Cryptocurrencies have been touted as a solution to people in developing countries which have central banks that unnecessarily print FIAT causing insane amounts of inflation, or instability/corruption which causes the demand for a country's currency to drop. Such drops in price reduces the possibility of a country's population to trade internationally, with their money being worth less and less to the rest of the world.
This means that their currency isn't acting as a store of value for their hard earned money. One can suggest holding a foreign currency such as USD, to be able to retain the value of one's assets. However this isn't practical, since all local businesses and necessities require their local currency as a medium of exchange.
This outlines the problem I'm trying to fix: allowing FIAT holders to be able to eliminate their exposure to their local currency, whilst at the same time still holding this money and use it as a medium of exchange.
What it does
BackedFIAT works by issuing various virtual FIAT currencies such as EUR, JPY, CHF, and a few others which have Chainlink price feeds to USD. These virtual FIAT currencies have their value backed by the locked up USD, and are therefore pegged to this reserve.
How I built it
BackedFIAT tokens are minted by depositing USD stablecoins, and having their equivalent real value minted in the other FIAT currency, such as vEUR. This vEUR balance varies depending on the USD/EUR market rate provided by Chainlink.
For example, if a user deposits 100 USD, approximately 84 vEUR tokens are issued to them if they select EURO as their desired medium of exchange. As Chainlink's network of decentralised oracles update the USD/EURO rate, this balance changes. However, at the same time, the user can transfer the vEUR to 3rd parties, which at the back end moves the reserve USD currency in the 3rd party's ownership.
Code can be found here: https://github.com/franono/BackedFIAT
Challenges I ran into
Transferring these virtual tokens. However this was resolved by moving the underlying reserve tokens. Finishing and debugging the UI in time.
Accomplishments that I'm proud of
I think this tech would be useful for people in for example Brazil, Mexico or Venezuala, countries which in general don't have a stable economy and can lead to volatility in their local currency. If one wants to trust the EUR or USD, they're able to use BackedFIAT tokens for holding their assets' value, and get a virtual representation of their local currency issued to them.
This system would work if there was an app to have buyers and merchants accept these type of tokens. With this system a user could technically lock up Bitcoin and get Venezualan currency issued to them, then pay 10 Venezualan currency at a shop, moving that Bitcoin in the backend to the merchant. Both parties will not be exposed to the local currency in this way, and use Bitcoin as a true store of value.
This is a very exciting and I don't think there's a lot of work possible in this area.
What I learned
Time management and underestimating timelines.... Solidity and React
What's next for BackedFIAT
A fully working UI. Documentation on how it works. An app would be very useful to have buyers and merchants be able to interact with virtual tokens. Possible rebranding and further price feeds including of developing country FIAT forex feeds - possibility of also having Bitcoin and Ethereum backed tokens. Security audit.
My twitter: https://twitter.com/cremonafran