A stablecoin for the Singapore dollar just launched. Here’s what it’s about

Blockchain critics are having a field day right now, with various projects cutting staff as cryptocurrency prices plummet.

But if the past years are any indication, the bear market is probably temporary due to the cyclical nature of cryptocurrency valuations.

What’s more important, though, are the various blockchain projects under development that promise to solve the underlying issues surrounding the technology.

One of the highly touted saviors of the blockchain ecosystem is the so-called stablecoin. As the name implies, stablecoins are cryptocurrencies with stable prices. Each coin is pegged to a corresponding asset – whether it’s the US dollar, the Australian dollar, gold, or anything, really.

There are also stablecoins that stabilize their prices through an algorithm without being attached to an asset.

By being price-stable, it’s hoped that these stablecoins can be used for purposes beyond trading. The hybrid coin is supposed to combine the best features of fiat currencies and the seamlessness of a blockchain network.

See: Stablecoins are close to being a real currency, but not quite

But we still don’t know if stablecoins can live up to the hype. There has been a flowering of stablecoin varieties in the market, but only Tether, which is pegged to the US dollars, has seen significant traction (PDF download). Even so, it seems the only real use cases for stablecoins right now are related to crypto trading.

Against this backdrop comes the launch of the first Singapore dollar-backed stablecoin called SGDR (short for “Singapore dollar rate”). Created by the team behind blockchain startup Rate3, which raised US$15 million in an initial coin offering, SGDR is “a 1:1 Singapore dollar-backed stablecoin, guaranteeing users full redeemability for Singapore dollars on demand,” according to the FAQ.

The currency is only available for accredited or institutional investors at the moment as it’s in closed beta.

With so many stablecoins available to the market, should there be a need for one that’s pegged to the Singapore dollars?

Of course, there is the fact that Singapore is one of a handful of countries that received the top AAA sovereign credit rating by Standard & Poor’s. Essentially, the higher your rating, the less risky it is to invest in your bonds. By extension, the Singapore dollar is the very definition of stability.

Benjamin Ong, who recently joined Rate3 in a product management and strategy role after four years at Mastercard, tells Tech in Asia that there’s more to it than that.

Redeeming qualities