Facebook has officially released the white paper for its digital currency and Blockchain-based payment platform.
Facebook Announces Creation Of Subsidiary, Calibra
Going by the announcement, which was made on the 18th of June, the company’s global stablecoin Libra will run on its native Libra Blockchain network. The stablecoin will be pegged on assets in the company’s reserve, Libra Reserve, which is purportedly designed to diminish value volatility while maintaining intrinsic value. The assets include a variety of bank deposits and government securities, and will back every Libra token issued.
Facebook’s digital currency will be managed by the Libra Association, a consortium based in Switzerland. This association boasts prominent entities among its founding members including MasterCard, PayPal, Uber, Andreessen Horowitz and Coinbase. The company is looking to expand the number of members in the association to 100 before Libra’s official launch in 2020.
The white paper states that although the final decision with regards to the project lies with the association, Facebook will retain leadership throughout this year. The white paper also notes that the company has created a regulated subsidiary, dubbed Calibra, to ensure that financial and social data are kept separate. The subsidiary will also develop and run services on the native Blockchain on behalf of the company.
Libra’s Authorized Resellers To Have The Opportunity Of Selling Back Tokens To The Association
The Libra Association Council governs the Association. The council’s members comprise of the founding members of the association with each member operating a validation node on the network. To get a seat on the council each member was required to invest a minimum of $10 million in the association, earning them a vote each on the council.
The social media giant also announced the release of another Crypto token dubbed the Libra Investment Token which is different from the Libra stablecoin. The Libra Investment Token will be issued to the accredited investors and founding members of the association as dividends. It can also be purchased. Even though Facebook claims that the stablecoins’ reserve has been designed so as to mitigate volatility, redemption of the token for a fixed amount of fiat currency will not always be possible. This is mainly because the stablecoin is not backed by any specific fiat currency.
When the authorized resellers buy the tokens from the association, with fiat currency equivalent to the value of the tokens, new stablecoins will be minted. When the tokens are sold back to the association for assets equivalent to their value, they are burned. The white paper notes that the Reserve will function as a buyer of last resort seeing as authorized resellers will always have the opportunity of selling back the tokens to the association.
Will The Libra Stablecoin Boost Crypto Adoption?
Previous reports have stated that the soon to be launched stablecoin enable payments to be made across the messaging apps such as WhatsApp and messenger. This would make the token accessible by a combined pool of up to 2.5 billion users on a monthly basis.