The Case for a Qubic Stablecoin - Part 5: Growing the Ecosystem

In the final part of "The Case for a Qubic Stablecoin" series, we outline our request for funding from the Qubic Computor-Controlled Fund (CCF) to jump-start a Qubic-based stablecoin.

Spelunker, Sept 02, 2024.

Who is asking for funding?

We are Valis, a dedicated group supporting the Qubic community through software, smart contracts, tokens, and services. Our mission is to develop solutions that enable free and instant payments worldwide. Execution and transparency are our cornerstones. The Valis team is composed of a mix of full-time employees, contractors, and volunteers.

Valis was co-founded in June 2024 by Qsilver, a well-known contributor to the Qubic Community, and Spelunker, who brings over 20 years of experience in Product Management across SaaS and consumer-facing startups and scale-ups. Both founders have experience building bootstrapped and funded companies. Together, Qsilver and Spelunker combine their deep expertise in Qubic technology and product development to drive Valis forward.

What will the funding be used for?

Valis will use the funding to build the Minimum Viable Product (MVP) of a Qubic-based single-chain Stablecoin for the European Union market. This MVP will contain only the essential features necessary to meet the primary needs of EU early adopters. Integration with centralized exchanges, the marketing launch, and expansion into the US or Asia are not included in this funding request.

What is your USP?

Our unique selling proposition (USP) leverages Qubic for instant finality and feeless transactions, combined with the Valis Network’s superior scalability, to deliver unmatched throughput. These network-dependent factors provide a competitive edge that no other stablecoin or chain in the market can match.

Unlike multi-chain stablecoins focused on liquidity and reach, our single-chain approach ensures a consistent user experience (UX) in speed, cost, and scalability. This makes our stablecoin particularly well-suited for use cases that demand either high performance or consistent UX, such as High-Frequency Trading and Decentralized Finance. For more details, see Part 3: The Best Option.

How will the funding be allocated?

The funding will be allocated across four key development areas, including Smart Contracts (SC) Development, Non-SC Development, Integration, and Compliance.

Smart Contracts (SC) Development

To ensure equivalent value issuance, seamless transfers, proper collateral return, equitable profit sharing, robust collateral management, transparency in operations, and democratic governance, we plan to develop the following feature groups using Smart Contracts (SC):

1. Issuance: Receive collateral (e.g., EUR, USD, USDT, USDC, QU) and issue stablecoins (e.g., VEUR, VUSD, VXAU) equivalent to the collateral value.
2. Transfer: Leverage roll-ups to transfer stablecoins to other users, providing high transaction throughput, instant settlement, and zero user fees.
3. Redemption: Redeem stablecoins for the underlying collateral, managing stablecoin burns and releasing the corresponding collateral.
4. Collateral Management: Manage the collateral backing the stablecoin, diversifying it into fixed-income assets, and rebalancing the portfolio.
5. Audit: Audit and report on stablecoin operations, publishing data on collateralization, issuance, and redemption.
6. Governance: Vote on key parameters (e.g., collateral ratios, redemption fees) and proposals for system upgrades and improvements.

The above feature groups could be implemented as one or several SCs. Some features may be developed as back-end infrastructure (e.g., Collateral Management), as oracles, or as a combination of SCs and oracles (e.g., Audit), rather than purely as SCs. All SCs will be integrated with one another where appropriate.

Since Qubic Core plans to charge SCs based on usage (e.g., storage, CPU usage), all SCs will incur protocol-level fees. Valis plans to cover all protocol-level Transfer fees while charging additional application-level fees for Redemption and Governance.

