On 9 November 2018, New York-based blockchain startup Carbon-12 Labs (better known as "Carbon"), which develops a stablecoin called CarbonUSD (CUSD), announced that CUSD was available on the EOS platform. In this article, we take a closer look at CarbonUSD.
Carbon, which was founded by Samuel Trautwein (CEO), Connor Linn, Gavin Mai (CPO), and Miles Albert (CSO), originally launched CarbonUSD on the Ethereum platform on 12 September 2018. CarbonUSD is a price-stable cryptocurrency that is fully-collateralized 1:1 by U.S. dollars held in FDIC-insured accounts.
However, the long-term plan, according to Sam Trautwein, the company's CEO, is to transition a "fiat-backed algorithmic hybrid approach" once "CarbonUSD reaches sufficient scale as a fully fiat-backed token." Here is how he explains it:
"While redeemable, fiat-backed tokens are generally trusted on day 0, they are intrinsically unscalable. Structurally these tokens are multi party bearer receipts meaning that their soundness depends not on a single fail point, but rather usually four to five. If the auditor, the bank, the trust company, the smart contract auditor, or the software provider fails (in any sense of the word), the entire structure comes tumbling down. As the stablecoin scales it undergoes significant strain. They draw increased regulatory scrutiny meaning that small things that were once overlooked now will draw the ire of governing bodies. In many ways Tether outscaled its compliance. They lost their ability to withdraw and deposit through Wells Fargo overnight. It’s difficult to build a new paradigm within the old paradigm."
"Combining the two presents the best route forward. We offer the optimal consumer product today and tomorrow. The transition will be gradual and transparent as we will leave the infrastructure in place for users to keep using fiat-backed solutions if they so desire."
On November 9th, Carbon announced that CarbonUSD had also become available on the EOS platform. In a blog post published on November 10th, Trautwein explained that "Carbon’s interoperability solution enables CarbonUSD users to transfer their tokens onto the EOS blockchain, where users can transfer CarbonUSD with even lower fees and faster settlement than on Ethereum." He added:
"“We are honored and excited to be the first stablecoin on EOS and to play such a crucial role in such a burgeoning ecosystem. Stablecoins are critical infrastructure for value and we think providing this to EOS further enhances the ecosystem."
Trautwein went on to explain how deposits/withdrawals work:
"To create new CarbonUSD tokens, users can make fiat deposits with the company’s partner bank, Nevada-based Prime Trust. Frequent third-party attestations by leading auditor Cohen & Co. verify publicly that each token is backed 1-to-1 by escrowed funds in a trust account."
Sam Kazemian, Co-Founder and President of Everipedia (an EOS DApp that calls itself "the world's largest encyclopedia on the blockchain"), stated:
“Stablecoins, as an asset class, are the next big thing in crypto and will lead to a new bull market in the next 6–18 months. Carbon’s unique hybrid approach for gaining stablecoin adoption is the most promising I know of. There’s no other project like it”.
Featured Image Courtesy of Carbon-12 Labs