The multinational blockchain technology company “Emurgo” announced the stable digital currency “AgeUSD” in January 2021.
Then the same company announced a partnership with the "Input-Output Global" company that stands behind the Cardano project and headed by "Charles Hoskinson".
Emurgo revealed that "AgeUSD" will be available on "Cardano" as soon as the latter launches smart contract capabilities.
Does the cryptocurrency market really need another stable currency?
Project “Emurgo”, through its new stable digital currency, aims to prevent the recurrence of the tragic events of “MakerDAO” that emerged through weaknesses in the mechanism of guaranteeing the stable digital currency “Dai”.
As a result of the mass liquidation of the vast majority of “Maker” coins, about $ 4 million of the “DAI” digital currency was produced with a guarantee at that time in March 2020.
Accordingly, the static digital currency “AgeUSD”, which is inspired by the protocol, “Staticoin”, is designed to place collateralized debt (CDPs).
Where the stable digital currency “AgeUSD” is described with the following:
Thanks to the currency design, the "MakerDAO" Black Thursday scenario is not feasible for "AgeUSD".
Without CDPs, there are no filter events and no requirement for users to perform transactions to ensure that the filtering operations are working properly.
The stable digital currency “AgeUSD” runs on the “Ergo” blockchain.
Reserve providers pay the original "Ergo" blockchain coin "ERG" to mint the reserve coins that are the primary collateral.
The ERG can also be deposited in reserves for “AgeUSD” minting, and this is only permitted by protocol if there are sufficient reserves.
Banks use a similar method to lend money.
Partnership with Cardano:
Cardano's partnership will also enable the digital currency, "ADA", to be used as collateral for "AgeUSD" reserves.
However, the potential downside is that the stablecoin is only supported by these two assets (ADA and ERG), while the DAI digital currency is backed by several cryptocurrencies.
"AgeUSD" will be launched on "Cardano" when it launches the "Alonzo" update that will introduce smart contracts supported by "Plutus".
This update is expected in the second half of this year, according to the roadmap.