**BitGo, a Cryptocurrency Custodian Backed by Goldman Sachs, Ventures into the Stablecoin Market**
On September 18, BitGo, a notable cryptocurrency custodian with backing from banking powerhouse Goldman Sachs, announced its foray into the stablecoin space with the launch of a new stablecoin pegged to the US dollar. This new digital asset, named USDS, aims to incentivize participants in its ecosystem by enhancing liquidity.
Set to debut in January 2025, USDS will be supported by a mix of short-term Treasury Bills, overnight repos, and cash reserves. The goal is to position USDS as a formidable competitor against established stablecoins such as Tether (USDT) and Circle’s USDC (USDC).
USDS will be issued by the BitGo New York Trust Company, a regulated trust entity established in 2021 under New York state law. A unique aspect of BitGo’s stablecoin is its commitment to distributing 98% of its earnings to network participants, setting it apart from USDT and USDC.
BitGo’s approach is centered on rewarding those who contribute to the network, rather than concentrating profits within the issuing entity. “Traditional stablecoins generate interest on their reserves, with 100% of that income retained by the issuer or redirected to exchanges, leaving participants with nothing,” BitGo highlighted on its USDS website.
With USDS, BitGo is introducing an innovative reward system designed to allocate up to 98% of earnings to those who bolster the ecosystem.
*Earnings model for BitGo’s USDS. Source: Usdstandard.com*
“This method guarantees that all qualifying institutions, exchanges, liquidity providers, and users are motivated to support and expand the USDS network, thereby cultivating a more inclusive and balanced ecosystem,” BitGo remarked.
### Who Qualifies for USDS Rewards?
As outlined on the official USDS website, BitGo intends to distribute rewards to any entity that can create “sufficient liquidity” and registers with the company. Once approved, participants must verify ownership of the addresses where they hold USDS through the designated USDS portal.
“These addresses will be utilized to compute daily balances and ensure an equitable reward calculation for participants,” BitGo explained.
*Comparison of USDS with USDC and USDT. Source: Usdstandard.com*
To determine USDS rewards, BitGo will implement various compensation tiers based on the amount of USDS held by each participant. Eligible participants will receive their total compensation monthly, which will be calculated according to the distribution revenue share (DRS) they have earned.
### Minting USDS: A User-Friendly Process
A significant distinction between USDS and major stablecoins like Tether and USDC is BitGo’s intention to make the minting and burning of tokens more accessible to a wider audience of qualified users.
“Once approved to join the network, users can mint USDS using USD, USDC, or USDT. Similarly, users can burn USDS to receive USD, USDC, or USDT. There are no fees for minting or burning, as BitGo will cover all associated costs,” the company stated.
While BitGo is prepared to challenge existing players like Tether and USDT, it emphasizes its commitment to maintaining market neutrality, showcasing its dedication to fostering a diverse and competitive stablecoin landscape.
### Conclusion
As BitGo prepares for the launch of USDS, the cryptocurrency community is keenly watching how this new stablecoin will reshape the dynamics of the stablecoin market and enhance opportunities for users.
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