Eunchae Jang has extensive experience in IT support roles. She currently works as an IT Support Manager at Platinum Q DAO Engineering. Eunchae has been effective in streamlining communications between customers and development teams, helping identify and prioritize bottlenecks and challenges. She regularly participates in major conferences and meetups, always ready to showcase the latest achievements by Platinum Q DAO Engineering and partnering projects.
Right now, PLATINUM Q DAO ENGINEERING, a major blockchain development outlet, is helping to develop a new stablecoins, called USDQ/KRWQ. It’s an ERC20 token with a soft peg to 1 USD. It’s easy to use this token as any other ERC20 asset out there. Right now it trades on BTCNEXT with plans to make it available on other crypto exchanges as well. The difference is that USDQ/KRWQ feature a stable price, which means that it’s worth $1 for USDQ today, will be worth the same tomorrow and in a month. In contrast to centralized offerings on the market, like Tether, it’s completely decentralized with all of its components living on the blockchain.
I think that the architecture within this ecosystem is amazing. It’s clever and it works smoothly. And the fact that all the components work together successfully — without any centralized controller — makes you think that we are on the brink of a new era in economy, governance and society as we know it. The economy that’s fully decentralized. In this article, I will explain to anybody who’s willing to spend around 10 minutes the ways in which USDQ/KRWQ bring trust and reliability.
The system collateralizes Bitcoin. But Bitcoin is very volatile. Doesn’t it make the system volatile too?
The USDQ/KRWQ system is based on the over-collateralization, which means that for $1000 in BTC, you’ll be able to generate only $660 in USDQ/KRWQ. This protects the system against unexpected moves in the collateral assets. So, unless BTC goes to 0 and doesn’t change its price very fast (like 30% in 1 minute), the system’s gonna be stable.
By the way, we are planning to collateralize other digital currencies in the future, i.e. TOP-10 cryptos. Doing this, we’ll be able to serve much more crypto enthusiast, who doesn’t want to convert from their favorite assets but also want to have the capabilities for collateralization.
And now let’s look into this question in more detail.
So, if anybody — for instance, a system’s developer — wants to get some USDQ/KRWQ, they need to interact with the smart contract. And the smart contract will need some of that tasty Bitcoins before it can create the so-called “Collateralized Debt Position”.
The CDPs created by the system are characterized by the varying level of indebtedness. As I said above, you can withdraw only 66% of your collateral’s worth. However, we don’t expect that every CDP holder will draw the full available amount of USDQ/KRWQ. The majority of them will draw only 10%, 30% or something like that.
I like it that the system enables the smart contracts to automatically change the levels of debt whenever the price of BTC changes relative to USD. If BTC goes up, your loan becomes less risky. If BTC goes down, you have a riskier loan on your hands.
And you can rank all the loans in terms of their riskiness levels.
The maximum riskiness level is 66%. And as BTC goes down, the risk grows. Whenever this level is crossed, any USDQ/KRWQ holder can pay off the debt, incurred by the CDP, and make a profit. This results in the destruction of USDQ/KRWQ within the system, termination of the CDP and the liquidation penalty being imposed on the CDP owner.
I think that some of the details in regard to these processes can be tricky. But, overall, the high-level concepts aren’t that hard to understand. There are rational actors — ordinary market participants — who use the system in order to obtain some financial benefits. They are incentivized to remove the riskiest loans from the system, so that the system doesn’t go overboard with the risky liabilities on its books. If any particular CDP owner doesn’t care about the riskiness of his debt, he’ll get a penalty.
As I said before nobody expects that ordinary users will get into this thing. It’s big financial players, developers and blockchain investors who will deal in CDPs. So, they wouldn’t want to get exposed to excessively high risk. That’s why they will be OK with repaying some of the debt in order to reduce the risk profile before it goes over the 66% level. The diligent CDP owners will keep track of the things, while the negligent ones will not — and they will get penalized, making them leave the ecosystem for good.
The architecture already enables USDQ/KRWQ with the future plans to roll out stablecoins pegged to other fiats, like CNYQ and JPYQ to sustain any falling prices in the collateral asset. Even if the fall is going to be continued for a long time and even if it’s going to be big.
How Does System Learn BTC Prices, If It’s Decentralized?
I think that this is a pretty smart question. And this very vulnerability might pose the biggest threat to the system’s sustainability.
It’s true that the Q DAO platform needs to source the information somewhere, but it’s highly dangerous to trust a single actor as it will make the system centralized. So, the system leverages several oracles who simultaneously provide the same data. This means that even if 49% of the oracles collude and furnish the bad data, the other oracles will keep furnishing correct data and there won’t be any trouble. In addition, the system limits the step of change for any single block, which prevents a possible attack.
I am really impressed by the fact that the Q DAO platform takes so much effort to assure security. So, there’s another layer for security — it’s called “Global Settlement”. It activates in case of a massive attack on the system. All the loans are unwound and all collateral assets are returned to CDP owners. The decision as to whether this options should get activated is taken by Q DAO holders (Q DAO is the second token within the ecosystem, acting as an internal governance coin).
This is the last part of our guide. Please find the other parts via the web or in the blog. USDQ/KRWQ will continuously hold its soft peg to USD/KRW. It’s this peg that’ll prove that system’s working fine. The longer it does, the more trust it’ll win from users.
I am sure that we’ll be hearing a lot about the USDQ/KRWQ stablecoin when it starts going mainstream. Importantly, the more adoption we see, the higher Q DAO, the internal governance token, will be in price.
About PLATINUM Q DAO ENGINEERING
USDQ is brought by the PLATINUM Q DAO ENGINEERING team, as a measure to develop a high-endurance stable coin that uses innovative solutions in collateralization, price stabilization mechanisms, and oracles.
Visit https://usdq.platinum.fund for latest updates about USDQ (and KRWQ — soon)
Dive in Official Kakao Talk to ask questions in Korean directly to Platinum Q Dao management team.