Binance Research has released an analysis of the most recent Libra whitepaper identifying what could be a potential disruption to the current payments industry.
“Differences with the first version of Libra include a different mission statement and overall narrative, a clear attempt to comply with applicable regulation, a better description of the various parties in the Libra universe, and the set of currencies (multiple single-currency and a multi-currency pegged stablecoins).”
This new whitepaper further highlights Libra’s fundamental pillars as well as some new changes in the operation of the Switzerland-based organization. According to the whitepaper, key pillars within Libra’s ecosystem include its blockchain, stablecoins, and network governance. Notably, the association maintained its technical blockchain structure, LibraBFT, as earlier outlined in 2019.
Libra’s Market Prospects
Given the developments by Libra, it is likely that this Facebook initiative will gain more traction from all market stakeholders. The big question, however, remains on whether the Libra stablecoins will be accommodated by the authorities who were initially skeptical about the project. Should this happen, Libra stands a real chance to revolutionize the payments industry according to Binance Research,
“Libra’s envisioned global payment system could do to the payment industry what SpaceX did to the space industry: shake the foundations of a well-established sector with high entry barriers,”
The report also notes that Libra could significantly increase its market share if it will be able to maintain user-friendly interfaces and allow access to third parties such as financial regulators. Despite Libra’s disruption threat, Binance Research said that its stablecoins are not likely to affect monetary stability in developed countries.
While the Libra project has been hailed by some, critics with influence in the regulatory space have stalled the launch of its digital assets. The situation has given rise to some risks that would have been otherwise averted.
For instance, Libra’s approach to collateralize its stablecoins with a larger percentage of short-term instruments might reduce the interest on them. Binance Research added that its diverse portfolio basket could also expose Libra (LBR) to more risk,
“Libra’s currency pegging system is unique, with collaterals being subject to sovereign risk and redemption risk. Despite the system being overcollateralized, it would mostly be backed by short-term fixed-income instruments denominated in fiat currencies, which may raise questions regarding money creation.”