I-Chan Huang is a highly experienced consultant for blockchain technologies and decentralized ecosystems. He currently acts as an advisor in Q DAO project. Products of the project are unique fully decentralized stablecoins (USDQ, CNYQ, JPYQ, KRWQ) backed by Bitcoin.
I-Chan has two prestigious degrees – MA of Economics, SOAS University of London, and BA of Journalism, NCCU, Taiwan. He leverages +5Y in IT, Data Science, and peacekeeping operation for the United Nations, delivering effective Fintech startups and sustainable development goals (SDG) consulting.
Working closely with Platinum ENGINEERING he is managing STO for Eliconn PTE Ltd. which has close relation with FOXCONN Group.
I-Chan regularly publishes in major IT-related and economic-related outlets in HK, Taiwan and Mainland China. He has a perfect command of Chinese, English, and Thai.
Q DAO and USDQ: Basic Information on Operations
First, let’s talk about the concept of DAO (decentralized autonomous organization) since USDQ is a DAO and it’s at the core of its operations. Such systems are in part driven by automated decision-making (executed by pieces of code operating on the blockchains and called “smart-contracts”), helping to govern the ecosystem and reduce fluctuations in the stablecoin prices. At the same time, the system enables humans to impact the system’s operations and make important decisions whenever they see fit. We enable Q DAO holders to have weekly meetings, during which the community votes on proposals concerning potential changes to the system. I believe that such an approach to governance is an important building block for USDQ ecosystem, enabling the community to steer development in the right direction, assuring that it stays competitive and appealing to users.
Q DAO ecosystem enables any person to collateralize their cryptocurrency assets and generate the stablecoin, USDQ. Then, whenever the user repays the earlier provided USDQ units and fees, chargeable for the system’s use, the collateral is returned to the person. All of these procedures are completely automated and require no human engagement thanks to the use of the smart contracts, which are termed as Collateralized Debt Contracts (CDCs). The CDCs are regulated by changing risk parameters, applying to them. Thus, our development team is helping to create and sustain the ecosystem that is an amalgamation of machine and human-driven decision-making, making use of the best qualities from both and establishing the overall architecture on top of blockchain.
Why Should Users Choose Q DAO and USDQ?
And now I’d like to identify the biggest benefits that users win from when choosing Q DAO to generate stablecoins and use them to hedge, invest or save.
- Principally new approach to stablecoins, leveraging predictive capabilities and pro-democracy DAO-styled decision-making”
- Major development outlet PLATINUM ENGINEERING working on the system
- A decentralized mechanism, offering lending capabilities to any person anywhere and anytime
- Effective stabilization mechanisms for the system’s stablecoin, USDQ
- Incentives for Q DAO holders, rewarding them for productive governance and decision-making
I’ve seen many people say USDQ is a fascinating idea, but it’s too difficult to understand and they’re better off using simpler systems like Tether. Below, I will provide a very easy introduction into Q DAO ecosystem, so that everybody can form a basic understanding of major concepts and see how convenient and beneficial the system can be. I truly believe that USDQ offers unique capabilities for lending and marginal trading, and we, as a development team at PLATINUM ENGINEERING, are set to help crypto community adopt this solution so that they can benefit from using the platform.
What Products Does Q DAO and USDQ Offer?
I think that it’s best to start off with speaking about the products offered by Q DAO Ecosystem, as opposed to what it is and how it functions. Originally, the ecosystem is to offer a single product, USDQ.
USDQ is a stablecoin. Conceptually, a stablecoin is any cryptocurrency that operates on blockchain just like Bitcoin or Ether, but its price is stable, i.e. there’s no volatility. Of course, all assets’ prices are volatile and it’s just the volume of volatility that differs. Working on USDQ, we try to assure that USDQ is as closely linked as possible to USD price, which means that USDQ tries to have no volatility as compared to USD. Thus, USDQ attempts to peg itself to USD. It’s the first mass-marked-ready stablecoin, featuring predictive capabilities and fully decentralized architecture.
