Libra developers: The path forward
From the beginning, the goal of the Libra* project has been to enable a simple global payment system and financial infrastructure that empowers billions of people. In the months since our initial June 2019 announcement, we’ve worked closely with regulators, central bankers, elected officials, and various stakeholders to shape an innovative approach to using blockchain technology to support a regulated, licensed payment system. The updated white paper outlines the significant work we have done on the design of the Libra payment system since June 2019.
We have made changes to our initial approach, many of which depart from the approaches taken by other blockchain projects. Our goal was never to emulate other systems, but rather to leverage the innovative approach of using distributed governance and distributed technology to create an open and trustworthy system. By undertaking the difficult work of enhancing traditional financial systems to become programmable, interoperable, and upgradeable, we hope to allow others to leverage our efforts to build not only innovative but also safe and compliant financial applications that can serve everyone. We appreciate the discussions with policymakers around the world who have helped us understand key concerns so that we can integrate actionable improvements into the Libra payment system’s design and into a phased rollout plan.
We have summarized below the changes that will most directly impact developers:
- Marrying blockchain technology with accepted regulatory frameworks.
- Offering single-currency stablecoins in addition to the multi-currency coin.
- Phasing the rollout of the Libra network.
Marrying blockchain technology with accepted regulatory frameworks
Our goal is to build a platform that is open and interoperable with protocol-level controls to help developers meet the high standard of compliance. We are focused on determining the best way to marry blockchain technology with accepted regulatory frameworks.
The updated white paper outlines categories of network participants, including Virtual Asset Service Providers (VASPs) and Unhosted Wallets. We believe most people will interact with the Libra payment system through VASPs, such as custodial wallets and exchanges. We also believe it is important to permit the broader developer community access to the Libra network by enabling Unhosted Wallets with protocol-level compliance controls.
In the first Libra white paper, we announced a path to eventually transitioning the network to a permissionless system. In the months since, a key concern we heard is that it would be challenging for the Libra Association to guarantee that network compliance provisions would be maintained. In the updated white paper, we present the approach we are exploring to offer new entrants the ability to compete for the provision of core network services and participate in the governance of the Libra network while ensuring the Association’s ability to meet regulatory expectations. Click for more information here.
Offering single-currency stablecoins in addition to the multi-currency coin
The Libra network is designed to be a globally accessible and low-cost payment system — a complement to, not a replacement for, domestic currencies. The stabilization of currencies and value preservation are key efforts that are properly within the exclusive remit of the public sector. Therefore, we are augmenting the Libra network by including single-currency stablecoins (e.g., ≋USD, ≋EUR, ≋GBP, etc.). We hope to work with regulators, central banks, and financial institutions around the world to expand the number of single-currency stablecoins available on the Libra network over time and to explore the technical, operational, and legal requirements to access direct custody with them.
Phasing the rollout of the Libra network
Since the June announcement, we have held discussions with policymakers around the world to determine an appropriate phased rollout plan. Initially, the network will only be accessible to Designated Dealers and Regulated VASPs while the Association continues to develop its certification process for other VASPs and its compliance framework for Unhosted Wallets based on the feedback received from regulators. The Association intends to make the network accessible to Certified VASPs and Unhosted Wallets once the relevant compliance frameworks have been finalized.
Through our experience using Move to build the support for the features described in the white paper, we were able to see first hand the potential of a programmable financial infrastructure. For example, Move generics allowed us to create a straightforward API for single-currency stablecoins.
The Association is committed to implementing appropriate review and risk controls for smart contracts. At first, only Association-approved and -published smart contracts will be able to interact directly with the Libra payment system. Over time, the Association will explore appropriate controls to allow third-party publishing of smart contracts.
We know that due to our phased rollout plans, not all aspects of the Libra network will be available immediately to some developers, but we are excited to work with the community to drive the evolution of these features.
For more details, check out the Libra network’s documentation and community sites. We also invite you to take part in our open-sourced early preview of the Libra testnet, with accompanying documentation. We hope you continue to read, build, and provide feedback!
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*On December 1, 2020, the Libra Association was renamed to Diem Association.