eaglecoin

Introduction

There exists a vast array of assets in the world which people freely choose as a storeofvalue, a transactional medium, or an investment. We believe the Tron

blockchain is a better technology for transacting, storing, and accounting for these assets. Most estimates measure global wealth around 250 trillion dollars [1]

with much of that being held by banks or similar financial institutions. The migration of these assets onto the Tron blockchain represents a proportionally large

opportunity. Alt coin was created as “an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact

directly with each other without the need for a trusted third party.”[2]. Alt coin created a new class of digital currency, a decentralized digital currency or

cryptocurrency .

Alt coin was created as “an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with

each other without the need for a trusted third party.”[2]. Alt coin created a new class of digital currency, a decentralized digital currency or cryptocurrency .

Some of the primary advantages of cryptocurrencies are: low transaction costs, international borderless transferability and convertibility, trustless ownership

and exchange, pseudoanonymity, realtime transparency, and immunity from legacy banking system problems [3]. Common explanations for the current limited

mainstream use of cryptocurrencies include: volatile price swings, inadequate massmarket understanding of the technology, and insufficient easeofuse for

nontechnical users.

The idea for assetpegged cryptocurrencies was initially popularized in the alt coin community by the 2 Mastercoin white paper authored by J.R.

Willett in January 2012[4]. Today, we’re starting to see these ideas built with the likes of BitAssets, Ripple, Omni, Nxt, NuShares/Bits, and others.

One should note that all alt coin exchanges and wallets (like Coinbase, Bitfinex, and Coinapult) which allow you to hold value as a fiat currency

already provide a similar service in that users can avoid the volatility (or other traits) of a particular cryptocurrency by selling them for fiat

currency, gold, or another asset. Further, almost all types of existing financial institutions, payment providers, etc, which allow you to hold fiat

value (or other assets) subsequently provide a similar service. In this white paper we focus on applications wherein the fiat value is stored and

transmitted with software that is opensource, cryptographically secure, and uses distributed ledger technology, i.e. a true cryptocurrency.

While the goal of any successful cryptocurrency is to completely eliminate the requirement of trust, each of the aforementioned

implementations either rely on a trusted third party or have other technical, marketbased, or processbased drawbacks and limitations.

Our implementation has the following advantages over other fiatpegged cryptocurrencies:

 EagleCoin exist on the Tron blockchain .

 EagleCoin can be used just like alt coin, i.e. in a p2p, pseudoanonymous, decentralized, cryptographically secure environment.

 EagleCoin can be integrated with merchants, exchanges, and wallets just as easily as alt coin or any other cryptocurrencies can be

integrated.

 EagleCoin inherit the properties of the Omni Layer protocol which include: a decentralized exchange; browserbased, opensource,

wallet encryption; Alt coin based transparency, accountability, multiparty security and reporting functions.

 EagleCoin Limited employs a simple but effective approach for conducting Proof of Reserves which significantly reduces our

counterparty risk as the custodian of the reserve assets

 EagleCoin issuance or redemption will not face any pricing or liquidity constraints. Users can buy or sell as many EagleCoin as they

want, quickly, and with very low fees.

 EagleCoin will not face any market risks such as Black Swan events, liquidity crunches, etc as 5 reserves are maintained in a onetoone

ratio rather than relying on market forces.

 EagleCoin’s onetoone backing implementation is easier for nontechnical users to understand as opposed to collateralization

techniques or derivative strategies.

At any given time the balance of fiat currency held in our reserves will be equal to (or greater than) the number of EagleCoin in

circulation. This simple configuration most easily supports a reliable Proof of Reserves process; a process which is fundamental to

maintaining the priceparity between EagleCoin in circulation and the underlying fiat currency held in reserves. In this paper we

provide evidence that shows exchange and

wallet audits (in their current state) are very unreliable (i.e. flaws in Proof of Solvency[6] methods) and instead propose that exchanges and

wallets outsource the custody of user funds to us via EagleCoin. Users can purchase EagleCoin from EagleCoin.com (our webwallet) or from

supported exchanges such as Bitfinex who support EagleCoin as a deposit and withdrawal method. Users can also transact and store EagleCoin

with any Omni Layer enabled wallet like Ambisafe, Holy Transaction or Omni Wallet. Other exchanges, wallets, and merchants are encouraged to

reach out to us about integrating EagleCoin as a surrogate for traditional fiat payment methods. We recognize that our implementation isn’t

perfectly decentralized since EagleCoin Limited must act as a 7 centralized custodian of reserve assets (albeit EagleCoin in circulation exist as a

decentralized digital currency). However, we believe this implementation sets the foundation for building future innovations that will eliminate

these weaknesses, create a robust platform for new products and services, and support the growth and utility of the Tron blockchain over the

long run. Some of these innovations include:

 Mobile payment facilitation between users and other parties, including other users and merchants

 Instant or nearinstant fiat value transfer between decentralized parties (such as multiple exchanges)

 Introduction to the use of smart contracts and multisignature capabilities to further improve the general security process, Proof of Reserves, and

enable new features.

