New Token Targets Institutions And Regulators With Reserve Backing And Tamed Volatility

FinTech, Investing | August 14, 2018 By:

Saga Foundation recently launched a new token that’s non-anonymous and reserve-backed. The currency is designed with a tamed volatility mechanism, addressing concerns expressed by policy makers, regulators and market participants regarding cryptocurrency anonymity, lack of underlying value, and high volatility.

So far, Saga contends, no blockchain project meets the three basic requirements for a functional currency: Store of Value, Medium of Exchange, and Unit of Account. If that to be fulfilled, Saga claims, a new currency can be proven stable and reliable and gain acceptability with banking institutions and with regulators.

The Saga Foundation is not conducting an ICO. Rather, it is being deployed with the support of accredited investors, VCs and hedge funds, including Mangrove Capital Partners, Lightspeed Venture Partners, The Singulariteam Technology Group and Initial Capital.

Saga Foundation founder Ido Sadeh Man talked with Block Tribune about the project.

BLOCK TRIBUNE: So have you seen the Goldman Sachs report that came out over the weekend? It basically makes the same point that you did.

IDO SADEH MAN: I heard of it. I haven’t had the chance of reading it yet.

BLOCK TRIBUNE: So, your claimed advantage is the coin that you’re going to be backing will be non-anonymous and reserve backed. Why are those in edge in this market?

IDO SADEH MAN: I think that when judging a coin, one of the base questions to ask is, “What is this about to achieve or what problem it resolves?” When we are looking at Saga, we are aiming to create the global counterpart to Fiat currency. Our claim is simple: we’re not in a head-to-head fight with Fiat, trying to prove which is better. We’re simply claiming that national or sovereign currencies are designed to cope with sovereign economies.

If you’re a British citizen, the day after the Brexit, and you lost several percent’s of the value of your currency, when you interact with the British economy, then it will react to the same political decision. But when you go and buy on Amazon, the prices on Amazon are not changing in reaction. Therefore, we considered there is a real need, in an ever-growing global economy with nation-less product and nation-less services, to have a global economy- to have global currency, sorry.

And when we look at the currency, it needs to fulfill three functions: the function of store value, the function of menu of exchange, and the function of unit of account. And in any currency, whether it’s locked-in based or sovereign currency, there needs to be a balance between the prospect of the store a value hopes to gain and the stability of the medium of exchange needs to attain. If you want the margins to be willing to favor one currency over the other, she first needs to know that she can meet her obligations the next day, and raging volatility is not helpful in gaining stability. We consider the reserve to be a sort-of crutch, a way to stabilize a currency on its way to gaining intrinsic value with the lowest possible volatility, and we actually didn’t invent it. When the dollar started, it was fully leaning on gold to acquire its cost, departing from its gradually complete departure from a golden standard in the 1970’s. So we consider the reserve, not as an aim, but as a momentary utility in stabilizing our currency.

BLOCK TRIBUNE: What will be the effect on fiat currency once you establish your coin?

IDO SADEH MAN: So, we consider the fiat currency, when they’re properly managed, are probably a better response to national economies. We don’t expect Saga to be a currency that one would use to transact with its own nation, within its own economy, but rather for global transactions, whether it’s for corporates or for individuals. So, we think that fiat currencies are going to change, or the control of money supply in the world is going to change, regardless of Saga, simply because our economy is changing, and what was under the monopoly of the nation-state is now given to a diverse of new instruments, but that’s regardless to Saga. We don’t foresee any direct impact of Saga on fiat currencies, and that’s what obviously takes a lot more time before we see this scene changing dramatically. We do think, and several central bankers are already aware of it, whether it’s the Landow Report in France, that the monetary scene is changing, although it has its growth.

BLOCK TRIBUNE: What’s your timeline for establishing the coin?

IDO SADEH MAN: We plan to issue Saga by the end of this year.

BLOCK TRIBUNE: Okay, and you will do that via an initial coin offering?

IDO SADEH MAN: No, actually, to finance the project, we’ve decided not to undergo an ICO. We consider the success of the project in the ability to breach between the traditional financial institutions and this new technology and this new monetary possibility. Therefore, we opted for the conservative route of raising some funds, and we are lucky to have business such as Lightspeed and Mangrove back us up. Our financing was only done by accredited investors and not in a public offering. Saga itself, as a currency, would be a continuous offering for the market to settle.

BLOCK TRIBUNE: Now, you’re also a venture capitalist, correct?

IDO SADEH MAN: I am a shareholder in a V.C. called Singulariteam, yes.

BLOCK TRIBUNE: When you’re dealing with projects that you’re going to back, are you going to be using your own digital currency to back these projects?

IDO SADEH MAN: No, there is zero relation between Saga and the V.C. activity, other than Singulariteam invested in Saga. I think that Singulariteam has its own consideration in regards to investing in projects. I very much hope that Saga will turn to be an attractive currency that could be used by the V.C. I’m a partner in, such as other V.C.’s, but there is no such imminent conflicts.

BLOCK TRIBUNE: What else should we know about your coin?

IDO SADEH MAN: First of all, I might ought to have answered the anonymity part of things. I think that the anonymity will gain acceptability eventually, unless one is an anarchist or a libertarian. If one believes in accountability, in the need to pay taxes if we want to continue and build roads and education infrastructures, then the only current organ to enforce such accountability between participants is the nation-state, and it is unable to do that unless identity is disclosed. The state needs to know who to claim taxes from and who to repay. Therefore, I believe that if opting for anonymity and concealing identity, at least we don’t get to be surprised that nation-states are reluctant to adopt those new currency of ours.

Therefore, Saga has implemented the KYC process that is programmed into the money in the sense that anyone wishing to hold Saga can do it with any simple ERC20-compatible wallet; However, they will need to undergo a KYC process by the end of which the wallet address is being wire-traced, and the wallet address that is not a part of this wire-trace would not be able to transact with Saga, not to accept it nor to send it. In this sense, the KYC process is not an auxiliary process, but rather one that is programmed into the money itself, and we believe this is extremely important in the ability to transact with existing financial institutions, whether it’s the banking system or gaining acceptance from regulators around the world.

We are in the process of engaging with several banks; our home jurisdiction is Switzerland, and that’s where we’re starting. Our KYC system is one that enabled us to engage with them in a very transparent method. It is also what enables them to provide a daily net value at the station of how much we have in reserve so that no one has to trust us. I think this is a very important path of stepping into the mainstream of becoming from a niche, very energetic but still niche, domain and combining the syn tech and the tech scene, combining this new technology and the new monetary possibilities it brings into the financial established institution.

I think that another point that is important is simply about knowledge. I don’t think that we, as technology experts, get to lead the right. The fact that paper-printed currency were enabled by brilliant engineers that invented the printing machines two-hundred years ago did not mean that those engineers were the ones to create the central bank. The same goes for the brilliant engineers that invented blockchain and developed technologies around it. I think we need to walk hand-in-hand with monetary policy leaders with macro-economies to create a sustainable monetary policy. As for us in Saga, we started by acknowledging we are not a technology start-up, but rather a monetary start-up, one that has a very strong technical team to be able to develop this monetary application, but the problem we’re aiming to solve is a monetary one.