The Roxe Chain Foundation has announced the launch of a new stablecoin which seeks to maintain price stability by mimicking a central bank.
Created by ExOne liquidity solution provider Apifiny, Roxe Chain aims to create what it claims will be the first truly decentralized stablecoin. Using algorithms programmed into smart contracts, the three-token DeFi system will adjust supply and demand in a way that is supposed to maintain RoUSD’s price stability more effectively than fiat- or digital asset-backed stablecoins.
According to an Oct. 8 announcement, the system will be fully algorithmic and is designed to solve the intermediate currency problem in cross-border payments. The new protocol will launch next week. Roxe Chain Foundation director Leo Sun said:
“The DO family of stablecoins aims to solve the vexing problem of digital asset price volatility. […] We believe the solution to this problem lies, in part, in creating a completely decentralized economy powered by blockchain, which is lacking in today’s market. We aim to make DO a fundamental component of the DeFi world.”
The new Roxe Payments Protocol will allow any individual, business, payment platform, or bank to make instant cross-border payments.
Apifiny also runs the Roxe Global Instant Settlement Network. providing instant asset transfers and settlement directly between banks and digital asset exchanges
What is decentralized?
Roxe criticized leading stablecoins like USDC and tether for being backed by a reserve of U.S. dollars—a centralized asset—and thus not truly decentralized. The DAI “is a stablecoin collateralized by assets from other systems,” Roxe added. As for blockchain-native AMPL, Roxe complained that “its expansion and contraction is based on prices fed from centralized information sources.”
The three-token DO system is inspired by the way central banks function as a part of a nation’s economy, adjusting inflation and deflation as a reaction to market supply and demand. The developers also added on-chain governance to the DO, to ensure that it is controlled by its users.
The DO gives birth to a whole family of tokens—the DO, Roxe Cash (or ROC), and the roUSD stablecoin. The roUSD stablecoin will be pegged to the United States Dollar, while the DO algorithmically controlled stablecoin will be issued to manage price stability. The ROC is the system’s governance token.
Value can be transferred instantly between those tokens through on-chain mechanisms.
The ecosystem also includes a payment protocol that allows for instant peer-to-peer transfers integrated with an automated market maker which enables users to transfer, buy, and sell crypto and fiat assets. As with other decentralized finance protocols that leverage an automated market maker, Roxe users can also provide liquidity to this pool and earn passive income.
Stablecoins face an uncertain future
Regulators are increasingly wary of the potential of stablecoins to skirt their control over finance. As Modern Consensus reported in July, the Financial Action Task Force warns that stablecoins have a “propensity for mass adoption makes them more vulnerable to be used by criminals and terrorists.”
In late September, the European Central Bank also suggested that a panicked “stablecoin run” could cause damage that spreads into the traditional banking and financial system.