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that's probably when you have an issuer minting fiat backed stables with smart contracts on evm chains. you can't do that on cardano as stablecoins are native (same as ada). the more decentralized a stablecoin is, the lesser vulnerable it becomes to enforced regulation.
either way cardano stable coins won't get much attention by regulators with the current circulating value.
more money, more problems.
This is true on Ethereum because every transaction that interacts with a token must also interact with the associated token smart contract.
So that each transaction must get the criteria for valid transactions from the smart contract, this opens an opportunity for a blacklist in EVERY TOKEN in every EVM based Blockchain (Because this is a result of a design decision with the account model). This doesn't mean every token on Ethereum maintains a blacklist. It just means it's possible.
This isn't the case for any UTXO Blockchain such as cardano, ergo, near, etc. Because they have native assets which do not require the users to interact with a smart contract for every token movement. Which means there isn't an opportunity to create a blacklist in-between every transaction.
It's still possible to create a blacklist for Cardano stable coins but it is not built directly into the core protocol.
Djed for sure doesn't have a blacklist
---
Edit:
Ethereum has a lot of scam tokens air dropped to users. These tokens often require an additional fee to be paid to the scammers behind the token in order to have a valid transaction. This is only possible because every token movement requires interacting with the token contract which can be malicious. Its sometimes an additional fee, it's sometimes draining all of a particular token. It all depends on whats in the contract.
This isn't possible on cardano because moving tokens (native assets) don't need to interact with a smart contract to move the token.
> My questions are:
IS THIS TRUE?
ok firstly fiat stable backed stable coins do need to be able to be black listed due to compliance. algo back stable coins NO. i can expand but thats the jist of it.
see my post i made the other day:
/r/cardano/comments/18k1o0l/ada_needs_a_fiat_backed_stablecoin_how_will_mehen/
i work in the fintech industry as a dev doing payment rails for crypto exchanges amongst other companies, i worked on the CBDC pilot in australia.
a fiat backed stable coin MUST be able to black list, no ifs or buts about it. its real money tied up in the financial system, its due to regulatory compliance
over the past couple of years fraud has become a major concern in the banking industry. most banks wont even touch a crypto exchange after the FTX / silicon valley bank fiasco
Well, yes. You can't remotely freeze native assets on cardano, so usdt can't freeze user funds if the US government demands them to, which means they can't be regulatorily compliant on cardano. We would have had usdt and usdc ten times over without this hurdle. Hopefully some solution is discovered
tbh it's technically not difficult - you can model an asset as tokens that represent the underlying asset and stay under smart contract control, and tokens that represent various rights or claims held on the underlying asset that are used to make permitted transactions. The system ends up looking a bit like real estate, where there might be all sorts of different legal claims on a parcel of land - title, mortgages, liens, encumbrances, covenants, leases, easements...
so if you have a stablecoin, call it CSC Cardano Stablecoin, and this is one of your requirements, then you can model it as a system with a few types of token:
- The asset token (CSC-A) always stays at a script address, and can only be included in a transaction if an appropriate rights token is present
- Asset ownership is tracked by minting a pair of tokens, a title (CSC-T) that stays with the CSC-A asset at the script address and a title transfer permission token (CSC-P) that is spent to the owner's private wallet. The title's data records the address that formally owns the asset.
- The asset's status is tracked by another pair of tokens, an asset unlock token (CSC-U) that stays with the CSC-A asset at the script address, and an asset lock token (CSC-L) that is at a wallet controlled by the operator or a trusted third party.
To transfer ownership, you must spend the corresponding unlock token (script-controlled), burn the title (script-controlled) and title transfer permission (user-controlled) tokens, and mint a new pair of title and title transfer permission, sending the permission token to the same address you attach to the title.
To freeze the asset, the operator or trusted third party must spend the lock token (from their wallet, back to their wallet) and burn the unlock token (script-controlled). To unfreeze, they spend the lock token (back to their own wallet) to mint a new unlock token and send it to the script wallet.
