Raft, a new stablecoin issuer, is avoiding fiat currency for its financial backing.

Raft has launched a new stablecoin called R, which is backed by a single crypto asset, Lido’s staked ether (stETH), and is denominated in U.S. dollars. The stablecoin uses both hard and soft peg mechanisms to keep its value close to $1. The hard peg relies on arbitrage, while the soft peg incentivizes users to act based on the expectation that the peg will be maintained in the future. Raft’s stablecoin is the first stablecoin to be collateralized by Lido Staked Ether (stETH). While some stablecoins are backed by traditional assets like U.S. Treasuries, those backed by crypto assets have had mixed success. MakerDAO’s DAI, for example, has accumulated about $4.6 billion of market capitalization. Raft’s new R product differs from other stablecoins because its assets are issued by unrelated entities, whereas other stablecoins are collateralized by a combination of Ethereum-based tokens, stablecoins, and real-world assets. Following the U.S. banking crisis in March, a slew of crypto protocols have been focused on avoiding fiat assets as collateral to shield from ongoing regulatory pressures and exposure to banks. Raft’s lending protocol allows users to deposit stETH and borrow a minimum amount of $3,000. This design choice is meant to attract larger players in the liquid staking ecosystem and to ensure a healthy balance in the protocol. Raft’s Head of Marketing, Tony T., declined to provide his last name in an exclusive interview with CoinDesk. The article was edited by Nick Baker.

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