We recently connected with Matthew Commons, President of the Verified USD Foundation, which aims to facilitate seamless, equitable and transparent on-chain and off-chain transactions within the Web3 ecosystem, backed by the Verified USD (USDV) stablecoin.
Commons reportedly comes with more than a decade of blockchain experience having held significant roles, including Founder and President of Commons Partners — an executive advisory firm for multiple well-known FinTech companies — as well as the Co-Founder and CEO of Cambridge Blockchain. The latter enterprise specialized in developing digital identity software for banks and institutions and was successfully sold to Blockchains Inc. in 2020.
A seasoned entrepreneur and executive, Commons excels in managing high-performing teams and leading strategic planning initiatives to drive innovation in the Web3 ecosystem. He holds an MBA from Harvard Business School, BA and BS degrees from the University of Pennsylvania (Wharton School) and completed the Chartered Financial Analyst (CFA) program.
Our conversation with Matthew Commons is shared below.
Crowdfund Insider: What are the current challenges imposed by legacy stablecoins for the development of new use cases within DeFi?
Matthew Commons: USDV is designed to provide on-chain transparency into its underlying reserves while fostering an equitable stablecoin ecosystem – where those who created the value, share in the rewards.
Blockchain applications rely on fungible tokens, such as stablecoins to provide an easy-to-use, reliable and trustworthy interaction mechanism, including payments and rewards. Currently, our industry lacks an on-chain algorithm to trace token demand generated by either CeFi or DeFi applications; thus stablecoin issuers are unable to to fairly reward entities for generating demands and their overall contributions to the ecosystem.
USDV bridges this gap by tracking token demand and incentivizing community-driven development as a native on-chain stablecoin. The expected use cases for USDV in DeFi include collaboration with third-party institutions at the application level, enhanced utility and versatility within the Blockchain Ecosystem through DeFi Protocols; and allowing users to engage in a wide spectrum of DeFi activities such as farming, lending, and staking, etc.
Crowdfund Insider: There are many stablecoin issuers in the market. In what ways does USDV offer a competitive edge over existing market options?
Matthew Commons: USDV differentiates itself in the crowded stablecoin market through four key advantages: transparency, stability, interoperability and community-centricity.
Based on the design of USDV, we are able to offer transparency and stability. As an on-chain stablecoin, we offer unmatched transparency. USDV’s transaction history is open for public audit on Etherscan. Enhanced by real-time proof-of-reserves, it offers visibility into its reserve assets, thereby reducing risk and improving liquidity. USDV is also 100% backed by tokenized short-term US Treasury Bills and reverse repurchase agreements, with low reserve asset risk and consistent value stability.
To add, USDV is built on the native omnichain ERC-20 token standard and is engineered for fluid integration with multiple blockchains, thereby widening its reach across CeFi and DeFi platforms. We are further powered by LayerZero’s ColorTrace algorithm, cultivating an inclusive stablecoin ecosystem that rewards contributors transparently and equitably. This fosters vibrant community participation, enabling continuous innovation in use cases and applications.
These attributes give USDV a competitive edge, offering users a stablecoin that is not only more transparent and stable but also highly accessible and rewarding.
Crowfund Insider: Can you discuss the importance of USDV being backed by Matrixport’s Short-term Treasury Bill Token (STBT)?
Matthew Commons: STBT was selected as the inaugural reserve asset for USDV for several compelling reasons. To start, STBT offers high liquidity and creditworthiness as it is backed by short-term U.S. Treasuries, including short-term treasury bills within 6 months maturity and overnight reverse purchase agreements (Repos). It also has a daily rebase mechanism that maintains its peg to a 1 USD value, while expedient minting and redemption processes minimize slippage and liquidity risks.
Additionally, STBT utilizes Chainlink’s proof-of-reserve, ensuring full transparency and real-time verification of its asset backing. It further employs a bankruptcy-remote orphan SPV structure, mitigating counterparty risks, and adheres to strict KYC and whitelisting protocols, while conducting rigorous checks and periodic audits by esteemed security firms like BlockSec and Zellic.io, with findings made publicly accessible on Etherscan.
Through these attributes, STBT not only meets but exceeds our criteria for a dependable, transparent, and secure reserve asset.
Crowdfund Insider: How does USDV achieve its unique cross-chain functionality? Is USDV supported across multiple blockchain networks currently?
Matthew Commons: USDV is a native omnichain stablecoin initially deployed on five key chains: ETH, BNB Smart Chain, Avalanche (L1), Arbitrum, and Optimism (L2).
Built on LayerZero’s Omnichain Fungible Token (OFT) Standard, USDV is inherently adaptable and capable of seamless operation across any blockchain network that LayerZero supports, pending stringent audits. Additionally, USDV contracts are compatible with the widely adopted token standards (e.g. ERC20 on EVM) with administrative features for compliance requirements. It will also include signature-based permit (EIP2612) interfaces on EVM chains. This multichain functionality empowers USDV with extensive accessibility and versatility within the ever-evolving blockchain ecosystem.
Crowdfund Insider: How does USDV’s novel value attribution algorithm, ColorTrace, work? In what way does it allow for greater incentivization to contribute to the ecosystem?
Matthew Commons: USDV is designed to create an equitable stablecoin ecosystem embedded with a fair distributed rewards system that fosters an inclusive community-based approach to drive adoption of the stablecoin, as well as achieve ecosystem growth in a sustainable manner.
To realize this vision, USDV leverages, ColorTrace, a novel value attribution mechanism invented by LayerZero Labs. USDV’s integration of ColorTrace enables verified minters participating in USDV to receive equitable rewards for their contributions to the ecosystem. Similar to Bitcoin’s UTXO structure, minters can mark USDV, gaining the right to claim the rewards from their contributions to the USDV ecosystem without dispute. This maximizes the advantages of large-scale minter ecosystem without influencing USDV’s ability to function as a fungible token circulating within various ecosystems.
This shapes an ecosystem that resembles the nascent days of BTC mining where community contributors democratized the securing and support of the network, USDV directly rewards growth contributors – protocols, applications, and market makers – as the ecosystem grows.
Crowdfund Insider: How is USDV preparing for future scalability and technological advancements, navigating potential regulatory changes, and engaging with the community to drive growth and innovation?
Matthew Commons: Over the next three years, we expect to see a major increase in stablecoin adoption, along with increasing regulatory clarity in many jurisdictions. We’re monitoring regulatory developments closely, and working to ensure that USDV follows best practices globally. In terms of community engagement, we’re having many conversations with potential partners to see what we can enable together.
Our collaboration with industry leaders like Matrixport and LayerZero helps to ensure that USDV remains at the forefront of innovation, and will help us to extend our footprint to include new Real World Assets (RWA) in our tokenized collateral mix.
Crowdfund Insider: What role does the Verified USD Foundation play in USDV’s future roadmap?
Matthew Commons: In the USDV ecosystem, the Verified USD Foundation (“the Foundation”) acts as the steward and catalyst. Rooted in the philosophy of community-driven development, the Foundation works relentlessly to nurture a vibrant, equitable, and transparent ecosystem.
It isn’t merely an oversight entity but an active participant, integrating verified minters and other stakeholders into the fabric of USDV. It sets clear, transparent rules for reward distribution and continually welcomes new contributors. In doing so, the Foundation not only maintains the health of the network but also ensures its sustainable growth, aligning with its mission to democratize value and empower the community.
USDV has just been launched and its on-chain progress is open for all stakeholders to observe. As its steward, the Foundation will be sharing timely updates on its development plan on an ongoing basis.