Stably — A Transparent USD-Backed Stablecoin
I am very happy to announce that we have successfully closed a seed round for Stably, our stablecoin and blockchain payment startup based in Vancouver, Canada. It is a momentous and exciting day for everyone on our team as we continue our tireless effort to develop a hard-currency-backed stablecoin with organic price stability and high reserve transparency.
An All-Star Team
I am honored to have Bryan Guy, J.D., join Stably as our co-founder and in-house legal counsel. Bryan is an attorney, payment technology and product development expert with 17 years of industry experience. He has led the development and legal reviews of major technology products for companies like Wells Fargo, First Data, T-Mobile, Microsoft, Starbucks as well as a number of Seattle startups.
I am also excited to have David Zhang and Amiya Diwan — both former Amazon software engineers — on the Stably team as technical co-founders. I myself am a former private equity data analyst from PitchBook in Seattle. The four of us have long shared a mutual interest in algorithmic trading and we also share the same vision of a future blockchain economy that is powered by billions of dollars worth of price-stable cryptocurrencies, a.k.a. “stablecoins.”
We originally came up with the idea for Stably in 2017 after noticing a lack of options in the stablecoin market. Our first whitepaper and website were then published in November. In December, I resigned from PitchBook to focus full-time on Stably and we started fundraising in January.
Today, we’re announcing the successful closing of our $500,000 seed round led by Beenext from Singapore and 500 Startups from the US. The round is also supported by a group of Canadian and US angel investors including Raaid Hossain (Edvo, Wiser), Jeffrey Roh (Intuitive-X), Tony Chen (Channel Factory) and Randy Hana (private crypto investor).
Why We Need Stablecoins
The blockchain economy desperately needs a reliable and price-stable medium of exchange as well as store of value in order to evolve and scale beyond its current speculative state. Most cryptocurrencies cannot fulfill this role due to their high price volatility. Imagine conducting a $1-billion M&A transaction denominated in Bitcoin, only to find out the next day that Bitcoin has gone down 5% overnight. This scenario may just sound like another normal day in the crypto world but somebody is going to wake up with a $50-million loss in the morning (ouch!).
As the blockchain economy continues to grow, the demand for stablecoins will naturally expand to accommodate the mass adoption of blockchain technology in everyday commerce. In addition, stablecoins are widely used as a “safe-haven” asset by crypto traders and investors during times of high market volatility. Use cases for stablecoins might even expand beyond what we can currently observe. Stablecoins give rise to many possibilities such as decentralized banking/lending, being a common currency for decentralized applications and perhaps even traditional e-commerce. However, we believe that one thing is certain: there will be more than one major stablecoin to power the future blockchain economy. Despite its recent events, Tether (USDT) still dominates most of the stablecoin market, a market that has exploded from almost nothing to more than $2-billion in the past two years and is still rapidly growing. Tether’s first-mover advantage has paid off handsomely but their dominance probably won’t last forever as more stablecoins start coming onto the scene.
A Focus on Organic Price Stability
In response to growing demand, a wave of stablecoin projects have emerged recently as blockchain technologists, entrepreneurs and venture investors worldwide start pouring money into this space. Most of the focus so far, however, has been devoted to decentralized stablecoins. These cryptocurrencies derive inorganic price stability from either blockchain-based financial engineering (e.g. Basecoin) or a digital asset reserve (e.g. MakerDAO/Dai). Although they may sound doable in theory, decentralized stablecoins have often been challenged to prove the reliability of this “stability” and, more critically, their scalability. For us, we simply believe that the market demands a more immediate and practical solution.
In contrast to decentralized stablecoins, our stablecoin derives its organic price stability from a centralized reserve of hard currency (e.g. Canadian or US dollars) in the real world. While it may be true that this removes many aspects of decentralization, it is impossible for a stablecoin to possess organic price stability without actually being backed by a price-stable asset such as hard currency. Furthermore, organic stablecoins have the potential for greater reliability and scalability on enterprise levels. This is one of the reasons why major crypto exchanges like Binance and Bittrex decided to integrate with Tether and TrueUSD instead of other decentralized alternatives.
How It Works
Once launched, Stably intends to operate as a Canadian money services business (MSB). Stably will not follow a banking/lending business model and it will not be engaging in fractional reserve practices like banks. The hard currency reserve will be transparently managed by Stably and every Stably token will be backed 1-to-1 with real currency.
Stably will have a web platform and API endpoint which will allow platform users to issue or burn Stably tokens, minus any slippage, exchange fees and Stably fees. However, outside of slippage and exchange fees, Stably plans to offer Stably token issuance/repurchase at no cost to clients for an indefinite promotional period after launching.
In order to maintain a high level of transparency for Stably’s cash reserve, we are working on four different transparency channels — including regular audits — for the public to verify our reserve balance as well as on-chain and off-chain transactions (more details can be found here in our whitepaper). Below is an overview of the four transparency channels:
1. Publicly verifiable on-chain transactions for token issuance/repurchase.
2. Hashing of off-chain transactions for later verification during audits.
3. Quarterly reserve and transaction audits conducted by a reputable third-party auditor.
4. Reporting of reserve balances to the public at frequent intervals via our service providers’ APIs (e.g. banks, brokers, exchanges).
To encourage adoption, we plan to establish Stably’s presence on the Stellar network as an anchor in addition to Ethereum, making our tokens interoperable across both blockchain protocols. Later on, we will continue to review options to expand to other promising protocols.
We are in the process of becoming a FINTRAC-registered MSB prior to our official token launch and exchange listing which is now planned for summer 2018. We are considering the possibility of listing Stably on several major crypto exchanges, particularly the ones that are currently overexposed to a single stablecoin. In the upcoming weeks, we will release more details about Stably’s launch, an FAQ and a beta user signup list as well as more information about our advisors, auditors, legal counsels and banking partners. Follow us on Twitter (@StablyCoin) and join our Discord channel for the latest updates as we embark on an exciting mission to connect wealth from the real world to the blockchain economy!
~Kory Hoang Co-Founder & CEO @koryhoang
Stably is a venture-capital-backed startup that is on a mission to connect wealth from the real world to the blockchain economy and help bring stability to the volatile cryptocurrency market. We raised $500,000 in seed funding from 500 Startups, Beenext Ventures, and angel investors to kickstart our project.
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