Non-Smart Contract Development

In addition to SC development, several non-SC components are crucial for offering a stablecoin to EU consumers. We will leverage solutions from third-party vendors where appropriate:

1. Banking Integrations: Establish partnerships with EU-based banks to enable seamless fiat on-ramps and off-ramps. This includes the development of APIs to facilitate real-time transactions between users’ bank accounts and their stablecoin holdings.
2. Compliance Infrastructure: Implement a comprehensive compliance framework to ensure adherence to EU financial regulations, including Anti-Money Laundering (AML), Counter-Terrorism Financing (CTF), and Know Your Customer (KYC) protocols, and reporting mechanisms to financial authorities.
3. Customer Support Systems: Develop a robust customer support infrastructure, including a multi-lingual support team, user-friendly interfaces, and a secure communication channel for handling sensitive information.
4. User Interfaces: Design and develop user interfaces for both web and mobile platforms, ensuring that users can easily manage their stablecoin holdings and execute transactions.
5. Security Protocols: Establish security measures to protect user data and funds, including encryption, two-factor authentication, and continuous monitoring for suspicious activity.

Integration

Valis’ vision for a world with free instant payments comprises several phases, each a stepping stone for the next one. Valis Stablecoin builds on our previous developments and, once operational, it will serve as the foundation for next developments. Therefore, Valis Stablecoin will be integrated with:

• Valis Liquidity: Our liquidity pool will provide liquidity to all Valis Stablecoins. We plan to deploy the VLIQUID Smart Contract on testnet by late September. The QWALLET token will serve as secondary currency in Valis Liquidity. We expect significant QWALLET appreciation once this milestone is achieved.
• Valis Network: Our middleware capable of supporting millions of concurrent Qubic users will incorporate enhancements on data compression, address encoding, signatures aggregation, and dynamic scaling to make Qubic the fastest chain in 1-to-1 transfer scenarios, ideally suited to power our stablecoin.

Compliance

We will ensure full regulatory compliance while maximizing privacy through a dual incorporation strategy. Our primary incorporation will be in a privacy-focused jurisdiction, where a holding company will own the intellectual property and shares of our operational entities, safeguarding founder identities while meeting local legal obligations.

Since our initial focus will be on the EU market, the operational entity will be established in a crypto/fintech-friendly EU jurisdiction, such as Estonia or Lithuania. This entity will handle all customer-facing activities, regulatory interactions, and daily operations within the European market. We plan to secure an Electronic Money Institution (EMI) license to offer compliant financial services across the EU, with the issued money recorded as tokens on the Qubic DRT. We will closely monitor the development of the Markets in Crypto-Assets (MiCA) regulation and adjust our strategy accordingly.

For future expansion into the US, we plan to incorporate a third entity in a business-friendly state like Delaware, ensuring compliance with US regulations, including acquiring Money Transmitter Licenses (MTLs) as required.

Additionally, we will implement robust AML/CTF measures, and ensure compliance with data protection laws and electronic records and signature laws, maintaining operational resilience across all jurisdictions. This structure will enable us to protect privacy, optimize compliance, and efficiently manage operations across key markets.

What are the estimated costs?

Personnel Costs

We aim to build a high-performing team of professionals who take pride in their work and in collaborating with like-minded individuals. These initial key hires will lay the foundation for Valis' culture. While we strive to minimize hiring mistakes, we’re prepared to address any missteps swiftly. Our "slow to hire, fast to fire" approach has proven effective in past ventures, and though it may slow down some initial development efforts, we prioritize long-term success over short-term gains. This careful hiring strategy introduces variability in our timeline, making it challenging to predict an exact burn rate during the first few months. The pace of finding and negotiating with top talent will directly influence our expenditure. Notably, while Qsilver could be our highest personnel cost, he has chosen not to take a salary, allowing us to allocate more resources towards attracting the best professionals.

