedging"? because this is quite common in the regular stock market...
I'm not planning on selling myself but just exploring stable coins as another alternative to earn a bit on the side. I'm sure there's different approaches people will prefer and stop losses are very much an option. I try to stay off exchanges for an extended period if I can help it though!
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Very interesting. I am still kind of learning about all of this DeFi stuff. I started using the Diesel pools the other day, but I can't figure out where my tokens that I earn are going. Nothing has really showed up in my wallet yet. It is all very confusing!
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I have heard about diesel pools but have absolutely no idea how they work. The DeFi stuff and pools and whatnot are a little beyond me so sticking to a "slightly safer" option but will probably play around - let me know how you get on!
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Okay, I am just trying to find someone who can answer my questions at this point. There doesn't seem to be an FAQ or anything. Maybe someone will write a post about them eventually.
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I get TGBP through Crypto.com
Stablecoins are a good way to mitigate risk.
One benefit is having emergency savings. If you suddenly need cash, stablecoins can readily be converted without tax implications. One of the problems with other cryptos is that you lose out on capital gains or lock in a loss if you are forced to liquidate suddenly. For this reason, stablecoins can act as a buffer for when you need cash.
Stablecoins can also serve to hedge against currency fluctuations. For example, I could buy TUSD and TGBP. Depending on where I want to spend, I can tap into either one of those. Interest would be earned in each currency. If the dollar is weaker, I spend TGBP. If the Pound is weaker, I spend TUSD.
Crypto.com offers 3 month, 1 month, and flexible deposit terms. The 3 month and 1 month terms work like CDs or bonds. The flexible term acts like a money market account.
One final advantage that stablecoins offer is one against volatility of your overall crypto portfolio. You want some stable component to help smooth out the wild fluctuations of your portfolio. This helps lock in gains and helps keep you from freaking out to see your investments fluctuate wildly.
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Ah I did read about Crypto.com offering it but wasn't sure if you minted them there or just bought whatever supply they had.
Stablecoins are still considered a crypto asset here in the UK so would need to see what the tax implications are here should earning stablecoins and interest etc becomes significant.
But definitely agree with the stability side of it and if you want to have that with your crypto portfolio then worth keeping a core of it in stablecoins so you don't have sleepless nights, which are quite common in crypto!
Thanks for sharing your experiences of TGBP and stablecoins 😀
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It's enough to make your head spin isn't it!?
Which stable coin?
I like the fact that this is audited, I don't like given away my crypto to celcius to earn interest
Funnily enough, stable coins are supposed to be easier to decipher but there's so many of them, take your pick!
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A mix is best!
Oh... watch out for USDr - the Rune stable coin. Coming shortly to a DEX near you.
Haha, it's like the pick n mix section for stablecoins! Wonder how many we'll have by the end of the year!