A new DLT company is aiming to disrupt the existing infrastructure, with a novel approach even by blockchain standards. SovereignWallet Network (SWN) is attempting to create and maintain a stablecoin using a non-collateralized approach known as Algorithmic Central Bank (ACB) while also providing a host of crypto-financial services.
The ACB style of maintaining stability utilizes smart contracts to automatically adjust the supply. This is in contrast with the clumsy and cumbersome regulatory procedures of collateralization and checks by third parties with typical stablecoins such as Tether, which has already been accused of fraud. It can also be contrasted to crypto backed stablecoins such as MakerDao.
What crypto-financial services does SNW provide?
The SovereignWallet is an application that offers bank-grade security. Sending cryptocurrency to other parties with SWN is said to be as easy as sending a text message, and the application will assist in banking the unbanked and the underbanked. The reality may be that unless sending and receiving cryptocurrency is made as easy as sending a text message, people may not adopt it. Despite the obvious advantages of cryptocurrency, the majority of the population has still not even downloaded a basic wallet.
SovereignWallet has developed a suite of crypto-financial services and recently announced a custody free decentralized exchange platform. The decentralized exchange platform uses atomic swap technology for ultimate security, and current tokens listen on the platform include MUI, Ethereum, OmiseGo, 0x, AirSwap, Kyber Network, TenX, Status, TrueUSD, Golem, and Augur. It is also possible for users to mint their own coin using the Sovereign Wallet meta blockchain.
Do we really want a stablecoin?
The network further intends to utilize an ERC-20 stablecoin called the MUI, built on the 0x protocol. ETH is used as the base currency on the platform. For many, stablecoins are inherently pointless, but this is primarily because they are linked to fiat and require third-party verification. In this sense, stablecoins are indeed completely pointless. However, an ACB-based stablecoin needs none of these requirements, running on open source software that uses smart contracts to automatically adjust the supply. In this way, people can leverage the benefits of stablecoins that do not fluctuate, so they can preserve wealth without having to worry about some of the widespread volatility in the BTC market, currently down 30% in less than a week.
Algorithmic stablecoins could assist in the transition from centralized fiat to decentralized crypto. Crypto detractors such as Nouriel Roubini may cite the benefits of central banks over decentralized currencies. But even if any of this was true, these benefits can be attained via an algorithm, without paying bankers millions of dollars in the process.
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Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.