Bitcoin Forum

ARC Reserve Currency – Stability in a Volatile Cryptoverse


ARC Reserve Currency Quick Facts

•   ARC is an asset-backed, intrinsic-value digital stable coin
•   Created by Dr Garrick Hileman (University of Cambridge Judge Business School, co-author of ‘Global Cryptocurrency Benchmarking Study 2017) and Stephen Findlay (co-founder and CEO of BondMason, Financial Services veteran with 16 years’ experience including time Andersen, Deloitte, and time spent as VP at Fidelity.
•   ARC aims to provide stability by using Currency Diversification, Support from an underlying asset class and Pricing controls
•   ARC will be one of the first FULLY REGULATED ICOs launched and will benefit from high levels of transparency and governance.

Why have we created ARC Reserve Currency?

There continues to be unprecedented volatility in cryptocurrency markets. As a result, investors can experience significant gains in their portfolios on a daily basis – but naturally can also experience significant losses. This signifies that most cryptocurrencies are a poor store of value – investors cannot be certain that their investment will remain stable in real terms due to the high fluctuation in their value.
Similarly, the volatility in the cryptocurrencies used to measure the success of other projects (BTC, ETH) results in a distorted picture of the success of other blockchain projects. What happens when project X increases in value by 10% but BTC increases by 20% over the same period? Project X’s value is inaccurate and distorted. Therefore, current cryptocurrencies have limitations when considered as a unit of measure.
This is where ARC comes in. By utilising various mechanisms to ensure stability – investors can be safe in the knowledge that their investment can remain stable in real terms over time and future projects can be accurately represented, leading to increased efficiency in the crypto sphere.

Social Implications

We are passionate about ARC and believe it has the potential to have wider social implications than those described above. Currently, around 2 billion people are living in countries that have inflation higher than 5% and/ or have political instability. Individuals living in these countries are seeing the money they have put aside to plan for their and their children’s future eaten away by inflation or taken away by untrusted counterparties.
ARC will set a Target Return (described further in ‘How will ARC ensure stability?’) that incorporates the average rate of inflation of G10 countries over the past 10 years plus a premium. This means that ARC will aim to perform at (and slightly above) inflation. This will enable people to insulate themselves from the effects of inflation of their national currencies.
Without a reliable currency and somewhere safe to store your savings, it is very difficult for people to provide for their families. Very often, individuals are suffering the consequences of the actions of others. ARC wants to enable people to have access to a stable, safe, transparent currency that can help them plan for their future and provide for their family.

The Team

Dr Garrick Hileman –
Dr Hileman is a research fellow at the University of Cambridge, Judge Business School, leading global expert on cryptocurrency, and the principal investigator on the ‘2017 Cambridge Global Cryptocurrency Benchmarking Study’. He has over 15 years’ experience in the private sector with time spent at Bank of America, IDG and Allianz. He has served on the board of directors of both public and private companies. He was recently ranked as one of the 100 most influential economists in UK & Ireland.
2017 Global Cryptocurrency Benchmarking Study
Report PDF download https://ssrn.com/abstract=2965436
Report PowerPoint Slides: https://www.slideshare.net/ghileman/2017-global-cryptocurrency-benchmarking-study
Twitter - https://twitter.com/garrickhileman
Garrick’s Personal Website - http://www.garrickhileman.com/p/about.html


Stephen Findlay –
Stephen is the co-founder and CEO of BondMason, a financial technology platform that enables distribution and administration of capital into loans and other fixed income investments. He has 16 years financial services and investment management experience with firms including Deloitte, Andersen and was a former VP at Fidelity. He is a qualified chartered accountant (FCA – ICAEW) and became an approved person of the UK’s Financial Conduct Authority in 2009.

Twitter – https://twitter.com/stevewfindlay
LinkedIn - https://www.linkedin.com/in/stephenwfindlay/


 
Overview of ARC

How does it work?

Anyone can request to buy new ARC coins. ARC Fiduciary Ltd – a ring-fenced not-for-profit entity – receives the subscription funds and issues ARC coin to the purchaser.
ARC is issued when three tests are met:
•   Proof-of-stake: the purchaser of coin sends sufficient funds.
•   Proof-of-identity: the purchaser passes regulatory tests, such as KYC and AML.
•   Proof-of-reserves: the purchaser is paying the correct price per coin. This will be the Net Asset Value (NAV) per coin; the value of all assets held by ARC Fiduciary Ltd divided by the total number of coins in issue.
New issuances can be unlimited, instantaneous, and non-dilutive for existing coin holders, which is a critical feature of ARC, and vital for any stable coin.

How will ARC ensure stability?

