Havven is a decentralised payment network where users transact directly in a price-stable cryptocurrency. Those who use the stablecoin pay fees to those who collateralise the network, compensating them for the risks of providing collateral and stability. Collateral providers control the money supply, and fees are distributed in proportion with each individual’s stabilisation performance. Thus, Havven rewards suppliers of stability and charges those who demand it. Havven implements two linked tokens to achieve this structure:
The stablecoin, whose supply floats. Its price as measured in fiat currency should be stable. This token is useful insofar as it provides a superior medium of exchange. Thus in addition to price stability, Havven should encourage adequate nomin liquidity.
This token provides the collateral for the system and has a static supply. Its market capitalisation reflects the system’s aggregate value. Ownership of havvens grants the right to issue a value of nomins proportional to the dollar value of havvens placed into escrow. If a user wishes to release their escrowed havvens, they must first present the system with the quantity of nomins previously issued.
The havven token is a novel decentralised asset, whose intrinsic value is derived from the fees generated in the network it collateralises. This enables a form of representative money in which there is no requirement for a physical asset, thus removing the problems of trust and custodianship. Issuance of nomins requires a greater value of havvens to be escrowed in the system, providing confidence that nomins can be redeemed for their face value even if the price of havvens falls. The system incentivises the issuance and destruction of nomins in response to changes in demand, but ultimately the intrinsic value of the havvens will reflect the required nomin supply. Backing a stablecoin in this way provides full transparency over how many tokens have been issued against the available collateral. This provides a solid basis for confidence in the solvency of the payment network built upon it.
Denominating the value of the nomin in an external fiat currency means that stability is relative only to that currency. Initially this currency will be the US dollar, and this is the target currency used throughout this paper, but in the future the system will support additional flavours of stablecoin that are denominated in other currencies.