Saga company, based the UK, is a blockchain firm advised by Myron Scholes, co-creator of the famed Black-Scholes model of derivative valuation for which he won the Nobel prize, just issued a new stablecoin SGA – a rival to Facebook’s Libra, which is hoped will revolutionize cross-border exchange and become a global currency.
Myron Scholes, co-creator of the famed Black-Scholes
Others on Saga’s advisory board are Jacob Frenkel, the former governor of the Bank of Israel and chairman of JPMorgan Chase International, and Dan Galai, a pioneer of the VIX volatility index.
SGA bases on the currency’s value
On Dec 10, the company reported launching its saga (SGA) token, a virtual currency tied to a basket of currencies in order to maintain a stable value. It is not too different from Libra that was met with a barrage of regulatory opposition moments after being announced, however, one key thing that is what SGA bases the currency’s value on.
Saga also emphasized that its cryptocurrency is different from volatile blockchain-based currencies like BTC, ETH because it resembles central bank-issued money “SGA is the first digital currency that replicates the mechanics of central bank national currencies”. Therefore, it will be useful as a more stable asset for the storage of value and cross-border exchange.
According to Liquid Blog, the new stable coin has been designed with the global economy in mind and to overcome the challenge of buying globally whilst only being able to pay nationally, Saga has created a system that “a truly global currency can come into existence—away from national or political tensions.”
SGA is similar to Libra in that it is pegged to a basket of fiat currencies, but the difference it’s pegging its token’s value to bank deposits in the same group of currencies that form the International Monetary Fund’s special drawing rights (SDR), international reserve assets held by central banks to supplement their official reserves. The international reserve asset includes five currencies: the U.S. dollar, the euro, the Chinese yuan, the Japanese yen, and British pound.
Ido Sadeh Man, founder of Saga said that unlike other players, its company reality will not be profiting from it that only acting as a launcher of the token, not building its own digital wallet for users to store and exchange. The SGA tokens will initially be available to purchase on Saga’s website and are being listed on Liquid, the crypto exchange.
Similar to Libra, SGA has features the characteristics of Stablecoin, which seeks to avoid the volatility of cryptocurrencies. Sadeh shared that it can stabilize the value of SGA with smart contracts — self-executing contracts on the blockchain that are used to adjust the money supply in order to meet demand.
“Saga’s economy model is designed to allow growth. Participants are obliged to undergo a Know Your Customer process, assuring Saga’s economy is compatible with traditional financial institutions”, he added.
On how it will be used, he said that SGA plays a role to serve as a “complementary currency for cross-border payments.” For instance, British consumers wanting to use it to pay on Amazon if the pound fluctuates. “This is where we see saga fitting in as a global currency.”
Saga has ambitions to serve as a global currency, so it claimed to have built “a robust monetary model and effective system of governance.
Compliance the banking-grade
On the other hand, having a degree of skepticism is warranted for nascent blockchain projects as Saga’s. 2 years ago, investors bought into new cryptocurrencies generated through initial coin offerings, a fundraising practice that gave rise to many scams. Therefore, presently regulators are more cautious than ever when say to crypto space because of its association with illicit activity.
However, the company affirmed that different from BTC that users are identifiable only by an alphanumeric address, its offering is different due to it encompasses “banking-grade compliance,” with anti-money laundering checks to ensure the people transacting in the token are not anonymous. And a key reason for worry for regulators regarding Libra has been its potential use in illegal transactions.
It also reported that the model provides a “democratic” alternative to Libra, which is being monitored by a consortium of 21 companies. According to Sadeh Man, the holders are the sovereign of the currency, and those holders will be able to vote on Saga’s board of directors and steer its monetary policy. He shared he agrees with Tim Cook, Apple CEO that corporations like Facebook should not be in control of currency.
In spite of being a non-profit organization, the venture is supported by investors such as Lightspeed Venture Partners and Mangrove Capital Partners. However, the firm says these investors did not get equity in exchange for their investment, instead, they received Saga’s “genesis”, or SGM, tokens which can be changed into SGA when it is launched.
Besides, having one glaring problem with the token that not regulated, so will not launch in the U.S “is an area we don’t want to be in” for the time being, Sadeh Man said. He added they only want to operate where it is clear due to respecting compliance”. Especially, He hopes the U.S. regulatory picture looks clearer in the future.
Saga is listing on Liquid
Liquid, a global cryptocurrency platform in Japan, reported that it become the first exchange to list the Saga token for secondary trading.
Mike Kayamori, CEO and co-founder of Liquid said that they are so delighted to “offer Liquid customers the opportunity to buy and trade SGA”. They believed this is an interesting opportunity for traders because of great value in Saga’s approach of replicating the mechanics of central bank national currencies and applying them on a global.
Moreover, the SGA will firstly be traded against the USD, BTC, and ETH with more trading pairs are expected in the future.
Read more:
- Etoro: Facebook Should Support Third-Party Stablecoins Instead Of Libra
- Non-Profit Human Rights Foundation: Stablecoins Lack Of Privacy