Bithumb Global AMA Live with SAGA (SGA)

13th March 2020, Friday

Recap of Live AMA with the founder of SAGA, Ido Sadeh

AMA Link >> https://t.me/bithumbglobal_EN/76036

Q1: Your goal is for SGA to serve as a global currency, integrated within the current financial system, governed in the interests of its holders, and endowed with the features to become a true store of value and means of exchange. How do you intend to achieve this going as part of the criticism and challenges faced by LIBRA?

A1: Several key differences — the first of which is the governance model. Saga does not have shareholders. It is increasingly governed by the currency holders. On the 10.12. 2020 we will have our first elections — in which only you will decide:
- Who leads the project.
- Any changes made to the monetary model.

Until such elections, not changes to the monetary model are allowed by constitution. This is very different from a corporate structure — where the shareholders determine the agenda and policy.

The second difference is the basket — we rely on the SDR, The SDR is a basket of currencies decided by the International Monetary fund. It was created in 1969, updated every 5 years. Central banks are using this basket to hold their reserves and diversify against currency volatility for 51 years now.

So, while there is some similarity between the projects, there are many differences as well.

We were able to launch Saga as a UK organization — following all UK and EU regulations and in compliance with them.

Q2. The supply of SGA tokens is determined by demand. Could you please, explain the ration behind this model, most especially for guys who have a keen interest in the project.

A2: Sure. A currency is a form of trust. When the trust is low — the intrinsic value should be low. When the trust increases the value should increase.
An elastic supply — determined by demand, allows the smart contract to consider the number of SGA as a vote of trust or distrust.

When the number is low — the currency is fully backed. When the number increases, the backing decreases ever so slowly and the currency appreciates- this allows the development of independent, intrinsic value while taming volatility while the currency grows.

This is very similar to having a gold backing for fiat currency — and slowly debasing. With one big difference — in Saga — it is done by the smart contract based on actual market trust. No one can start printing money.

Q3: Can you succinctly put, what hedging stands for and how is it related to the Saga ecosystem?

A3: Saga is backed by a reserve of the 5 most traded currencies in the world: USD, EUR, CNY, JPY, GBP.

It means that in times such as these, when fiat currencies fluctuate — the basket helps offset some of those fluctuations and hedge by diversifying.

This is how Central banks are doing it since 1969!

Up till now, only central banks could hold SDR. now — by holding SGA you can hold the same composition of currencies.

Q4: What has Interest and Price adjustment got to do with holding Saga as a token?

A4: SGA is backed by fiat reserve that is held in bank deposits. These deposits accrue interest that is paid back to the reserve itself, increasing the SGA token price using the price adjustment mechanism. So SGA holders benefit from an interest in their holding. This is very different compared to other stablecoin projects.

Q5: When implementing the Saga Protocol, what are the algorithms Saga largely based on?

A5: The main algorithm Saga is based on is our monetary model. Describing it in full will necessitate a lot of scrolling in this telegram chat, so for those of you interested in understanding all the little details are more than welcome to read the full description: https://tinyurl.com/wwezwzc.

If I do try to describe it in short I would say that Saga’s monetary model, inspired by central banks and developed by leading economists is built to allow SGA to become a global currency by balancing between stability and growth. When the currency is small (market cap <$100M) it is fully backed by reserve and behaves very similar to a stablecoin. As the market trust in Saga increases, the reserve backing is reduced allowing SGA price appreciation attributed to its intrinsic value.

Q6: A token only becomes a currency once it is used by markets as a store of value and means of exchange. Could you please, elaborate more on this as related to Saga?

A6: An asset does not become a store of value and a means of exchange over night. This is a very long process that may take years (if at all). Our strategy is to increase the usage of SGA first as a store of value, answering the increasing need for stability. Then, when a big enough network of users using SGA as a store of value will develop, SGA would become a means of exchange.

Q7: Saga’s model permits variation in SGA’s exchange rate. However, it also utilizes a variable reserve to moderate fluctuations so that stability is not jeopardized by unsustainable growth. What is the Saga model and how does it correlate with the exchange rate?

