A fiat stablecoin platform on Cardano

Developers Cardano Projects
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A fiat stablecoin platform on Cardano.

Idea: Create a stablecoin platform on the Cardano network for any fiat currency like the USD, EURO, YEN, Philipine PHP or the Ethiopian ETB. The stablecoin could be called USDC, EUROC, etc.

In this idea there is no need for a pile of fiat money upfront. Each stablecoin is created upon deposit and deleted upon withdrawal by the issuer.

Enable an app like the Cardano Yoroi wallet to also hold a USDC, EUROC, etc.

The incentive to use USDC is (cross border) ease of use. The incentive to hold USDC (and not convert it to fiat USD or cash) is that the holder receives interest!

The interest could be the same setup like joining a stakepool and earning off the transactions, but also paying the stakepool operator for his work.

Exchanges like Binance and Kraken work with banks like Bank Frick and Etana Custody. Collaborate with Exchanges (or banks directly) to connect the stablecoin to their ‘bankaccount’. They can then issue the USDC.

The sender uses the exchange to convert to USDC and the receiver can use the exchange to convert from USDC to his/her local currency.

The exchange/bank issues the USDC token upon deposit. Another (local) exchange/bank could be used for each (local) currency. This would ‘simplify’ the registration proces and deposit/withdrawels, because the exchange/bank could be active in that specific country/region.

In this idea there is no need for a large fiat (USD/EURO/etc) pile of money in advance.

If people want make a transaction they first need to deposit their fiat currency though an exchange and aquire the USDC/EUROC/etc token. Then they can transfer the token to their Yoroi wallet.

Each stablecoin transaction could (for exapmple) cost 1% (with a maximum of 10 USD). This 1% is then divided according to their share to ALL the people who hold the corresponding stablecoin and the bank holding the fiat. In addition to the 1% stablecoin transaction fee the Cardano Ada network transaction fee must also be paid. If the sender has Ada in the Yoroi wallet then he/she could submit the transaction by using his Ada. Or if he has no Ada he can submit the transaction through the bank who holds the actual fiat money. The bank will add the Cardano network transaction fee to the 1% stablecoin transaction fee. A Cardano network transaction currently cost 0.17 ADA which is 17 Lovelace which is about 0.02 USD which is 2 cents.

So if 10 people each deposit $1000 then the bank/exchange would hold $10000 fiat money and issue 10000 USDC. If there is a USDC transaction from one of the 10 people to a family member in another country or a storepurchase of $200 then the transaction cost is $2. If the sender does not have Ada then the bank/exchange would do the transaction and charge an additional 2 cents. The sender would send $200. The receiver would receive 197.98. If the sender already had Ada in his Yoroi wallet then he (automatically) uses that Ada to pay for the Cardano network transaction. Therefore the is no need for a bank to intermediate in the transaction. The $2 is divided accordingly to each (1000 USDC) stakeholder. In this example each of the 10 people receive 20 cents. From that 20 cents they all have to pay (for example) 5% to the bank (stakepool operator). Because the family member (or store) received the USDC there are now 11 people holding USDC. And because USDC holders receive transactions costs/interest the network will grow atomatically and thus increasing the Cardano network (transactions)! The 1% transactions fee with a maximum of $10 also incentiveses the use of USDC for (easy) large transactions and thus increasing the volume.

Stablecoin: https://en.wikipedia.org/wiki/Stablecoin
I was too late to submit this idea to Project Catalyst: https://cardano.ideascale.com/
Same idea: https://www.reddit.com/r/cardano/comments/k4sis1/a_fiat_stablecoin_platform_on_cardano/

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We need to find a stable coin value base other than fiat currency, because this will always be regulated and the banks use their stranglehold on the market to ensure their monopoly won’t fall apart as soon as we might hope.

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I’m interested in building stable coins that can be linked to local commodities. The community would have better understanding of what the coin is connected to and have an interest in using it as a local currency for their local trade. The value would need to be linked to a real local commodity price via an oracle to create a secondary market for the price feed.

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The local commodity should be the local currency the dollar, euro, or what not. That is the commodity that circulates the most. If you had an active commodities market in your community, a coin based off that could work too.

If you could buy a stable coin on Yoroi with fiat from your linked bank account and then spend that in stores locally we’d be even tougher to beat than we are. I think that is key here. That is where we created value for the consumer and the local business.

In an ada vs fiat world, people will be incented to hold ada and spend fiat as fiat is inflated with an infinite printing monetary policy. The fiat and stable coins will circulate. The ada will be the transaction fees and a stable store of value.

Nothing gets us adoption faster than a stable coin in our wallets that we can buy with fiat and spend locally. Neither happens without the other though and that is the chicken and the egg problem I guess.

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