Multi-currency stable coins

About the Project
This project is about a decentralized system to issue and enable payments in stable coins denominated in multiple currencies. This work goes back to 2019 when we started work on a decentralized exchange for digital securities. That required digital cash tokens in multiple currencies as settlements of trades are in different currencies. And we had and still have mostly USD denominated stable coins.

The Problem set
Despite stablecoins and CBDCs, mostly what is available currently and have sufficient liquidity are USD denominated coins. However, they are not very useful when it comes to

  1. settling transactions where assets are denominated in other currencies. For example, if a seller of a security token wants to sell in peso or rupee, they may not willing to accepting USDC or Tether.

  2. low cost, low value payments. This is also quite important for financial inclusion where avoiding foreign currency swaps is important to keep costs down.

  3. settling transactions such as in bound remittances where sufficient liquidity in local money is required. No point expecting someone to hold Tether if they have to pay out in rand.

What is therefore required are digital cash tokens in multiple currencies BUT issued and managed based on a common monetary - economic framework.

The Proposed solution
Here is a recent article that summarises the proposal.

To summarize, the approach considers

  1. using inexpensive local payment methods (and not expensive credit cards or payment gateways) for fiat ramps (pay in and pay out). Also, since the implementation is on ethereum, pay in and out in ether / erc20 is supported.

  2. using a system of decentralized escrow agents to hold paid in local currencies. And NOT hold them in foreign currencies or exchanging them into crypto as reserves / .

  3. using digital bonds to create liquidity where it is required and to also assure returns to holders of digital cash tokens (aka stable coins).

The third point is using Defi as one of the ways to stabilize exchange rates between digital currencies, which is interesting and also debatable.

The Implementation
Here is a first cut implementation of the proposed solution in code.

On the technical implementation, this has now been factored out to a L1 (holding cash balances) and L2 (processing transactions) network. We are working on the bridge using chainbridge and any help will be appreciated. L2 is a permissioned Quorum (IBFT) network of local payment service providers.

On the business side, the fiat ramps for India is going up now. A lot remains to be done and we would think there would be interest in a lot of currencies that are not represented today as digital assets. Ramps can be set up for any currency that has a need, where a local rep is willing to operate an escrow account, and where as a bonus, the local cash token can be listed in a local crypto exchange that settles in local fiat.

Why a DAO and where we need help
A system like this needs a DAO for it to be operational and also be safe when it comes to regulations. A centralized entity operating a multi-currency platform is likely to come across regulatory hurdles.

A DAO is also ideal for being transparent with respect to assets in custody. Anything which is opaque will break trust.

Since we are ourselves quite new to how DAOs work and can be set up, I thought I should ask for help here. Here is a laundry list of what we need help with

  1. Best practices for DAO set up and governance. We need robust governance.

  2. Feedback, reviews and audits. Both for the economic thesis / design and the code.

  3. Finding local interest for participating as affiliates for - appointing escrow agents, integration with local exchanges and for operating the DAO.

Any feedback - no matter how critical - is welcome !

Hey, thanks a bunch for submitting, I’m currently reviewing, I’m going to DM you instructions.

Thanks @MoneyMage , look forward to hearing from you.