Technology Stack and Processes

Each EagleCoin issued into circulation will be backed in a ratio with the equivalent amount of corresponding fiat currency held in reserves by

Hong Kong based EagleCoin Limited. As the custodian of the backing asset we are acting as a trusted third party responsible for that asset. This

risk is mitigated by a simple implementation that collectively reduces the complexity of conducting both fiat and crypto audits while increasing

the security, provability, and transparency of these audits.

EagleCoin Technology Stack

Here is a review of each layer.

1) The first layer is the Tron blockchain. The EagleCoin transactional ledger is embedded in the Tron blockchain as metadata via the embedded

consensus system, Omni.

2) The second layer is the Omni Layer protocol. Omni is a foundational technology that can:

 Grant (create) and revoke (destroy) digital tokens represented as metadata embedded in the Tron blockchain; in this case, fiatpegged digital tokens,

EagleCoin.

 Track and report the circulation of EagleCoin via Omnichest.info (Omni asset ID #31, for example, represents EagleCoin) and Omnicore API.

 Enable users to transact and store EagleCoin and other assets/tokens in a:

a) p2p, pseudoanonymous, cryptographically secure environment.

b) opensource, browserbased, encrypted webwallet: Omni Wallet.

c) multisignature and offline cold storagesupporting system

3) The third layer is EagleCoin Limited, our business entity primarily responsible for:

 Accepting fiat deposits and issuing the corresponding EagleCoin

 Sending fiat withdrawals and revoking the corresponding EagleCoin

 Custody of the fiat reserves that back all EagleCoin in circulation

 Publicly reporting Proof of Reserves and other audit results

 Initiating and managing integrations with existing Tron coin/blockchain wallets, exchanges, and merchants

 Operating EagleCoin.com, a webwallet which allows users to send, receive, store, and convert EagleCoin conveniently.

Flow of Funds Process

Step 1 User deposits fiat currency into EagleCoin Limited's bank account.

Step 2 Users transact with EagleCoin . The user can transfer, exchange, and store EagleCoin via a p2p 8 opensource, pseudoanonymous, alt

coin-based platform.

Step 3 The user deposits EagleCoin with EagleCoin Limited for redemption into fiat currency.

Step 4 EagleCoin Limited destroys the EagleCoin and sends fiat currency to the user’s bank account.

Users can obtain EagleCoin outside of the aforementioned process via an exchange or another individual. Once a EagleCoin enters circulation it

can be traded freely between any business or individual. For example, users can purchase EagleCoin from Bitfinex, with more exchanges to

follow soon.

The main concept to be conveyed by the Flow of Funds diagram is that EagleCoin Limited is the only party who can issue EagleCoin into

circulation (create them) or take them out of circulation (destroy them). This is the main process by which the system solvency is maintained.

Proof of Reserves Process

Proof of Solvency, Proof of Reserves, RealTime Transparency, and other similar phrases have been growing and resonating across the

cryptocurrency industry.

Exchange and wallets audits, in their current form, are very unreliable. Insolvency has occurred numerous times in the alt ecosystem, either via

hacks, mismanagement, or outright fraud. Users must be diligent with their exchange selection and vigilant in their use of exchanges. Even then,

a savvy user will not be able to fully eliminate the risks. Further, there are exchange users like traders and businesses who must keep nontrivial

fiat balances in exchanges at all times. In financial language, this is known as the “counterparty risk” of storing value with a third party.

We believe it’s safe to conclude that exchange and wallet audits in their current form are not very reliable. These processes do not guarantee

users that a custodian or exchange is solvent. Although there have been great contributions to improving the exchange audit processes, like the

Merkle tree approach[6], major flaws still remain.

