Directed acyclic graph (DAG) platform Obyte has unveiled stablecoin capabilities on its network that can be pegged to fiat currencies, financial instruments and other cryptocurrencies.

The Liechtenstein-based firm says the stablecoins are designed to trade with a discount to their benchmark asset or index in such a way that the discount decreases over time – “therefore, the stablecoin appreciates”.

It’s on the hunt for more action and reckons these characteristics “should appeal to investors seeking low volatility as well as traders looking for alternatives to the traditional financial centres that are expensive to engage with on top of having limited hours”.

Investors and traders can create a stablecoin using an Obyte wallet that can then be traded on a decentralised exchange.

Stablecoins are issued when a user deposits a collateral on a stablecoin autonomous agent (AA). AAs are programs running on a distributed ledger that are designed to orchestrate a programmed, rules-based flow and custody of assets, free from any human intervention.

Obyte explains that stablecoins are issued as a loan and the borrowing user both gets the newly minted stablecoins and retains ownership of the collateral which they can reclaim when they repay the loan. The value of the collateral needs to be higher than the value of the loan to ensure that the loan is properly secured despite volatility of the collateral. If the value of the collateral drops below a certain threshold, the loan recipient must increase the collateral or else the collateral enters an auction.

To offer peace of mind amid any potential concerns, Obyte states that the stability of a discount stablecoin is ensured by having a future date when the stablecoin becomes convertible to the collateral. The conversion is done at the exchange rate registered on that future date. Any present exchange rate of the stablecoin is naturally “pulled” to that future exchange rate, much like the price of futures contracts is determined by the expected price of the underlying at some future date. The convertibility is provided by the same AA that issued the stablecoin.

The firm says the fact that convertibility becomes available only at some future date justifies a discount in the present price. The discount decreases – and the stablecoin appreciates – the closer it gets to the expiry date. The price trajectory of discount stablecoins is “expected to be similar to that of zero-coupon bonds”.

The company has also launched a website to let people define and launch a new stablecoin pegged to an asset or index of the user’s choice. The newly launched stablecoin becomes immediately available to other users and tradable on the ODEX decentralised exchange against other stablecoins and GBYTE – the native currency of Obyte’s platform.

Anton Churyumoff, Founder of Obyte, says: “It is the first time that setting up new stablecoin tokens becomes available to regular users, and I hope to see a lot of diversity and fast iteration cycles in this field.”

The company was launched on Christmas Day 2016. According to LinkedIn, it has eight employees. Churyumoff is based in Moscow and has one other firm on the go. Namely, Teddy ID for internet security.

In other news, last month Obyte unleashed its AAs to program and automate the movement of funds on a distributed ledger.

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