What Happened?
The government agency of Wyoming, USA, has launched the “official version” of the digital dollar (FRNT). It is regulated by law and mandates that reserves must exceed 2% of the issuance, supported by US dollars and US Treasury bonds, aiming to become one of the safest and most reliable stablecoins in the market.
The biggest highlight of FRNT is its seamless integration with real-world payment systems. Through a partnership with Visa, users will be able to spend FRNT directly at any location worldwide that accepts card payments, transforming it from a purely digital asset into a payment tool that can be used in daily life.
The long-term goal of FRNT is to enhance the government’s administrative efficiency and transparency. In addition to the successfully tested “instant payment” for government suppliers, there are future plans to use it for direct tax refunds and social welfare payments to citizens, opening up a new, highly efficient model of digital public services.
Wyoming Sets a Precedent, Launches the First Official Stablecoin in the USA: FRNT
On August 19, 2023, Wyoming officially announced that its official dollar stablecoin, the Frontier Stable Token (FRNT), has successfully launched its mainnet. This move makes Wyoming the first state in the USA to issue a fully reserved stablecoin by a public entity, marking an important milestone in the digital finance sector.
Mark Gordon, the Governor of Wyoming and the Stablecoin Committee chairman, stated in a press release: “The launch of the Frontier Stable Token mainnet will empower our citizens and businesses with a modern, efficient, and secure way to transact in the digital age.”
Technical Details and Issuance Status
According to blockchain data from the official website, FRNT tokens have been deployed on seven major blockchain networks, including Ethereum, Solana, Arbitrum, Avalanche, Polygon (POL), Optimism, and Base.
To ensure its stability and security, FRNT has adopted an over-collateralization model in its design.
An ideal dollar stablecoin aims to maintain the value of one token equal to one dollar. To achieve this goal, the issuer must commit to depositing assets worth one dollar (such as cash or US Treasury bonds) in their reserve for every token issued. This way, whenever a holder wishes to exchange their tokens back for dollars, the issuer has sufficient funds to redeem, stabilizing the token’s value at one dollar, which is referred to as “full reserve.”
Wyoming goes a step further by mandating through regulation that reserves must exceed 2% of the issuance. This is known as the “102% reserve ratio,” or “2% over-collateralization.”
This means that to issue 100 million FRNT tokens, the reserve must legally hold assets worth 100 million and 200 thousand dollars. Why do this? The extra 2% (or 2 million dollars) acts as a “safety cushion.” It can withstand minor market fluctuations, increase user trust, and cover operational costs. After all, while US Treasury bonds are very stable in the short term, market prices can still experience extremely minor fluctuations. This 2% buffer ensures that even if the value of the bonds slightly declines, the total reserve will not fall below the total amount of tokens issued. Moreover, it sends a strong signal to the market and users: “We are very trustworthy; our reserves are absolutely sufficient, and there’s even a surplus. You can use it with complete confidence.”
Although the mainnet has officially launched, the token is currently not open for public purchase due to pending regulatory procedures. The Wyoming Stablecoin Committee anticipates that in the coming days, the public will be able to purchase FRNT on the Solana blockchain through the Wyoming-based cryptocurrency exchange Kraken.
Integrating Real-World Payments and Future Applications
A major highlight of FRNT is its integration with real-world payment systems. According to an announcement from Ava Labs, developers of Avalanche, users will soon be able to use FRNT for payments at any location that accepts Visa through a Visa card issued in partnership with Rain, including mainstream mobile payment wallets like Apple Pay and Google Pay.
Last month, Wyoming successfully conducted a real-time transaction test for government contractors on the Hashfire platform of the Avalanche blockchain.
Anthony Apollo, executive director of the Wyoming Stablecoin Committee, pointed out that the launch of FRNT symbolizes a “paradigm shift.” He stated, “Beyond regulation, public entities now possess an innovative model that can significantly enhance the efficiency of government processes. From paying suppliers within seconds to enabling on-chain tax refunds and social welfare disbursements, FRNT brings state government operations into the programmable age.”
In simple terms, FRNT is the “digital dollar” that exists on mobile phones and the internet, primarily usable in the following four areas:
- Daily Consumption: Can be linked to a Visa card for direct payment at any store that accepts card payments or Apple/Google Pay, covering all aspects of daily life.
- Quick Transfers: Transfer money as quickly as sending a message, especially suitable for international remittances, saving time and costs.
- Government Services: Can be used to receive government tax refunds and social welfare payments in the future, making government disbursements more direct and efficient.
- Digital Finance: Serves as a stable trading currency on cryptocurrency exchanges or for investment and financial management in decentralized finance (DeFi).
The timing of this launch coincides with the Wyoming Blockchain Summit taking place in Jackson Hole, Wyoming. As one of the most blockchain-friendly states in the USA, Wyoming has passed over 45 related bills since 2016. The introduction of the official stablecoin further solidifies its leading position in the digital asset space.
References: cointelegraph, coindesk