As part of our efforts to educate community about the importance of stablecoins, we have made a public spreadsheet with relevant information on stablecoin projects. Feel free to share it - https://docs.google.com/spreadsheets/d/17giG2v5I7CrtiftvXooTFWoHqA0NKnHyOoy5fE8Tfms/edit#gid=0 …
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Topic: Coin Payment Processor - Building a stablecoin (Read 178 times)
Here, you will find everything about the current state of all Stablecoin projects!
https://medium.com/cp-processor/comprehensive-overview-of-stablecoins-819d183f6ac7
https://medium.com/cp-processor/comprehensive-overview-of-stablecoins-819d183f6ac7
Which STABLECOIN or Stablecoin project is your favourite and why?
We have compiled a list of 12 STABLECOINS and Stablecoin projects for you to choose:
1. Tether
2. MakerDAO
3. Havven
4. CP Processor
5. DigixDao
6. Globcoin
7. Minexcoin
8. TrueUSD
9. Fragments
10. Bitshares
11. Basiscoin
12. Aurora
LEAVE YOUR COMMENT, OR GO TO OUR TWITTER POLL - https://twitter.com/CP_Processor/status/1006463148176658435 AND VOTE!
We have compiled a list of 12 STABLECOINS and Stablecoin projects for you to choose:
1. Tether
2. MakerDAO
3. Havven
4. CP Processor
5. DigixDao
6. Globcoin
7. Minexcoin
8. TrueUSD
9. Fragments
10. Bitshares
11. Basiscoin
12. Aurora
LEAVE YOUR COMMENT, OR GO TO OUR TWITTER POLL - https://twitter.com/CP_Processor/status/1006463148176658435 AND VOTE!
Because of great interest and importance of this topic, we have repeated the poll DO YOU THINK THAT STABLECOINS ARE NEEDED FOR THE FUTURE OF CRYPTO PAYMENTS, and it will last for seven days! We want to hear your opinion, so like this poll, share it or comment 
https://twitter.com/CP_Processor/status/998521133900140544
https://twitter.com/CP_Processor/status/998521133900140544
Simple way to create Stable Tokens
PERSONAL LOAN WITH LIFO COLLATERAL
No matter where you are, the simplest way to come into possession of Stable Tokens is, of course, to borrow them. In order to personally borrow them, you only have to have a certain guarantee. What would be logical in the world of cryptocurrency is to guarantee and deposit a second crypto currency for borrowing the first at a negotiated proportion and on a decentralized network which can execute this for all users equally by using independent Smart Contract.
In that way we get a Stable Token personal loan with LIFO collateral ETH , by the agreed proportion — repo rate. That represents the unique method for any user on Ethereum decentralized network to execute collateral of its ETH for Stable Token through the Smart Contract.
This personal loan would be transacted by the agreed proportion, e.i. repo rate. In case that Stable Token is pegged to USD in proportion 1:1, then the repo price would be iETH Price Index iETH/USD and pegged exclusively for the specific user, that is, its public address. During this procedure, personal collateral would create-mint, through Smart Contract, specific number of new Stable Tokens, that would, in this case, automatically receive value 1:1 in relation to USD. In this initial process of creating Stable Tokens, converted value is the same as the value of USD, and it cannot be changed over time. With this procedure of initial creation, Stable Tokens confirm their fixed value that simultaneously represent the possibility to make payments with them for various goods and services.
The procedure of closing the personal loan position is simple and it creates the possibility to make a refund of borrowed Stable Tokens with the release of the guarantee — ETH stocked by the LIFO method (last in first out). That means that the user can have multiple active personal loans, and perform closing starting from the last opened loan made at the repo rate and proportion that was valid on the public Smart Contract with the safe custodian that is not privately owned.
Characteristics of this theory are:
the system is always backed (the number of Stable Tokens minted is the same number that can be retrieved at any moment),
the system has neither a surplus nor a shortage, because it is based on a constant proportion of exchange and not on a collateral.
market cap of the collateral would not be calculated by the current market rate but as a sum of all personal collateral prices.
expiration date of the loan would be unlimited as well as the amount that can be borrowed.
the price of Stable Tokens is derived based on the constant proportion of trade volume ETH/USD and is expressed in proportion ST/ETH, which means that ST:USD is always 1:1 at each calculation of the loan,
If a user performs a loan repayment, he executes a buyback of the personal collateral ETH which is calculated by the LIFO method, and therefore in every future moment there is a personal extra gain or loss,
Personal extra gain happens if the current market trade volume ETH/USD is bigger than the one calculated at the moment of personal loan ST/ETH (ETH/USD — ST/ETH = personal extra gain).
