In a bold move that could redefine the decentralized finance landscape, Elastos has launched BTCD, a stablecoin fully backed by Bitcoin. Announced on June 18, 2025, this innovative project seeks to create a modern digital rendition of the Bretton Woods system, positioning Bitcoin at the heart of a new monetary order.
A New Era for Stablecoins
Elastos, the brains behind the BeL2 protocol, is venturing into uncharted territories with BTCD. Unlike traditional dollar-pegged stablecoins—commonly backed by short-term U.S. Treasuries—BTCD is underpinned by Bitcoin itself. This might seem counterintuitive, given Bitcoin’s infamous volatility, but Elastos has a plan.
The stablecoin’s stability is maintained through overcollateralization, ranging from 160% to 200% of BTCD’s value in Bitcoin. “Oracles feed the BTC-USD rate each block,” explained Ahmed IJ, head of marketing at Elastos, during a conversation on Telegram. He further elaborated, “If cover falls to 110%, arbitrage may repay the debt, grab the BTC at a small discount, and erase the risk.”
This mechanism ensures that BTCD maintains its peg to the dollar, with dynamic adjustments in supply responding to market fluctuations. When BTCD trades above a dollar, holders are incentivized to burn it to reclaim Bitcoin, reducing supply and bringing prices down. Conversely, if the price dips, users mint new BTCD with fresh Bitcoin, increasing supply and stabilizing the price. This innovative approach mirrors developments in other networks, such as the Bitcoin-Based Stablecoin Network Plasma, which recently raised its deposit cap to $1B.
The Broader Vision of Bitcoin-Powered DeFi
This development isn’t just about creating another stablecoin; it represents a significant stride in the evolution of Bitcoin-powered decentralized finance (DeFi). By leveraging the security and vast reserves of the Bitcoin network, Elastos aims to facilitate decentralized activities within the blockchain ecosystem. As explored in our recent coverage of Bitcoin DeFi on Sui, the integration of Bitcoin into DeFi platforms is gaining momentum, offering new opportunities for innovation.
“The ambition is to harness Bitcoin’s robustness to secure and fund decentralized operations,” a DeFi analyst remarked. “This could potentially unlock new opportunities for innovation and stability in the crypto market.”
The move by Elastos to reimagine the Bretton Woods system, with Bitcoin at its core, reflects a growing sentiment among crypto enthusiasts who see Bitcoin as more than just a speculative asset. It could become the linchpin of a decentralized financial system, offering a stable store of value and medium of exchange.
Implications for the Crypto Market
As the stablecoin market continues to expand—projected to reach $2 trillion by the end of 2028, according to Standard Chartered—BTCD’s introduction could influence both the market dynamics and the role of Bitcoin in global finance.
While the concept is promising, it raises questions about sustainability and market acceptance. Can a Bitcoin-backed stablecoin maintain its stability amid Bitcoin’s price volatility? And how will regulators respond to this novel approach, especially given their increasing scrutiny of the crypto space?
The answers to these questions will unfold in the coming months as BTCD gains traction. Yet, one thing is certain: Elastos is pushing the boundaries of what’s possible in the world of decentralized finance, challenging the status quo and paving the way for new financial paradigms.
As we move further into 2025, the crypto community will be watching closely to see if BTCD can deliver on its promise—ushering in an era where Bitcoin is not just a digital gold, but also the backbone of a stable financial ecosystem.
Source
This article is based on: Bitcoin DeFi Project Elastos Debuts BTC-Backed Stablecoin BTCD
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
