KuCoin AMA with e-Money — The Next Generation Stablecoins for the Internet of Money

Dear KuCoin Users,

Time: October 4, 2021, 11:00-12:08 (UTC)

KuCoin hosted an AMA (Ask-Me-Anything) session with e-Money CEO and Founder, Martin Dyring-Andersen, in the KuCoin Exchange Group.

e-Money is a blockchain-based payment platform built by Danish fintech e-Money A/S, committed to bringing financial inclusion and to help people around the world to have easy access to digital currencies. Built on Cosmos technology, e-Money supports a range of fiat-stablecoins which are fully backed by bank deposits and government bonds that are also interest bearing. The fidelity and transparency of e-Money stablecoins will be ensured by Ernst & Young providing quarterly Proof of Funds. e-Money currently supports several European currency-backed stablecoins such as the eEUR, the eCHF, and tokens backed by Scandinavian currencies (eNOK, eDKK, and eSEK). The e-Money ecosystem has a second token class, the NGM token is a staking token and rewards token, users can stake NGM to secure the e-Money network.

Official Website: https://e-money.com

White Paper:

Follow e-Money on Twitter and Telegram.

Guest:

Martin Dyring-Andersen — Founder & CEO of e-Money

Q: Can you give a high-level introduction of the e-Money project, the team and what it intends to solve?

Martin: Absolutely. The idea for e-Money was formed around the following 3 key components:

1) A blockchain based on the Cosmos software (Tendermint and Cosmos SDK).

This provides instant-finality transactions, so that payments can be done in < 500ms, as well as DEX for efficient exchange of tokens at very low cost.

2) Cross chain protocols such as Inter Blockchain Communication (IBC), used for connecting to Cosmos chains, along with an EVM-compatible bridge to connect to networks such as Avalanche and Ethereum.

And finally, 3) A novel model for interest-bearing stablecoins developed in-house. It enables e-Money to issue tokens in all major currencies, regardless of positive or negative Central Bank interest rates.

By combining the 3, we can improve (and even replace) large parts of the existing payment infrastructure and offer open access to on-chain, multi-currency accounts.

We think of ourselves as a “layer 2” solution for the traditional banking system. In more concrete terms, we’re issuing European stablecoins with a few novel properties.

The stablecoins are compliant, interest-bearing and audited.

The e-Money chain is built using the Cosmos SDK and thus provides excellent throughput, cheap transactions and proof-of-stake.

The project was started back in the early days of Cosmos (2017) and we are now on our 3rd mainnet. We recently upgraded our Mainnet enabling Inter Blockchain Communication (IBC) that bridges us to the Cosmos Hub and Osmosis AMM DEX.

Q: What are the features of e-Money?

Martin: We’ve spent quite a lot of resources on regulatory exploration, and our stablecoins are fully compliant with EU legislation.

The stablecoins are backed by actual money in the bank account. To support this claim EY are providing periodic proof of funds to provide transparency and trust that the tokens are backed by actual money.

The above allows our stablecoin users to reason about the actual value of the stablecoins.

(Not that common still)

A novel feature of our stablecoins is that they are interest-bearing, much like a traditional bank account.

This means that the model scales well in low or zero-interest environments, as well as environments with much higher interest rates.

This aspect of our stablecoins make holding them very similar to having funds in a savings account. We pass any interest accrued on the actual funds that back the stablecoins.

In addition to our stablecoins, we’re issuing the NGM ("Next Generation Money") token, which is a staking token similar to the Cosmos ATOM. It secures the e-Money chain through staking.

The $NGM token comes with 3 benefits:

1. Staking rewards, which currently has an APY of about 17%.

2. Transaction fees from the chain.

3. Buy-back of NGM tokens based on stablecoin inflation by 0.5% per year, which is part of the interest mechanism. The power of the buyback mechanism essentially scales with the adoption of the stablecoins.

Our token model is designed for a future of interoperable networks, so bridging to other blockchains is an essential part of our strategy.

We’ve so far bridged to Ethereum, Cosmos Hub and Osmosis, several more networks are in the pipeline.