I think that before we move forward it’s important to distinguish between different types of stablecoins. Currently, the most popular type of such solutions are the coins that peg themselves to USD and hold USD reserves in the bank accounts, claiming that they are effectively “backed” by the fiat they hold. However, I doubt that such projects are actually stablecoins at all because although the “avatars” (i.e. representations of the fiats) exist on the blockchain, some of the system’s components are still dealing with the “legacy” financial system. This results in centralization and, consequently, additional risks. Thus, such projects may not be able to guarantee that the bank they’ve engaged won’t arbitrarily freeze their bank account or that their accountants won’t scheme to steal the funds. I believe that whenever crypto projects rely on legacy finance, they start dealing with middlemen, unreliable and costly.
I’ve always been convinced that we, as a blockchain development community, can do better. And this became a perfect opening to USDQ to come on stage.
I want to draw readers’ attention, that, in comparison, all USDQ components function on the blockchain which completely eliminates any risk regarding disputes with business partners or legal issues of any manner.
I share the opinion that the full potential of blockchain technology will never be uncovered without reliable stablecoins in place. Any use cases, which assume the need for a low-volatility unit of exchange, will not be feasible when they are implemented with a cryptocurrency featuring enormous gyrations on the daily basis, such as Bitcoin or Ether. Even mundane remittance transactions can be highly risky and unpredictable since the fluctuations within the confirmation period (which equals to the time, needed to create a new block in the blockchain) might be much higher than the fees, charged by payment processors, such PayPal or Western Union.
Let’s look at an example. When a trader bets on USD/EUR price to be seen in one year, they will never be able to tolerate a potentially high price change in Bitcoin which might occur within the same period of time. In addition, stablecoins like USDQ are a perfect fit for decentralized exchanges (where users always retain custody over their funds) which can use it as a USD substitute. I find it highly promising that with decentralized exchanges, no hacks on traders’ funds are possible and using a USD avatar makes trading here much easier and appealing to the general public.
I think that in order to better understand the ways in which the USD Platform enables stability for USDQ, we should first look into basic concepts, underpinning blockchain operations. Below, I am going to provide brief explanations for the new terms, which might puzzle you, so that you can form a general understanding of the system.
Important comment: if a person simply wishes to purchase USDQ, they don’t need to learn about the system’s inner workings because USDQ will be freely available on various crypto exchanges to be purchased just as easily as any other cryptocurrency.
In the ecosystem, USDQ is generated through collateralization of an underlying asset (Bitcoin). When a holder wishes to create USDQ, they need to send the collateral (Bitcoin) to a CDC (Collateralized Debt Contract). It’s a smart contract, which means a piece of code which operates fully automatically on the blockchain.
We’ve designed Q DAO and USDQ in such a way as to assure that all business processes are performed using smart contracts. I believe that one of the biggest benefits blockchain brings is the ability to interact with the system on your own as compared to engaging middlemen as it was done before. Bitcoin was the first iteration for this idea to be realized as it enables to transfer value between two persons with no need to trust each other, i.e. since transactions are completely trustless, no middleman is needed anymore.
In Bitcoin, it’s only the blockchain that users have to trust, not each other (like in person-to-person transactions), not intermediaries (like in using payment processors, such as PayPal). USDQ improves on this original concept and enables to add instructions on top of the value transfers. These instructions are packed into smart contracts. Now users can specify various conditions: “Send XXX amount to Alice on a particular date, provided that the following conditions have occurred.”
CDCs are the main type of smart contracts, running at USDQ ecosystem. I’ve seen that comparing our ecosystem with the bank works great. So, just imagine that you’ve gone to your bank and asked for the loan, collateralized with your home equity. You use your house as a collateral asset, while the bank provides you an amount of cash. If your house loses in value, the bank will ask you to repay the loan. If you can’t repay it, the bank will repossess your house.