Personal extra loss happens if the current market proportion of ETH/USD is smaller than the one that is calculated at the moment of the personal loan ST/ETH (ST/ETH-ETH/USD = personal extra loss)
According to this theory, stability is always guaranteed 1:1, but the client has to additionally pay for the extra loss or to receive extra gain at the time of the loan repayment.
PERSONAL LOAN WITH LIFO COLLATERAL
No matter where you are, the simplest way to come into possession of Stable Tokens is, of course, to borrow them. In order to personally borrow them, you only have to have a certain guarantee. What would be logical in the world of cryptocurrency is to guarantee and deposit a second crypto currency for borrowing the first at a negotiated proportion and on a decentralized network which can execute this for all users equally by using independent Smart Contract.
In that way we get a Stable Token personal loan with LIFO collateral ETH , by the agreed proportion — repo rate. That represents the unique method for any user on Ethereum decentralized network to execute collateral of its ETH for Stable Token through the Smart Contract.
This personal loan would be transacted by the agreed proportion, e.i. repo rate. In case that Stable Token is pegged to USD in proportion 1:1, then the repo price would be iETH Price Index iETH/USD and pegged exclusively for the specific user, that is, its public address. During this procedure, personal collateral would create-mint, through Smart Contract, specific number of new Stable Tokens, that would, in this case, automatically receive value 1:1 in relation to USD. In this initial process of creating Stable Tokens, converted value is the same as the value of USD, and it cannot be changed over time. With this procedure of initial creation, Stable Tokens confirm their fixed value that simultaneously represent the possibility to make payments with them for various goods and services.
The procedure of closing the personal loan position is simple and it creates the possibility to make a refund of borrowed Stable Tokens with the release of the guarantee — ETH stocked by the LIFO method (last in first out). That means that the user can have multiple active personal loans, and perform closing starting from the last opened loan made at the repo rate and proportion that was valid on the public Smart Contract with the safe custodian that is not privately owned.
Characteristics of this theory are:
the system is always backed (the number of Stable Tokens minted is the same number that can be retrieved at any moment),
the system has neither a surplus nor a shortage, because it is based on a constant proportion of exchange and not on a collateral.
market cap of the collateral would not be calculated by the current market rate but as a sum of all personal collateral prices.
expiration date of the loan would be unlimited as well as the amount that can be borrowed.
the price of Stable Tokens is derived based on the constant proportion of trade volume ETH/USD and is expressed in proportion ST/ETH, which means that ST:USD is always 1:1 at each calculation of the loan,
If a user performs a loan repayment, he executes a buyback of the personal collateral ETH which is calculated by the LIFO method, and therefore in every future moment there is a personal extra gain or loss,
Personal extra gain happens if the current market trade volume ETH/USD is bigger than the one calculated at the moment of personal loan ST/ETH (ETH/USD — ST/ETH = personal extra gain).
Personal extra loss happens if the current market proportion of ETH/USD is smaller than the one that is calculated at the moment of the personal loan ST/ETH (ST/ETH-ETH/USD = personal extra loss)
According to this theory, stability is always guaranteed 1:1, but the client has to additionally pay for the extra loss or to receive extra gain at the time of the loan repayment.
Stable Tokens NOT Convertible coins
Convertibility is the quality that allows money or other financial instruments to be converted into other liquid stores of value. Convertibility is an important factor in international trade, where instruments valued in different currencies must be exchanged.
Freely convertible currencies have the immediate value on the foreign exchange market, and few restrictions on the manner and amount that can be traded for another currency. Free convertibility is a major feature of a hard currency. Convertibility first became an issue of significance during the time banknotes began to replace commodity money in the money supply. Under the contemporary international currency regimes, all currencies’ inherent value derives from fiat, thus there is no longer any thing (gold or other tangible store of value) for which paper notes can be redeemed.
So, to have USD convertible coin it must be:
1. fully backed, 100% in fiat USD,
2. freely convertible,
3. changeable directly to fiat USD,
If we want to be fully backed in fiat USD currency we must work like Tether LTD does. But we do not want to be like Tether! We do not want to have full backing in fiat USD like Tether has, because of this >>>
https://imgur.com/azujcpH
Second option is to focus on currency board and fixed proportion. A currency board is an institution that issues currency that is freely convertible, at a fixed rate, into an external reserve asset. Also currency board must hold 100 percent foreign reserve ratio at the margin — not necessarily 100 percent total reserves. This results from the fact that a currency board cannot independently influence the money supply and cannot engage in any type of discretionary monetary policy, like we can not engage in USD money supply. A currency board is a monetary authority that maintains a fixed exchange rate with an anchor currency.