A7: Saga’s monetary model uses a variable fractional reserve in order to set SGA price. SGA value comes from two distinct sources: reserve backing and intrinsic value.

When the currency is small and does not enjoy the market’s trust, the intrinsic value is low and SGA’s price is set by the reserve backing. Here, SGA behaves like other stablecoins.

As the market trust in Saga increases (measured by the number of SGA tokens in circulation) the reserve backing slowly decays giving room to intrinsic value to develop and the SGA price to increase.

You can imagine SGA as a bridge between stable coin and bitcoin, when small — it is similar to a stable coin, only at $5T! Will it be independent, and at this market cap — it will not suffer from the volatility we are currently witnessing. The model is built to support the growth and tame the volatility.

Q8: Who are your competitors and how do you think you can stand the test with the level of adoption in the ecosystem?

A8: Well, Libra is definitely trying to answer the same pain we are. in different manners stablecoins are too. But we don’t see them as competitors — we all, together have the task of bringing crypto currencies to mass users. In regards to Libra I have noted the differences but there is another one. We are live with regulatory compliance. In regards to stablecoins — we believe the the choice of relying on the IMF basket of 5 currencies rather than on a single currency is important. Especially in periods of crisis such as the world is experiencing now.

Moreover — you can go to https://www.saga.org/performance/ and see how much money is in reserve any day. You don’t have to believe us — you can read the bank attestations — updated on a daily basis.

Q9: How would you bridge the gap between internet money and real money with #SGA since most advertising firms might fight it a hindrance to first buy tokens and then proceed with their advertising efforts?

A9: One of the big challenges of the entire industry is on ramps and off ramps from fiat to crypto and back. This is one main area of focus of Saga as well — hence our recent collaborations allowing to buy SGA with credit Card — very very soon on Bithumb as well.

It is a continuous process. the face that we are compliant makes it easier for us — we can bridge to the traditional financial industry, allowing banks transfers to be a ramp. we will have big announcements in this regards in the coming quarter.

Q10: How do you think Blockchain will be driving Force in the Fintech world? What type of problem right now exists in the Fintech world? And, What is the problem though this project gonna address or solve?

A10: I think crypto is not only going to drive Fintech forward. but the monetary ecosystem. We live in a global world. we face global challenges that are clearly leaving national structures struggling to provide ALL the solutions. The fact the with Blockchain — we can build Smart, Trustworthy and GLOBAL solutions is the key. Take the SDR for example — for 50 years there are callings to make this available to anyone, not just central banks. But national considerations are blocking this initiative — now with blockchain, we were able to allow the same composition to be available to all — not just central banks. At the same time — this change is gradual. and with out 3 elements we will not succeed:

1. Address volatility. it would be hard to convince anyone today, that crypto is the new money when the prices are swinging.

2. Connect to the traditional financial system — if we don’t want to be a niche market — this means working with regulators, not against them.

3. Improve user experience — keeping blockchain under the hood and offering a UX people can actually use.

We don’t care if Telegram is written in Java or in Python. It is easy and fun to use. The same goes for blockchain.

Question from the Community

Q: I think $SGA is a great and very hopeful project with very skilled teamwork . In light of current events, will his #SAGA work take precedence over his use in everyday life before Bitcoin and any other cryptocurrency?

A: Thank you so much. This is for the market to decide. We built SGA for stability — in these unstable times we think this is what the market will seek.

Q: Does the recent COVID-19 affect saga, especially technically? What precautionary measures do you have to safeguard your team? And, how is Saga helping in the fight against it?

A: CoronaVirus is a global problem. It needs global solutions. We are going to see economies fluctuate and the value of currencies fluctuate with it. Saga helps offset these fluctuations.

Q: SAGA is funded by some capital like Mangrove, Vertex Venture, lool Venture. What made them believe in your team and the product?

A: In their own words https://medium.com/looltalk/saga-why-we-invested-1baa6e70c28c

Q: I would like to hear how you guys see the future business development possibilities in the next 3/6/12 months. Is there specific business areas, and also maybe geographical locations, which you want to focus on most?

