Engineer Carlos Baeza Negroni: „Copihue is a stablecoin, anchored to the value of the Chilean peso“

We talked to Carlos Baeza Negroni, a computer engineer and the mind behind Copihue, a stable currency tied to the value of the Chilean peso

Carlos Baeza Negroni is a computer engineer and the mind behind Copihue, a stablecoin tied to the value of the Chilean peso. Cointelegraph en Español spoke with him to get more details about this cryptomon currency, but also to learn about his vision from Chile.

Fernando Quirós (FQ): How did you get into the world of cryptomontages?

Carlos Baeza Negroni (CBN): At the beginning of February of this year (2020), we were already beginning to see the effects that the COVID-19 pandemic was having on our society, due to the curfews and quarantine periods (lockdown) that we were forced to comply with in our homes, as a measure to prevent the rate of infection from continuing to expand and spread throughout the country.

It was within this context that I asked myself the following question: „What could be done with all this idle infrastructure? What could be done with all these new actors who will enter the game from their homes to carry out their daily work? How could we mitigate the rise in the basic electricity bills of each family?

Along with these questions came a couple of assumptions:

Not all people attend their computer all day, but most must have it on to respond to any request related to their work or main activity.

The proposal should be very friendly and easy to use by the common people.

The proposal cannot interfere with people’s main work, i.e. the solution must not be demanding on computer resources.

In May of this year, it was when I was able to start joining all the dots, and I discovered some solutions that were not blockchain as such but that used the base technology of some current protocols.

From this point on it was a matter of time until I met Bitcoin, and later Ethereum, which is the platform I am currently developing.

FQ: How do you see the crypto market in Chile?

CBN: Very interesting, since, although the perception regarding the adoption by Chileans with respect to cryptomonies may be low, this represents an enormous opportunity and market niche with new participants willing to educate themselves financially, putting at their disposal all the tools necessary to operate within this new paradigm called DeFi.

Local exchanges provide sufficient liquidity to carry out operations in moderate volumes, having prudent withdrawal terms and commission rates in accordance with the market, enabling the purchase and sale of Immediate Edge assets directly from a „Cuenta RUT“ (local debit card held by all Chileans), within 24 hours at the most.

The above gives us the confidence and firm ground to be able to propose new business models based on this paradigm, since if we add the liquidity provided by local exchanges, the ease of financing them (no credit card required), and also the ease of operation (tokenization, metamask, web3), then we have a formula for success.

The rest is our work in educating people as best we can, and committing ourselves to delivering products that are properly audited and approved by the community.

FQ: What about the rest of Latin America?

CBN: Surely Chile must be among the Latin American countries with the least knowledge of the crypto ecosystem. I don’t want to get political, so I will say that the „blame“ lies with our local fiat currency which is fairly stable and does not usually have large depreciations against the US dollar. This certainly never generated the need for the Chilean to consider other financial means or mechanisms.

In other countries such as Venezuela for example, laws and regulations are already being discussed for this industry, which demonstrates the maturity this market is acquiring. In other places, such as Colombia and Puerto Rico, they are also taking giant steps in terms of the adoption of this type of technology by promoting economic strategies and incentives.

Latin America also has great exponents. One of them, and of which I had the privilege of meeting and sharing within the context of this year’s hackathon, is the Argentinean Mariano Conti, who is also very dedicated to everything that is happening within the local DeFi ecosystem.

FQ: Do you consider DeFi a trend, a bubble or does it really solve problems?

CBN: I believe that DeFi effectively comes to solve problems, allows us to add new layers of complexity to traditional financial mechanisms, provides transparency, automates business flows, is able to interoperate or interact with other protocols, can be transformed and exchanged for various types of assets and then changed back, in other words, we are starting with DeFi.

There is an interesting term called „Money Legos“, or legos of money. This concept refers to the ability of intelligent contracts to be programmed to carry out various automated and repetitive operations, incorporating and converting various protocols with each other, in order to maximise the return on the assets being used for trading.

A practical example of this could be an intelligent contract that receives a certain amount of Ether as collateral or capital reserve, and does the following:

  • Use collateral and take out credit in stable currencies
  • Use stable currencies to arbitrage in liquidity pools
  • Paying off credit debt in stable currencies
  • Earn profits from the arbitration and also receive the collateral of the return contract

This is what the various developers are currently testing, formulas and automated mechanisms to achieve the best return on assets, and it is in this quest that many people lose their money by investing in new protocols that ultimately result in extraordinary hacking, but it is part of the risks that are taken in this industry that is advancing so quickly, so it is important to be informed and educated well. It is everyone’s duty to do their own research.

FQ: What is Copihue and how did the idea come about?

CBN: Copihue is a stable currency, anchored to the value of the Chilean peso in a 1:1 ratio, backed by cryptoactives from the Ethereum network as collateral or reserve value.

A stable currency will maintain its market value regardless of conditions or behaviour. It is not affected by speculation or volatility that could be generated by a massive purchase/sale, or factors external to the very value reference on which its anchorage depends.

In this case, 1 Copihue would be the equivalent of 1 Chilean Peso, and the protocol would be in charge of regulating this as well as keeping the price constant automatically.

To achieve this balance, a second token, or governance token, must be incorporated into the equation. This token called Condor, which also follows the same technical conventions as Copihue, will be our volatile investment asset and liquidity reserve fund to guarantee Copihue’s price stability, i.e. any adjustments to Copihue’s supply or liquidity will come from Condor (investment risk fund).

Interaction with Copihue will be via the Metamask extension and each person will have access to a customised management panel to trade and review their account, plus some surprises that we are preparing to interact between various tokens and liquidity wells focused on early investors.

We are preparing a simple implementation integration kit, focused on enabling and equipping traditional e-commerce sites with a payment button that is capable of receiving active crypto through intelligent contracts directly to the suppliers or clients accounts, without intermediaries, supported by Metamask and Web3.

We generate a new market using the concept of Money Legos but focused on logistics and retail, in which the equation will replace a credit request by hiring a courier to automatically dispatch a purchase from the commerce from which it was generated, this is the type of intelligence that we could already be talking about, and incorporating into this equation a stable asset that is not affected by market volatility, as a value instrument, undoubtedly represents a fundamental piece for this new economic paradigm that is being built from cryptoactives.

How Copihue works from a technical point of view:

  • Token: ERC20
  • Blockchain: Ethereum
  • Bookstores: OpenZeppelin
  • Oracles: Chainlink
  • Version: Solidity 0.7.3

FQ: What do you think of the attempts at regulation?

CBN: Perhaps my opinion is going to be a little unpopular, but I believe that if we want to have a healthy industry that grows in a sustainable way over time, regulation is necessary, since, although in part we sacrifice privacy, on the other hand we expand the spectrum of adoption and exposure that we may have, that is to say, if we manage to regulate and generate standards (keeping the proportions), we will be able to incorporate many more people interested in participating in these activities, since they will feel much more protected and secure when using various protocols.

It is by virtue of this, that all those who wish to be early adopters of Copihue and have their contracts in the Condor risk funds (Vaults), will be required to go through a KYC process to comply with all the necessary regulations required by the relevant entities.