Value in becoming an anchor

interstellr

Hi,

I'm new to this, so go easy on me if I've misunderstood. ?
I'm considering setting up and becoming an anchor / issuer

Is there a way to determine up my own fees? If not, what's the benefit of becoming an anchor. Are all anchors equal?
e.g. If Bank of England issued GBP then I'd trust this more than if Corporation ABC on the other side of the world who issued GBP?
So a user may be willing to pay a higher % as they know that they're highly likely to have their asset returned. But also, a corporation ABC might have much lower fees to attract buyers/users?

Is this purely down to the trust-line created by the user?

Also, can you only redeem your asset-backed token from the original issuer? e.g. could I redeem my BoE GBP from a different anchor? Will the stellar network always calculate the cheapest rate via the distributed exchange ?

Sorry for all the questions. I really like what the foundation is doing and hoping to bring my project to the platform.

Thanks in advance.
InterStellr

cryptobrant

interstellr I guess there is the trust problem, if you trust a bank more than just someone releasing the same pegged token, you’ll go with the banks token.
But there is also the order book. If I were to release a fiat token, at the beginning I would also create XLM (or any other popular asset) offers for that token. People would be attracted to the token they can exchange.

jagstock

The BoE GPB token cannot be redeemed with different anchor. A particular type of token is issued by an anchor and the same anchor will honor the redemption of token to physical asset. Basically ABC token is different than BoE GPB token even thought the underlying physical asset is same.
(Really want experts to +1 my answer though !)

cryptobrant

jagstock what prevents an Anchor to redeem the value of an asset redeemed by another anchor? What if 4 banks release a USD token? If the banks trust each other then they could very well keep the USD tokens and redeem real fiat. As long as the asset is believed to have value. Right?

WebWallet

jagstock practically this would be possible if someone else trusts the official issuer enough to honor his pledge. Else there would be no remittance possible in the first place except each service runs their own assets AND partners with or runs their own places to withdraw.

A practical example:
The BoE issues a GBP asset, a user buys it and sends it to their friend in Nigeria. If the person in Nigeria could get the asset turned back into cash only by the BoE, the whole transaction wouldn't make sense. He will go to a local remittance service that accepts the asset of the BoE to cash out (or exchange to another accepted asset).

lparenteau

Alternative way to look at that is that while you assume that GPB is the British Pound, it could actually be Great Purple Bean, a fictitious currency from the game Wizards Throwing Flames. The developers of that game decided to use Stellar to manage the ledger of their in game currency, because... why not?

So, all GPB are definitely not created equal. And Stellar can't automagically know that some GPB are actually British Pounds and some other are instead Great Purple Beans.

interstellr

Thanks all. That confirms my understanding. If you create a trust line then you are understanding the risks associated.
Just like there are multiple Fiat currencies, some are stronger than others.
If you buy government bonds this is as close as you get to the currency, but depending the government's rating, eg moody, you'll get a different return.

savebattgo

interstellr Are you creating an GBP anchor to another currency? Which one is it? We are new to Stellar. We are looking to collaborate on anchors between highly liquid good quality fiat/cryptos against emerging country currencies. This is to target the underbanked.

PoblaAscober

WebWallet So what would be the incentive for the Nigerian bank to issue the BoE GBP asset in cash? I guess solely because they trust the liquidity of the BoE anchor?

I think right now it's very hard to know if an anchor is reliable. How do we indeed know if Stronghold.co or Apay.io holds the real assets?

umbrel

PoblaAscober I am constantly thinking how can I provide proof of reserves for apay.io.
If you have any ideas - feel free to reach out

frejete

umbrel Couldn't you publish your BTC cold storage public key and a message signed by the private key to prove you control it? (and do the equivalent for ETH, etc.)

umbrel

frejete it doesn't work that way, hundreds and thousands of addresses are in use. I was thinking of publishing xpub at some point, but people talked me out of it. Not the best idea, can be used to attack my users.

dzham

umbrel

xpub + one compromised privkey is enough to compromise all the others, IIRC

sacarlson

I have always felt one possible solution (not the final solution) for being a fiat or other asset anchor would be to have whatever asset insured by backing it with some locked multi-sig crypto signed by a group of trusted signers that are part of the distribution. I wrote about it here: https://www.funtracker.site/wiki/doku.php#btc_insurance_bonding_fund_in_place_of_fdic_insurance if your interested in details on that.

Also I feel transparency would be required for such methods to work. On our Thailand biz bank accounts we can setup user accounts that can do nothing more then to just view balances. That would have to be accessible to at least a number of auditors and the values should be posted and kept updated to the anchors website at some point so all could view it. I assume most countries must have banks that have such features so this should be possible and done on all fiats in the franchise.

It should be easy for most anyone to check the crypto insurance back deposits. Anyone can view the blockchain info and see how many signatures, signing requirements and balances held in the accounts from the public blockkchain info.

The stellar.org asset distribution accounts are also the same that most anyone can view the signers and how many of each asset has been distributed from public blockchain info in realtime.