On July 17, 2023, Huobi launched wstUSDT, a token associated with the Real World Asset (RWA) backed token stUSDT. What is wstUSDT, and how can you acquire it and profit from it?
What is stUSDT?
Before we can comprehend what wstUSDT is, it is essential to grasp the concept of stUSDT. stUSDT stands for a RWA-backed token, which users can acquire by staking USDT through the official website stusdt.io. The token be converted back and forth with USDT at a 1:1 ratio, and provide the same functionalities as other TRC20 tokens. Currently, stUSDT mostly invests in low-risk debt products.
What is wstUSDT?
wstUSDT (Wrapped stUSDT) is a TRC-20 token acquired by depositing stUSDT into the Wrapper contract. By holding wstUSDT, users can receive the same staking rewards as they would with stUSDT. Unlike stUSDT, the staking rewards from holding wstUSDT will not directly affect the number of tokens held. Instead, the rewards will be reflected in the price of wstUSDT.
Why convert usUSDT to wstUSDT?
Essentially, the interest earned from holding either stUSDT or wstUSDT remains fixed in terms of value performance, regardless of market price fluctuations.
To enhance the convenience of trading stUSDT on exchanges, it is essential to wrap this RWA-backed token as a TRC-20 token called wstUSDT. This will enable investors to trade stUSDT with greater ease and flexibility. Additionally, as price changes reflect the interest income, investors will enjoy the added convenience compared to frequently settling stUSDT.
How to understand the price change of wstUSDT?
If the RWA debt product boasts a 5% APY, and you stake 100 USDT on-chain, you will receive 100 stUSDT and potentially earn an annual interest of 5 stUSDT. This would result in a total of 105 stUSDT after one year, equivalent to a value of 105 USDT.
Alternatively, if you exchange 100 USDT for 100 wstUSDT on Huobi and hold it for a year, you will still possess 100 wstUSDT. However, the price of each wstUSDT may increase to 1.05 USDT, potentially resulting in the 100 wstUSDT you hold being worth 105 USDT in value.
In other words, initially, wstUSDT was exchangeable with USDT at a 1:1 ratio. However, due to interest income, the price of each wstUSDT will increase to 1.05 USDT after one year. While the interest earned from holding wstUSDT does not directly affect the quantity of tokens held, it does impact the price of wstUSDT. The price of wstUSDT will continue to rise as the interest income from the RWA debt product increases.
Therefore, in either case, you are expected to enjoy the same value income and asset appreciation at the end of the period.
How to earn returns from RWA debt products?
Exchange: By purchasing wstUSDT directly on Huobi and holding it, you can potentially benefit from its appreciation in value.
On-chain: Through stusdt.io, you can stake USDT and receive stUSDT in return. By holding stUSDT, you can earn interest and potentially enjoy value appreciation.
What are the opportunities and risks of trading wstUSDT?
The price of wstUSDT is composed of both principal and interest, making it generally stable. If the price of wstUSDT falls below its fair value, purchasing wstUSDT directly could yield more profit than staking USDT for stUSDT. On the other hand, if the price of wstUSDT surpasses the combined fair value and interest income, selling wstUSDT allows you to obtain a premium income greater than the interest earned.
In terms of risks, if the market price of wstUSDT falls below its fair value, the interest income may be depleted or even result in a loss of principal. Conversely, if the price of wstUSDT exceeds its fair value, purchasing wstUSDT on the market will entail higher trading costs. Thus, investing in wstUSDT can be likened to investing in fixed-income bonds in traditional finance.
This concludes our introduction to wstUSDT. Start trading on Huobi now to seize the thrilling opportunities that await you!