EagleCoin’s Proof of Reserves configuration is novel because it simplifies the process of proving that the total number of EagleCoin in

circulation (liabilities) are always fully backed by an equal amount of fiat currency held in reserve (assets). In our configuration, each EagleCoin

in circulation represents one US dollar held in our reserves (i.e. a onetoone ratio) which means the system is fully reserved when the sum of all

EagleCoin in existence (at any point in time) is exactly equal to the balance of USD held in our reserve. Since EagleCoin live on the Tron

blockchain, the provability and accounting of EagleCoin at any given point in time is trivial. Conversely, the corresponding total amount of USD

held in our reserves is proved by publishing the bank balance and undergoing periodic audits by professionals.

Observe that almost all digital currency exchanges and wallets (assuming they hold USD/fiat) already face many of these challenges. Therefore,

users of these services are already subject to these risks. Below we describe how each of these concerns are being addressed.

We could go bankrupt In this case, the business entity EagleCoin Limited would go bankrupt but client funds would be safe, and subsequently,

all EagleCoin will remain redeemable. Most security breaches on alt coin businesses have targeted cryptocurrencies rather than bank accounts.

Since all EagleCoin exist on the Tron blockchain they can be stored by individuals directly through securing their own private keys.

Our bank could go insolvent This is a risk faced by all users of the legacy financial system and by all exchange operators. EagleCoin Limited

currently has accounts with Cathay United Bank and Hwatai Bank in Taiwan, both of whom are aware and confident that EagleCoin’s business

model is acceptable. Additional banking partners are being established in other jurisdictions to further mitigate this concern.

Our bank could freeze or confiscate the funds Our banks are aware of the nature of altcoin and are accepting of altcoin businesses. They also

provide banking services to some of the largest alt coin exchanges globally. The KYC/AML processes we follow are also used by the other digital

currency exchanges they currently bank. They have assured us we are in full compliance .

We could abscond with the reserve assets The corporate charter is public as well as the business 13 owners names, locations, and reputations.

Ownership of the account is legally bound to the corporate charter. Any transfers in or out of the bank account will have the associated traces

and are bound by rigid internal policies.

Recentralization of risk to a single point of failure We have some ideas on how to overcome this and we’ll be sharing them in upcoming blog and

product updates. There are many ways to tackle this problem. For now, this initial implementation gets us on the right track to realize these

innovations in following versions. By leveraging the platforms we have chosen, we have reduced the centralization risk to one singular

responsibility: the creation and redemption of tokens. All other aspects of the system are decentralized.

Main Applications

In this section we’ll summarize and discuss the main applications of EagleCoin across the Tron coin/blockchain ecosystem and for other

consumers globally. We break up the beneficiaries into three user groups: Exchanges, Individuals, and Merchants.

The main benefits, applicable to all groups:

 Properties of alt coin bestowed upon other asset classes

 Less volatile, familiar unit of account

 World’s assets migrate to the Tron Blockchain

For Exchanges

Exchange operators understand that accepting fiat deposits and withdrawals using legacy financial systems can be complicated, risky, slow, and

expensive. Some of these issues include:

 Identifying the right payment providers for your exchange

 Integrating the platform with banks who have no APIs

 Liaising with these banks to coordinate compliance, security, and to build trust

 Prohibitive costs for small value transfers

 37 days for international wire transfers to clear

 Poor and unfavorable currency conversion fees

By offering EagleCoin, an exchange can relieve themselves of the above complications and gain additional benefits, such as:

 Accept crypto-fiats as deposit/withdrawal/storage method rather than using a legacy bank or payment provider

 Outsource fiat custodial risk to EagleCoin Limited just manage cryptos

 Easily add other EagleCoin fiat currencies as trading pairs to the platform

 Secure customer assets purely through accepted crypto-processes

 Anything one can do with alt coin as an exchange can be done with EagleCoin

Exchange users know how risky it can be to hold fiat currencies on an exchange. With the growing number of insolvency events it can be quite

dangerous. As mentioned previously, we believe that using EagleCoin exposes exchange users to less counterparty risk than continually holding

fiat on exchanges. Additionally, there are other benefits to holding EagleCoin, explained in the next section.

