In this article, Jitendra Rathod talks about USDQ – a fully decentralized stablecoin that offers reliability and easy collateralization for Bitcoin. Working as a Marketing Manager at Platinum Q DAO Engineering, Jitendra collaborates within the huge team to develop hi-end solutions, including the full-cycle business models for crypto projects. Soon there will be even more fully backed stable coins: JPYQ, KRWQ, SGDQ, HKDQ, CNYQ, RUBQ under Q DAO ecosystem. He is amazed by how easy it is to use USDQ in order to obtain a Bitcoin-collateralized loan. In this article, he talks in-depth about the ways USDQ makes finance easier for anybody anywhere anytime.
The rapid development of the cryptomarket has brought forth several new investments and ventures into the technology, and while some have proved to be a dud, others have surpassed user expectations.
One cryptocurrency that is set to create a lot of buzz is USDQ. Let’s break down and explore what USDQ is really all about and how it will transform the crypto space.
To offer a viable alternative to Tether (USDT), one of the most scandal stablecoins, Platinum Q DAO Engineering is creating the technology that will power a next-gen stablecoin – USDQ. The USDQ will be a completely decentralized and trustworthy stablecoin and its value will be pegged to the US Dollar, in ratio 1:1. The volatility of the price will be controlled by an ingenious combination of market forces, economic incentives, and internal processes. Moreover, KRWQ – a stablecoin pegged to Korean Won will be attached to Q DAO family. This will not only make a huge impact on the local Korean market but also to the whole Asian region.
Eliminating all third-party intermediaries, USDQ will offer a fully transparent stablecoin that will provide traders with a “fiat-like” currency option to trade with while being completely inside the cryptocurrency ecosystem.
The Dual Coin System
The USDQ platform will have two coins: Q DAO and USDQ.
Q DAO is a volatile token that will be used to govern the USDQ ecosystem.
USDQ is a stablecoin that can be bought, traded, used as payment or as collateral.
Comparing USDQ With Tether (USDT)
Price – Both coins are pegged to the value of one US Dollar.
Mineability – Both coins are non-mineable
Collateral Asset – USDT Tether is backed by US Dollars that are held in audited bank reserves, whereas USDQ is backed by Bitcoin held in the asset-control system.
Price Stabilization – Tether’s price is derived entirely by the ability of the holder to exchange one Tether for one US Dollar. On the other hand, USDQ’s price is stabilized at one US Dollar using a combination of external market factors such as collateralized debt contracts (CDCs), autonomous feedback mechanisms and external economic incentives.
Decentralization – Tether is essentially centralized as it can only be created or destroyed by the makers of the currency. USDQ, on the other hand, is completely decentralized as individual users have the power to create and destroy it.
Why Do We Need Stablecoins
Normal cryptocurrencies suffer from too much price volatility, which hampers their real-world use. Stablecoins, on the other hand, have relatively fewer fluctuations in price and also offer the advantages of a decentralized cryptocurrency for swifter, more efficient and secure financial transactions.
Uses of the USDQ Stablecoin
Here are four markets that could essentially benefit from the use of the USDQ. This is just a representation and the USDQ can find many different use cases in real-world scenarios.
Gambling Markets – It is against common-sense to make long-term bets using cryptocurrencies whose price fluctuates dramatically. Such price fluctuations will expose the gambler to a number of risks, like the risk of the bet and the risk associated with price. A stablecoin, like USDQ, allows the gambler to negate the price risk and limits his risk to the gambling bet.
Financial Markets – A stablecoin such as USDQ is essential to drive the options and derivative smart contracts in the financial sector. The collateralized debt contract (CDC) of USDQ can offer permissionless decentralized trading leverage.
International Trade – It is a fact that international transactions are costly. Use of a stablecoin like USDQ will play a vital role in mitigating foreign exchange volatility. It will also successfully eliminate all intermediaries from the transaction process.
Transparent Accounting Systems – Since all transactions occurring within the USDQ ecosystem are transparent, it offers governments, corporations, and organizations a way to increase their efficiency and lessens chances of economic corruption.
The Essential Functions of Q DAO
The Q DAO token will have three essential roles within the USDQ ecosystem:
- Utility Token
Q DAO is essentially used to pay the fees You can only use Q DAO to pay the fees needed by collateralized debt contract (CDC) that generate USDQ in the ecosystem.
