The Basis stablecoin project that raised more than $133 Million in venture capital, is said to be shutting down and returning a very large amount of the funds to investors.
This new development is happening due to regulatory hurdles, in contrast to other projects packing up due to the bear market. However, as at the time of this writing, no official announcement has been made by the Basis team.
The Basis platform was meant to be a unique one because it had three entities: the bond tokens, stable coin, and base shares. The Basis coin would be pegged to the US dollar and core to the system. The blockchain will auction off the Bond tokens when it needs to contract Basis supply (inflation).
These tokens would not pegged to anything. One Bond token would promise the holder exactly one Basis later in the future and would be sold at a reduced price.
Base Shares, which is the 3rd type was meant to be a fixed supply and not pegged to anything. The dividend model was meant to determine their value. When there was an increase in the demand for Basis and new coins created in order to meet the demand (deflation), the base shares holders would receive these new Basis coins so long as all outstanding Bond tokens had been redeemed.
Taking a better look at the whitepaper and algorithm, one can draw a conclusion that what Basis set out to achieve was very much similar to what the Central Bank does.
Reserve.org CEO, Nevin Freeman giving an explanation as to why the added tokens must have played a role in the increase in regulatory hurdles said that the bond tokens were securities and therefore can only be bought by eligible U.S. investors, and these restrictions or something similar could be applied in other areas as well. In the future, retail investors could trade them, but it may take a while before it gets the approval of the SEC.
