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The Rise of the Stablecoins

September 12, 2018

 

When the Gemini Dollar went live a few days ago, Crypto Twitter began to be aflutter with proclamations akin to it being the answer to the market’s need for a true Stablecoin.

 

Something had to save us from Tether, right?

 

This week alone, the companies: Gemini, Paxos and Carbon have all released Stablecoins that appear to be essentially the same at their core. All of them claim to be backed by reserves of US dollars and all of them claim to be able to hold at a value of $1 per coin, even in the face of rampant market volatility. On top of all of this, it appears that all of them claim to be compliant with relative regulations too.

 

Because these core similarities exist, the central question becomes: how can a Stablecoin project rise above the pack?

 

According to a recent article from Coindesk, the answer is at the algorithmic level, particularly with the Stablecoin that was released by Carbon, today. Inside of the piece, Coindesk claims that based on their sources tied to this particular project, Carbon plans to change the algorithm that runs their coin once it gets up to a $1 billion market cap.

 

The specific way that they aim to do this is a bit complicated.

 

In a general sense, based on a quote from Miles Albert who is Carbon’s co-founder, the team plans to take an action which is called “whitelisting its metatoken structure.”

 

Since this explanation is quite technical, another way of understanding this is to breakdown this phrase in the context of the Crypto space. To whitelist a token is to make it acceptable to some types of investors and not acceptable to other types of investors, in a general sense.

 

Furthermore, the phrase “metatoken structure” is a bit more difficult to understand, given the fact that Carbon appears to be keeping most of the specifics of its algorithms that run its network and its coin close to the breast, as any firm reasonably would.

 

In a simple sense, when taken into account with the fact that the Carbon Stablecoin is specifically being marketed to traditional exchanges, hedge funds, and other institutional investors, a specific conclusion on the context of this phrase can be made.

 

 In short, it could be said that by whitelisting metatoken structure, the team means that only institutional investors will be able to access Carbon’s coin after it reaches this market cap, though this brings to question what happens before this point.

 

To be fair, the project does mention a connection between being able to purchase what is called Carbon credit and investors then having the ability to directly determine the resultant price of the Carbon coin, which is somehow tied to this credit.

 

All in all, with the facts in mind, it is difficult to see if Carbon brings anything different to the table, beyond the proclamation that the chief algorithm for their Stablecoin will change as it grows.

 

Exactly how this plays out depends directly upon investor confidence in the project, so releasing a bit more technical information on what this means could only help their cause.

 

Given that Carbon’s coin has not even been on the market for a week, this could still occur.

 

 

By: BGN Editorial Staff

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