Element Zero’s New Stability Protocol Can Potentially Eliminate Volatility Completely

Amy Mathews  |

Stability is a new protocol developed as part of the Element Zero Network, aiming to address a common problem on not just the cryptocurrency market, but the financial one as a whole – volatility. The new Testnet phase of the protocol is reportedly now complete, allowing users to experience the impact of the network on a typical financial system.

Background

This is not the first time we’re hearing about this technology, as Element Zero was introduced about a year ago and proposed as a strong candidate for resolving the current problems with volatility on the stablecoin market. The network aims to create a whole new generation of stablecoin, one that’s not susceptible to volatility at all, and to this end, the developers have been studying the current state of the financial market for a while.

A New Approach

The network relies on a completely new approach. At the moment, there’s a heavy reliance on backing a stablecoin with real currency, or some other type of physical asset. This has various limitations and can even lead to problems in the long run, because it relies on the assumption that the market will always continue to trade the coin at a stable value. Element Zero uses a new two-way smart contract to ensure that the coin remains as stable as possible in the market.

Dealing with Volatility in the Long Run

The company aims to completely eliminate volatility in the long run, which can be great for certain modes of operation that rely on more stability and lower fluctuation. Using stablecoins as an internal trading tool within certain organizations and industries is a good example of that, and we’ve already seen some efforts in this direction. Element Zero has made it even easier to implement something along those lines.

Maintaining Stability

This brings us to the final point – it will be easier to maintain that state of stability for the future, rather than simply achieving it once. This is the main difference between Element Zero and other attempts we’ve seen to address the volatility problem in the past, and it’s the main reason why the platform has seen so much attention from multiple sides of the industry. Many in the market are looking to it as a solid candidate for resolving many of the problems of stablecoins in their current state.

All this relies on heavy usage patterns, however, in order for the developers to collect enough information about the viability of their idea. It’s important for anyone who has an active interest in the stablecoin market to check out new solutions like this one. It’s not just about the perks of being an early adopter. Helping steer these developments in the right direction is important for everyone who believes that they will be in a position to gain something from them in the future, and in the current environment, almost anyone can get on board.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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