New York-based crypto startup Carbon said on Wednesday it had launched a new 1:1 dollar-collateralized virtual coin, becoming the third US company to bring out a stablecoin this week after the GUSD project of the Winklevoss twins and Paxos’s PAX.
Dubbed CarbonUSD (CUSD), Carbon’s crypto offering uses the Ethereum ERC20 protocol. Currently, the project targets institutional investors, traders, and exchanges. In order to “create” CUSD, miners should make a fiat deposit into Nevada-based Prime Trust, the banking partner of Carbon. The startup is in the process of finding exchanges that would want to list the coin, and once it happens, CUSD will be available to other customers.
A basket of white-listed tokens supports CarbonUSD, eliminating a dependence “on the size of an initial reserve,” Carbon co-founder and CEO Sam Trautwein explained.
“In the long term, we anticipate CarbonUSD will be composed of a basket of whitelisted stablecoin tokens, including a trust-minimized, algorithmic stablecoin,” Trautwein said in a blog post.
The first of those is called Whitelisted Token 0 (WTO). It is collateralized by Carbon’s US partners and redeemable for US dollars, the CUSD white paper says.
“Governing members of the whitelist can decide when CarbonUSD has enough liquidity to safely switch off from full fiat collateralization, which we believe is a robust mechanism for introducing a trust-minimized, algorithmic stablecoin to the market that is not dependent on the size of an initial reserve,” according to the white paper.
Carbon plans to analyze the interoperability of ERC20 with other protocols and to deploy its algorithmic protocol to Hedera Hashgraph at some future point, the Telegram post added.
Stablecoin projects have become a hot topic this week after New York State’s financial regulator approved two US dollar-pegged project, Gemini Dollar (GUSD) and Paxos Standard (PAX). Several leading crypto industry figures have praised the regulator-backed initiatives as a way to find a solution to the volatility problems of the crypto market.
Carbon did not disclose any approval from regulators, only claiming that the project is “complaint.” Earlier this year, the startup raised around $2 million for CUSD from several investors including Digital Currency Group, General Catalyst, and Play Ventures.