MobileCoin, a cryptocurrency and payments company, has launched a new stablecoin called 'Electronic Dollars.'

 MobileCoin, a cryptocurrency and payments company, has launched a new stablecoin called 'Electronic Dollars.'

CoinDesk's Frederick Munawa

2022-10-10 15:55

MobileCoin, a cryptocurrency and payments startup focusing on privacy, has introduced a new stablecoin called "Electronic Dollars" in conjunction with stablecoin platform Reserve (eUSD). According to the company, eUSD is fully collateralized and is specifically designed to secure consumers' confidential transactional data.

eUSD is backed by a basket of other stablecoins, including USD Coin (USDC), Pax Dollar (USDP), and TrueUSD, according to MobileCoin (TUSD). End-to-end zero-knowledge encryption is used to encrypt each transaction. In other words, owing to encryption that employs zero knowledge proofs, only the transacting parties can view their own transactional data (a way of proving something without revealing sensitive information).

The eUSD stablecoin is based on the MobileCoin blockchain.which is intended for mobile devices, according to MobileCoin Apparently, MobileCoin was created with the intention of integrating with the encrypted mobile communications programme, Signal. As a result, eUSD will inherit the functionality of MobileCoin's native cryptocurrency, MOB, however eUSD users will pay transaction fees in eUSD rather than MOB (a fixed $0.0026 per transaction).

 MobileCoin, a cryptocurrency and payments company, has launched a new stablecoin called 'Electronic Dollars.'

"To the best of our knowledge, no project has produced a native stablecoin with privacy attributes that is a first-class citizen in the ecosystem and never necessitates the use of 'non-private' transaction technology to use regularly." "In summary, no one has constructed a private digital dollar yet," MobileCoin noted in the eUSD whitepaper.

How does eUSD function?

The eUSD appears to have a centralised governance system, with the MobileCoin Foundation serving as the principal governing body. The foundation chooses "governors" who can mint and burn eUSD.

The collateral for the stablecoin is stored in Safe (previously "Gnosis Safe"), a popular Ethereum multisignature (multisig) wallet. Governors only issue new eUSD after confirming that an equivalent amount of collateral has been sent to the Safe wallet.

"Anyone may look at the contract that holds this basket [of collateral] to see what the current amounts are." "It's a Gnosis safe, which is also one of the most well recognised contracts on Ethereum for keeping assets," MobileCoin's Chief Innovation Officer Henry Holtzman noted in an interview with CoinDesk.

Similarly, when a user redeems eUSD, the token is "verifiably burnt," and the accompanying collateral is released by the governors. When burnt eUSD is transferred to a "burn address," it becomes "visible" for transparency reasons, but "unspendable."

However, ordinary users are unlikely to engage in burning and minting. A person looking for eUSD would simply buy it on an exchange. Large quantities of eUSD would be issued by approved liquidity providers (LPs).

"Individuals have a far more straightforward experience than liquidity providers." "Liquidity providers are producing Electronic Dollars in large quantities, and consumers are just purchasing them on an exchange," said Joshua Goldbard, CEO and founder of MobileCoin, to CoinDesk.

Auditing

Many asset-backed stablecoin issuers hire third-party accounting firms to create attestation reports that affirm the presence of assets that correspond to the stablecoin's circulating supply. MobileCoin employs a "reserve-auditor" mechanism that serves a similar purpose.

"We're also putting in place an auditor who will let you to view for yourself all of the wrapping and unwrapping activities and ensure that the overall supply is the same on both blockchains," Holtzman explained.

The reserve auditor connects to the Safe wallet through an application programming interface (API) and ensures that each freshly issued eUSD is accompanied by the appropriate amount of collateral in the wallet.

"We'll make everything open source." So, if you like, you may run your own copy [of the reserve auditor]. You can inspect it to ensure that we truly "As we state, they are supported precisely as we claim," Holtzman told CoinDesk.

Asset Collateralization

Because eUSD is backed by assets that exist on other blockchains, MobileCoin requires a bridge to those other blockchains. Safe, an Ethereum smart contract, holds the eUSD collateral. To transport "wrapped" copies of eUSD between the two blockchains, a bridge between MobileCoin and Ethereum is necessary. Wrapped tokens are tokenized versions of crypto assets that are not native to the blockchains on which they reside.

Governors provide permission to liquidity providers and bridge operators to wrap and unwrap eUSD as it moves between the MobileCoin and Ethereum blockchains.

"Each wrap and unwrap must be signed by two partners." One of them is the person executing the wrapping and unwrapping, which is the financial institution, and the other is the bridge operator. So, jointly, the bridge operator and the liquidity provider cannot steal," Holtzman stated to CoinDesk.

Know-your-customer (KYC) and anti-money laundering (AML) standards are stated to be in place at all on- and off-ramps, despite the fact that eUSD depends on end-to-end zero knowledge proof encryption to keep transactions secret."Every on-ramp and off-ramp has comprehensive KYC and AML." "Privacy exists only within the network, peer-to-peer," Goldbard noted. "I believe the most important thing we'd like you to take away from today's chat is that we're constructing a data-protecting cryptocurrency that also conforms with the law."