Q DAO and USDQ operate in a similar manner, you just need to replace your house with Bitcoin, while instead of a bank you interact with a smart contract, and you get a loan not in cash, but in USDQ. Everything else stays the same. A user furnishes Bitcoins to a smart contract and, in return, they get a loan in USDQ. If the value of the collateralized asset, Bitcoin, goes below a predetermined level, the user will have to either pay back the loaned amount to the smart contract or the smart contract will do auction in order to sell the collateral at the highest price it can get.
The bottom line is that smart contracts are a “lock-box” that contains your collateralized assets within the USDQ.
After you’ve sent Bitcoins into a CDC, you can generate USDQ. The amount of USDQ, available for creation, depends on the size of your collateral. To calculate this amount, we use the “collateralization proportion”, which is a ratio of the amount of USDQ, allowed for creation, to the amount of Bitcoin, collateralized within the smart contract.
Let’s look at the following example. Let’s assume that Bitcoin currently costs $5,000 and the collateralization proportion is 166%. If you transfer 1 BTC into CDC, you’ll be able to generate 3,012 USDQ. This means that the USDQ you’ve just generated is backed with 1,66 of Bitcoin, collateralized in CDC. Whenever you repay the loan amount, you’ll be free to get back your collateral.
A high collateralization proportion of 166% is needed because Bitcoin is highly volatile. In this way, Q DAO protects against a sudden fall in the price, which would result in the debt exceeding the collateral.
That it’s all that you need to know if you just wanted to understand how your interactions with USDQ ecosystem work. Below, we get deeper into the magic of blockchain, learning about technical details.
Now I’d like to look at the two possibilities for USDQ prices to change.
In the first case, the USDQ price grows above the 1-to-1 peg. It’s not such a big problem. This just means that USDQ becomes stronger with demand exceeding a number of people who are willing to create it. We’ve made sure that the ecosystem offers incentives for external market participants to generate more USDQ and thus grow supply.
In the second case, the USDQ price falls below the 1-to-1 peg. This means that the debt exceeds the amount of collateral originally used to generate USDQ. With USDQ worth less than 1 USD, the risk of system collapse emerges. In order to mitigate this risk, we’ve designed a special line of defense, upon which CDCs are liquidated and collateralized Bitcoins are auctioned off before CDCs “go underwater”.
“I’m sure that an example will help us here. Let’s imagine that the collateralized Bitcoin has gone in value below a predetermined level (for instance, 130%). In this case, the CDC will liquidate (i.e. it will terminate its operations) and the collateral will be auctioned off to the highest bidder in exchange for USDQ. Then, the system will use the obtained USDQ to repay users the net value of CDCs. In this way, we’ve assured that the system has enough USDQ to repay the value of holdings.
I am sure that now you understand how the system works. It’s not that hard. If the collateral goes below the predetermined level, you need to repay the loaned amount here and now. If you fail to do that, the system automatically liquidates your collateral. In this way, we make sure that USDQ is sufficiently collateralized at all times.
You might have heard about a potential risk vector which is called “black swan event”. In such a case, Bitcoin price would experience a tremendous fall within a short period of time, and the system won’t be able to react as fast. To mitigate this risk, we’ve included another line of defense. It’s the second coin, called Q DAO.
Q DAO is a utility token, used for internal governance. Q DAO holders vote on proposals concerning potential changes to system’s parameters. The collateralization proportion is one of such parameters, and any changes to it must go through the vote. Q DAO holders are rewarded with fees, which incentivizes them to act diligently. At the same time, they have certain duties.
One of them is acting as buyers of last resort. Whenever debt exceeds collateral, the system automatically created an additional amount of Q DAO tokens and sells it on the secondary market in order to raise funds and purchase the lacking collateral. Essentially, this dilutes holding of Q DAO holders.
I want to clarify this point – it’s Q DAO holders, and not USDQ users, who stand to lose if the system fails. In this way, they are clearly incentivized to think hard about their decisions and prevent systemic failure.
Even though our development team at PLATINUM ENGINEERING brings together expert talent pool and even though we’ve carried out rigorous tests and audits, our system is not perfect. That’s why I think it’s important to have a last-resource measure in place.