STABILITY = fixed exchange rate +convertibility +high external reserve at the margin
fixed exchange rate can be ETH/USD=ETH/ST
Users can send when they want and how much they want ETH to personal conversion smart contract to change them for minted Stable Tokens ST.
2. convertibility can be personal conversion on the smart contract ETH to ST and ST to ETH
User can do buyback of all ETH on personal conversion smart contract by the same peer if he sends Stable Tokens ST to burn them on the smart contract and no one else can buyback his ETH.
3. high external reserve at the margin can be ST=ETH+derivative1+derivative2…derivativeN on the smart contract
Personal collateral smart contract gives every user personal liquidity by safe keeping input amount of ETH and preserving minted amount of derivative1, derivative2….derivativeN in the trusted smart contract custodian. The only challenge is to determine the derivatives.
Convertibility is the quality that allows money or other financial instruments to be converted into other liquid stores of value. Convertibility is an important factor in international trade, where instruments valued in different currencies must be exchanged.
Freely convertible currencies have the immediate value on the foreign exchange market, and few restrictions on the manner and amount that can be traded for another currency. Free convertibility is a major feature of a hard currency. Convertibility first became an issue of significance during the time banknotes began to replace commodity money in the money supply. Under the contemporary international currency regimes, all currencies’ inherent value derives from fiat, thus there is no longer any thing (gold or other tangible store of value) for which paper notes can be redeemed.
So, to have USD convertible coin it must be:
1. fully backed, 100% in fiat USD,
2. freely convertible,
3. changeable directly to fiat USD,
If we want to be fully backed in fiat USD currency we must work like Tether LTD does. But we do not want to be like Tether! We do not want to have full backing in fiat USD like Tether has, because of this >>>
https://imgur.com/azujcpH
Second option is to focus on currency board and fixed proportion. A currency board is an institution that issues currency that is freely convertible, at a fixed rate, into an external reserve asset. Also currency board must hold 100 percent foreign reserve ratio at the margin — not necessarily 100 percent total reserves. This results from the fact that a currency board cannot independently influence the money supply and cannot engage in any type of discretionary monetary policy, like we can not engage in USD money supply. A currency board is a monetary authority that maintains a fixed exchange rate with an anchor currency.
STABILITY = fixed exchange rate +convertibility +high external reserve at the margin
fixed exchange rate can be ETH/USD=ETH/ST
Users can send when they want and how much they want ETH to personal conversion smart contract to change them for minted Stable Tokens ST.
2. convertibility can be personal conversion on the smart contract ETH to ST and ST to ETH
User can do buyback of all ETH on personal conversion smart contract by the same peer if he sends Stable Tokens ST to burn them on the smart contract and no one else can buyback his ETH.
3. high external reserve at the margin can be ST=ETH+derivative1+derivative2…derivativeN on the smart contract
Personal collateral smart contract gives every user personal liquidity by safe keeping input amount of ETH and preserving minted amount of derivative1, derivative2….derivativeN in the trusted smart contract custodian. The only challenge is to determine the derivatives.
One of the main problems with Bitcoin for ordinary users is that, while the network may be a great way of sending payments, with lower transaction costs, much more expansive global reach, and a very high level of censorship resistance, Bitcoin as the currency is a very volatile means of storing value. This volatility results from its built-in quantity commitment: because the number of Bitcoins in existence stays on a programmed path, variations in the real demand to hold Bitcoin must be accommodated entirely by variations in its unit value. When demand goes up, there is no quantity increase to dampen the rise in price; and vice-versa for a fall in demand. So, the currency has an established reputation for extreme volatility and Bitcoin holders can lose their wealth and quite often the price moves up or down by as much as 10–20% in a single day.
Can we have the full decentralization that a cryptographic payment network offers, but at the same time have a higher level of price stability, without such extreme upward and downward swings? YES, we can!
But the stability problem is still there and we must do something better.
