Blockchain startup Stably has raised $500,000 in a seed funding round for its "stablecoin" project.
Led by venture capital firm Beenext and accelerator 500 Startups, an early investor in bitcoin startups, the funds will contribute to Stably's efforts to launch a fiat currency-backed stablecoin with "organic price stability and high reserve transparency."
Angel investors – drawn from both Canada and the U.S. – who backed the round include Raaid Hossain, Jeffrey Roh, Tony Chen and Randy Hana.
The company was founded in 2017 and its funding round commenced in January. Its project represents one of a growing number of stablecoins, which are designed to avoid volatility by adjusting their supply with the rise and fall of prices and pegging them to some kind of underlying asset.
As a result of their purported volatility-resistant engineering, stablecoins have also been touted as a means of bolstering the commercial case for blockchains.
"The blockchain economy desperately needs a reliable and price-stable medium of exchange as well as store of value in order to evolve and scale beyond its current speculative state," Stably co-founder Kory Hoang wrote in a blog post.
The company plans to launch its coin on both the Stellar and ethereum blockchains, and said it may consider operating on additional platforms in the future.
Hoang said in the blog post that he envisions the coin as a rival to the currently dominant stablecoin, Tether.
"Tether's first-mover advantage has paid off handsomely, but their dominance probably won't last forever as more stablecoins start coming onto the scene," he wrote.
The company outlined several measures for transparency in its statement, including "publicly verifiable on-chain transactions" and "quarterly reserve and transaction audits," among others.
Critics have also pointed out that stablecoins are not decentralized, diminishing their appeal for some. However, Hoang argues that this is necessary to achieve price stability.
"Our stablecoin derives its organic price stability from a centralized reserve of hard currency (e.g. Canadian or U.S. dollars) in the real world," he wrote, arguing further:
"While it may be true that this removes many aspects of decentralization, it is impossible for a stablecoin to possess organic price stability without actually being backed by a price-stable asset such as hard currency."
Stack of coins image via Shutterstock