From the beginning of the cryptocurrency movement, its goals were clear. That aim: Creating an alternative decentralized financial industry. But nobody ever expected it would be easy to reach that goal. And the last few years of crypto development have shown that.
The first hurdle was the rise of centralized exchanges (CEXs). Soon, they had a stranglehold on the industry. And that despite their existence flying in the face of everything crypto stands for.
But it didn’t take long for those CEXs to stumble. This reaffirmed why people wanted a decentralized financial system in the first place. A main issue: countless instances of fraud and mismanagement. Finally, the industry responded with the rise of decentralized exchanges (DEXs).
But lately, another hurdle has appeared. It’s the crypto industry’s reliance on stablecoins. They serve a valuable purpose – to reduce market volatility – but in a way that again jeopardizes the crypto industry’s mission. Because they’re often tied to fiat currencies like the US Dollar, they perpetuate crypto’s reliance on the conventional financial system.
And there’s reason to be wary of stablecoins. The biggest one – Tether – is shrouded in mystery and refuses to allow audits to prove it’s really holding on to the assets that guarantee its token’s value. Once again, it’s a centralized institution that could wreak havoc on the crypto world if it were to fail.
It’s clear that the crypto world needs a better solution than fiat-backed stablecoins. And just as DEXs evolved to solve the CEX problem, there’s a new solution appearing to reduce the industry’s reliance on stablecoins and their fiat-backed treasuries.
It’s a new generation of crypto-backed algorithmic stablecoins that plan to serve as reserve currencies for their respective blockchains. And one of them, RomeDAO, plans to leverage the Polkadot blockchain to reign over them all.
The Rise of Crypto-Backed Reserve Currencies
Naturally, dollar-pegged stablecoins like Tether will remain popular. Still, they’re not the only kind of stablecoin around. Others, like DAI, rely on a basket of crypto-assets to guarantee their value. They do work to maintain parity with the US Dollar. However, they do so without ever holding or interacting USD or any other fiat currency.
Certainly, crypto stablecoins like DAI are a better long-term solution than fiat-backed stablecoins. But even they are just the beginning.
Today, some innovative projects like RomeDAO are leveraging crypto stablecoins like DAI. They seek to provide the crypto world with stable, blockchain-native central banking functions. They are, in effect, creating crypto’s first reserve currencies.
It’s a development that’s going to bring the crypto world a major step forward. It’s an important milestone for the mission of creating completely decentralized financial ecosystem.
What is RomeDAO?
To understand RomeDAO, you must first understand the project that it descends from. This is Olympus DAO, an Ethereum-based algorithmic stablecoin solution. Importantly, it’s backed by both a treasury and bond-issuing system.
The idea is brilliant in its simplicity. A treasury filled with DAI and other crypto assets backs OHM, Olympus DAO’s stablecoin. And the platform’s algorithm works to keep the value of one OHM equal to one DAI.
If the value of OHM drops below DAI, the algorithm buys back OHM on the open market and burns it. When the opposite happens, it mints new OHM and sells it on the open market. This process keeps the price of OHM stable. And: Its value never exceeds or falls below the total value of the assets in the treasury.
But what’s unique about it is that the platform itself – not its developers – owns all the assets. As a result, the system remains transparent. Platforms like this delivers value for users and investors equally. Importantly, no central authority can manipulate things behind the scenes.
RomeDAO, for its part, takes the same base approach. But its stated goal is to serve as a reserve currency within the Kusama/Polkadot ecosystem. And that’s a big deal. Why? Because that ecosystem gives RomeDAO and its ROME currency exceptional reach in the crypto world.
Key Innovations of RomeDAO
Although RomeDAO is a fork of Olympus DAO, they’re not identical. One key difference is the types of bonds that RomeDAO intends to offer at launch. It will begin operations with three bond types. Two of them are stable and one of which represents a liquidity position. They are:
- Magic Internet Money (MIM)
- ROME/MOVR Liquidity
Additionally, RomeDAO plans to launch without any VC support. It will remain beholden to its users and nobody else. To accomplish the feat, RomeDAO will levy a 10% tax on all bonds for the first two months after its launch. And nobody will receive an allocation of ROME other than those who buy into the project. That means the platform’s developers won’t have privileges over any other participants.
There is one temporary exception to that principle. Namely, RomeDAO’s developers will allocate the platform’s treasury at launch. Operations will begin with an extremely conservative investment strategy. This ensures that it will soon begin to earn safe returns for all participants. Soon after, control of the treasury’s direction transfers to the users themselves. Then, all ROME holders will have a say in how the platform invests its assets.
RomeDAO’s Development Timeline
RomeDAO’s developers haven’t published a specific launch timeline as yet, but there’s reason to believe they’ll follow a truncated launch schedule.
The primary reason for this is the fact that they’re starting out using Moonriver on the Kusama canary network. And because it’s compatible with the Ethereum Virtual Machine (EVM), the Olympus DAO smart contracts only require small modifications to operate there.
But the developers are the first to point out that anyone interested in participating in the project should view RomeDAO as an experimental protocol. Although the changes to the Olympus DAO smart contracts are minimal, they are still changes, which invalidates the audits previously performed to guarantee their safety.
Finally, the developers have also noted that they’ve already onboarded a full-time designer to do the critical work of designing a user experience for the platform. They plan to share mockups of the early designs with members of their community and invite a select group to participate in testing when there’s a functional frontend ready to go.
A Positive Early Response
Even though RomeDAO isn’t up and running yet, there’s been no shortage of people lining up to get involved. The project has already amassed over 20 thousand followers on Twitter, demonstrating how many people are already eagerly awaiting news of its progress. But even more significant is the response the project is seeing on Discord.
A mere 72 hours after launching an official Discord channel, it boasted 5,000 members – called Romies – sharing their opinions and ideas about the project. That’s a significant number for a project that has yet to execute any significant marketing campaigns. And those members are already demonstrating a financial commitment to the project, too. The channel has at least 500 boosters at the time of this writing, which is almost unheard of for DeFi projects on Discord.
What Comes Next
It’s too early to tell if RomeDAO will succeed in its mission to create a community-driven reserve currency that spans the crypto world. But it’s a project with a great pedigree, considering that Olympus DAO has amassed a treasury worth nearly $750 million just months after its launch. And the fact that RomeDAO will eventually have a far larger reach than its predecessor bodes well for their odds of success.
And if they succeed, they’ll be helping the crypto world to solve a major problem that threatens its very stability. That’s a laudable cause and yet another in a series of developments that proves that cryptocurrencies will one day stand on their own – independent and unfettered by institutional control – just as they were always meant to be.