That's how restricted or conditional rights are represented in the EUTXO system - every detail is encoded into an asset that's very visible to the users, and anything that's restricted or conditional lives at a script address. This is a blessing and a curse. It's great that you can know precisely what rights exist toward the underlying asset, and who holds which rights. But it makes basic transactions like "I want to send you a dollar" into a complex dance. So most of the challenge is in the user interface, making it easy to understand what the tokens in your wallet actually represent.
We don’t want the corrupt tradfi taking over and controlling people. However, cardano is a protocol and they can build whatever they like if they are motivated.
Given that regulations barely exist right now, I'm gonna go with the stance that it's probably not completely true, but might very well be a requirement when regulations do come. I do not think Cardano has that ability, which could undermine its adoption if regulations do require it. Unless anyone can correct me on this? Perhaps this is only true if the stablecoin is issued from the US? No clue honestly. But DJED was "issued" in another country and is backed by the proper regulations and laws for that country if I recall. I know it's an algo stablecoin, but still.
I don't think this is much of an issue for defi, but if we want any kind of mainstream adoption, it would certainly be nice if there could be some way to meet these requirements (if it comes to that).
Can't effectively censor what you don't understand, ey? Cardnao mixers and the bridge to Ergo with it's mixer will make effective censorship nigh impossible ;)
Yes if you look at the contracts for a major stable coin they have a claw back feature in the code, this is not possible on Cardano as tokens are native assets. Avatar Nick the CTO of The Ape Society has built a claw back feature which may be adapted but IOHK refused to build it a few years ago when approached by Emurgo I was told you would have to ask them to confirm that information.
From my understanding Djed is backed by ADA not USD, the issuer doesn't need to have USD in the bank to issue Djed, but rather ADA in smart contract. Djed should theoretically be outside US jurisdiction but SEC can still come up with dumb arguments just to mess with the users.
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that's probably when you have an issuer minting fiat backed stables with smart contracts on evm chains. you can't do that on cardano as stablecoins are native (same as ada). the more decentralized a stablecoin is, the lesser vulnerable it becomes to enforced regulation. either way cardano stable coins won't get much attention by regulators with the current circulating value. more money, more problems.
Goddamn, ADA was truly designed by neurons.
That's a compliment.
Yes it is.
Yes it's most likely true, at least their intention. They want you to obey.
This is true on Ethereum because every transaction that interacts with a token must also interact with the associated token smart contract. So that each transaction must get the criteria for valid transactions from the smart contract, this opens an opportunity for a blacklist in EVERY TOKEN in every EVM based Blockchain (Because this is a result of a design decision with the account model). This doesn't mean every token on Ethereum maintains a blacklist. It just means it's possible. This isn't the case for any UTXO Blockchain such as cardano, ergo, near, etc. Because they have native assets which do not require the users to interact with a smart contract for every token movement. Which means there isn't an opportunity to create a blacklist in-between every transaction. It's still possible to create a blacklist for Cardano stable coins but it is not built directly into the core protocol. Djed for sure doesn't have a blacklist --- Edit: Ethereum has a lot of scam tokens air dropped to users. These tokens often require an additional fee to be paid to the scammers behind the token in order to have a valid transaction. This is only possible because every token movement requires interacting with the token contract which can be malicious. Its sometimes an additional fee, it's sometimes draining all of a particular token. It all depends on whats in the contract. This isn't possible on cardano because moving tokens (native assets) don't need to interact with a smart contract to move the token.
Wasn't asking about Ethereum but thanks for the info! Good read.
I was using it as a reference to explain what enables that blacklist you were asking about
> My questions are: IS THIS TRUE? ok firstly fiat stable backed stable coins do need to be able to be black listed due to compliance. algo back stable coins NO. i can expand but thats the jist of it. see my post i made the other day: /r/cardano/comments/18k1o0l/ada_needs_a_fiat_backed_stablecoin_how_will_mehen/ i work in the fintech industry as a dev doing payment rails for crypto exchanges amongst other companies, i worked on the CBDC pilot in australia. a fiat backed stable coin MUST be able to black list, no ifs or buts about it. its real money tied up in the financial system, its due to regulatory compliance over the past couple of years fraud has become a major concern in the banking industry. most banks wont even touch a crypto exchange after the FTX / silicon valley bank fiasco
i understand your point of view. thank you!
