Hey All,
I’ve been lurking for since the beginning of this forum and just recently decided to make a project suggestion. I’m not a coder and am not familiar with any regulations involved in my proposition. What I am saying is coming from an Algorand and Algofi user who would like a better experience on chain. I want to float the idea of a low cost stablecoin/Fiat on ramp facilitated through Algofi (independent of the current Coinbase option). I see this as the creation of a fully reserved stablecoin, similar to USDC.
Right now, we are very limited as to sources of stablecoins like USDC on the Algorand network. A very limited number exchanges support USDCa, and purchasing them from Transak or the like ends up with very high fees. If crypto is going to grow, emphasis should be placed on ease of getting assets on and off chain.
A fully backed Stablecoin would give Algofi 3 new sources of revenue (that I see).
1. The low cost fee for on-boarding. I assume an absolutely free on/off boarding platform would invite volatility (maybe?), as a result some fee would likely be necessary. Something like 0.1% up to some maximum maybe. No idea, that would be up for discussion. The point is that the fee would be far under what anyone else is charging to onboard crypto.
2. Profits that the fiat currency yields. Fiat could be held with a portion of it placed in very safe yield bearing liquid assets like US treasury bills or something similar. Nothing fancy. This should be boring and completely transparent. This is exactly what I understand circle does with USDC.
3.The crypto could be made available instantly as a loan until the actual bank transfer comes through (assuming the correct amount of collateral on the users end). This would give the user the option to pay a small interest fee for instant access vs. no additional fee to mint the tokens whenever the bank transfer clears. The principle of the loan could be repaid automatically with the incoming completed transfer, leaving a small balance that would need to be paid off.
Beyond the fees that Algofi would profit from, both on and off chain, this would bring users to Algofi. The instant access loans would incentivize keeping liquidity in Algofi, deepening available pools. Using Algofi for one service would familiarize users with the platform, and some percentage would likely find other useful offerings.
Those are concrete ways that Algofi would benefit, but this could also be a boon to the larger ecosystem. A reliable low cost on/off ramp would allow people to fluidly use their assets for more real world applications. Crypto loans that could be easily and cheaply used in the real world, increasing the utility of Algorand.
I’m very sure that this would be a difficult process to implement, both technically and with regard to regulation. If I’m off base suggesting something like this, feel free to tell me. The fact that no one has suggested something similar before seems to tell that this would be too big of a project, but since this is just a temperature check so I figured I’d drop it out there.
Thanks for your time.
*Edit
I’m rightfully getting pushback regarding the complexity of the suggested project. What about using Algofi as a passthrough to directly purchase USDC from Circle. My understanding is that Circle provides free accounts to businesses that allow minting of USDC at low or possibly zero cost. Is there a way to send money to Algofi, have them purchase USDCa and send it to our wallets? It seems like at least technically that would be simpler.