Carbon aims to introduce a new stablecoin powered by Hedera Hashgraph technology. Find out how it works today in our review.
Carbon, found online at Carbon.money, is a price-stable cryptocurrency based on a trustless ecosystem. Carbon aims to correlate with the price of US dollar by “algorithmically adjusting coin supply based on the demand.”
The entire system is built on Hedera Hashgraph, a blockchain-like technology. Like blockchain, Hedera is built on a distributed ledger, although the two technologies achieve consensus in different ways. Using Hedera, Carbon is capable of processing 100,000+ transactions per second.
Carbon’s token will be listed on exchanges in the near future under the symbol CUSD. Just like Tether, Carbon will allow traders to access a price-stable cryptocurrency trading pair.
How Does Carbon Work?
Launching a price-stable cryptocurrency isn’t easy. How does Carbon plan to create a price-stable cryptocurrency that tracks the value of the USD? Essentially, Carbon will have an elastic supply policy that adjusts the quantity supply of the coin in response to its market demand. The ultimate goal is to keep the value of each Carbon token locked to a value of around $1 USD.
Some of the key features of Carbon’s price stability scheme include:
Measuring the Exchange Rate: Carbon uses something called a “decentralized schelling point scheme” to achieve distributed consensus on Carbon’s exchange rate. Every 24 hours, also known as the rebasement period, a schelling point scheme is initiated. Nodes will submit bids for what they believe to be the true exchange rate of Carbon. Each bid is weighted by a collateral denominated in Carbon. Votes are tallied at the end of 24 hours to determine the optimal exchange rate for Carbon.
Aztec Model: The Aztec Model is something unique to Carbon. The Aztec Model works differently than most elastic supply stablecoin models. Under the Aztec Model, users gain 100% of the upside in expansionary cycles assuming those users burned their tokens during contractionary cycles. That means users have a strong incentive to assist in Carbon’s price-stability mechanism. We’ll talk more about how participants benefit from this model below.
The Carbon Credit: Carbon will introduce two digital currencies, including the Carbon Stablecoin (CUSD) and the Carbon Credit. The Carbon Credit is a volatile coin that will be used to absorb demands and price shocks to the CUSD.
Contraction: When coins are trading for less than $1 USD, Carbon will auction off Carbon Credits via a reverse Dutch auction to market participants who are willing to burn their stablecoins. This will create upward price pressure, causing the price of the stablecoin to appreciate back up to $1.
Expansion: When coins are trading for more than $1, coins will be distributed to Carbon Credit holders pro rata, creating downward price pressure and bringing the price of the stablecoin back down to $1 USD.
The entire system is powered by Hedera Hashgraph. Here’s how the Carbon whitepaper describes Hedera Hashgraph and its unique benefits:
“Hashgraph is a blockchain-alternative that achieves hundreds of thousands of transactions per second in addition to asynchronous Byzantine Fault Tolerance, the strongest form of security attainable for a distributed ledger.”
The end result of all of these technologies is a stablecoin capable of handling 100,000+ transactions per second while maintaining a stable exchange rate of around $1 USD.
About Carbon Features
We already have several stablecoins on the market today – including the USD Tether and similar currencies. What makes Carbon different? How will Carbon succeed where others have failed? Here are some of the core features of Carbon:
Stable: Carbon will be closely correlated to the US Dollar and, eventually, CPI-based pegs.
Programmable: Carbon is compatible with smart contracts, which could potentially make Carbon “intelligent money”. It’s a programmable, price-stable digital currency.
Lightning Fast: Carbon claims to offer transaction speeds of 100,000 transactions per second through the use of Hedera Hashgraph.
Trustless: As the Carbon website explains, you can “trust great code, not unknown third-parties”.
Borderless: Send value around the world with no strings or borders attached.
Who’s Behind Carbon?
Carbon was created by Connor Lin (Founder), Gavin Mai (Founder), Miles Albert (Founder), and Samuel Trautwein (Founder).
The company was founded in New York City in September 2017. The company is officially called Carbon-12 Labs, while their flagship product is the Carbon cryptocurrency.
The team comes from Stanford, USC, Columbia University, the Y Combinator accelerator program, Uber, Hedera Hashgraph, and other notable organizations.
Use For Carbon
There are countless use cases for a price-stable cryptocurrency. Here are some of the specific Carbon use cases identified in the whitepaper:
Carbon is trustless and fully programmable through smart contracts. This means all value transfer has context, and Carbon can be used to enable a higher degree of information encoding in each transaction. As the whitepaper explains, “Carbon expands the horizons of what money can be and the most powerful customizations are likely ones that we haven’t even thought of yet.”
The cryptocurrency community has enormous demand for a stable cryptocurrency trading pair – like a digital currency that represents the USD. The USD Tether is very popular among exchanges, although Tether has faced controversy for its lack of audits. Tether grew to achieve a $2 billion market cap. Carbon plans to partner with cryptocurrency exchanges to achieve a similar or greater market cap.
Global Payment Network
Carbon sees itself as a foundational element in a global payment network. It can serve as a unit of account, a store of value, and a medium of exchange. The main things stopping bitcoin and other digital currencies from becoming global currencies are their lack of characteristics like price stability, liquidity, and scalability. Carbon has all three of those characteristics.
Hedge Against Price Inflation
Use the CUSD to transfer your cryptocurrency holdings into a price-stable asset to hedge against future volatility.
Use Within Decentralized Applications In The Future
App developers struggle to accept cryptocurrencies as payments because the value of cryptocurrencies changes so frequently. Carbon sees itself as a potential medium of exchange for app developers, allowing them to accept cryptocurrencies without putting their livelihood at risk.
Carbon believes lending markets will be built on top of its infrastructure, allowing global access to secure and price-stable loans, enabling people to effectively and efficiently obtain capital with minimal friction.
Additional financial products that can be launched on top of Carbon include a network of trustless, decentralized credit/debt markets, options, futures, and other derivative contracts. As the whitepaper explains, “We envision Carbon as the foundation for the next generation of financial products that leverage distributed ledger technology.”
Carbon is a trustless stable cryptocurrency designed to correlate with the USD. Each Carbon Stablecoin (CUSD) will be worth approximately $1 USD. If the price is trading above or below $1 USD, then Carbon has a unique pricing mechanism in place to adjust the price downward or upward with inflationary or contractionary supply policy. The entire system relies on Hedera Hashgraph to achieve consensus while processing 100,000+ transactions per second.
Carbon is designed to be the stablecoin of the future. To learn more about Carbon and how it works, visit online today at Carbon.money.