Proposal: Add United Arab Emirates AED Currency

Overview

Crypto communities in United Arab Emirates have been excited about UAE Central Bank officially endorsing Crypto in law. It is also one of the governments where services can be paid in crypto. There exist no local currency stablecoins. E.g. government fees are paid in BTC or ETH.
Screenshot of UAE Central Bank Crypto ruling can be found here https://twitter.com/picaye/status/1387116565984858120

AED is pegged to the USD at a fixed rate. USD is already on Terra.

Remittances in UAE is a multi billion USD Business. Q1 2020 saw 40B AED Outward remittances alone.
They are mainly used by workers sending part of their salaries (earned in AED) home (India, Pakistan, Philippines, Lebanon etc). In order for terra to be a meaningful alternative it would need to support AED so an efficient onramp can happen. Further local currencies (offramp) would need to be added like INR etc. This avoids currency conversions as much as possible, efficient processing and easier end-user adoption.

The proposal

proposer: Picay

I propose to add AED to Terra swaps.

However, since the liquidity for AED might be smaller compared to existing Terra swaps, the tobin-tax should be adjusted accordingly. Suggestion is to use same tobin tax as USD as the currency is pegged.

Type

Parameter-change

Changes

  [
    {
      "key": "whitelist",
      "value": "[
        {\"name\":\"ukrw\",\"tobin_tax\":\"0.003500000000000000\"},
        {\"name\":\"usdr\",\"tobin_tax\":\"0.003500000000000000\"},
        {\"name\":\"uusd\",\"tobin_tax\":\"0.003500000000000000\"},
        {\"name\":\"umnt\",\"tobin_tax\":\"0.020000000000000000\"},
       {\"name\":\"ueur\",\"tobin_tax\":\"0.003500000000000000\"},
       {\"name\":\"ucny\",\"tobin_tax\":\"0.003500000000000000\"},
       {\"name\":\"ujpy\",\"tobin_tax\":\"0.003500000000000000\"},
       {\"name\":\"ugbp\",\"tobin_tax\":\"0.003500000000000000\"},
       {\"name\":\"uinr\",\"tobin_tax\":\"0.003500000000000000\"},
       {\"name\":\"ucad\",\"tobin_tax\":\"0.003500000000000000\"},
       {\"name\":\"uchf\",\"tobin_tax\":\"0.003500000000000000\"},
       {\"name\":\"uhkd\",\"tobin_tax\":\"0.003500000000000000\"},
       {\"name\":\"uaud\",\"tobin_tax\":\"0.003500000000000000\"},
       {\"name\":\"usgd\",\"tobin_tax\":\"0.003500000000000000\"},
       {\"name\":\"uthb\",\"tobin_tax\":\"0.007500000000000000\"},
+     {\"name\":\"uaed\",\"tobin_tax\":\"0.003500000000000000\"}
      ]",
      "subspace": "oracle"
    }
  ]

Cost / Benefit analysis

Benefit:

If TerraAEDis added, users in UAE will receive the following benefits:

  • An access to a decentralized, AED stablecoin
  • Ability to include AED into a risk-diversified investment portfolio with other fiat currencies
  • Benefit from very crypto friendly government policies which eventually will lead to real world adoption

Cost:

Oracle feeder providers will have to upgrade software to support the new pairs being added, and validators will have to make sure they run the new and upgraded software. Submitting oracle votes will also now be slightly more expensive.

Next steps

This proposal will sit in agora for the next two weeks before the proposal is submitted onchain.

2 Likes