Upstart crypto firm Saga desires to concern a brand new world foreign money on the blockchain. Just don’t name it a stablecoin.
Saga’s SGA digital foreign money depends on a global reserve asset referred to as Special Drawing Rights (SDR), which was launched by the International Monetary Fund in 1969. This is a traditional basket of main world currencies — the US greenback, the euro, the British pound sterling, the Japanese yen, and the Chinese renminbi — that central banks around the globe use to hedge in opposition to fluctuations in their very own native foreign money. SGA borrows this mannequin for a monetary instrument and places it on the blockchain.
These days, one SDR is price about $1.40 USD, and SGA will probably be price the identical when it launches. But SGA’s worth can go up or down relying on what number of different persons are utilizing SGA. To purchase this cryptocurrency is to trigger Saga’s good contracts to generate it from scratch. To promote it again is to burn the cash. So the financial worth of SGA can change, however the thought is that any change in value occurs slowly and sustainably.
So SGA isn’t a stablecoin with a completely fastened value. But you may pretty name it a “stable currency.”
“It’s increasingly clear that for a global economy, we need a global currency,” stated Saga founder Ido Sadeh Man. “If we want to achieve this, we need to answer a few questions. Who controls it, how do you tame volatility, and is it legitimate?”
Saga treats its token holders as sovereign. Yes, Man began the enterprise, however Saga makes use of an Ethereum-based governance mannequin that makes it doable for holders to elect a board of administrators or one other financial committee that ignores his needs completely.
Saga is in the end an ERC-20 token system that additionally adheres to AML and KYC practices. While the considered regulating some new world foreign money might sound foolish, this compatibility ought to be fairly interesting to policymakers. Man defined that Saga most likely received’t obtain standing as a method of trade inside a yr or two of launch — why maintain it if nobody accepts it, and why settle for it if nobody has it? Instead he suggests SGA will discover its first purposes inside hedging.
When requested about his foreign money enjoying a job in a world hypothetically freed from geopolitical borders, Man stated, “It’s obvious that nation-states can’t handle all our identities for all our lives, but I don’t believe that my generation will witness that, and probably not my children’s generation either.”
SGA launches on December 10th and will probably be out there for buying and selling on Liquid.