Former SoftBank executive Akshay Naheta founded Distributed Technologies Research Ltd (DTR), a decentralized finance startup, just ten months ago. Now, DTR is making a significant announcement as it launches its UAE dirham-backed stablecoin called DRAM.
Breaking the Mold
DTR’s goal with DRAM is clear: to gain a foothold in the $130 billion stablecoin market. While this market is currently saturated with US dollar-backed stablecoins, DTR sees an opportunity in the UAE’s more cryptocurrency-friendly environment. The company aims to capture a single-digit market share in the stablecoin sector for DRAM shortly.
For those unfamiliar with stablecoins, they are cryptocurrencies linked to an underlying asset, which can be a fiat currency, financial instruments, or exchange-traded commodities. Tether (USDT) and USD Coin (USDC) are among the most prominent stablecoins, boasting a combined market capitalization exceeding $105 billion.
Naheta explained DTR’s choice of the dirham as a stablecoin anchor:
“We’ve linked it to the dirham as opposed to any other currency because it’s (UAE) a very stable and growing economy, it’s attracting a lot of talent and has become among the biggest financial hubs of the world.”
He believes DRAM offers an attractive alternative to dollar-based stablecoins, as it combines stability, ties to the Swiss system, and a currency with a promising macroeconomic outlook.
The DRAM Offering
DTR will license its stablecoin technology to Hong Kong-based DRAM Trust, which will manage the reserves backing DRAM tokens. Each DRAM token will be backed by 3.6725 dirhams, equivalent to $1. These tokens became available on most global decentralized exchanges starting Monday, with centralized exchanges expected to follow soon. Initially, DRAM coins worth up to $10 million will be issued.
Naheta emphasized their cautious approach:
“We will start in a measured manner… We have demand, but we want to make sure all our processes and compliances are in place.”
DTR, currently with a team of around 30, plans to expand its workforce as it develops more products and services.
While stablecoins are typically linked to official currencies, regulatory attitudes vary. Some, like India, approach cryptocurrencies with caution, concerned about their impact on central bank policies. However, the primary appeal of stablecoins lies in their ability to maintain a relatively stable value, providing a haven in volatile markets.
Gary Gensler, the chairperson of the US Securities and Exchange Commission (SEC), has been vocal about the need for cryptocurrency regulations. He renewed these calls in the past year, comparing stablecoins to poker chips. Despite this, DRAM believes stablecoins shouldn’t be equated with central bank digital currencies (CBDCs).
Stablecoins vs. CBDCs
Naheta explained:
“Stablecoins should not be compared to CBDCs. In democracies, CBDC won’t work because people inherently don’t want the invisible hand of the government in their wallets.”
He highlighted how stablecoins, unlike CBDCs, provide a borderless means of conducting transactions.
Naheta illustrated the significance of stablecoins in economies facing high inflation:
“Imagine if you’re living in a high inflationary regime like Turkey, Egypt, or Lebanon, the official exchange rate is X, and the unofficial rate in some cases is even 200-300% higher. Stablecoins provide a credible and democratized way of enabling cross-border transactions.”
Final Thought
DTR’s launch of the DRAM stablecoin represents a bold move into a competitive cryptocurrency market. With its anchor to the UAE dirham and a commitment to stability, DTR aims to carve out its share of the market. While regulatory challenges persist, the potential for stablecoins to provide accessible cross-border transactions remains promising. DRAM’s journey into the crypto world is one to watch closely.