Datachain and Progmat Collaborate on Stablecoin Business: Completion of Joint Development of Contracts for Standard Features and Successful Transfers in Testnet
Tokyo, May 31, 2024 — — Progmat, Inc. (“Progmat”) and Datachain, Inc. (“Datachain”) are pleased to announce their collaboration aimed at providing and maximizing the assets under management (AUM) of stablecoins issued using Progmat’s stablecoin issuance and management platform, “Progmat Coin.” Specifically, in addition to the existing multi-chain/cross-chain deployments, Progmat and Datachain will jointly promote the development of stablecoin contracts and business development in the global market.
The development of smart contracts related to standard stablecoin features has already been completed, and successful stablecoin transfers across multiple blockchains in the testnet environment have been achieved. Moving forward, both companies will strengthen their collaboration to standardize stablecoin issued using “Progmat Coin” on a global scale, including the creation of international use cases.
1. Background
As of May 2024, the global stablecoin market has exceeded $160 billion. In addition to their use in blockchain-based services, various use cases, such as enhancing convenience in retail and corporate payments, are being explored.
Currently, a significant portion of the market is dominated by USDC, issued by Circle in the United States, and USDT, issued by Tether in Hong Kong. Tether’s net profit for the first quarter of 2024 reached $4.5 billion, highlighting the considerable attention this sector is receiving.
However, existing stablecoins face numerous challenges, including regulatory compliance and price instability. There is a growing demand for safe and secure stablecoins that are compliant with regulations and issued by internationally trusted financial institutions. In Japan, stablecoins were defined in the revised Payment Services Act, which came into effect in June 2023, and preparations for issuing stablecoins compliant with this legislation are underway.
Progmat, in collaboration with trust banks and other stablecoin issuers, is leading the development of the stablecoin issuance and management platform “Progmat Coin.” Once intermediaries handling stablecoins complete the necessary license registrations, it will be possible to issue and circulate stablecoins using this platform. Each stablecoin can be issued in major fiat currencies such as JPY, USD, and EUR, with an eye on global market expansion.
2. Details of this Initiative
The purpose of this initiative is to maximize the AUM of stablecoins issued using Progmat Coin by collaborating with Datachain. Specifically, Progmat and Datachain will work together to advance the following two key areas critical to liquidity in the stablecoin business.
Regarding smart contract development, the standard functions for stablecoin registration, issuance, and transfer have already been completed. Successful execution of stablecoin transfers between different blockchains has been confirmed in the testnet environments of multiple public chains (Ethereum and BNB Chain).
The transfer transactions utilize the Burn-Mint method, which involves burning (destroying) stablecoins on one blockchain and minting (issuing) the same amount of stablecoins on another blockchain. This method offers superior capital efficiency and user convenience compared to traditional methods. As of now, apart from Circle’s USDC, no other stablecoin has implemented this method, making the Progmat Coin platform the only one capable of achieving Burn-Mint cross-chain transfers from Day 1 (system release date) (as of May 2024, according to our research).
Each stablecoin issued using the Progmat Coin platform implements the above method using the Inter Blockchain Communication (IBC) protocol *1, developed with contributions from Datachain. This enables the provision of a safer, more versatile, and capital-efficient cross-chain stablecoin transfer function.
The blockchains supported using IBC will be expanded sequentially, considering transaction costs, transaction speeds, and the size of related ecosystems, to meet the needs of stablecoin users.
3. Future Plans
Progmat and Datachain, in collaboration with trust banks and other stablecoin issuers, plan to issue stablecoins using the “Progmat Coin” platform within 2024. Following this, they aim to maximize AUM by developing additional features and engaging in discussions with various domestic and international financial institutions and stablecoin-using enterprises.
Announcements regarding individual initiatives will be made as preparations are completed.
*1) IBC: A standard specification to ensure interoperability between blockchains. Abbreviation of Inter-Blockchain Communication.
About Datachain
Datachain is a blockchain startup founded in 2018 that specializes in blockchain interoperability. Its core products include YUI, a Hyperledger Lab that enables interoperability between multiple heterogeneous blockchains via IBC, and LCP, a proxy for light client verification using TEEs. Datachain is also working on an IBC-enabled cross-chain bridge in partnership with TOKI and are involved in several projects with enterprises, focusing on cross-chain technology. For more information about Datachain, please visit https://www.datachain.jp/.
About Progmat
Progmat is a startup company building digital asset infrastructures that can transform the financial system. With a mission of “Connecting the society with the programmable network and digitizing every value,” Progmat delivers the issuance and administration platform for tokenized securities, stablecoins, and utility tokens, while pursuing partnerships to expand global use of digital assets. Progmat, as an independent firm backed by several key institutions in national financial markets, also leads digital assets ecosystem across multiple industries by running the Digital Asset Co-Creation Consortium, which has over 200 member firms. For more information, visit https://progmat.co.jp/en/