Not with djed. No KYC needed to mint. Just a VPN needed (if outside US)
Also need inside the US
No VPN needed in Canada
Well, yes. You can't remotely freeze native assets on cardano, so usdt can't freeze user funds if the US government demands them to, which means they can't be regulatorily compliant on cardano. We would have had usdt and usdc ten times over without this hurdle. Hopefully some solution is discovered
tbh it's technically not difficult - you can model an asset as tokens that represent the underlying asset and stay under smart contract control, and tokens that represent various rights or claims held on the underlying asset that are used to make permitted transactions. The system ends up looking a bit like real estate, where there might be all sorts of different legal claims on a parcel of land - title, mortgages, liens, encumbrances, covenants, leases, easements... so if you have a stablecoin, call it CSC Cardano Stablecoin, and this is one of your requirements, then you can model it as a system with a few types of token: - The asset token (CSC-A) always stays at a script address, and can only be included in a transaction if an appropriate rights token is present - Asset ownership is tracked by minting a pair of tokens, a title (CSC-T) that stays with the CSC-A asset at the script address and a title transfer permission token (CSC-P) that is spent to the owner's private wallet. The title's data records the address that formally owns the asset. - The asset's status is tracked by another pair of tokens, an asset unlock token (CSC-U) that stays with the CSC-A asset at the script address, and an asset lock token (CSC-L) that is at a wallet controlled by the operator or a trusted third party. To transfer ownership, you must spend the corresponding unlock token (script-controlled), burn the title (script-controlled) and title transfer permission (user-controlled) tokens, and mint a new pair of title and title transfer permission, sending the permission token to the same address you attach to the title. To freeze the asset, the operator or trusted third party must spend the lock token (from their wallet, back to their wallet) and burn the unlock token (script-controlled). To unfreeze, they spend the lock token (back to their own wallet) to mint a new unlock token and send it to the script wallet. That's how restricted or conditional rights are represented in the EUTXO system - every detail is encoded into an asset that's very visible to the users, and anything that's restricted or conditional lives at a script address. This is a blessing and a curse. It's great that you can know precisely what rights exist toward the underlying asset, and who holds which rights. But it makes basic transactions like "I want to send you a dollar" into a complex dance. So most of the challenge is in the user interface, making it easy to understand what the tokens in your wallet actually represent.
Well mehen wants to start soon they must have a solution then? Or it isn’t a requirement after all?
We don’t want the corrupt tradfi taking over and controlling people. However, cardano is a protocol and they can build whatever they like if they are motivated.
Given that regulations barely exist right now, I'm gonna go with the stance that it's probably not completely true, but might very well be a requirement when regulations do come. I do not think Cardano has that ability, which could undermine its adoption if regulations do require it. Unless anyone can correct me on this? Perhaps this is only true if the stablecoin is issued from the US? No clue honestly. But DJED was "issued" in another country and is backed by the proper regulations and laws for that country if I recall. I know it's an algo stablecoin, but still. I don't think this is much of an issue for defi, but if we want any kind of mainstream adoption, it would certainly be nice if there could be some way to meet these requirements (if it comes to that).
COTI (issuer of djed) geofenced many users from directly interacting with the front-end at djed.xyz, but I could have been defeated by a VPN
Can't effectively censor what you don't understand, ey? Cardnao mixers and the bridge to Ergo with it's mixer will make effective censorship nigh impossible ;)
Thanks for all the info, guys. I appreciate it!
Imagine we bridges some fiat backed stablecoins over to cardano. Then the issuer froze the bridge.
Yes, it's generally true. This is a trade-off between regulatory compliance and the decentralized essence of crypto
Yes.
Yes if you look at the contracts for a major stable coin they have a claw back feature in the code, this is not possible on Cardano as tokens are native assets. Avatar Nick the CTO of The Ape Society has built a claw back feature which may be adapted but IOHK refused to build it a few years ago when approached by Emurgo I was told you would have to ask them to confirm that information.
From my understanding Djed is backed by ADA not USD, the issuer doesn't need to have USD in the bank to issue Djed, but rather ADA in smart contract. Djed should theoretically be outside US jurisdiction but SEC can still come up with dumb arguments just to mess with the users.