Carbon 'Stablecoin' Project Raises $2 Million in Seed Round

Cryptocurrency startup Carbon has raised $2 million in seed funding, the company revealed to CoinDesk, Thursday.

Tether is "The elephant in the room," said Carbon co-founder Connor Lin, that puts Carbon in a challenging position: "How do you build up trust?".

Cryptocurrencies' extreme volatility has made the prospect of a reliable stablecoin alluring, allowing the technology to satisfy "Basic economic needs like paying bills and buying coffee, not to mention more complex needs like loans and insurance contracts," says Carbon's white paper, In a statement to CoinDesk, the team added cross-border remittances to that list, too.

This mechanism involves two tokens: carbon stablecoin, which is pegged to a value of $1, and carbon credits, which fluctuate in value in order to absorb changes in demand.

When the stablecoin's value falls below $1, an auction is held, and users willing to give up their stablecoins receive carbon credits in exchange.

The next time the stablecoin's price rises too high, its supply increases, and those newly created stablecoins are given to carbon credit holders.

Lin compares Carbon to the U.S. central bank's bond buying.

For now, says Carbon co-founder Sam Trautwein, the goal is to maintain an exchange rate of $1. Eventually he thinks that "Society can do better than the Federal Reserve" and other centralized arbiters of monetary policy.

Carbon, in other words, acts as a proof-of-concept for monetary policy through smart contracts.

Carbon has decided to base their stablecoin system on Hedera hashgraph.