AUDD and Stellar – anchored together
19 Jan, 2023
Since its launch on 1 November 2022, AUDD’s functionality on the Stellar blockchain has offered users around the world the opportunity to make payments and trade with other Stellar-based digital assets via its on-chain decentralised exchange.
Our integration with Stellar is an important step in AUDD’s ambition to connect Australians to the blockchain economy by delivering a seamless payments experience that empowers users to send currencies or remittances globally with near-instant settlements.
Novatti is a stablecoin issuer on Stellar, providing the network with the very first fiat-backed AUD stablecoin, AUDD. With the issuance of AUDD, Novatti joins more than 50 Stellar-based anchors established across the globe, designed to connect the Stellar network to the traditional banking system.
As a blockchain-agnostic stablecoin, our intention is to add AUDD to a range of other platforms over time to connect the Australian market with more exchange options and liquidity.
Our shared belief that stablecoins will play a critical role in the payments ecosystem made Stellar the ideal blockchain to launch AUDD on, before offering it across other platforms.
The Stellar Development Foundation is a non-profit organisation that supports the growth and development of the decentralised, fast, scalable and uniquely sustainable Stellar network. The Stellar network is both a cross-currency transaction system and a platform for digital asset issuance, designed to connect the world’s financial infrastructure.
Our initial interest in Stellar began back in 2017 and gained pace in mid-2021 as use cases and acceptance of stablecoins became more common. With support from the Stellar Development Foundation, Novatti issued AUDD on Stellar by incorporating the latest technological principles in this space, culminating in AUDD’s launch on 1 November 2022.
Stellar’s status as a commercially reputable blockchain was another important attraction to us. Banks and financial institutions worldwide issue assets and settle payments on the network, which has grown to over seven million accounts since its inception in 2014.
Additionally, Stellar’s on-chain transaction fees are highly competitive, with a proven track record of operating at scale.
AUDD is intended to facilitate payments, transactions and remittances between businesses and their customers.
It is part of a trend in which we believe digital currencies will become as widely accepted as cash, allowing entities to pay and be paid anywhere in the world.
According to the Reserve Bank of Australia (RBA), the total value of stablecoins on issue reached US$185 billion in April 2022 before more recently falling to US$150 billion amid the market volatility that followed the collapse of a large algorithmic stablecoin.
Unlike stablecoins that are collateralised with algorithms or cryptocurrencies, AUDD is collateralised on a 1:1 basis by Australia’s sovereign currency to minimise the risk of it depreciating in value. It is only minted and distributed upon confirmation of the equivalent amount of Australian dollars being received in a custodial bank account.
The RBA has noted the potential of some forms of stablecoin to enhance the efficiency and functionality of payments and other financial services while also acknowledging the need to consider appropriate regulatory settings to safeguard investors and users.
On top of its foundational layer, Stellar also utilises ‘SEPs’ (Stellar Ecosystem Proposals), which allow anchors like Novatti to access and integrate Stellar’s payment rails to their existing tech infrastructure, optimising critical processes to increase the efficiency of transactions without compromising the governance which underpins stablecoins.
We are working towards integrating several SEPs to support the issuance of AUDD in 2023. One of these protocols, SEP 12, will allow users to enter the information required to meet Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) obligations in a streamlined manner – and then will allow such information to be used for subsequent transactions. It will let a wallet owner (and subsequently a transaction initiator) attach encrypted Know Your Customer (KYC) or Know Your Business (KYB) information to the transaction, which is then sent along with the stablecoin to the receiving party.
We are also integrating other SEPs which build on SEP 12, including SEP 24 and SEP 31. The former will allow users to deposit from or withdraw to their chosen payment method in local fiat currencies, while SEP 31 enables cross-border payments between two financial accounts that exist outside the Stellar network.
Want to know more?
If you’d like to know more about AUDD itself and how it can be used on Stellar, please contact us using the form below.