What is First Digital USD (FDUSD)?

Introduction

Amidst the dynamic and often turbulent world of cryptocurrency, creating a hedge against market volatility and uncertainties is very important. Introducing FDUSD, the revolutionary stablecoin that recently entered the digital currency scene. A brainchild of First Digital Labs, FDUSD is more than just a fiat-collaborated digital currency; it represents a seamless fusion of stability, speed, and innovative technology, aimed at transforming how financial transactions are conducted globally.

FDUSD has the potential to streamline conventional financial operations, making remittances and payments faster, more secure, and more efficient by harnessing the power of blockchain technology. In this article, we will delve into the intricacies of FDUSD, exploring how it is poised to reshape crypto trading. Ultimately, you will be equipped to engage in informed discussions about this stablecoin.

Pioneers of First Digital USD (FDUSD)

First Digital Group Limited, headquartered in Hong Kong, is at the forefront of financial technology and committed to spearheading innovations within the finance sector. Their services include custody, administration, payroll, escrow, and restructuring. With a strong presence in Asia, they have garnered recognition from industry titans such as KPMG and HSBC, earning the prestigious title of “Emerging Giants in Hong Kong” as prominently featured in the “Emerging Giants in Asia Pacific” report of 2022.

First Digital Labs is a subsidiary of the First Digital Group that specializes in pioneering research and advancement of digital currencies. With a strong commitment to driving technological breakthroughs and ensuring secure and efficient transactions, First Digital Labs is the driving force behind the launch of FDUSD stablecoin in June 2023. Operated by FD121, First Digital Labs strives to reshape the global financial landscape by leveraging the power and stability of cutting-edge digital currencies.

What is First Digital USD (FDUSD)?

Cryptocurrency is renowned for its extreme volatility, where digital coin prices can fluctuate dramatically without warning, posing significant challenges for accurate value predictions. While this volatility can yield substantial profits for early and experienced investors, it also carries substantial risks exemplified by the dramatic crash of LUNA. This crypto coin once reached an all-time high of $119 only to plummet to an all-time low of $0.00001675. It gave credence to the emergence of stablecoins as a crucial solution to safeguard crypto assets from these turbulent price swings.

FDUSD is a digital representation of the US dollar, earning its “stablecoin” label by being pegged to the USD at a 1:1 ratio. This pegging ensures that the value of the reserve assets backing FDUSD matches or exceeds the total quantity of outstanding stablecoins. You can read about the reserve report as of August 2023 here. Supported by the Ethereum and BNB Smart Chain (BSC) networks, FDUSD is fully backed by cash and cash-equivalent assets securely held by an audited custodian and is a crucial tool in the crypto space.

In a few months of trading, FDUSD has attained a market capitalization of $390 million as of September 2023 and is available in over 16 pairs on various centralized exchanges (CEXs). Additionally, the FDUSD team’s strategic roadmap includes expansion to other blockchain networks and listings on more exchanges (on both CEXs and DEXs), which will give customers a broader range of stablecoin choices.

Furthermore, there are two distinct pathways for acquiring FDUSD. First, it’s available for key players, financial intermediaries, or professional investors who meet specific criteria determined by the team. Also, individuals can directly purchase FDUSD from First Digital Labs. On the other hand, for retail users, FDUSD is conveniently accessible through various secondary markets, including Gate.io, PancakeSwap, BingX, Nominex, and more. This dual approach ensures that both institutional and retail users can easily obtain FDUSD according to their preferences and requirements.

Use Cases of FDUSD

FDUSD offers multifaceted utility in the crypto space. Its stability makes it an ideal choice for digital remittances, providing a cost-effective and reliable means of transferring value across borders. Furthermore, it is a versatile payment solution for merchants seeking swift and frictionless payment processing.

Beyond these use cases, FDUSD can play a pivotal role in the DeFi landscape. Users can leverage it for yield farming, participation in lending and borrowing platforms, and potentially earning liquidity through these strategic investments.

How Does FDUSD Work?

For every unit of FDUSD in circulation, there is an equivalent amount of USD securely held in reserve by First Digital Trust Limited, the designated audited custodian for FDUSD. This arrangement ensures seamless redemption for users. FDUSD’s smart contract adheres to the widely recognized ERC-20 token standard and undergoes rigorous audits conducted by Peckshield to further enhance its reliability and security.

To increase accessibility, FDUSD is issued on both the Ethereum and BNB Smart Chain networks, utilizing either a Proof of Stake (PoS) or Proof of Staked Authority (PoSA) consensus mechanism. This setup ensures the immutability and transparency of FDUSD. Users also have the flexibility to incorporate FDUSD into smart contracts, enabling faster and frictionless transactions.

Benefits of FDUSD Stablecoin

FDUSD’s core principles revolve around these essential pillars: cost reduction, stability, speed, and security. Let’s take a closer look!

Cost reduction

Minimal costs are one of the standout features of FDUSD, facilitating cost-effective transactions with fees typically ranging from 0.1% to 1% on specific exchanges. However, it’s important to note that each exchange establishes its own fee structure. In contrast, traditional finance tends to enforce substantial transaction fees, often reaching as high as 2% to 5%. Overall, transacting with FDUSD offers much better cost savings.