There are three types of stablecoins:
fiat-collateralized coins
crypto-collateralized coins
non-collateralized coins
Also we have seen “the evolution of stablecoin in three generation” :
collateral backed IOU
collateral backed on blockchain
elastic monetary supply based
Tether (USDT) — fiat collateral
Market cap = more than 2 bil.USD
Claiming that every USDT has one USD as reserve stored in Tether’s bank account. This guarantees Tether’s ability to redeem the legal currency at any time. Yet the model is 100% centralized because the company is in full control of the money supply and reserves. Because its US dollar reserve must be stored in regulated bank accounts, it is subject to government regulations. The most interesting thing is that the Bitfinex exchange, which, incidentally, controls the work of the company Tether Ltd, after the termination of cooperation with banks has incorporated and introduced the use of USDT, and managed to impose the dominance of USDT as the only stable coin for all other crypto exchanges.
MakerDAO & DAI — crypto collateral
Market cap = about 500 mil.USD
Maker is able to maintain the price stability of the Dai through the Dai Credit System, which backs the Dai with collateral stored in Ethereum smart contracts, while simultaneously functioning as an internet-based, p2p credit market that commoditizes credit by allowing anyone with valid collateral to take out loans that have low transaction costs and no middle man fees. Anyone can generate Dai on the Maker platform with a collateral value of twice Dai’s Pooled Ether (PETH). The most interesting thing is that the stable token DAI in practice has the role of ETH LONG leverage and in other words serves as some kind of ETH CALL Option.
Basecoin — non collatelar adjustment
Market cap = not active
Basecoin uses a three-token model, which includes Base Share, Basecoin and Base Bond. The supply of Basecoin is elastic while the supply of Base Share is fixed. When the supply of Basecoin contracts, it triggers the Base Bonds to recycle and destroy the Basecoin. When the Basecoin supply expands, the new Basecoin repays the Base Bonds and the rest is assigned to the Base Shareholders. Three-token models present complex problems when traded on exchanges and implement network effect so they are not in public use yet. The most interesting thing is that this project was first to includ the supply-demand adjustment in the price stabilization process as well as “signorated share” principles.
Havven (HAV) & nomin — crypto collatelar
Market cap = about 30 mil.USD
Havven is a decentralised payment network where transaction fees are collected from users of the network. These fees are allocated to collateral token holders, which is where the collateral token derives its value. There are two tokens in the system: havvens, the collateral token; and nomins, the stablecoin. Nomins are backed by havven tokens, as nomins can only be issued by locking havvens into a smart contract. Against the value of havvens a fraction of nomins can be issued, which ensures the network is overcollateralized and is resistant to price shocks. They establish the initial value of the system through a token sale. Because there are no transactions yet, participants in the sale are predicting the value of the Havven network, factoring in some risk premium. Collateral tokens are purchased on the basis that if the network grows and transaction fees increase, the value of the collateral token will increase and users will be rewarded for collateralising the system. The most interesting thing is that this project will create a stable token exclusively with the supply and collateral of its own token that builds value based on the transaction fees.
USDX — crypto collatelar adjustment
Market cap = not active
The project will roll out in two phases by Q2.2019. Phase 1) Tokens will be produced as Ethereum ERC20 tokens called USDX. Anyone can join USDX’s ecosystem to contribute to the ICO. Phase 2) An independent public chain will be called USDY. Previous USDX token holders will be awarded USDY equal to their USDX, then enjoy “the ultimate stabilization reached by its self-balancing mechanism. After phase 2, USDX will implement intelligent algorithmic monetary control. The algorithm will adjust the total quantity of money in the economy (M). It will also adjust the velocity of money (V). Diversified mechanisms will adjust M and V. Those diversified mechanisms include a variable block reward, a mining lock, and a variable transaction fee. USDX is finite and does not have the self-balancing mechanism of a Stablecoin. USDX will be traded on the open market and the price will be free to rise and fall to reflect market expectations.The most interesting thing is that this project will create own public blockchain based on proof of stake with high transaction speeds.
CP Processor (cPRO) & Stable Tokens+Supplements — crypto collatelar adjustment
Market cap = activating in Q2.2018
CP Processor will go beyond all of the above mentioned projects in order to achieve a higher goal — “world’s single coin” with a global open payment protocol (GOPP). Also, CP Processor by default integrated almost all process and functions that we can find here. The most interesting thing is that this project will link missing parts and use a sinergy to create a new dimension of global payments, and the Stable Token System is just the first stage of that road.
Can we have the full decentralization that a cryptographic payment network offers, but at the same time have a higher level of price stability, without such extreme upward and downward swings? YES, we can!
But the stability problem is still there and we must do something better.
