The global cryptocurrency market is gradually moving away from the pluralist model of multi asset interaction and is starting to become more centric, revolving around an established and highly capitalized hub of recognized and applicable cryptocurrencies. With the utility token having proven its inability to act as a store of value, the coins and stablecoins are turning into the hub of investment and capital activity on the market. The likes of Bitcoin, Ethereum and USDT Tether are currently holding the position of said hub, with the multiple other altcoins acting as the spokes, revolving around the mainstays, affected by their price movements and developments.
Stablecoins have received considerable traction over the last couple of years in light of the many events that have shaken the foundation of the global economy and undermined the reliability of many global fiat currencies. With fiat devaluing and losing its qualities as a store of value against the background of mounting geopolitical tension and rising inflation, the stablecoin is taking on the mantle of a haven for storing accumulated value and savings in an immutable fashion on the blockchain.
However, the stablecoin market is considerably overheated. The main problem is the presence of a single dominating stablecoin – Tether, which is a systematic risk for the entire industry. Statistics indicate that Tether constitutes 65% of daily trading volumes of all stable tokens, standing at over $155 billion. The world’s largest stablecoin is not very stable, as a Small Taiwanese bank that is fully controlled by Tether Ltd Caribbean Bank is used to store all of its US Dollar reserves. The legal tribulations around Tether go much deeper, as Tether paid an $18 million fine to settle NYAG cryptocurrency cover-up charges. It has also been accused of having no direct connection between the custodian bank and its infrastructure and distributed ledger. With its fully manual issuance of tokens, the system is completely dependent on the reliability of its staff. The latter factor casts serious risks of fraud on Tether, as any misuse on the [art of the administrators would potentially result in the additional issuance or burning of the coins.
The inherent weakness of a legal status of Tether extends to the lack of rigorous KYC/AML procedures leading to a systematic risk for the stablecoin and its custodian, including risk of reserve funds blocking. So far Tether has defaulted on many promises to deliver transparent audits, as publicly available data suggests that the token is 49% backed by unspecified commercial papers.
Such risks compile and undermine both the integrity of Tether as a reliable stablecoin and result in significant risks for those relying on it as a secure store of value for their savings and as a trading instrument.
The solution lies in the creation of a truly reliable and credibly backed stablecoin that would be able to offer its holders an undisputed degree of transparency and integrity as a digital currency retaining value on the basis of the inherent qualities of the blockchain. The AAD project is creating such a solution in the form of digital cash — stable and liquid as fiat money, boundless and immutable as cryptocurrency – the world’s first digital cash built right.
The AAD project intends to maintain all of its reserves in a Swiss bank with Cryptographic Proof of Reserve backing. The merger of real-world finance and decentralization means that the coins may not be issued, or burned without the approving cryptographic signatures of AAD and the repository Bank, thus confirming that the account balance has been changed. All AAD coins will be maintained at a 1 to 1 ratio in US Dollars deposited on the reserve account and coins in circulation.
The underlying Cryptographic Proof of Intent algorithm means that the coins are issued or retired only in case of the corresponding intent registered by a customer on a public blockchain. The 1 to 1 intent-issue amount and intent-burn amount ratio is cryptographically verified, meaning that issuance without reserve and retirement without withdrawal is impossible due to cryptographic restrictions.
Application of mandatory KYC and AML procedures will add a much-needed layer of security and legality to the AAD stablecoin, as all new clients will be obliged to pass it prior to the purchase or sale of any tokens. A progressive legal framework set in Zug, Switzerland, supervised by Swiss authorities will complement the basis of the AAD infrastructure built on the Ethereum blockchain and its scaling to other major DeFi platforms.
As the world’s first digital cash built right, AAD will launch a strategic initiative aimed at achieving listing on the most prominent global exchanges, thus becoming available for the broader crypto community. AAD will move towards becoming an enabling technology for payment systems, remittance payment solutions, e-commerce platforms and other value exchange systems.
Considering that the main users of Tether are exchanges, arbitrage traders and members of the crypto community, AAD intends to develop a solution that will cater to all layers of the decentralized market audience, thus providing them with a reliable and credible stablecoin. The project will ensure that all the fundamental problems of the stablecoin market are addressed, while rapidly gaining traction and broad adoption within both the crypto and fiat domains. By combining excellent technical expertise, partnership with a Swiss bank and full transparency on the basis of impeccable Swiss regulation, AAD intends to become the go-to stablecoin solution on the market.
The tokenomic model of the AAD project is based on the mechanism of generating revenue from commissions for each transaction carried out with the use of the AAD token. The commission is paid in AAD tokens at a fixed rate of 0.2% per transaction. The AAD project’s business development team will be fully focused on promoting the token as a means of payments in the e-commerce retail sector, while attracting active market traders who are currently largely exposed to Tether. With the annual turnover of stablecoins in 2021 on-chain standing at $2.5 trillion, AAD foresees that the introduction of its solution and its integration into such off-ramp systems of Visa and Mastercard as a means of payment will result in an immediately addressable market of around $20 trillion.
The AAD project development team also foresees considerable demand from groups that perform arbitrage trades between exchanges. The basis of AAD as a secure, transparent and liquid means of payment shall attract more retail users and new entrants into the decentralized assets market seeking reliable value storage instruments.
The ultimate goal of AAD is to become a means of exchange for payment systems, empowering developers from across the globe to build their payment solutions with AAD at its core.
There is immense verifiable demand for stablecoins, however, related projects currently operating on the market have provable design flaws, which have led to explicit technical and credibility issues, including investigations, legal actions, over issuance of coins, and others. A true stablecoin has to consist of a combination of unique blockchain characteristics, such as immutability, a lack of intermediaries, instant settlements, and fiat stability, while maintaining the functionality of a store value and a means of payment.
The AAD project has combined all the necessary elements to build a true stablecoin relying on a recognized legal framework, a competent team with extensive professional experience, a Swiss banking partner, and legal supervision. The given factors, and the existing market makeup give the AAD project the necessary bedrock to develop and scale in an aggressive fashion that will attract investor involvement and bootstrap user engagement.