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By Staff Writer
Once viewed as pariahs, cryptocurrencies have now seen their legitimacy and value widely recognised by the world’s largest institutions. Nowhere is this clearer than at this year’s World Economic Forum in Davos, the annual epicentre of institutional finance and power, where cryptocurrencies have taken centre stage.
This is particularly true of the fast-growing $260 billion stablecoin market. Stablecoins are a type of cryptocurrency whose value is pegged to another asset. The most prominent of these are US dollar-backed stablecoins such as USDC, issued by Circle. In contrast to the outdated and unwieldy legacy international banking system, USDC enables near-instant, 24/7 settlement for cross-border transfers, with fees at a fraction of the cost. Each USDC token is backed by one dollar of cash or cash-equivalent reserves, ensuring that USDC maintains its value.
One important development in the space launched at Davos was the historic announcement at Circle House on Wednesday 21 January of OIL1, the world’s first oil-backed token. Each OIL1 token will be collateralised by one barrel of Gulf crude oil held in verified reserves and will be pegged to both the US dollar and the price of Gulf crude oil, creating an unprecedented link between the energy sector and the digital asset economy. OIL1 will broaden access to energy assets by lowering barriers for retail traders, enabling smaller investment denominations and 24/7 market access, with programmable, near-instant transfers and on-chain settlement.
OIL1 will be powered by Arc, an open Layer-1 blockchain from Circle, and will be subject to regulatory approval by the Central Bank of the Kingdom of Bahrain. Funded by a consortium of US investors led by C5 Capital, GEX represents a new model for how digital assets in the global energy market can be traded.
“OIL1 combines the stability of the US dollar, long the world’s most trusted reserve currency, with the intrinsic value of the Gulf’s most strategic natural resources. By bridging traditional energy assets with blockchain-based finance, we are creating a secure, transparent, and globally trusted currency for the energy age as an instrument of energy security,” said Andre Pienaar, Chief Executive of C5 Capital.
