What is FDUSD?
FDUSD (or First Digital USD) is a new stablecoin issued by FD121 Limited – a subsidiary of First Digital. FDUSD was launched after Hong Kong’s long-awaited licensing regime for virtual asset trading platforms went live on June 1, 2023.
According to First Digital, FDUSD is a 1:1 USD-backed stablecoin. FDUSD reserves are held by financial institutions controlled by First Digital. FDUSD is a programmable stablecoin enabling the execution of financial contracts, escrow services, and insurance without intermediaries.
What is First Digital?
Established in 2019 in Hong Kong, First Digital (or First Digital Trust) a technology-driven financial institution powering the digital asset industry. It aims to connects users from the traditional market to the crypto market by using Web3 technology to tokenize, custody, and trading assets.
The most prominent product of First Digital is First Digital Mastercard, which offers features and benefits of a standard credit card. It allows users to make online and offline payments globally in a secure, flexible and convenient way.
With its efforts, First Digital was recognized as one of the emerging giants in Hong Kong in KPMG and HSBC’s ‘Emerging Giants in Asia Pacific’ Report 2022.
Why was FDUSD created?
Hong Kong is an international financial center, featuring a developed banking system and professional financial services. Blockchain and crypto companies in Hong Kong has also created a stable technological infrastructure.
On June 1, 2023, Hong Kong was one of the first Asian countries to adopt “Guidelines for Virtual Asset Trading Platform Operators”, aiming to legalize cryptocurrencies. It sets out detailed procedures to guide them on how to apply for a licence as well as the relevant ongoing notifications and other applications required of them after obtaining a licence.
With clear regulation and favorable infrastructure, First Digital has launched FDUSD stablecoin. First Digital Labs said that it has worked with agencies to ensure FDUSD meets Hong Kong’s regulatory framework.
FDUSD use cases
Like other stablecoins, FDUSD was born to address users’ need for stable assets since its value is pegged to the U.S. dollar at a 1:1 ratio. FDUSD is not only a bridge between the traditional market and the crypto market, but also used to store, transfer value, make payments or interac with DeFi. FDUSD holders can also increase profits by borrowing, lending, farming, etc.
In a nutshell, FDUSD offers various uses cases:
Remittances: FDUSD can be used for fast and cost-efficient cross-border transactions, providing an economical option for remittance services. Compared to traditional bank wires or transfers, stablecoins like FDUSD have much lower fees and transactions are completed more quickly.
Payment solutions: FDUSD can be used by businesses and individuals to process payments with lower fees and faster processing.
Hedging against price volatility: FDUSD can be used as a hedge and an anchor of stability during periods of volatile price movements. Investors can convert other crypto into stablecoins like FDUSD to lock in gains or protect their investments from extreme market swings.
Convert value: FDUSD is tradable and convertible into other cryptocurrencies of equal value with low transaction fees.
Usages in DeFi: Similar to other stablecoins, FDUSD can be used throughout various DeFi applications to do yield farming, lending, borrowing, and staking.
Escrow: Users can deposit FDUSD as collateral for margin operations, to limit price fluctuations as well as security risks.
Challenges FDUSD faces in the stablecoin market
Despite being backed by Binance and meeting Hong Kong’s regulatory framework, FDUSD still faces challenges.
One of the biggest problems facing FDUSD and other stablecoins is the ability to keep their peg. FDUSD’s pegging mechanism depends on its reserves’ being able to support the redemption of FDUSD at par at any given time for all redemption demand. Therefore, the safety and liquidity of the reserve assets is key to FDUSD’s stability.
FDUSD’s reserves are held in custody by a third-party, and can vary from highly liquid to illiquid assets. There are risks from the potential failure of the issuer to fulfill the claimed stablecoin features, including its nominal value and timely redemption at par.
Binance supports FDUSD
Although FDUSD is a new stablecoin with a small market cap, it gets a lot of support from Binance. Previously, Binance USD (BUSD) was a stablecoin that operated mainly on BNB Chain and backed Changpeng Zhao – CEO of Binance.
However, since February 2023, after the SEC repeatedly sued Paxos – the issuer of BUSD, Binance has been trying to separate itself from this stabelcoin and cooperate with other stablecoins like TUSD and now is FDUSD.
Binance listed FDUSD on July 26 with zero trading fees to incentivize users to use this stablecoin. Some investors said that Binance’s support makes FDUSD a possible alternative to BUSD, in the same way that Binance backed TUSD.
In the past, Binance has supported TUSD with zero trading fees, helping the stablecoin’s market cap to skyrocket, from 500 million TUSD to 3 billion TUSD. Therefore, the fact that Binance supports FDUSD with zero trading fees also helps this stablecoin to quickly develop in near future.
Besdies zero trading fees, Binance also allows users to use or purchase FDUSD on Auto-Invest and join the launchpool by staking FDUSD.
Token name: First Digital USD
Blockchain: Ethereum, BNB Chain
Token Standard: ERC-20, BEP-20
- ERC-20: 0xc5f0f7b66764F6ec8C8Dff7BA683102295E16409
- BEP-20: 0xc5f0f7b66764F6ec8C8Dff7BA683102295E16409
Token type: Stablecoin
Total Supply: 305,783,747 FDUSD
Circulating Supply: 305,783,747 FDUSD