What is USDB (USDB)?

TLDR USDB is a multi-chain stablecoin combining Bitcoin's security with dollar stability, designed for decentralized finance (DeFi) and cross-border transactions.

1. Bitcoin-backed stability – Uses proof-of-burn and arbitrage to maintain its $1 peg, backed by Bitcoin reserves.
2. Layer-2 scalability – Operates natively on Bitcoin’s Spark layer-2 and XRP Ledger, enabling fast, low-cost transactions.
3. Regulated reserves – Some iterations hold U.S. Treasury bills or government bonds for regulatory compliance.

Deep Dive

1. Stability Mechanism

USDB employs a proof-of-burn mechanism, where Bitcoin is permanently removed from circulation to mint new USDB tokens. This ties its value to Bitcoin’s scarcity while arbitrageurs correct price deviations from $1, as seen in its design. Unlike algorithmic stablecoins, this hybrid model aims to reduce volatility without relying solely on fiat reserves.

2. Cross-Chain Functionality

USDB operates on multiple blockchains:
- Bitcoin’s Spark layer-2 – Enhances Bitcoin’s utility by enabling stablecoin transactions natively, avoiding cross-chain risks (source).
- XRP Ledger – Facilitates remittances in Latin America with sub-5-second settlements, backed by U.S. and Brazilian bonds (source).

3. Regulatory Compliance

Recent versions prioritize transparency, with reserves audited by firms like KPMG. For example, Braza Group’s USDB on XRP Ledger holds government bonds, aligning with Brazil’s upcoming crypto regulations and MiCA standards in the EU.

Conclusion

USDB merges Bitcoin’s robustness with stablecoin practicality, serving both DeFi and traditional finance. Its adaptability across chains and focus on compliance position it as a bridge between crypto and regulated markets. Will its multi-chain approach withstand fragmentation risks as adoption grows?