Social media giant Facebook has released the white paper for its long-awaited cryptocurrency and blockchain-based financial infrastructure project today, June 18.
According to the paper, Facebook’s global stablecoin, dubbed “libra,” will operate on the native and scalable Libra blockchain, and be backed by a reserve of assets ostensibly “designed to give it intrinsic value” and mitigate volatility fluctuations.
These assets consist of a basket of bank deposits and short-term government securities that will be held in the Libra Reserve for every Libra that is issued.
The
new cryptocurrency will be governed by a not-for-profit,
Switzerland-based consortium — the “Libra Association” — which counts Mastercard, PayPal, Visa, Stripe, eBay, Coinbase, Andreessen Horowitz and Uber among its founding members.
ostensibly plans to expand the association to around 100 members by the
time of Libra’s launch in the first half of 2020. The white paper notes
that:
“While final decision-making authority rests
with the association, Facebook is expected to maintain a leadership role
through 2019. Facebook created Calibra, a regulated subsidiary, to
ensure separation between social and financial data and to build and
operate services on its behalf on top of the Libra network.”
The
Libra Association is itself governed by the Libra Association Council.
The council’s members initially are the founding members, each of which
runs a validator node on the network and was notably required to make a
minimum investment of $10 million to seal the position. Each $10 million
investment secures an entity one vote on the council, per Facebook.
has also revealed the release of the Libra Investment Token — distinct
from its global user-oriented cryptocurrency libra — which can be
purchased or distributed as dividends to the association’s founding
members and accredited investors.
As libra is not technically
pegged to any given national fiat currency, the white paper states that
users will not always be able to redeem the token for a fixed amount of
fiat, although Facebook claims that the reserve assets have been chosen
so as to minimize volatility.
While the reserve assets are
ostensibly held by “a geographically distributed network of custodians”
in order to secure decentralization, the reserve is managed by the
association itself, which is the only party able to mint and destroy the
coin.
New libra are minted once authorized resellers have
purchased the coins from the association with enough fiat to fully back
their value, and burned when authorized resellers sell the token back to
the association in exchange for the underlying assets. Moreover, the
white paper states:
“Since authorized resellers will
always be able to sell Libra coins to the reserve at a price equal to
the value of the basket, the Libra Reserve acts as a ‘buyer of last
resort.’”
Facebook further notes that the software
that implements the Libra blockchain is open source in order to create
an interoperable ecosystem of financial services and broaden inclusion.
Previous reports had indicated that the coin will facilitate payments across Facebook’s various platforms including WhatsApp, Messenger and Instagram, giving the new coin potential exposure to a combined 2.7 billion users each month.
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