Pantera and Lemniscap have led a $4.14 million round for Reflexer Labs, the creator of a new gentlecoin, one that follows ether's (ETH) price, minus the volatility. Several backers from its prior round followed on.
If a purely crypto token had an easily conceivable value relative to real products (for example, one token consistently equaled, say, four Snickers bars), that would meet the test of a "unit of account," something that could be used to assess the value of goods.
"Unit of account" is one of three facets of the traditional money definition that major cryptocurrencies fail to meet due to their volatility. That's what Reflexer is going for: a crypto-native unit.
"You don't need to peg to anything in order to be stable," founder Stefan Ionescu told CoinDesk in an email. "The most important thing to understand is that DeFi can and should be detached from the fate of the US Dollar. RAI is a first step in that direction."
Reflexer Labs ran a demo test of its system from October to January, called Proto RAI. It was largely able to maintain a stable price relative to ETH but with a small amount of gain. The company compares its approach to central banks' use of the managed float, where exchange rates look for general stability over time, despite occasional short-term tumult.
"Many stable assets in use today are pegged to fiat currencies, a design with many limitations. These networks have limited economic incentives that can be used to influence the market price of their native stablecoins," Paul Veradittakit, partner at Pantera Capital, said in a press release.
Roderik van der Graaf, founder of Lemniscap, said in the release, "Reflexer is opening up a completely new design space in the realm of 'stable' cryptoassets."
The company has work on its user interface and educational materials to do ahead of the release of RAI. A governance minimized crypto asset, it has also published a timeline for winding down parameters that the community can change.
Correction (Feb. 11, 16:19 UTC): Reflexer Labs raised $4.14 million, not $4.4 million as was previously included in this story.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.