Former CEO of Troubled Crypto Firm Creates New Stablecoin – How Does it Work?
Flex Yang, the former CEO and founder of Babel Finance, has introduced a new decentralized stablecoin backed by crypto-native reserves and an entire DeFi ecosystem built around it.
Yang claimed the Hope stablecoin blends centralized finance (CeFi), decentralized finance (DeFi) and traditional finance (TradFi) to deliver transparency and security that other so-called decentralized stablecoins lacked, he said in an interview with TechCrunch.
More specifically, the Hope stablecoin will be backed by Bitcoin and Ether reserves and would seek to maintain its dollar peg by relying on market makers and arbitrage traders selling the token at a premium when there is more demand for newly minted stablecoins and buying it at a discount when there is less demand and burning tokens.
Yang said Hope is more comparable to MakerDAO, the issuer behind the popular DeFi stablecoin Dai, but with “a series of added functionalities.” For instance, HopeConnect, one of Hope’s protocols, is a DeFi settlement and clearance application that allows users to trade derivatives across major exchanges without depositing assets on CeFi platforms.
“That means no CEX custody, no user credit risk, while bringing CEX trading experiences to DeFi. Users can access CEX liquidity in anonymous and decentralized ways."
While the Hong stablecoin may remind some people of collapsed TerraUSD stablecoin, there are some specific distinctions. For one, TerraUSD was a pure algorithmic stablecoin that relied on an arbitrage system with its own partner token, LUNA. On the other hand, Hope will leverage some elements of CeFi.
Some prominent investors have expressed support for the stablecoin. Moreover, Yang has allegedly confirmed that he will personally invest $10 million out of
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