Much is said about using stablecoins to protect investors from volatility or act faster when buying another crypto asset. But another important use of stablecoins usually sits aside: access to international liquidity.
The Brazilian’s trader life is not easy for his crypto asset trading when it comes to market liquidity. He is obliged to resort to international exchanges when he wants to conduct high-volume crypto asset trades on exchanges. Generally, Brazilian companies have timid liquidity in the order book. The lower the “depth of the book”, that is, the liquidity verified on the platform, the worse the average purchase price of a given digital asset will be. And with a high average price, the worst will be the expected return of a given trade.
However, to access an international exchange’s liquidity, the trader needs to buy bitcoin or another crypto asset (such as a USD stablecoin) with reals. Only then can he trade this BTC or stablecoin for the target digital asset on the international platform. However, in addition to having brutal volatility, bitcoin’s reference price is denominated in dollars, which adds a high complexity to the trade itself and its subsequent monitoring due to the numerous variables present.
That’s where the Brazilian stablecoin come into play. For example, through BRZ, the trader can access the liquidity of an international platform with a token that emulates the value of the Brazilian currency, and as a consequence, they can go shopping on the international exchange with “reais”. It makes it easier to control their trades and gives access to a more competitive average price.
The impossibility of having a balance in reais outside the country is due to the Brazilian currency feature. Since the real is an NDF (Non-Deliverable Forward), no natural or legal person can have an account balance in reais outside Brazil. And the idea of the BRZ is to have emulated the balance in Brazilian real on platforms outside the country, whether this platform is an exchange or a marketplace, where you offer goods or services, or even an internationally issued credit card.
Stablecoins allow international payments at competitive prices
Stablecoins also allow a lower cost on international payments. It is because their conversion to the dollar is priced closer to that of the commercial dollar.
And BRZ fulfills this role as a bridge between the Brazilian market and the entire global market, thus connecting the Brazilian market, especially the consumer market, to an offer of products and services to which, until then, it had no access.
Besides, there is also the benefit of access — with less volatility – crypto assets available only on exchanges based in other countries — as is the case with most of these platforms.
When you access another cryptocurrency using bitcoin, it is like you take a volatile asset and trade for another even more volatile one. And keeping up with this trade is a much harder thing to do. That is why you use stablecoins.