Datachain and Progmat partner to launch stablecoin business

Datachain and Progmat have partnered to maximize the AUM (Assets Under Management) of stablecoins issued using “Progmat Coin”, a stablecoin issuance and management platform developed by Progmat.

The collaboration will see Datachain and Progmat jointly promote the development of stablecoin contracts and global market development, in addition to their existing multi-chain/cross-chain expansion.

Development of smart contracts for standard stablecoin functionalities has already been completed, and successful stablecoin transfers between multiple blockchains have been confirmed in a testnet environment. Going forward, both companies will strengthen their collaboration to establish a global standard for stablecoins issued using “Progmat Coin”, including the creation of international use cases.

Background

As of May 2024, the global stablecoin market size exceeds 160 billion USD (approximately 25 trillion JPY). In addition to their application in blockchain services, various use cases are being explored, such as improving convenience in retail and inter-company payments.

Currently, USDC issued by Circle and USDT issued by Tether account for the majority of the market. Tether’s net profit in the first quarter of 2024 reached 4.5 billion USD (approximately 700 billion JPY), demonstrating the significant attention this field is receiving.

However, existing stablecoins face challenges such as regulatory compliance and price volatility. There is a growing need for safe and secure stablecoins issued by internationally trusted financial institutions that comply with regulations. In Japan, stablecoins were defined under the revised Payment Services Act enforced in June 2023, and preparations are underway for the issuance of stablecoins compliant with this law. In fact, the first tokenized deposits under this scheme have recently been launched.

Progmat is leading the development of “Progmat Coin”, a stablecoin issuance and management platform, in collaboration with stablecoin issuers such as trust banks. Once intermediaries handling stablecoins complete the necessary license registration, it will be possible to issue and distribute stablecoins using this platform. Each stablecoin can be issued in major fiat currencies such as JPY, USD, and EUR, with plans for global market expansion.

About This Collaboration

The goal of this collaboration is to maximize the AUM of stablecoins issued using “Progmat Coin” through the joint efforts of Progmat and Datachain. Specifically, the two companies will collaborate on the following two points, which are key to liquidity in the stablecoin business:

• Smart Contract Development (Multi-Chain Expansion/Cross-Chain Functionality): Smart contract development to enable registration, issuance, and transfer of SCs issued on the “Progmat Coin” platform across multiple blockchains, as well as bridging functionality between multiple blockchains.
• Business Development in the Global Market: Business development to create international use cases such as cross-border payments using SCs issued on the “Progmat Coin” platform.

For smart contract development, the development of standard functions such as stablecoin registration, issuance, and transfer has already been completed. In a testnet environment of multiple public chains (Ethereum and BNB Chain), successful stablecoin transfer transactions between different blockchains have been confirmed.

This transfer transaction adopts the Burn-Mint method. This method burns stablecoins on one blockchain and mints an equivalent amount of stablecoins on another blockchain. This offers improved capital efficiency and user convenience compared to conventional methods. Currently, no stablecoin other than Circle’s USDC has implemented this method, and “Progmat Coin” is expected to be the only stablecoin platform capable of Burn-Mint cross-chain transfers from Day 1 (system release) (as of May 2024, according to the partners’ research).

Each stablecoin issued using the “Progmat Coin” platform implements the above method using Inter-Blockchain Communication (IBC), a blockchain interoperability protocol to which Datachain contributes development. This will enable the provision of a safer, more versatile, and capital-efficient stablecoin transfer function between blockchains.

The blockchains supported by IBC will be expanded sequentially based on factors such as transaction costs and speed of each chain, the size of the related ecosystem, and the needs of SC users.

Future Plans

Progmat and Datachain will continue to collaborate with stablecoin issuers such as trust banks to issue stablecoins using the “Progmat Coin” platform within 2024 and maximize their AUM thereafter. The companies will continue to develop additional functions and hold discussions with various financial institutions and stablecoin-using companies in Japan and overseas.

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