One of the main reasons for governments and central banks to oppose cryptocurrencies is that they are anonymous (tracking is almost impossible). Furthermore, the cryptocurrencies exhibit tremendous volatility. According to economists a volatile coin cannot succeed to become a mode of payment. To resolve these issues, high profile financial executives, economists and even a Nobel laureate have teamed together to develop a non-anonymous cryptocurrency named as “Saga.”
The cryptocurrency Saga is being developed by a Swiss non-profit organization named “The Saga Foundation.” The foundation, which is dedicated to developing new technologies in open and decentralized software, has an advisory board made up of Jacob Frenkel, the former Governor of the Bank of Israel and chairman of JPMorgan Chase International; economics Nobel laureate Myron Scholes, known for creating the Black-Scholes formula, the most well-known model for pricing options and derivatives; Dan Galai, a co-developer of VIX, the leading measure of financial market volatility; and Leo Melamed, the chairman emeritus of CME Group and pioneer in financial futures.
The main aim of creating Saga is to offer a cryptocurrency that can serve as a means of payment, without any wild price swings. The developers are planning to employ methods from traditional finance to ensure low volatility. The cryptocurrency will also offer a fractional reserve method, similar to banks, and reserves will be deposited in regulated banks. The proposed cryptocurreny will be pegged to the IMF’s Special Drawing Right (SDR), an international reserve asset (a currency basket comprised of the US dollar and euro, among others). Many of the central banks hold SDR in their official reserves.
The circulation of Saga will be adjusted algorithmically according to the changes in its economy. When the economy expands, the circulation will be increased and vice versa. This is achieved automatically through a smart contract. Additionally, a price band will also prevent volatility.
AML, KYC requirements
Unlike other cryptocurrencies, Saga holders must comply with AML & KYC regulations, according to the Swiss law. This removes anonymity, which is a cause of concern for banks and financial institutions.
Saga: VOX MONETÆ (The Voice of Money)
According to the website, Saga tokens will be available from fourth-quarter of this year. It can be purchased with Ether or bank transfer to one of the banks holding Saga reserves.
To fund the project, Saga has raised $30 million from investors, including Mangrove Capital Partners and Lightspeed Venture Partners. Saga genesis is offered to early investors in the form of voucher token.
Saga is not the only project which is trying to develop a cryptocurrency that is less volatile and can be used as a payment. Tether, a controversial project, offers USDT and EURT, which are used mainly by cryptocurrency investors to protect the wealth when market turns downwards.
Basecoin, which uses “algorithmic central bank”, and Dai token, whose exchange rate against the greenback is decided by a “decentralized autonomous organization” are other projects which aims to offer price stability. Both projects are backed by blue-chip venture capital firm Andreessen Horowitz.