What happened?
The 'official' digital dollar (FRNT) launched by government agencies in Wyoming. It is regulated by law and mandates that reserves must exceed 2% of the issuance, supported by U.S. dollars and U.S. Treasury bonds, aiming to become one of the safest and most trusted stablecoins in the market.
The biggest highlight of FRNT is its seamless integration with real-world payment systems. Through collaboration with Visa, users will be able to spend FRNT directly anywhere in the world that accepts card payments, transforming it from a purely digital asset into a payment tool that can be used in everyday life.
FRNT's long-term goal is to enhance government administrative efficiency and transparency. In addition to the already successful 'instant payment' for government suppliers, there are plans to use it for directly issuing tax refunds, social welfare payments, etc., opening a new, highly efficient model of digital public services.
Wyoming takes the lead in launching the first official stablecoin in the U.S., FRNT
On August 19, the state of Wyoming officially announced the successful launch of its official dollar stablecoin, the 'Frontier Stable Token' (FRNT) mainnet. This move makes Wyoming the first state in the U.S. to issue a fully collateralized stablecoin by a public entity, marking an important milestone in the digital finance sector.
Mark Gordon, the Governor of Wyoming and Chairman of the Stablecoin Committee, stated in a statement: 'The launch of the mainnet for the Frontier Stable Token will empower our citizens and businesses to have a modern, efficient, and secure way of transacting in the digital age.'
Technical details and issuance status
According to blockchain data from the official website, FRNT tokens have been deployed on seven major blockchain networks including Ethereum, Solana, Arbitrum, Avalanche, Polygon (POL), Optimism, and Base.
To ensure its stability and security, FRNT's design adopts an over-collateralization model.
An ideal dollar stablecoin aims to keep the value of one token equal to one dollar forever. To achieve this goal, the issuer must commit: for every token issued, an asset worth one dollar (such as cash or U.S. Treasury bonds) must be deposited in their reserve vault.
This way, whenever holders want to exchange their tokens back for dollars, the issuer will have enough funds to redeem them, stabilizing the token's value at one dollar, which is the concept of 'full reserve'.
Wyoming has gone a step further by mandating through regulations that reserves must exceed 2% of the issuance. This is known as the '102% reserve ratio', also referred to as '2% over-collateralization'.
In other words, if 100 million FRNT tokens are to be issued, the reserve vault must legally hold assets worth 100 million and 200 thousand dollars.
Why do this?
The extra 2% (which is 2 million dollars) acts like a 'safety cushion'. It can withstand minor market fluctuations, increase user trust, and cover operational costs.
After all, although U.S. Treasury bonds are very stable in the short term, market prices may still have extremely minor fluctuations. This 2% buffer ensures that even if the value of Treasury bonds slightly declines, the total reserve's value will not fall below the total amount of issued tokens.
This also sends a strong signal to the market and users: 'We are very trustworthy, the reserves are absolutely sufficient, and there is even a surplus, so you can use it with complete confidence.'
Although the mainnet has officially launched, the token is not yet available for public purchase due to pending regulatory procedures. The Wyoming Stablecoin Committee stated that the public is expected to be able to purchase FRNT on the Solana blockchain through the cryptocurrency exchange Kraken, headquartered in Wyoming, within the next few days.
Integrating real-world payments with future applications
One of the highlights of FRNT is its integration with real-world payment systems.
According to an announcement from Avalanche developer Ava Labs, users will soon be able to use FRNT for payments at any place that accepts Visa through a Visa card issued in partnership with Rain, which includes mainstream mobile payment wallets such as Apple Pay and Google Pay.
Last month, Wyoming successfully conducted a real-time transaction test to pay government contractors on the Hashfire platform of the Avalanche blockchain.
Anthony Apollo, Executive Director of the Wyoming Stablecoin Committee, pointed out that the issuance of FRNT symbolizes a 'paradigm shift'. He stated: 'In addition to regulation, public entities now have an innovative model that can significantly improve government process efficiency. From paying suppliers in seconds to achieving on-chain tax refunds and social welfare disbursements, FRNT has propelled state government operations into the programmable era.'
In simple terms, FRNT is the 'digital dollar' that exists on mobile phones and the internet, primarily used in the following four aspects:
Daily Consumption
Can be linked to a Visa card for direct payments at any store worldwide that accepts card payments or Apple/Google Pay, covering all aspects of daily life.
Fast Transfer
Transfer money to anyone as quickly as sending a message, especially suitable for international remittances, saving time and money.
Government Services
In the future, it can be used to receive government tax refunds, social welfare payments, making government disbursements more direct and efficient.
Digital Finance
As a stable trading currency on cryptocurrency exchanges, or for investing and managing finances in decentralized finance (DeFi).
The timing of this press conference coincides with the 'Wyoming Blockchain Summit' held in Jackson Hole, Wyoming. As one of the most blockchain-friendly states in the U.S., Wyoming has passed over 45 related bills since 2016. The launch of an official stablecoin further solidifies its leading position in the digital asset field.
Reference materials: cointelegraph, coindesk