On the tech side, we’re building on the Cosmos SDK stack, which delivers instant finality and cheap transactions and enables us to use the Cosmos IBC protocol to easily connect to chains.

Q: Can you tell us about how e-Money is innovating stablecoins?

Martin: Yes, happy to dive into that.

The idea for e-Money was formed in early 2017 around the time of the Cosmos fundraiser.

We wanted to act as a fiat gateway between the real economies and the world of interconnected blockchains.

Even though USDT had been around for a while in 2017, we wanted to build something better:

More transparent.

Supporting all major currencies.

With negligible fees.

Supporting instant payments while being movable across chains.

We realized to accomplish this, we had to invent a new model for currency-backed stablecoins.

Early in the development it quickly became apparent that a 1:1 pegged stablecoin model would not work for European currencies, as many of them have negative interest rates.

Even though our stablecoins are fully backed by a reserve (e.g. EUR bank deposits and EUR government bonds for eEUR tokens), there is an exchange rate ("dynamic peg") that governs the relationship between the stablecoin and its reserve.

This means that for positive-interest currencies, the reserve will increase in value which translates into each stablecoin token increasing in value. Conversely, for negative-interest currencies, the reserve will diminish in value which translates into each stablecoin token decreasing in value.

The same exchange rate (dynamic peg) is used when people want to convert between currency and the stablecoin. You'll notice that we are effectively transmitting the interest rates of the currency onto the stablecoin holders.

When users see their present-day value of the stablecoins in our wallet, it will be converted to the underlying currency value. Taking all of this together, from a user perspective, having e-Money stablecoins is very similar to having a traditional savings account.

Q: What are the advantages of e-Money in the same field? What is the difference between collateralized stablecoins and Algorithmic stablecoins?

Martin: A key advantage of e-Money stablecoins is they are available for a growing number of currencies, not just USD. This is necessary for adoption outside of the crypto space as we look for broader adoption of blockchain technology and our stablecoins.

In contrast to crypto-collateralized and algorithmic stablecoins, it is possible to reason about the value of our stablecoins. There are no "cliff events" (where value suddenly diminishes) or risks inherent by using a new algorithmic protocol.

Instead the owner can sleep well at night knowing that there is always a "big whale buyer" in the market, willing to buy the stablecoins against the underlying currency.

That whale buyer is actually the reserve managed by e-Money, backing the value of each issued stablecoin.

We are also improving on the transparency side. As mentioned Ernst & Young (EY) are doing proof-of-funds. I believe we are the first stablecoin project to get a big4 auditor to do this.

Q: What is special about the economic model and the utilities for NGM tokens?

Martin: Similar to Cosmos Hub ATOMs, the e-Money NGM token can be staked to earn staking rewards.

NGM supply is inflated 10% per year and distributed to stakers.

This is possible through our web wallet and yield is approx 17% APY. (The APY varies when the percentage of NGM staked out of the total NGM supply)

The staking aspect will feel very familiar to anyone already active in the Cosmos ecosystem.

A more novel feature of the e-Money project and our stablecoins is that we monetize the issuance of stablecoins by inflating the supply 0.5% per year.

0.5% of stablecoins are used to buy back NGM tokens in the market (via our DEX), effectively reducing supply of NGM while supporting the value of it.

Simply put, as our stablecoin issuance increases buyback pressure grows, affecting the NGM price.

Q: What is the role of DeFi in your platform?

Martin: We see DeFi as an essential tool for increasing adoption of our stablecoins and we’re actively pursuing that avenue.

Our token model is designed specifically for interoperability and having our tokens present across many different networks, so we have the option of integrating with DeFi projects where they are present.

Our focus for the near term future is to increase stablecoin adoption through AMMs and create great liquidity between our EEUR and crypto assets.

I'm excited to announce that e-Money’s EEUR as was the first stablecoin to be integrated with the Osmosis AMM DEX.

We have created liquidity mining programs to incentivize people to add liquidity to the EEUR and $NGM pools (announced later today).

The Osmosis community has also voted "YES" to add liquidity incentives in OSMO for pools with EEUR and NGM.