ARC will utilise several key mechanisms that will enable the its price to fall within a narrow band. These are summarised below:
•   Currency Diversification – ARC will be priced relative to a selection of currencies. This will be based on the trade-weighting of major national currencies. National Currencies with a trade weighting of more than 5.0% as published in the tri-annual report conducted by the Bank of International Settlements will be included in the ARC currency allocation. The largest single currency exposure will be in USD (which naturally leads to a degree of correlation of ARC: USD). However, as ARC will benefit from diversification, the effect of this correlation is diluted.

•   Support from an underlying asset class – for the success of ARC in the future, it is vital that there is value creation in nominal terms, to ensure stability in real terms. ARC will have a Target Return which will be the rate at which the value of an ARC coin is expected to increase per year. This will be set at the higher of:
o   Average rate of inflation in G10 countries over the last 10 years plus a premium which is higher of:
   3 times the average standard deviation of the average inflation over the previous 10 years: and
   1.0% per annum
o   The average central bank rate in the US, Europe, Japan and UK, over a rolling 5-year period plus a premium of 1.0% per annum.
o   Please see - https://www.arccy.org/sites/default/files/arc-public-docs/lending-and-fixed-income-as-an-asset-class.pdf for more information on fixed income and lending as an asset class

•   Exchange Rate Controls – It is imperative that ARC’s pricing can fall within a narrow and predictable range relative to the Net Asset Value (NAV). ARC benefits from transparent and predictable controls to maintain this pricing range. So how can we ensure this?
o   Protection against over-speculation – The supply of ARC is infinite. This is vital for a stable coin. The reason for this is that if a stable coin has a fixed supply, when demand > supply the natural result is an increase in price. Infinite supply overcomes this ensures supply can always meet demand. Anyone can visit www.arccy.org and request to purchase new issue of ARC at NAV at any time.
o   Protection against undervaluation -The issuer will purchase ARC coin if the price falls below the NAV per coin and an acceptable range (reflective of the bid: offer spread on exchanges). The Issuer will have a minimum amount held in cash and liquid investments – which will be used to buy back ARC coins if and when the price falls below the acceptable range. Any coins purchased by the issuer will be immediately burned, as this is the opposite of issuing a new coin. These two mechanisms will result in a natural buoyancy of ARC coin over time – essential for its stability.


The Governance of ARC

There are 3 key factors which result in the strong governance of ARC and these are as follows:

   Regulation – ARC Reserve Currency will be one of the first fully regulated ICO’s and will be regulated by the Jersey Financial Services Commission (JFSC). We are proud to have worked closely with the JFSC and we will ensure continued communication and work to foster a strong relationship with the regulators. We believe regulation can have positive effects on the crypto sphere and regulation can be a catalyst for the adoption of crypto currencies and blockchain technology worldwide.

   Transparency –The underlying value, position and performance supporting the currency will be shared widely and freely – available for everyone to see. Transparency is key for blockchain technology and this is something we wish to uphold. Remuneration of the directors of ARC will be publicly disclosed and can be viewed at all times at www.arccy.org.

   Integrity – There will be centralised elements to ARC at the outset – This is something we will hope to overcome in the future when we believe the ecosystem can support it. This is what makes integrity of central governance so important for ARC. We hope to keep central governance to a minimum and actions will be clearly disclosed.

Roadmap

Through the creation and development of ARC we have identified some limitations, which require further work. Work and research will be continuously performed to ensure these limitations are overcome in the future.
•   Decentralisation – One of the main limitations of ARC is its initial degree of decentralisation. It is of paramount importance that work is done to ensure that in the future it is possible for ARC to minimise the degree of centralisation deemed necessary at this point in time to ensure a successful launch. Through our recognition of this limitation and until decentralisation of ARC has been achieved in full, we will use a combination of automated centralised actions, strong governance and the highest possible levels of transparency to provide the opportunity for peer oversight to foster trust. The two main centralised activities:
o   Investment Allocation: We will work to research and establish a method for allocating capital into lending investment opportunities without central oversight. In the future, this could take the form of truly peer-to-peer lending, something which could be made possible through the natural development of the blockchain ecosystem.

o   Governance of SPV: We continue to explore DAO possibilities, but we believe there is further work to be done in the blockchain ecosystem to facilitate DAOs. We anticipate that a suitable DAO framework could only be adopted once the appropriate currency and investment allocation algorithms are fully implemented. It is important to note that the people who have created ARC wish to adopt decentralised governance in the future as this is central to the idea of blockchain.


The Bigger Picture – If ARC is successful, who will benefit?

ARC Reserve Currency is established and operated (until full decentralisation can occur) by a ring-fenced Special Purpose Vehicle (SPV) with ‘leakage’ minimised including no opportunity for beneficiaries (e.g., shareholders) of the SPV to benefit from financial gain arising from dividends or value appreciation of the SPV. Not a single individual, including the founders and advisers to ARC, will be able to purchase ARC at a discounted rate; ARC coin can only be purchased at a price equal to the NAV of the SPV per coin.
Overall, ARC has the potential to be a catalyst for the adoption of cryptocurrencies worldwide.
If you have any questions about ARC and would like further information, please contact hello@arccy.org and we will get in touch with you. Thanks!

