Abstract

Trust is the ultimate currency that drives any human interaction across the world. People trust someone or something if they have strong backing. Cash as we know it today is utilized as the medium of exchange because it has strong support from their countries’ respective governments. Two layers of trust run any business or human interaction across the world. Companies or clients pay in currencies like Rupees/Dollars to another business/person in return for the services/effort/goods delivered to each other. Here, trust in currency and trust in another business to provide the services keeps the wheels of the economy chugging along.

There was a time of the Free Banking Era when anyone could print their currency and in which there was no government interference. The free-banking laws specified that a state banking authority determined the general operating rules and minimum capital requirement without any approval. However, this issued new currency also requires the backing of government bonds. These state bonds at that time were not fully risk-less as the governments at that time were going through restructuring due to changing world order and the countries economic output were slightly volatile. But, banknotes issued against these state bonds were at the par value of bonds. So, Banks could issue a $100 banknote by depositing a state bond with a market value of $90 but par value of $100. Thus, banknotes can be issued at a premium against an asset whose present value is less than the face value of the asset. Not only that, the backing of the bank note is through a state bond which is debt of the government.

Thus, highly trusted backing ensures that the system will be highly capital efficient. Banks can lend a loan against an illiquid asset like property/real estate or an intangible asset like an Ivy League college education. This introduces capital efficiency as people can take a loan against their non-cash equivalents or non-liquid assets. Similarly, corporations can issue corporate bonds against their book assets, and their credit ratings generated through a well curated reputation engine ensure that the interest charged is reasonable.

At Autonomint, our vision is to take the crypto to this stage where crypto native debt can be issued and highly trusted among the users & institutions. On top of this, protocols can then issue currency or credit in the form of stablecoins thus ultimately achieving pure decentralisation where users can not only autonomously mint stablecoins from any corner of the world through a global decentralised financial system but can also autonomously issue debt against their assets. This debt realises it's face value over a longer time horizon thus building the crypto native yield curve against various discreet time horizons.

Achieving above vision might take years and is the collective responsibility of the protocols, users, institutions and governments.

At Autonomint, we have built our protocol on some of the above core principles with the final aim being to create a highly capital efficient stablecoin protocol which can fulfill multitude of use cases from simple to complex. The stablecoin is pegged to the dollar and has a collateralised issuance architecture which relies purely on trustless components like underlying blockchain protocol and tokens built on this trustless architecture. We have built some mechanisms to tackle the volatile nature of these coins/tokens through a delta neutral design where the delta neutrality is enabled internally within our protocol without relying on external market protocols like perps or other market mechanisms. Through this delta neutral design, we aim to provide near to 100% capital efficiency to users on their crypto native assets and also help provide capability to users to issue a pure crypto native debt. The credit risks of this debt are spread over a longer time horizon decided by users and handled through our decentralised credit default swap (dCDS) product which is another innovation which we are introducing in the space.