Details Emerge on Iran’s XLM-Based Gold-Backed Cryptocurrency

Iran’s new gold-backed cryptocurrency “PayMon” will be technically based on the Stellar Lumens (XLM) network (which is an open-source codebase), and will trade in “special exchange offices.” These details emerged during a Sputnik interview with Hamid Reza Shaabani, founder of Iranian blockchain company ArzDigital.

As CryptoGlobe reported earlier this month, a company called Ghoghnoos (ققنوس - “phoenix” or “gryphon”in Persian) and four national banks are cooperating with Iranian authorities to produce the PayMon system.

The principal aim of PayMon is to provide a way for Iran to trade around US-sponsored sanctions, which have been increasing under Donald Trump’s push to scuttle (and renegotiate) the Obama-era “Iran deal.”

Commenting on the potential fulfilment of gold for tokens, Shaabani said that the “contract with [Ghoghnoos] stipulates that token holders can receive gold, but the details are not clear yet.” He also said that the crypto will be mostly traded by “special exchange offices,” adding that “It's likely that currencies will be traded in major international currency exchange points.”

Golden Ticket

Iran has been seeking to increase its internal mining production of gold and other precious metals such as copper, in the wake of sanctions which partially targeted these items. Gold has been used in past years to get around sanctions, specifically those that predated the Iran Deal. Gold has helped Iran funnel billions of dollars around sanctions, via Turkey and Turkish nationals.

It is little wonder then that the Central Asian country has eventually thawed to the idea of a cryptocurrency, which is capable of transferring value with uncensorable impunity depending on how it is designed.

Iran joins the Venezuelan government among countries to adopt a state-backed crypto, with Russia also playing with the idea - all for the same general purpose of skirting US-backed sanctions.

Also in the realm of centralized, non-public stablecoins, the JPMorgan Chase mega-bank launched its own a few days ago. The coin will not be widely available, with only entities vetted by the bank having access to the private crypto.

Wrapped Bitcoin Has Exploded Since Entering MakerDAO's System

After over a year of existence, the market capitalization of (Ethereum-)Wrapped Bitcoin (WBTC) has seen a steady rise since roughly March. Starting on about May 10, the USD value of bitcoins wrapped in WBTC smart contracts surged from about $10 million to over $35 million at the time of writing.

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This change in the WBTC chart represents a parabolic explosion of use, whereas the system had before rarely held more than $5 million worth of value on its network.

One explanation for this rise since March is of course the rise in general asset prices of cryptos like Bitcoin and Ethereum.

Another, more dynamic explanation for the surge, especially in May, is the recent addition of WBTC to the MakerDAO ecosystem. As covered by CryptoGlobe on May 4, Maker holders recently voted to allow WBTC as a form of collateral for minting DAI, a decentralized stablecoin.

DAI is created when another Ethereum-supported digital asset is locked in a smart contract against it. The underlying asset can eventually be released, and both the formation and dissolution of the locked smart contract is performed by paying a fee in MKR, MakerDAO’s native token (which also gives voting rights on the system). In addition to Ethereum (ETH) itself, Basic Attention Token (BAT) and USDC can also be used to mint DAI.

A complex system of balances is designed to keep DAI equal to one US dollar—although, since there is no central authority controlling supply, the peg is not always perfectly 1:1.

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