Money grab.

Better get some semux instead.  Real development, no bullshit.

We can assure you - this is the first fully regulated ICO out of Jersey, has been developed by Dr Garrick Hileman (Author of the 'Global Crypto currency Benchmarking Study 2017 - link below) and Stephen Findlay (FCA Approved person, Financial Services veteran) and is an intrinsic value, asset-backed stable coin.

This is certainly not a 'money grab' - we want to provide crypto currency users with a stable coin that is transparent, regulated and has strong governance.

Thank you for your feedback  :)

Global Bench marking study link - https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/alternative-finance/downloads/2017-global-cryptocurrency-benchmarking-study.pdf

Thank you :) We are glad you think so!

I think one of the most well regulated ICO and having all prior approvel of regulatory authority of their jurisdiction.I will not say that this would moon but would certainly be Stable Currency and Store of Value.I wish goodluck to team for their successful ICO.

We are very proud to have been the first fully-regulated ICO out of Jersey and believe regulation can play a positive and important role in the development of the crypto sphere.

ARC has been designed with strong pricing mechanisms to prevent it from 'mooning' (This is essential for a stablecoin) as it is the volatility in crypto currencies today which can hinder their widespread adoption.

Garrick Hileman explains this in a recent article - http://uk.businessinsider.com/what-is-stopping-bitcoin-from-becoming-mainstream-currency-finance-tech-2017-12

Thank you for your comment  :)

This appears to be very well thought out and researched.  A regulated crypto currency designed to have low volatility should prove attractive to a wide spectrum of end users and really addresses a gap in the this growing space.  Well done and good luck to ARC and all involved.
 

Hello, this project look very promising,im wondering when will start your crowdsale?

Thank you!

Our bounty program is live now and will continue until the ICO ends. ARC is available to buy from www.arccy.org

https://bitcointalk.org/index.php?topic=2526877 - link to bounty program

Thank you for your feedback. Yes, we believe compliance with regulation can be positive and important for the development of crypto assets. We also believe that volatility can hinder the widespread adoption of crypto currency and assets

There is already a coin with the ARC ticker - Arcticcoin. And I think you misinterpreted the concept of Proof-Of-Stake.

Do you have a website and a photo of your team members? I really wish this is legit as the idea behind the project is good.

Hi blink_stun,

Thank you for your comment.

Absolutely, I can completely understand your caution with there being a prevalence of scam coins around. As a note, ARC is a fully-regulated ICO, the first regulated ICO out of Jersey. Two press releases from our advisors:

JTC and Carey Olson:

https://www.jtcgroup.com/articles/jtc-and-carey-olsen-have-advised-arc-fiduciary-ltd--on-the-launch-of-jersey-s-first-initial-coin-offering--ico-?utm_medium=referral&utm_source=twitter.com&utm_campaign=ARC-ICO&utm_content=Link&utm_term=ics

https://www.careyolsen.com/news-and-deals/carey-olsen-and-jtc-advise-arc-fiduciary-ltd-jerseys-first-ico

The team - pictures of Garrick Hileman and Stephen Findlay can be found on www.arccy.org (scroll down the page to find their twitter and linked in accounts)

An article including Garrick Hileman (he is in the video) - http://uk.businessinsider.com/what-is-stopping-bitcoin-from-becoming-mainstream-currency-finance-tech-2017-12

Garrick Hileman on Cambridge University Judge Business School website - https://insight.jbs.cam.ac.uk/tag/garrick-hileman/

I hope this provides some assurance that ARC Reserve Currency is real, authentic and is out to aid the development and adoption of crypto currencies world wide.

Hello, thanks for your comment.

Information on our bounty program can be found on the bounty thread - https://bitcointalk.org/index.php?topic=2526877.0

If you require any further information drop me a PM.

Thanks  :)

Thank you for your comment.

We are not sure what our ticker will be yet - this will decided in conjunction with exchanges. Further updates will follow, but it unlikely to be 'ARC' - there are already two crypto's with ARC ticker.

Re Proof of Stake:
There are three test that need to be met for Arc coin to be successfully issued (please see technical paper for further details):
 - Proof of Identity - KYC/AML and regulatory approval checks on the purchaser
 - Proof of Funds - to ensure the purchaser has sent sufficient funds, and to confirm this is amount
 - Proof of Reserves - to confirm the NAV per coin - which sets the subscription price

We hope this answers your query.
 

