The e-Money mainnet launched on the 25th of March 2020 at 12:00 UTC.
A block explorer is available at e-money.network.
The following currencies are supported: EUR, CHF, DKK, SEK and NOK.
We will be adding support for more currencies once mainnet has been launched.
Obtaining an e-money license was part of our original roadmap, but as the token model matured we discovered that it is currently incompatible with the EU e-money regime, which prohibits applying interest.
We have worked with the Danish FSA and top regulatory advisors to ensure that our currency-backed tokens are fully compliant.
The Terms and Conditions for the currency-backed tokens detail the regulatory status of the tokens.
We do expect that the EU e-money regime will eventually be updated to handle interest and have designed our token model in preparation for this.
Transaction costs are typically around EUR 0.01.
Transaction fees in the e-Money zone can be paid in either of the currency-backed tokens or the NGM token.
The rewards from staking NGM tokens come from two sources: transaction fees and a markup on the currency-backed tokens.
Transaction fees can be paid with NGM or in any of the currency-backed tokens and we expect trading activities on the DEX to be the primary source of these.
The markup consists of an annual 1% inflation on each currency-backed token. The markup is applied continuously and distributed pro-rata to staked NGM token holders.
In short, the rewards that are distributed to staked NGM tokens tie directly to the amount of issued currency-backed tokens.
The model eliminates the reliance on transaction costs to sustain operations. This aligns with the design goals of Cosmos Hub and the Internet of Blockchains, as the currency-backed tokens can move freely across zones.
Currency-backed tokens offer several advantages over algorithmic stablecoins:
Having a full reserve makes it possible to maintain a constant demand for the tokens. Knowing that you can always sell back your tokens back their value.
They are highly liquid compared to exchange-traded algorithmic stablecoins. Currency-backed tokens can be issued and redeemed efficiently as funds are deposited/withdrawn from the reserve and tokens minted/burned accordingly.
They allow for zero slippage and spread when issuing/redeeming, regardless of size. Our goal is to find ways to reduce costs compared to the status quo, not increase them.
An increasing number of central bank interest rates are near-zero or negative. This makes it impossible to maintain 1:1 pegged tokens, as a safely managed reserve (ie. government bonds and bank deposits) would diminish over time.
We want to offer a user experience similar to a savings account. The underlying interest on the reserve, be it positive or negative, will be passed on to the user sans the 1% annual markup.
This markup is the revenue source from issuing the tokens. We are not relying on transactions fees or similar to sustain our business. This makes our tokens ideal for Cosmos, where they can move around freely between zones.
We believe that building a long-term business around assumptions on interest rate levels is unsustainable. Our prediction is that many USD-backed tokens will be highly distressed if interest rates drop further.
The value of our currency-backed tokens track those of their underlying currencies, i.e. they won’t suddenly depreciate 5% in value overnight.
In contrast to 1:1 pegged coins, a currency-backed token increase or decrease in value over time with the interest rate of the underlying currency. From a user perspective this is similar to a savings account in a bank.
Common to all tokens, the only thing supporting its value is buy-side demand. The price stability towards the underlying currency is accomplished by keeping a reserve consisting of bank deposits and government bonds, all in the same denomination as the token currency. When a token is sold, the proceeds are added to the reserve. Consequentially we can maintain a constant buy side for the tokens using the funds of the reserve.
The NGM token supply is fixed at 100M tokens. A single NGM token is dividable into 1M minor units.
NGM tokens will soon be made available on the e-Money DEX.
The company has been advised to structure the NGM token so it is non-transferable. As such it can only be used in a transfer or traded on the DEX, if e-Money A/S is on either side of the transaction.
The company will provide liquidity for NGM on the DEX (the Community Sale). This will also enable NGM holders to satisfy any buy-side demand.
The company expects to periodically revisit the question of transferability of the NGM token, the first time in March 2021. The company will then reassess the risks and exposures associated with a possible transferability of the NGM token, with the aim of eventually making it freely transferable.
The decentralised exchange will initially support trading of all currency-backed tokens and NGM.
Any token in the zone can be traded on the DEX. Once IBC is supported, that includes tokens that arrive from the Cosmos Hub.
The fee schedule for the DEX is as follows:
There are no listing requirements to trade a token on the DEX.
Any two tokens that exist in the zone can be freely exchanged between parties on the DEX.
As our currency-backed tokens are interest-bearing, there is no 1:1 exchange rate between a token and its underlying currency.
The difference in exchange rate between buying and selling a currency-backed token reflects the interest accrual over the same period. In other words immediately buying and selling will result in no interest being accrued.
The whitepaper explains the exchange rate model in greater detail.
Currency-backed tokens are tradeable on the e-money zone’s marketplace. Once IBC is launched, market makers are ready to create markets between the currency-backed tokens and ATOMS.
We will dedicate significant project resources to getting the currency-backed tokens listed on traditional exchanges.