A few months ago I wrote a piece about Chia and how important it was for them to choose partners in the future after the mess with Sirius. That was a warning about the risk of partnering with new, unproven or smaller companies like Stably and how they would inevitably end up spending their own good will to improve their partners position rather than leveraging a partner’s good will to improve their own.
This is very obvious with the boost in credibility the project has gotten from the partnerships with the World Bank Climate Warehouse project and the country of Costa Rica. These are large institutions and a partnership with Chia is a risk for them and a benefit to Chia Network. Had Chia continued along this path it would have been very good for the early supports of the project, like those that read this blog.
Then came the announcement of offer files and the onboarding of Stably into the ecosystem as the first US Dollar backed stablecoin on the Chia blockchain network. This was ostensibly good news, and I argue still is, as it gave a real mechanism to onboard and offboard with XCH and a portal to move XCH into other networks through USDS. This is a very good thing, on paper.
But when it launched some issues started cropping up right away. First, they didn’t support XLM memos so people trying to move funds through XLM in immediately had issues. When people looked into them, it seemed the volume was very thin considering the demand that was pent up for stablecoins in the Chia ecosystem. And then came the deposit issues.
This is the biggest problem, and has been legitimately costing Chia some goodwill among their userbase. If you check the #general channel of their Chia_offers keybase team it is littered with people seeking support for Stably transactions. Lots of people have reported delays in transfers in both directions and my gut feeling this is due to the low volume of USDS available in general, as well as the small team.
They even took Chia off their menu entirely for a few days due to wallet issues. Now, I hope beyond hope that Chia did not have Stably launch with the Beta light wallet for CAT management and that they have a stable node built-to-purpose. But if not, this could be the root of some of their issues.
To be clear I don’t think there is anything wrong with Stably in general. From what I can tell they are an honest outfit trying to build a legitimate stablecoin solution and avoid the issues Tether had in its early days. In order to do that they cannot just print USDS out of thin air and just promise themselves that they will balance the books later. It means operational issues while they keep the books balanced the whole time, and that’s what we are seeing. So the issues are potentially excusable from a macro sense.
But these are real people having real issues with real money, and because these are Chia People going to Stably on Chia’s recommendation Chia Network is going to eat some of the bad mojo. I sincerely hope that Stably sorts this out and wins these customers back, because this is a pretty critical moment for Chia and its not going great for everyone.