Thanks for your support!  :)

Cryptoninjas covering the ICO of ARC:

https://www.cryptoninjas.net/2017/12/14/arc-cambridge-research-fellow-dr-garrick-hileman-launches-new-stablecoin/

IBS Intelligence covering ARC-

https://ibsintelligence.com/ibs-journal/new-crypto-arc-launched-stablecoin-backed-assets-able-rate-currency-inflation/

Regulation in jersey - https://www.hedgeweek.com/2017/12/18/259426/carey-olsen-and-jtc-advise-arc-fiduciary-jerseys-first-ico

Garrick Hileman (co-founder of ARC) commenting on the major roadblocks stopping Bitcoin from becoming a mainstream currency - http://uk.businessinsider.com/what-is-stopping-bitcoin-from-becoming-mainstream-currency-finance-tech-2017-12

Announcement from invezz: http://invezz.com/news/crypto/28716-upcoming-ico-channel-island-ico-targets-five-mil

Announcement from institutional asset managers: https://www.institutionalassetmanager.co.uk/2017/12/18/259426/carey-olsen-and-jtc-advise-arc-fiduciary-jerseys-first-ico

Sounds like a realy solid project, im looking forward to it

Thank you very much for your support. The ICO is now live head over to www.arccy.org to find out more  :)

https://international-adviser.com/offshore-centres-battle-bitcoins/

Dr Garrick Hileman - co-founder of ARC Reserve Currency cited in the Telegraph discussing whether Bitcoin or any other cryptocurrency can work as money  - http://www.telegraph.co.uk/investing/news/can-bitcoin-cryptocurrency-actually-work-money/

UPDATE for ARC reserve currency- We are now branded as AAA reserve currency (www.AAAreserve.com (http://www.AAAreserve.com)) due to ticker conflicts. See below.

Nomenclature
AAA Reserve Currency - the branding for the cryptocurrency

AAA - the ticker for the cryptocurrency

AAA coin - the short version for the cryptocurrency

$AAA - another short version for the cryptocurrency

Arc Coin and Arc Reserve Currency - the legal reference for AAA Reserve Currency as defined in the Information Memorandum and associated documents

As an update for the project we have now finished our alpha phase of price discovery and despite relatively big fiat currency fluctuations the coin has performed well: Its 3x more stable than USD (https://medium.com/arc-blog/aaa-reserve-is-3x-more-stable-than-usd-5264ecaa4ea9 (https://medium.com/arc-blog/aaa-reserve-is-3x-more-stable-than-usd-5264ecaa4ea9))

We are now in the process of aggressively marketing our 'stable coin' within the crypto space and are currently in communication with several  exchanges in regard to a potential listing.
AAA reserve can add value to exchanges by serving as an effective fiat-to-crypto bridge. This enables:
•   more trading activity on exchanges (as clients remain in crypto rather than trade back into fiat)
•   on-boarding more clients (including newcomers looking for an easy entry point from fiat to crypto); and
•   reduced administration and operations for the exchange (less fiat bank accounts and fiat pairs).
Furthermore, since AAA reserve is backed by a number of fiat currencies not just pegged to 1 as the case for most other stable coins this gives us an unparalleled advantage at accepting a large number of currencies and effective fiat trading between them and cryptocurrencies on exchanges.

We are also talking to a number of ICOs who are planning to use AAA reserve as a medium for their ICO. This enables them to accept fiat as well as cryptocurrencies without the need for bank accounts (https://medium.com/arc-blog/how-to-accept-fiat-subscriptions-for-your-ico-9dcf97fef25d (https://medium.com/arc-blog/how-to-accept-fiat-subscriptions-for-your-ico-9dcf97fef25d)) this should increase there ICO revenue.  AAA can be used either via white label or directly through sending AAA and in doing so we also offer to conduct KYC/AML on their behalf to comply with regulatory requirements.

The team is also expanding so look forward to seeing a lot more activity from us in the crypto space.

Any questions contact the team at hello@aaareserve.com

Incorporating the average inflation rate? That's something I haven't seen before when it comes to crypto projects. You know what, that alone is able to convince me that your coin is worth it. The social implications side of it is straight-up vital to me.

Incorporating the average inflation rate? That's something I haven't seen before when it comes to crypto projects. You know what, that alone is able to convince me that your coin is worth it. The social implications side of it is straight-up vital to me.

Hi ZellaAnders,
AAA reserve does indeed incorporate inflation, by using the average inflation rate over the last 10 years of the G10 countries and manipulating the returns of fixed income assets backing the coin (plus a premium) we are able to nullify inflation.

Thanks for your support!

Hi Kickstarter,
AAA reserve does indeed incorporate inflation, by using the average inflation rate over the last 10 years of the G10 countries and manipulating the returns of fixed income assets backing the coin (plus a premium) we are able to nullify inflation.

Thanks for your support!