Karla Barker 
Funding Round Details
Standard Money, the company behind the BNB Chain-based stablecoin USDsd, has secured $8 million in a strategic funding round. The investment was led by Yzi Labs and included participation from several major cryptocurrency exchanges and investment firms. Gate.io, Crypto.com, and Animoca Brands all joined the funding round, according to an announcement shared with CoinDesk on Monday.
This funding represents a significant vote of confidence in Standard Money’s approach to algorithmic stablecoins. The company plans to use the capital to support its mainnet rollout and expand both liquidity partnerships and global operations. For a project working in the algorithmic stablecoin space, having strong exchange backing could be crucial for maintaining liquidity and stability.
Understanding USDsd’s Approach
USDsd is described as a yield-seeking algorithmic stablecoin that’s based on Tether’s USDT, which remains the world’s largest stablecoin by market capitalization. The algorithmic approach means the stablecoin maintains its peg to the underlying asset through smart contracts and economic incentives rather than direct fiat backing.
What makes USDsd different from some other algorithmic approaches is its yield-seeking nature. This suggests the protocol might automatically deploy funds to generate returns while maintaining the stablecoin’s peg. It’s an interesting approach, though one that comes with its own set of risks and complexities.
The Algorithmic Stablecoin Challenge
Algorithmic stablecoins have a complicated history in the crypto space. For many people in the industry, the term immediately brings to mind the Terra-Luna ecosystem collapse in 2022. That event was triggered when TerraUSD (UST), another algorithmic stablecoin, lost its peg to the U.S. dollar, causing a catastrophic domino effect across the entire ecosystem.
That collapse wiped out billions in market value and left many investors skeptical about the viability of algorithmic stablecoins. The memory of that event still looms large over any new projects in this space. Standard Money will need to demonstrate that their approach is fundamentally different and more resilient than what came before.
Market Context and Future Prospects
The stablecoin sector has been experiencing significant growth recently, which might explain why investors are willing to revisit algorithmic approaches. Despite the historical challenges, there’s still interest in finding more capital-efficient ways to create stable digital assets.
The participation of major exchanges like Gate.io and Crypto.com suggests these platforms see potential in Standard Money’s approach. Exchange backing could provide crucial liquidity and market access that previous algorithmic stablecoins lacked.
Still, I think the real test will come when USDsd launches on mainnet and faces real market conditions. Algorithmic stablecoins need to prove they can maintain their peg during periods of market stress, something that has proven difficult for many previous attempts.
The funding round shows that despite the industry’s painful experiences with algorithmic stablecoins, there’s still interest in exploring this approach. Whether Standard Money can succeed where others have failed remains to be seen, but the substantial backing from established crypto firms suggests they might have a compelling case.