The stablecoin sector has seen significant institutional interest, with companies like PayPal and Ripple entering the market.

BitGo, a cryptocurrency custodian backed by Goldman Sachs, is set to launch its new stablecoin, USDS, pegged to the US dollar, in January 2025.

The stablecoin aims to differentiate itself by offering a reward system that allocates up to 98% of earnings to institutions that provide liquidity.

BitGo's unique rewards-based approach will distribute a portion of returns from its reserves to liquidity-providing institutions on a pro-rata basis.

BitGo plans to make USDS available on all major exchanges and aims to achieve $10 billion in assets within the stablecoin by this time next year.

To ensure transparency, the company will provide real-time proof of reserves on a dedicated website and conduct monthly audits by a top-tier accounting firm.

USDS will be backed by short-duration Treasury bills, overnight repos, and cash, following a model similar to existing stablecoins.

BitGo's USDS intends to challenge this dominance by redistributing profits to network participants rather than concentrating them within the company.

CEO Mike Belshe emphasized the need for a more open and fair stablecoin, stating that USDS will reward participants who contribute to the network's growth.

USDS is being touted as the first 'open-participation' stablecoin, inviting institutions to contribute to its development and share in its success.

Rewards for USDS participants will be based on generating sufficient liquidity and will be distributed monthly according to a distribution revenue share model.

Currently, the stablecoin market is dominated by Tether's USDT and Circle's USDC, which together control around 90% of the $170 billion industry.