Compliance Costs

Reference compliance costs, using Estonia as the operational entity jurisdiction:

• Initial Capital Requirement ($380,000): The EU’s E-Money Directive (2009/110/EC) standardizes the capital requirements for EMI across the EU, including Estonia, where the minimum capital requirement is set at €350,000 ($380,000).
• Staff Costs ($150,000): Salaries for key personnel required by Estonian regulations, such as a Compliance Officer and Money Laundering Reporting Officer (MLRO).
• Technology and Infrastructure ($100,000): Costs for IT systems, AML/KYC software, and secure transaction infrastructure.
• Legal and Consulting Fees ($75,000): Costs for legal services, consulting on compliance, and application preparation.
• Office Setup Costs ($15,000): Expenses for setting up a registered office in Estonia, including rent and utilities.
• Miscellaneous Costs ($15,000): Additional expenses for training, certifications, and other regulatory requirements.
• Ongoing Compliance and Regulatory Reporting ($30,000 per year): Costs for ongoing audits, regulatory reporting, and maintaining compliance.
• Insurance ($8,000 per year): Professional indemnity insurance as required by Estonian regulations.
• Regulatory Application Fee ($3,500): Fee charged by the Estonian Financial Supervisory Authority (EFSA) for processing the EMI license application.

Costs Summary

Below is a summary of our estimated personnel and compliance costs.

When will the key milestones be delivered?

We anticipate the following timeline for key milestones:

How much are you asking for?

We’re requesting a total funding of 900 billion QUs, to be distributed through a combination of upfront and ongoing payments to meet the needs of both Valis and the CCF.

For Valis, securing top talent is essential. In our experience, it's nearly impossible to attract high-caliber individuals without guaranteeing their salary for at least a year. That’s why we’re asking for an upfront payment of 200 billion QUs (22% of the total funding requested), which will cover the costs of assembling a single core product triad—comprising a product manager, product designer, and software engineer.

For CCF, we recognize the importance of spreading out payments to validate our execution capabilities and to distribute QU conversions over time. Note that our request for 2% of weekly emissions over 35 weeks does not add to the significant sacrifices already being demanded from Computors (~1/3 of weekly emissions):

• 15% of Computors actual revenue to Donations.
• 10% of weekly emissions to Qearn.
• 8% of weekly emissions to CCF ← Our 2% request is included here.

Our proposal is designed to fit within the existing allocations, ensuring no additional burden is placed on Computors.

How much have you received in the past?

At Valis, transparency and execution are our core values.

All our addresses are public and managed solely by Qsilver, who is the only person with access to the private keys.

We have received 130B QUs to date:

• 30B QUs from Donations, and
• 100B QUs from the QWALLET and QPOOL Fundraiser

We currently have 104B QUs unspent:

• 49.8B QUs left in our VALIS address
• 49.4B QUs left in our QWALLET address, and
• 5B QUs converted into USDT (ERC20).

Of the 104B QUs unspent:

• 50B QUs are allocated to fund VLIQUID (formerly QPOOL) liquidity pool.
• 54B QUs remain available for future spending.

What have you achieved so far?

With the 26B QUs we have spent so far, we have achieved the following:

• Launched:
• Valis Wallet, the first and only Qubic non-CLI wallet supporting Qx.
• Valis Explorer, the first and only Qubic explorer supporting orderbooks and token balances.
• Valis Network, a powerful middleware capable of supporting millions of concurrent Qubic users and the backbone of Valis Wallet and Valis Explorer.
• QWALLET, a token that will serve as secondary change in VLIQUID.
• Valis Re-branding, from the “Qsilver Project” to the “Valis Team”, and launched our new Web, Blog, X (Twitter), and Discord.
• Published:
• First Qubic Interim Whitepaper.
• Valis Liquidity Specifications.
• Raised:
• QWALLET and QPOOL Community Fundraiser.
• Proposed:
• Qubic-based Stablecoin CCF Proposal.
• Contributed to:
• Paving the way for centralized exchanges to support Qubic.
• Helping design Qearn.
• Discovering attack vectors.
• About to launch:
• VLIQUID (formerly QPOOL) on testnet.

Our track record speaks for itself. Computors considering funding Valis can be confident in our commitment to transparency and cost-efficiency. We deliver, and will continue to deliver, exceptional results at a fraction of the cost of other teams.

Why should Computors fund you?

