Donuts founder leads $1.2M investment in Seattle startup that makes ‘price-stable cryptocurrency’

Paul Stahura
Paul Stahura. (Donuts Photo)

Cryptocurrency has yet to catch on with mainstream consumers, in large part due to its volatility. Bitcoin, for example, went from $900 in December 2016 to nearly $20,000 one year later, before dropping back down to less than $4,000 this past December.

Now some entrepreneurs have come up with a potential solution: stablecoin, a newer form of cryptocurrency that is pegged to a fiat currency such as the U.S. dollar and allows prices to remain more stable.

The idea has caught the attention of Paul Stahura, co-founder of domain registrar companies such as Donuts and eNom. He’s leading a $1.2 million round in Seattle startup Stably, which today announced the Series A investment.

Stably has developed its own stablecoin called StableUSD (USDS). When a user gives Stably $1 to buy its cryptocurrency, it mints one of its digital tokens. If someone gives Stably back that 1 USDS, it removes the coin from circulation and returns $1 from its cash reserve.

The idea is to provide benefits of cryptocurrency — fast transaction speed; anonymity; etc. — with less fluctuation in value.

Stably CEO Kory Hoang. (Stably Photo)

“We’re simply turning dollars into digital dollars,” said CEO Kory Hoang.

Stahura, who co-founded Donuts in 2010 and remains chairman at the Seattle area company, said he sees many parallels between cryptocurrency — specifically dollar-backed tokens — and domain names. He said there was room for many companies such as eNom or GoDaddy who were selling the exact same product (.com names).

“Same with dollar-backed tokens,” Stahura told GeekWire. “How hard can it be to sell a dollar for $1, especially if that dollar has more utility and lower fees, say, than a credit-card dollar?”

Stahura pointed to TrustToken, a startup backed by big-name investors such as Andreessen Horowitz and Founders Fund that recently passed $200 million in market capitalization for its stablecoin TrueUSD.

“I invested because of the sort of familiar opportunity I see, plus I like the energetic and experienced team,” Stahura said.

Hoang said that the most immediate use case of stablecoins is as a medium of exchange and a store of value for cryptocurrency traders.

“Many exchanges don’t let you easily convert between cryptocurrency and traditional fiat currency,” he said in an email. “A cryptocurrency that has the same value as fiat (i.e. a stablecoin) fixes that, and gives traders more control over their investments, especially in times of volatility.”

Hoang, who was previously an analyst at PitchBook, added that the long-term vision is to “enable fast and borderless payments, an efficient and cheaper solution for remittance, and a reliable alternative to money in developing or hyper-inflationary economies.”

“The world that stablecoins can enable is one where you can buy a cup of coffee with cryptocurrency,” he said.

Stably makes “flat income” on the cash reserve it holds that backs the USDS coins.

The company employs nine people and expects to grow as a result of the funding. Other backers include 500 Startups, Beenext, and angel investors. Total funding to date is $1.7 million.

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