There are three types of stablecoins:
fiat-collateralized coins
crypto-collateralized coins
non-collateralized coins
Also we have seen “the evolution of stablecoin in three generation” :
collateral backed IOU
collateral backed on blockchain
elastic monetary supply based
Tether (USDT) — fiat collateral
Market cap = more than 2 bil.USD
Claiming that every USDT has one USD as reserve stored in Tether’s bank account. This guarantees Tether’s ability to redeem the legal currency at any time. Yet the model is 100% centralized because the company is in full control of the money supply and reserves. Because its US dollar reserve must be stored in regulated bank accounts, it is subject to government regulations. The most interesting thing is that the Bitfinex exchange, which, incidentally, controls the work of the company Tether Ltd, after the termination of cooperation with banks has incorporated and introduced the use of USDT, and managed to impose the dominance of USDT as the only stable coin for all other crypto exchanges.
MakerDAO & DAI — crypto collateral
Market cap = about 500 mil.USD
Maker is able to maintain the price stability of the Dai through the Dai Credit System, which backs the Dai with collateral stored in Ethereum smart contracts, while simultaneously functioning as an internet-based, p2p credit market that commoditizes credit by allowing anyone with valid collateral to take out loans that have low transaction costs and no middle man fees. Anyone can generate Dai on the Maker platform with a collateral value of twice Dai’s Pooled Ether (PETH). The most interesting thing is that the stable token DAI in practice has the role of ETH LONG leverage and in other words serves as some kind of ETH CALL Option.
Basecoin — non collatelar adjustment
Market cap = not active
Basecoin uses a three-token model, which includes Base Share, Basecoin and Base Bond. The supply of Basecoin is elastic while the supply of Base Share is fixed. When the supply of Basecoin contracts, it triggers the Base Bonds to recycle and destroy the Basecoin. When the Basecoin supply expands, the new Basecoin repays the Base Bonds and the rest is assigned to the Base Shareholders. Three-token models present complex problems when traded on exchanges and implement network effect so they are not in public use yet. The most interesting thing is that this project was first to includ the supply-demand adjustment in the price stabilization process as well as “signorated share” principles.
Havven (HAV) & nomin — crypto collatelar
Market cap = about 30 mil.USD
Havven is a decentralised payment network where transaction fees are collected from users of the network. These fees are allocated to collateral token holders, which is where the collateral token derives its value. There are two tokens in the system: havvens, the collateral token; and nomins, the stablecoin. Nomins are backed by havven tokens, as nomins can only be issued by locking havvens into a smart contract. Against the value of havvens a fraction of nomins can be issued, which ensures the network is overcollateralized and is resistant to price shocks. They establish the initial value of the system through a token sale. Because there are no transactions yet, participants in the sale are predicting the value of the Havven network, factoring in some risk premium. Collateral tokens are purchased on the basis that if the network grows and transaction fees increase, the value of the collateral token will increase and users will be rewarded for collateralising the system. The most interesting thing is that this project will create a stable token exclusively with the supply and collateral of its own token that builds value based on the transaction fees.
USDX — crypto collatelar adjustment
Market cap = not active
The project will roll out in two phases by Q2.2019. Phase 1) Tokens will be produced as Ethereum ERC20 tokens called USDX. Anyone can join USDX’s ecosystem to contribute to the ICO. Phase 2) An independent public chain will be called USDY. Previous USDX token holders will be awarded USDY equal to their USDX, then enjoy “the ultimate stabilization reached by its self-balancing mechanism. After phase 2, USDX will implement intelligent algorithmic monetary control. The algorithm will adjust the total quantity of money in the economy (M). It will also adjust the velocity of money (V). Diversified mechanisms will adjust M and V. Those diversified mechanisms include a variable block reward, a mining lock, and a variable transaction fee. USDX is finite and does not have the self-balancing mechanism of a Stablecoin. USDX will be traded on the open market and the price will be free to rise and fall to reflect market expectations.The most interesting thing is that this project will create own public blockchain based on proof of stake with high transaction speeds.
CP Processor (cPRO) & Stable Tokens+Supplements — crypto collatelar adjustment
Market cap = activating in Q2.2018
CP Processor will go beyond all of the above mentioned projects in order to achieve a higher goal — “world’s single coin” with a global open payment protocol (GOPP). Also, CP Processor by default integrated almost all process and functions that we can find here. The most interesting thing is that this project will link missing parts and use a sinergy to create a new dimension of global payments, and the Stable Token System is just the first stage of that road.
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