Why we’re building the Jibrel Network
Having traditional assets on-chain offer numerous benefits across several use-cases. But one use-case is critical to the decentralized web.
Stable Tokens / Crypto-hedging.
With the success of Initial Coin Offerings (ICOs) a large amount of ETH (and BTC) is locked in escrow with milestones. This implies that a company that raises funds at a market high, will subsequently see its funding slashed in the short-term, due to market volatility.
A company raising USD 10 million through ICO @ ETH price $400.00 (or BTC @ $3000), would see its funding reducing to USD 5mn if ETH (or BTC) were to drop by 50%.
Similarly, a decentralized autonomous fund, operating completely on-chain, is forced to roll with the punches, absorb market fluctuations and hold a purely long position.
With the Jibrel Network, these funds could sell their digital assets at highs and replace them with stable money market tokens (on-chain), and re-deploy their capital into digital assets when the market is low. Benefiting from volatility rather than fearing it.
Decentralized organizations could also lock their funding in smart contracts, not in volatile currencies, but in stable money market instruments, that will yield additional returns over time, ensuring funding is not only safe, but grows.
Our fear is that any significant swing in the market (60–70%) could force crypto-startups into insolvency if their funding is reduced to a level lower than their commitments (we already witness 50% corrections regularly). This would imply that critical Web 3.0 infrastructure is at risk of not being built-out. It also means that a large number of interesting smaller projects are at risk.
To ensure sustainable growth of Web 3.0, stable digital assets that are linked to the traditional economy are needed.
That’s one of the main reasons we’re building Jibrel.