- Governance Token
Q DAO token holders can utilize this token to vote for the risk management and logistics of the USDQ ecosystem. The voting process occurs through a continuous approval voting.
Continuous approval voting – Every Q DAO holder is eligible to cast his or her vote for any number of proposals being put up by the community of Q DAO holders.
- Recapitalization Resource
If ever, certain sections of the collateral portfolio (bitcoins, in this aspect) become under-collateralized, or fall in value to the amount of USDQ take as a loan, the ecosystem automatically creates new Q DAO tokens and sells them on the market. This has the effect of raising money to help capitalize on the shortfall of collateral value in the system. This helps bring the ecosystem back from insolvency. In the case of bad governance, the value of all Q DAO tokens will become diluted. This creates a scenario that necessitates that the voters’ interests be aligned with the interests of the entire ecosystem.
How the USDQ System Works
The USDQ ecosystem is created in such a way that a user has to first place his or her bitcoins as collateral to be able to “create” USDQ and take them as loan. This is called the creation of collateral.
Collateralized Debt Contract
A CDC is a smart contract that helps a user create USDQ within the ecosystem, by leveraging his or her Bitcoins. CDCs not only generate USDQ for the user, they also accrue interest over a period until the loan is repaid. This is called the “Stabilization fund.” The USDQ ecosystem accepts only Bitcoin (BTC) as collateral for now.
User interaction with a CDC has four basic stages:
- Making the CDC – A user has to first send the request to the USDQ ecosystem to create a CDC. Then the user has to send his or her BTC to collateralize the CDC.
- Generating USDQ – The user has to send a request stating the amount of USDQ they require from the CDC. When the user receives USDQ, a proportionate amount of BTC is “frozen” in an asset control system. For every $166 value of BTC collateralized, USDQ worth $100 is received as a loan by the user. This frozen collateral cannot be accessed by the user until he or she pays back the loan to the system.
- Debt Reconciliation – To receive the collateral (frozen BTC), the user must pay off their outstanding debt in the CDC as well as the interest the loan has accrued (the stabilization fund, as mentioned earlier). Stabilization fund has to pay in Q DAO tokens and the outstanding debt in USDQ.
- Withdrawing Collateral – Once the user pays back the debt and commission and stabilization fund, the collateral (BTC) is “de-frozen” and can be retrieved by sending a request to the system.
Risk Parameters of CDCs
Q DAO holders have the ability to cast their votes on four key risk parameters for CDCs so that the stability of the USDQ system is maintained.
- Debt Ceiling – This refers to the maximum amount of debt that a single type of CDC can create.
- Liquidation Ratio – This refers to the ratio of collateral to debt at which point a CDC is on the brink of liquidation.
- Stabilization fund – This is the additional interest calculated as an annual percentage yield on the debt of a CDC.
- Penalty Ratio – This refers to the maximum number of USDQ tokens that can be raised from a liquidation scenario.
Price Stability Mechanisms
The USDQ Stablecoin System also relies on external market forces and economic incentives to peg the value of USDQ with that of the US Dollar.
The targeted price of USDQ performs two primary functions within the ecosystem:
- As a means of calculating the ratio of collateral to debt of a CDC
- To help determine the value of collateral assets in case of a Global Resolution event
Target Rate Feedback Mechanism
In a scenario when the market is extremely unstable, the USDQ ecosystem will adjust the targeted rate so that the rate of USDQ can be maintained as close to the targeted rate as possible.
Engaging the feedback mechanism to adjust the targeted rate will break the peg between the rates of USDQ and the US Dollar. However, it will change the targeted rate such that traders will be incentivized to bring the price of USDQ back to its normal range, i.e., closer to the value of the US Dollar.
- Market Price Falls Below Target Price
If the market price of USDQ falls below the targeted rate, the feedback mechanism will increase the targeted rate. When the targeted rate increases, generation of USDQ in the system will become expensive. Also, as the targeted rate increase, the gains associated with holding USDQ tokens will also increase, leading to an increase in the demand for USDQ.
An increase in targeted rate will result in the reduction of USDQ supply and increase the demand for more USDQ. This will lead to an increase in USDQ’s market price back towards the value of its original targeted price of one US Dollar.
- Market Price Climbs Above Target Price
In a market scenario where the price of USDQ climbs above the targeted price, the feedback mechanism will work to decrease the targeted rate. Such a decrease will cause the generation of new USDQ in the system less expensive. A decreased targeted rate will also result in lesser gains for holding USDQ, leading to reduced demand.