In exchange for funding the Valis proposal with 900B QUs (nearly a full 1T weekly emission) over 8 months, Computors and Miners receive five key benefits:

1. A strong team building on Qubic: Led by Qsilver and Spelunker, Valis will assemble a high-performance team that prioritizes value creation over supply manipulation, long-term sustained payback over immediate short-lived gains, and organic over artificial supply reduction—in essence, quality over quantity.
2. A groundbreaking project to expand the Qubic Ecosystem: A Qubic-based single-chain stablecoin with the potential to redefine the stablecoin market, elevate Qubic's standing in the crypto space, and significantly increase QU organic burning via smart contracts execution.
3. A powerful solution to make Qubic the fastest chain in all scenarios: A rollup-based solution, designed by Qsilver, that will dramatically increase Qubic’s Transactions Per Second (TxPS) in 1-to-1 transfer scenarios, from current 410 TxPS to potentially 1.8M TxPS with future network parameters.
4. A working Go-To-Market Strategy: “Ultra-high performance” positioning, actionable today, with high certainty and broad market appeal, unlike the current “the first uPoW for AI” positioning, which attracts small investors but sacrifices conversion funnels and flywheel momentum.
5. A strategic alternative to SteCo: Valis provides optionality by avoiding the risks of centralizing resources within a single "SteCo Foundation", ensuring greater flexibility and resilience for the ecosystem while incentivizing all players to perform. If Computors and Miners compete for rewards, others should too.

How will you ensure transparency?

At Valis, transparency is a core value. We have already made all our addresses public and published income transparency reports, including one for Donations and another for our first fundraising (the QPOOL & QWALLET Crowdfunding).

As we move forward with the stablecoin project, we will add two more transparency reports: Money Flows and Expenses.

All our reports are updated automatically every hour, offering near real-time transparency into our financial activities.

Additionally, if we secure funding for this project, we commit to share a monthly progress report and provide more frequent updates in the Valis Discord when significant milestones or developments occur.

Where can I find more information?

We encourage you to read “The Case for a Qubic Stablecoin” series fully:

1. Part 1: The Why Question · Aug 5, 2024.
2. Part 2: Marketing Qubic · Aug 7, 2024.
3. Part 3: The Best Option · Aug 14, 2024.
4. Part 4: Fast, Faster, Qubic · Aug 22, 2024.
5. Part 5: Growing the Ecosystem · Sept 2, 2024.

You can check our website, follow us on X, join the Valis Discord, or contact us:

• Publicly: Post in the #valis-xyz channel of the Qubic Discord.
• Privately: Use our web form, or email us at hello@valis.xyz.
• Personally: Send a Discord DM to _spelunker_ or silveragcrv.

Read “The Case for a Qubic Stablecoin” Series

1. 🇺🇸The Case for a Qubic Stablecoin - Part 1: The Why Question
2. 🇺🇸The Case for a Qubic Stablecoin - Part 2: Marketing Qubic
3. 🇺🇸The Case for a Qubic Stablecoin - Part 3: The Best Option
4. 🇺🇸The Case for a Qubic Stablecoin - Part 4: Fast, Faster, Qubic
5. 🇺🇸The Case for a Qubic Stablecoin - Part 5: Growing the Ecosystem

For the latest updates, join the Valis Discord, follow us on X, and bookmark our blog.

On this Page

• The Case for a Qubic Stablecoin - Part 5: Growing the Ecosystem
• Who is asking for funding?
• What will the funding be used for?
• What is your USP?
• How will the funding be allocated?
• Smart Contracts (SC) Development
• Non-Smart Contract Development
• Integration
• Compliance
• What are the estimated costs?
• Personnel Costs
• Compliance Costs
• Costs Summary
• When will the key milestones be delivered?
• How much are you asking for?
• How much have you received in the past?
• What have you achieved so far?
• Why should Computors fund you?
• How will you ensure transparency?
• Where can I find more information?
• Read “The Case for a Qubic Stablecoin” Series