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Novatti Group (ASX:NOV) has achieved a significant milestone in Australia's financial landscape by executing the nation's first charitable donation using a stablecoin backed 1:1 by the Australian Central Bank Digital Currency (CBDC), known as eAUD. This groundbreaking transaction was part of a pilot program conducted by the Digital Finance Cooperative Research Centre (DFCRC) in collaboration with the Reserve Bank of Australia (RBA) to explore the use cases of CBDC.
The Novatti test aimed to assess whether CBDC could serve as a reliable and risk-free means of supporting private stablecoins like their own eAUDD. A stablecoin backed by CBDC empowers clients to independently verify the reserves, providing them with greater confidence in the stability and reliability of private stablecoins.
How the Transaction Works
Novatti acquired 5,000 eAUD (CBDC issued by RBA) and issued an equivalent amount of their stablecoin, eAUDD, on the public Stellar blockchain. The 1:1 backing between eAUD and eAUDD was guaranteed by storing eAUD in a Hashed Time-Locked Contract (HTLC), effectively simulating a “bridge” between the CBDC registry and the Stellar blockchain.
Participants in the trial, albeit limited to testing purposes, could independently verify that this private stablecoin had sufficient backing by accessing the HTLC. To obtain eAUDD, participants had to purchase it with fiat Australian dollars through an authorized cryptocurrency exchange.
Benefits and Outcomes
The pilot project demonstrated the potential to create a stablecoin backed by CBDC, offering decentralized attestation and independent client verification. As the world becomes increasingly digital, the demand for digital currency solutions that provide real-time settlements, cost reductions, and enhanced security will continue to grow.
A stablecoin backed by CBDC will have real-world utility, appealing to cryptocurrency investors seeking greater stability in trading their digital assets, all the way to self-managed super fund trustees interested in diversifying their investment portfolios. This innovative pilot project paves the way for new possibilities in the intersection of central bank digital currencies and blockchain technology.
