500 Startups Backs $500k Seed Round for Stablecoin Project

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."

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.

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.

Critics have also pointed out that stablecoins are not decentralized, diminishing their appeal for some.

"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."

CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.