A Solana protocol to bring trust back to fungible and non-fungible tokens by adding one-way SOL backing.
The crypto space has been plagued by a trust problem due to the lack of stability and extreme volatility of digital currencies. While many people have invested with the hope of making a profit, the unpredictable nature of the market has caused significant anxiety and frustration for investors. During the current bear market, prices for cryptos and tokens can fall by significant percentages, and investors may experience losses on their investments. The huge lack of trust is hurting creators, collectors, and the whole ecosystem.
Volatility and lack of trust can be a challenge for any token, but are for NFTs in particular. All tokens are subject to fluctuations in value based on market demand and other factors. For example, an NFT that was once in high demand may lose its value if interest wanes, or if a newer, more popular NFT enters the market. This can make it difficult for buyers and sellers to predict the long-term value of NFTs, which can impact their willingness to invest in these assets. As with any digital asset, there is always the potential for fraud or scams, and it can be challenging to verify the authenticity of an NFT without a trusted third party.
So how can that be fixed? How can we put the trust back into the ecosystem? With Coinbacked we introduce a one-way token backing protocol that introduces the concept of intrinsic value to stir for longterm stability.
The alpha implementation of the protocol includes the following end user relevant on-chain operations (instructions.rs):
- CreateBackingAccount – create the backing account for a given token
- ValidateBackingAccount – validate existing backing
- AddToBalanceOfBackingAccount – increase the backing SOL amount
- BurnTokenAndFreeBalanace – burn the token itself and free any backed SOL
- CleanAccountsAfterBurning – clean-up after burning: close backing account
An alpha version of the Coinbacked program is deployed to Solana devnet (program ID B91LvPYXAo3KVNFbSXkWJWunVtXMV5irzdWCqPxJfMR7).