Overall, we have some very exciting things ahead on Osmosis and look forward to developing this further to offer great, trustworthy liquidity.

Further on, we will be expanding our footprint to other AMMs and DEX’s. Being present on several networks means that we’re not constrained to a specific one, but can focus our efforts and liquidity where the users are.

We also believe that the LP rewards program will be especially attractive for the stablecoin vs stablecoin pools, where the risk of supplying liquidity is limited.

In general, we’re seeing a lot of interest in having a good EUR alternative to the USD-based stablecoins, both due to regulatory concerns in the US but to hedge currency risk and for transparency reasons.

So we have rather high expectations for the EUR stablecoin especially.

Q: What else can the community expect from the e-Money team?

Martin: Absolutely. Where to begin.

* Expanding network integrations, such as Avalanche, Binance Smart Chain and Polygon. We are prioritizing integrations where we see a high probability of liquidity forming quickly.

* More crypto on/off ramps via AMMs such as Uniswap, Pangolin (Avalanche), etc. We're using Osmosis to gain experience on how to best drive this liquidity.

* More fiat on/off ramps for the stablecoins using centralized exchanges. Further down the line we can support credit card purchases of stablecoins as well as deposits/withdrawals using bank transfers. (In the Euro zone we have some interesting options on the bank integration side)

Q: How many team members do you have? Do they have enough experience in the blockchain field? Do they have any experience on working in crypto and non-crypto projects?

Martin: We are a small "crack commando" team of developers with experience from both the blockchain, currencies and markets/trading space. So well suited for the task at hand. We have also brought people onboard with experience from the banking and regulatory side, as well as marketing.

Q: How is fully collateralized applied?

Martin: All stablecoins are backed by bank deposits or government bonds in the same denomination. E.g., our EEUR token is backed by EUR bank deposits and EUR bonds.

As interest is accrued (positive or negative) on the EUR reserve, the exchange rate between EEUR and EUR will slowly change.

That means the amount of EEUR in your wallet does change, but the value of each token will slowly change vs. EUR. (similar to when you see your crypto assets valued in USD, it changes over time)

Q: Why should I choose NGM?

Martin: As we have already seen with USDT and USDC, fiat backed stablecoins are what people prefer for a number of reasons.

Our NGM token is the first in the market that links the success of issuing fiat backed stablecoins with the value of a project token (NGM).

Q: Do you have any coin burn/buyback systems or any token burn plans to increase the value of the token and attract investors to invest?

Martin: Yes, the NGM token is bought back and burned at a rate of 0.5% / year of our total stablecoin issuance.

Q: What are your security measures adopted from hacking and bugs in smart contracts? Have you conducted any audit to make your smart contract safe?

Martin: We put great effort into being a transparent and trustworthy project. CertiK has audited the e-Money chain codebase and as mentioned Ernst & Young (EY) are providing proof-of-funds for the stablecoins.

Q: What plans do you have to grow rapidly in terms of users, global market and partners? What are your strategies in building a big and strong community?

Martin: Near term we will focus on network integrations and building liquidity. We want EEUR to be the de facto stablecoin for the Eurozone and a highly liquid, trustworthy and regulated alternative to our USD backed friends across the pond.

Q: Is there anything else you would like to share or you want us to know?

Martin: Well two things.

1. The current NGM token that can be traded on KuCoin is the ETH wrapped version. It can be transferred to our mainnet through the wallet. Mainnet integration should be coming soon

2. I would encourage anyone interested in trying out liquidity mining the EEUR to drop by https://osmosis.zone. More liquidity incentives in the coming days.

KuCoin and e-Money have prepared a total of 1,800 NGM to give away to AMA participants.

1. Free-ask section: 75 NGM

2. AMA activity: 1,725 NGM

Activity 1 — Quiz: 1,300 NGM

Activity 2 — Price Guess: 300 NGM

Participation Rewards: 125 NGM

. . .

If you haven’t got a KuCoin account yet, you can sign up here!

Follow us on Twitter, Telegram, Facebook, Instagram and Reddit.