Galoy Secures $4M in Funding as it Launches Synthetic Stablecoins
Galoy, a crypto banking and payments startup has raised $4 million to continue growing its banking infrastructure which seeks to make Bitcoin (BTC) a more stable means of payment.
One of the first post funding actions is the issuance of its Bitcoin-backed synthetic stablecoins dubbed Stablesats on the Lightning Network.
Stablesats Operational Dynamics
As detailed by the startup, the core reason for the development of the Stablesats stablecoin is “to provide an alternative to the current stablecoin infrastructure and regular-way bank integration by using derivatives contracts to create a bitcoin-backed synthetic dollar pegged to the U.S. dollar.”
The startup is optimistic that by letting the world’s largest reserve currency flow through the Bitcoin protocol, the challenges of short-term price fluctuations can be eliminated.
Galoy believes through the Stablesats tokens and its business model that Bitcoin can evolve to be a mainstream payment currency.
The startup also detailed the modalities of operation for Stablesats which can be created by using BitMEX’s perpetual inverse swap using perpetual futures contracts. This functionality will create access for users to transact with US Dollars on the Lightning Network.
“Bitcoin has brought digital transactions to previously unbanked communities across Latin America, Africa, and beyond,” said Galoy CEO Nicolas Burtey in a press release. “However, its volatility makes managing financial obligations difficult. With Stablesats-enabled Lightning wallets, users are able to send from, receive to, and hold money in, a [U.S. dollar] account in addition to their default BTC account. While the dollar value of their BTC account fluctuates, $1 in their USD account remains $1 regardless of the bitcoin exchange rate.”
The full details on how the new product works are outlined on the protocol’s GitHub page.
Galoy’s Expanding Ecosystem
Galoy’s product offerings are revolutionary, and this has been identified by prominent investors in the digital currency ecosystem who helped the firm in the funding round.
Some of these investors include Valor Equity Partners, Timechain, El Zonte Capital, Kingsway Capital, Trammell Venture Partners, and AlphaPoint.
Galoy is also powering the El Salvador Bitcoin Beach Wallet, indicating how well its technology is being adopted.
The backing Galoy received is a testament to the focus investors has for innovative open source projects as there is a perception that these are essential in building the future of Web3.0
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