For Individuals

There are many types of individual alt coin users in the world today. From traders looking to earn profits daily; to long term investors looking to

store their alt coin securely; to tech-savvy shoppers looking to avoid credit card fees or maintain their privacy; to philosophical users looking to

change the world; to those looking to remit payments globally more effectively; to those in third world countries looking for access to financial

services for the first time; to developers looking to create new technologies; to all those who have found many uses for alt coin. For each of

these individuals, we believe EagleCoin are useful in similar ways, like:

 Transact in USD/fiat value, pseudo-anonymously, without any middlemen/intermediaries

 Cold store USD/fiat value by securing one’s own private keys

 Avoid the risk of storing fiat on exchanges move crypto-fiat in and out of exchanges easily

 Avoid having to open a fiat bank account to store fiat value

 Easily enhance applications that work with altcoin to also support EagleCoin

 Anything one can do with alt coin as an individual one can also do with EagleCoin

For Merchants

Merchants want to focus on their business, not on payments. The lack of global, inexpensive, ubiquitous payment solutions continue to plague

merchants around the world both large and small. Merchants deserve more. Here are some of the ways EagleCoin can help them:

 Price goods in USD/fiat value rather than alt coin (no moving conversion rates/purchase windows)

 Avoid conversion from alt coin to USD/fiat and associated fees and processes

 Prevent chargebacks, reduce fees, and gain greater privacy

 Provide novel services because of fiat-crypto features

 Anything one can do with alt coin as a merchant one can also do with EagleCoin

Limitations of Existing Fiat-pegging Systems

Here’s a list of some of the common drawbacks and limitations of existing fiat-pegging systems.

 The systems are based on closed-source software, running on private, centralized databases, fundamentally no different than Paypal or any other

existing mass-market retail/institutional asset trading/transfer/storage system.

 Decentralized systems that rely on Tron coin blockchains which haven’t been stress-tested, developed, or reviewed as closely as other blockchains,

like alt coin.

 Pegging processes that rely on hedging derivative metaassets, efficient market theory, or collateralization of the underlying asset, wherein liquidity,

transferability, security, and other issues can exist.

 Lack of transparency and audits for the custodian, either crypto, fiat, or relating to their own internal ledgers (same as closed source and centralised

databases).

 Reliance on legacy banking systems and trusted third parties (bank account owners) as a transfer and settlement mechanism for reserve assets.

Market Risk Examples

In the collateralization method, market risk exists because the price of the asset being used as collateral can move in an adverse direction to the

price of the asset it’s backing/pegging. This would cause the total value of the collateral to become less than the total value of the issued asset

and make the system insolvent. This risk is mitigated by the custodian closing the position before this happens; that is, when the collateral price

equals the pegged asset price then the collateral is liquidated (sold on the open market) and the position is closed. A great approach, with merit,

and used in many liquid markets across the traditional banking and financial markets. However, as we saw from the global financial crisis,

situations can arise in which the acceleration of such events causes a “liquidity crunch” and thus the collateral is unable to be liquidated fast

enough to meet trading obligations, subsequently creating losses. With the cryptocurrency markets being so small and volatile, this type of event

is much more likely. Additionally, the overall approach suffers from other liquidity and pricing constraints since there must be a sufficient supply

of users posting collateral for the creation of the pegged-assets to exist in the first place.

In the derivatives approach, the price of the asset is pegged through entering one of several derivatives strategies, such as: swap strategies,

covered and naked options strategies, various futures and forwards strategies. Each strategy has their own strengths and weaknesses, the

discussion of which we won’t engage in here. To summarize, each of these pegging processes themselves have similar “market risk”

characteristics as the aforementioned collateralization method. It should be noted that the two methods are not mutually exclusive and often

paired in a specific trading, hedging, or risk management function at legacy system financial institutions.

Finally, understand that we believe some combination of the above approaches may become a secure, reliable, and generally risk-free process

for backing/pegging assets; however, at this point in time, this is not a direction we feel is feasible to take to ensure liquidity and price stability.

Further, we believe that a reserve-based approach will always be in existence and complement these other approaches as the entire industry

grows. As advances in technology continue, we will evaluate and incorporate any benefits available while maintaining the guarantee of 100%

redeemability.

Legal and Compliance

EagleCoin is registered as a Money Services Business with the Financial Crimes Enforcement Network of the U.S. Department of the Treasury.

EagleCoin is establishing a relationship with a U.S. financial institution for purposes of better servicing EagleCoin users in the United States.

EagleCoin is concluding a principal–agency agreement with RenRenBee Limited (“RenRenBee”). RenRenBee is licensed as a Money Services

Operator Customs. Pursuant to the agreement, RenRenBee will provide anti-money laundering compliance work and customer due diligence

procedures as agent for EagleCoin as principal.

These banks are satisfied with our processes and also satisfied that our business operates in accordance with Taiwan offshore banking

regulations, as all of the banks had been requested to check this with their own legal, compliance and headoffice before opening accounts (also

at our own request). It was our goal from the beginning to have a compliant operation and to provide the maximum level of comfort to our

banking partners here. In addition these banks have and are working with other alt coin based businesses.