Source: Adobe / MaxFrost
Flex Yang, the former CEO and founder of Babel Finance, has launched a new decentralized stablecoin backed by crypto-native reserves and an entire DeFi ecosystem built around it.
Yang claimed that the HOPE stablecoin mixes centralized finance (CeFi), decentralized finance (DeFi), and traditional finance (TradFi) to provide transparency and security that other so-called decentralized stablecoins lacked, he said in an interview with TechCrunch.
More specifically, the HOPE stablecoin is backed by bitcoin and ether reserves and will seek to maintain its dollar peg by relying on market makers and arbitrage traders to sell the token at a premium when there is greater demand for newly minted ones Stablecoins exist, and buy him at a price discount with lower demand and burning tokens.
Yang said Hope is comparable to MakerDAO, the issuer behind popular DeFi stablecoin Dai, but with “a number of additional functionalities.” For example, HopeConnect, one of Hope’s protocols, is a DeFi settlement and clearance application that allows users to trade derivatives on major exchanges without depositing assets on CeFi platforms.
“This means no CEX custody and no user credit risk while bringing CEX trading experiences to DeFi. Users can access CEX liquidity anonymously and decentrally.”
While the Hong stablecoin may remind some people of the collapsed TerraUSD stablecoin, there are some specific differences. For one, TerraUSD was a purely algorithmic stablecoin that relied on an arbitrage system with its own partner token, LUNA. On the other hand, Hope will use some elements of CeFi.
Some prominent investors have expressed their support for the stablecoin. In addition, Yang has reportedly confirmed that he will personally invest $10 million from his own pocket in funding the Hope ecosystem.
Meanwhile, the first DeFi project to be built in the Hope ecosystem will be HopeSwap, which will serve as a ramp to allow users to buy HOPE on the platform. Built on the Ethereum blockchain, this swap protocol will use an “automated market making” or AMM system and will help provide liquidity.
HopeConnect will follow next, followed by other applications including a no-custodial lending platform with multiple liquidity pools called HopeLend, synthetic asset exchange HopeEcho, and other third-party DeFi applications built on the Hope ecosystem.
Babel Finance was a leading crypto lending platform. It started in China with the backing of a number of prominent China-focused investors, including Sequoia Capital China, Tiger Global and Dragonfly Capital. The company later opened a shop in Singapore, where it is now headquartered.
However, Babel Finance was hit by market contagion in June last year following the catastrophic collapse of the Terra ecosystem. The lender then announced the decision to halt payouts following similar moves by Celsius Network and Voyager Digital.
Earlier this month, Bloomberg reported that Babel Finance is working on a new plan to raise money through a crypto-backed stablecoin. At the time, the report stated that the proposed new stablecoin would be called Babel Recovery Coin.
Commenting on the report, Yang said HOPE would be staked out from Babel but would not repay creditors directly. Instead, creditors will receive a Babel Recovery Coin (BRC).
According to Yang, the team behind Hope, which consists of former Babel employees, will receive 30% of the leveraged tokens (LT) with a four-year vesting schedule. The team will lock down all of its LTs to elect escrowed tokens (veLTs) to govern Hope’s Decentralized Autonomous Organization (DAO).
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