The release of Libra’s whitepaper earlier this year stirred up a hornet’s nest of controversy, but it also attracted a lot of attention to the crypto space, spawning the development – or planned development – of several similar projects. One of these is Saga Monetary Technologies’ token dubbed SGA, which will be launched on December 10th. SGA token will be pegged to the Special Drawing Right monetary reserve.
A New Type Of Stablecoin
Saga Monetary Technologies announced the creation of SGA – a new type of stablecoin. It will start trading on December 10th but the full onboarding process is available from now. It will be an ERC-20 token which should address critical pressure points, such as regulatory compliance and governance. As per the announcement, SGA “is designed to serve as a frictionless global currency,”
While most stablecoins are usually backed by a single currency or an entity, SGA appears to be doing things differently. The value of Saga’s coin will purportedly be backed by the Special Drawing Right (SDR). The SDR is an artificial currency instrument created by the International Monetary Fund to operate as a supplement to existing money reserves.
This type of backing, combined with the Saga Contract, is supposed to help the token self-regulate. Simply put, once it’s launched, one SGA will be worth one tokenized SDR, but this should change depending on the market reaction. For example, if the price of SGA goes up, then it will be holding its own value and it will rely less on SDR. If the price goes in the opposite direction, then both values will mirror each other again. If executed properly, such dependence should exclude SGA from possibly being a target of pump and dump schemes.
Competition to Facebook’s Libra
Facebook’s announcement to create its own stablecoin called Libra brought serious attention and controversy. While most regulators and watchdogs are opposed to Facebook’s proposed solution, the idea for such a stablecoin has been met with approval by some.
China was among the first to react, announcing plans for a government-backed cryptocurrency of its own. It was supposed to be distributed to specific institutions and major corporations starting on November 11th. Even though it hasn’t appeared yet, the CCIEE Chair in the country recently said that the People’s Bank of China will be the first to launch such a product.
Even Donald Trump’s former pick to join the Federal Reserve and help manage the U.S. dollar, Stephen Moore, has plans to produce a stablecoin called Frax. His coin will be reportedly backed by the U.S. dollar directly, but it will rely on a fractional reserve system.
More recently, rumors emerged that the European Union is considering the possible launch of a public digital currency, which could be seen as a direct response to Libra.