Solana, a blockchain that aims to function at "web-scale," is integrating its first stablecoin.
Announced Wednesday, Solana is partnering with Terra, the stablecoin initiated by one of South Korea's e-commerce giants, TMON, as a way to cut credit card transaction fees out of retail profit margins.
"By bringing stablecoins onto our network, we aim to dramatically expand the design space for developers, opening the door to novel applications that require price-stable payments," the Solana team wrote in a draft blog post shared with CoinDesk in advance. "It's our hope by prioritizing support for stablecoins with Terra that we can accelerate the DeFi ecosystem within Solana."
Despite skepticism when they were new, stablecoins have proven to be one of the fastest-growing sectors of the cryptocurrency industry, though questions persist about the business model in an environment of negligible interest rates following COVID-19.
The Terra team wrote: "As we continue to grow, we expect demand to expand into new regions and new blockchain ecosystems beyond our own. Anticipating this, we recognize the priority of building bridges and relationships to grow the reach of Terra’s stablecoins within the Solana ecosystem."
The Solana project is quite new. Though its white paper came out in 2017, it only went live late last year, following a Series A round led by Multicoin Capital in July 2019. Solana has since been looking for partnerships to expand its reach.
Terra is one of many payment providers available to e-commerce users in South Korea, primarily through its payment app, Chai. In a blog post, Terra said it recently crossed 1 million daily active users and $3 million in daily transaction volume.
The advantage to vendors using Chai is that payment fees amount to only 0.5 percent, much less than typical credit card fees. Nevertheless, one knowledgeable source in Korea told CoinDesk that Chai still does not have nearly the user base of legacy payment platforms in the country.