A: 1. On ramps and off ramps — we can be the best store of value since sliced bread, but we have to be easy to buy and sell and PAY.

2. Interest rates in the world are looming 0%. we will announce next week a partnership to allow SGA holders to gain interest rate on their holding.

Defi — financial applications need stability — you cannot offer insurance on the blockchain with unstable currencies as collateral.

Q: Whats the main Mission & Vision of saga project? What you actually want to build & which problem can be solved through saga project?

A: To provide a global, cross border currency, that is not managed by any single nation state, maintains stability gathers trust gradually.

Q: Marketing is a leading element for every project. So what is your strategy to attract users and investors to Saga in the long term?

A: We will build it and they will come. The best marketing tool for SGA is the balance between stability and growth. especially now. The ability to safely store value in such times speaks for it self. naturally partnerships such as we are launching with financial providers for gaining interest on SGA is key to market SGA.

Q: What is the plan your project is preparing for 2020 before the current situation of CORONA disease? What are the achievements that your project has achieved over the years ?

A: SGA was designed to deal with global fluctuations. when all is shaking there is only one way to protect — diversify. in terms of achievements — the fact that we brought crypto to the central bankers trust is huge. being able to tap into the experience of leading monetary experts such as Prof. Frenkel — the former Governor of the Bank of Israel and JP Morgan international — allowed us to develop a robust monetary model.

Q: How do you manage to synchronize the price of SGA with the pegged currencies (usd jpy…) price?

A: We actually hold the “pegged” currency in our bank account and these funds are dedicated solely to buy back SGA from the market if needed, so the “synchronization” comes by our ability use them to buy SGA.

Q: What is the key differentiate between Saga and Fiat currencies? Can you tell us about Saga’s Governance model?

A: https://blog.saga.org/montesquieu-goes-digital-introducing-sagas-governance-model-d4dba257c81b Highlights on our unique governance model that combining elements from national government and DAO.

Q: Which blockchain networks your developer tools work with? Also, do you think that all blockchains are fit for steady financial use or have a preference for some? Which ones?

A: SGA is an ERC 20 token, deployed on Ethereum. the design of SGA allows us to support a multitude of blockchains — but it is not our first priority to extend to different blockchains yet — but in a later stage.

Q: Last year December, the EU Council and Commission issued a joint statement declaring that “no global ‘stablecoin’ arrangement” should begin operation in the region until “the legal, regulatory and oversight challenges and risks have been adequately identified and addressed.” Is Saga in any way affected by this?

A: This is a great question. The EU council referred to “stable” and “global”. Stable — as pegged to a single currency and with no independent value — this is not the case for SGA, which is backed by a basket and has a variable reserve that slowly and gradually departs from the basket. Global — as based on an EXISTING customer base that would endanger financial stability. Gradually sustainable growth, by gaining market trust. We therefore believe this statement does not refer to SGA but to other proposed solutions.

Q: What brought SAGA to Bithumb and what are the advantages this listing opportunity brings to the development of SAGA?

A: Great team, great volumes, great community! Transparent and engaged. we took a deep dive into the market opportunities looking for sustainable partnerships that have a clear win:win approach in mind https://www.saga.org/blog/blogPost/XScRtBEAACAAAMcQ/

Q: Why do you prefer to term Saga a “currency” rather than a “token”?

A: Saga was designed to be a store of value, medium of exchange and eventually a unit of account for cross border trade. this is the definition of a currency. while technically SGA is a token as well, it is a token designed to become a currency.

Q: Can you share to us What are the Improvements of SAGA tokenomics in 2020?

A: Saga Token economy was built for the market to regulate it. The improvement is already programmed into the smart contract in two main ways:

1. The reserve ratio decline as the currency is gradually adopted. This is of course at the sole discretion of the market.

2. The introduction of the SGA Price Band — allowing more and more price discovery by the market, as the contract gradually opens a spread between buy and sell price. this allows the price of saga to be determined in secondary markets such as Bithumb, by the market within the band, while the smart contract supports the price and tames volatility if the price band is exceeded.

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