The Global Resolution mechanism is such a measure. Upon activation, this mechanism freezes all operations across the platform and enables USDQ and CDC holders to receive back their collateralized assets. So, if a Global Resolution is triggered and I hold 100 USDQ, and one BTC is worth $100, I can exchange my 100 USDQ directly for one BTC right through a system. The same approach applies to CDC holders.
According to our design, the decisions concerning the Global Resolution are to be taken by a group of trusted persons. They use the special keys in order to trigger the Global Resolution and unwind the system in a controlled manner.
You might start thinking that it makes USDQ too centralized. I assure you that it’s not the case. This trusted group can make decisions only on whether or not the Global Resolution should take place, i.e. they have no power to take a decision on any other matters.
As some of you might have guessed, volatility can’t be eliminated just because somebody wants to. At USDQ, we provide you with a stablecoin, but where does the volatility go? It’s transferred directly to the CDC holder. Thus, if the user wants to exchange 3,012 USDQ back into BTC, they would be able to do that only if the price is above the liquidation ratio.
Another important consequence of our design is that you can exchange Bitcoin into USDQ, then use USDQ to purchase more Bitcoin, and then repeat the cycle. Essentially, this is margin trading, where you use a leverage that’s fully decentralized and disintermediated. I think that it’s fascinating that anybody can bet on the price of Bitcoin with 2x, 3x or a higher fully decentralized leverage.
Where do USDQ and Q DAO trade?
I’m happy to say that users can now trade USDQ and Q DAO on BTCNext.io, a popular crypto exchange. I think that it’s a great trading platform where everybody can engage in both spot and margin trading.
We’ve chosen BTCNext.io as the first partner to help us promote USDQ, growing awareness and adoption across crypto community. It’s convenient that all trading pairs at BTCNext.io will be listed with USDQ as the basis currency.
We’ve established effective communications with the exchange’s customer support service, making sure that they are fully prepared to answer all major questions about using USDQ.
I am convinced that after we roll out stablecoins pegged to other fiat currencies, such as JPYQ, KRWQ, SGDQ, HKDQ, CNYQ, RUBQ, we will bring even more convenience and benefits to users. This will enable to recreate forex transactions on the blockchain, opening the door to a huge market.
Q DAO and CDC: Enormous potential to be realized soon
I am sure that now that you’ve learned how USDQ works, you are thinking about the ways you personally can benefit from these new services. Well, there are two ways to do that – those who like trading and volatility can purchase Q DAO and look to win from future growth and adoption, while those who prefer to save and the hedge will be able to hold USDQ for a long term, winning from stability and blockchain-driven decentralization at the same time. Whoever you are and whatever you do, you can collateralize your Bitcoins right now and start using a fully decentralized stablecoin today.
What’s really important to me is that Q DAO is fully decentralized, which means that none of us has to rely on middlemen or each other into transfer value, invest, save or trade. Our team at PLATINUM ENGINEERING is happy to see just how many future use cases our platform will help enable.
I think that one of the best use cases is probably margin trading with the leverage that’s fully decentralized and disintermediated. In crypto markets, this niche is almost barren. I am delighted to be part of the team that works on the solution that will change things here.
Afterword
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.
USDQ is decentralized stablecoin, which uses algorithms to offer higher stability and reliability. Fully on-chain and monitored by high-speed AI robots, ecosystem offers reliable defences against malicious acts and attacks. First run in line of fiat-pegs, USDQ is brought by PLATINUM ENGINEERING Team, looking to edge together innovative solutions in collateralization, using stabilizing mechanisms and neural networks for high-endurance stablecoins. USDQ breaks limits out of this legacy world. 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 basis currency.
BTCNEXT Exchange – next generation spot and margin trading platform. 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.
I-Chan thanks you for reading this article. He’s always ready to share his vision on what makes USDQ such an outstanding project. I-Chan is convinced that USDQ will become a major disruptor in stablecoins niche, bringing predictive capabilities, full decentralization and pro-democracy governance architecture.
Disclaimer
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.