Stability

This is perhaps the most important reason people use stablecoins: they hedge against price dips. A common strategy among traders is to convert their assets into stablecoins when anticipating a bear market in a bid to preserve the value of their holdings. Stablecoins give traders this opportunity.

Speed

Another standout feature of FDUSD is its impressive transaction speed. Conventional financial processes often involve time-consuming processes, such as relying on intermediaries like banks and credit card companies to facilitate transactions. Additionally, the intricate nature of traditional financial systems, encompassing multiple stages and stakeholders, further contributes to prolonged transaction timelines, sometimes lasting up to 1–3 days. In contrast, FDUSD ensures lightning-fast transaction processing; for example, the BNB chain handles up to 2,200 transactions per second.

This remarkable speed and efficiency are achieved through the integration of state-of-the-art technology. Thanks to this, merchants can seamlessly accept FDUSD payments, with funds deposited into their accounts within seconds. Traders can swiftly engage in cryptocurrency transactions on exchanges using FDUSD, completing the process within seconds. Interestingly, users can conveniently send FDUSD to recipients worldwide in a matter of seconds.

Programmable

FDUSD, being programmable, allows for the implementation of smart contracts and automated functions within the blockchain ecosystem. This feature lets it use smart contracts to automate tasks on the blockchain, such as escrow services, decentralized exchanges, and various financial agreements.

Users can set conditions for releasing funds, automate recurring payments, and develop intricate financial products, while traditional payment systems often involve manual intervention and various intermediaries for complex transactions. FDUSD’s programmability reduces the need for middlemen and streamlines the transaction process, leading to faster and more cost-effective operations.

Security of Assets (SAFU)

The security of assets for FDUSD users is paramount. To guarantee this, FDUSD’s assets are held in fully segregated bankruptcy-remote holding structures. This safeguards the assets from unforeseen financial turbulence, ensuring the coin’s stability. Additionally, First Digital Trust Limited, an independent public trust company headquartered in Hong Kong, plays a pivotal role in ensuring the seamless protection of assets and adherence to regulatory compliance, fostering investors’ confidence and trust within the ecosystem.

Redeemable

The redeemable nature of FDUSD implies that users can convert their digital tokens to traditional fiat currency at any time. This builds great trust and flexibility in the user, knowing they can always convert their holdings back to a stable, widely recognized fiat currency if needed. Unlike many mainstream digital payment systems that may limit fund redemption or involve lengthy processing times and bureaucracies.

Potential Risks of FDUSD

In light of recent events like the LUNA crash and the de-pegging of UST (Terra blockchain stablecoin), it’s essential to acknowledge the risks involved in FDUSD to form a balanced perspective.

Regulatory Uncertainty

Stablecoins operate in a rapidly changing regulatory environment, which can lead to uncertainty and potential legal challenges.

Price Volatility

While stablecoins aim for stability, there’s always a risk that the underlying assets may fluctuate in value, affecting the stability of the stablecoin itself.

Competition

The stablecoin market is highly competitive, and new entrants can challenge existing stablecoins.

Counterparty Risk

Some stablecoins are backed by third-party institutions, and if these institutions face financial troubles, it could impact the stability of the coin.

Technology Risks

There have been instances of blockchain-related hacks and security breaches, typically affecting applications and platforms built on the blockchain rather than the underlying technology itself. These breaches often target cryptocurrency exchanges, wallets, and decentralized applications (DApps). A notable example is the Deus Finance security breach, resulting in the loss of over $6 million in its stablecoin, DEI, on May 5, 2023. The attack was linked to a vulnerability within the BNB Smart Chain (BSC), and a bot played a key role in the hack, leading to a loss of more than $1.3 million.

Is First Digital (FDUSD) a Good Investment?

FDUSD may not have achieved the same level of exchange listings as more established stablecoins like USDT and USDC, which could be attributed to its relatively recent introduction to the market. However, it has shown significant growth, with its market capitalization reaching $462 million in just a few months of trading, according to CoinGecko statistics, indicating its growth potential. Also, recent developments, such as Binance’s decision to phase out BUSD, may influence the increased adoption of FDUSD.

Furthermore, FDUSD’s whitepaper outlines a strategic vision that includes forming partnerships with various stakeholders. These partnerships include exchanges to enhance accessibility, payment processors to encourage merchant adoption, wallet providers for user convenience, and collaboration with DeFi projects to facilitate decentralized lending, borrowing, and trading. These plans provide insights into the team’s objectives, and if they can deliver on these aspirations, especially with the support of Binance, FDUSD’s prospects appear promising.

Crucially, its collateralization with USD makes FDUSD a more secure option than algorithmic stablecoins. As long as it maintains an equivalent amount in cash or near-cash assets in its reserve, this stability could encourage wider adoption. Nonetheless, it’s essential to emphasize that this analysis of FDUSD’s potential is for informational purposes and should not be considered investment advice. Therefore, do your own research and seek financial expert guidance before making any investment decisions.

How to Own FDUSD

You can buy FDUSD from notable centralized exchanges. For example, Gate.io offers traders different trading pairs: To own the token, create a Gate.io account, and complete the registration process. Also, you need to fund your spot trading wallet and go through the steps to buy FDUSD.

Take Action on FDUSD

Check out FDUSD price today and start trading your favorite currency pairs:

• FDUSD/CNY
• FDUSD/EUR
• FDUSD/GBP