A decrease in targeted rate, will, thus, work to increase the supply of USDQ while reducing the demand for USDQ, leading to an eventual pulling back of the USDQ price towards the originally targeted rate.
- Sensitivity Parameter
The USDQ’s system has an inbuilt sensitivity parameter that looks to constantly peg the targeted price close to the value of one US Dollar. It will be activated when market fluctuations cause any kind of departure from the targeted price.
Global resolution is a last-ditch attempt to stabilize the ecosystem under emergency circumstances. This process will help USDQ to maintain its targeted price of one US Dollar in cases of market turmoil. A Global resolution event, that can only be triggered by Q DAO holders (who can vote) will gradually shut down the entire USDQ ecosystem in a bid to ensure that all users (USDQ holders) receive the net value of assets they are entitled to.
For a Global resolution event to occur, Q DAO voters must first reach a consensus whether a complete shutdown is necessary and if yes, then vote on the proposal to enforce the event. Some scenarios that may warrant a Global resolution include long-term market turmoil, a breach in the security of the system or during times of system upgrades.
The Platinum Q DAO engineering team has already released the standard smart contract of USDQ, backed by bitcoin. The website monitors collateral and released assets and will also describe the concept of USDQ. Managing tokens will also be released soon.
USDQ is an ERC20 token and can be stored on any ERC20-compatible wallet, like MyEtherWallet or Mist. Users can now trade USDQ and Q DAO on BTCNext.io, a popular crypto exchange. It’s convenient that all trading pairs at BTCNext.io will be listed with USDQ as the basic currency.
With the admission from the Tether team that the stablecoin is no longer backed only by its US Dollar reserves, but a combination of multiple instruments, the time is ripe for a true stablecoin. USDQ provides a viable alternative. Platinum Q DAO Engineering has created a completely transparent and auditable stablecoin system that is truly decentralized and trustworthy. The launch of the USDQ will, undoubtedly, benefit the entire blockchain industry.
Maybe you heard about the project MAKER DAO and their DAI?
I want to praise these guys – they are first to create a decentralized stable coin.
We occupy an honorable second place at this race, and basically, we were inspired by the technologies of MAKER`s DAI.
Some Q DAO functionality is similar to MAKER DAO, so we decided to use Maker`s terminology because we do believe – their technologies should be a reference for creating any decentralized stable coins.
Why we are using BTC as collateral? 1) Bitcoin is a most liquid digital asset 2) we have many friends who are big Bitcoin holders (BTC whales) or Bitcoin OTC traders.
We hope even so big guys like Brothers Winklevoss (Cameron Winklevoss and Tyler Winklevoss) will start to use Q DAO. They have a lot of Bitcoins, but they don’t want to sell it. So if they need money – they can pawn their bitcoins to Q DAO and immediately get USDQ.
Why we built Q DAO based on Ether smart contracts, but not Tron (by Justin Sun) and not EOS ( by Daniel Larimer)?
Our genius engineers are love ETHEREUM because of mass adoption of this blockchain, also we respect the approach of Vitalik Buterin (we met him a few times). Maybe in the future, we will consider using TRON or EOS, in case their foundations can provide enough funds to proceed with development.
BTCNEXT Exchange – next generation spot and margin trading platform by the PLATINUM Q DAO ENGINEERING team. It is the first Strategic business partner of USDQ stablecoin that is based on a DAO technology. All pairs will be listed with USDQ. BTCNEXT customer service will be happy to answer all of your questions.
Platinum Q DAO Engineering values your opinion and invites the community to continue the conversation on Telegram or Facebook. The team believes that providing startups with high-performance solutions for STOs will usher in a disruptive wave in VC investing. Projects like Q DAO`s USDQ are a clear testament to broad expertise and high capabilities the team brings to the table. Whatever the crypto startup’s needs are, Platinum Q DAO Engineering is convinced that the team will offer an enticing set of options, uniquely meeting the customer’s needs. DLT-enabled fundraising campaigns.
This overview may not be fully exhaustive and does not assess the viability of any project, nor its team legitimacy. Readers should conduct their own due diligence before using or investing in any of the listed Stablecoins. This article represents the author’s opinions only and should not be considered investment advice. All described functionality in the article is still under development, it can be changed/processed. Please follow the updates.