In late August various crypto media reported that Tether planned to issue a Chinese yuan-backed stablecoin. Bitfinex shareholder Zhao Dong told ChainNews that the stablecoin would be called CNHT and be held in offshore accounts. Zhao also said that his peer-to-peer lending platform, RenrenBit, had invested in the project and on Sept. 9 Tether officially announced the launch of CNHT.  At the time Zhao said: 

“Personally, I think the offshore yuan stablecoin could boost the circulation of offshore renminbi and internationalize it. Regulators may be happy to see it proceed and succeed.”

Many in the crypto community believe that CNHT might make it easier for investors to enter the crypto space. A yuan-backed stablecoin could also make it easier for blockchain and cryptocurrency companies to raise capital and grow without jumping through cumbersome regulatory hoops. 

Some traders believe that Tether printing is directly connected to Bitcoin’s price action and Cointelegraph recently reported on the correlation between the two digital assets. It’s clear that cryptocurrency investors want additional clarity on the topic so Cointelegraph decided to have a chat with RenrenBit CEO, Zhao Dong.

Cointelegraph: Tell us more about your consumer-to-consumer (C2C) lending platform? How does it compare against other decentralized finance (DeFi) platforms like Compound Finance, Celcius, Uphold, BlockFi and DyDx?

Zhao Dong: RenrenBit provides two types of C2C lending and borrowing services: ads posting and order matching, both support multiple selections of digital assets for pledging. There is a 100% reserve certificate and a strict plan for risk management so this means users' assets are secure and will never be embezzled.

The core competitiveness that makes RenrenBit different from other DeFi platforms is that we adopted a centralized solution, offering asset custody, financial services, and a market with high-liquidity and better user experience.

From our perspective, centralization is never a competitor of decentralization. We must admit that there is a barrier for those who are new to the blockchain world and their assets are often at risk because of the lack of technical skills and security awareness. User education usually costs a lot.

DeFi essentially requires that users have to overcome these difficulties themselves, whilst RenrenBit managed to solve this problem by helping users from zero to one.

CT: What interest rates are offered on the digital assets and what is the custody solution for securing client and RenrenBit assets?

ZD: Currently, users can pledge BTC, ETH, USDT, BNB, ETC, BCH, HT, EOS, LTC, DASH, OKB, LEO or RRB. Users also have the option to borrow ETH, BNB, USDT, HT ,BTC, BCH, CNY, OKB or LEO. They can customize the duration, collateral rate, and daily interest of their loan. For example, the APR of USDT in our market is around 12% to 15%.

Once a user has pledged their digital assets, they will be locked in their Cloud Wallet. By tapping the Proof-of-100%-Reserves button, pledgors can verify that their digital assets are secured anytime. In the meantime, pledgees can also verify that there is sufficient collateral backing each asset.

CT: Tell us more about RenrenBit’s involvement or support of Tether’s CNHT stablecoin. I was under the impression that cryptocurrency exchanges and trading were banned in China?

ZD: RenrenBit core members are the biggest over-the-counter (OTC) service providers in China, where the annual trading volume once reached 1 million Bitcoin. They have always been the firm supporters and dealers of USDT. We will offer CNHT as there are many strengths and this allows us to meet the demands of both users and the market.

Theoretically, the administering authority takes no duty over the surveillance of CNHT, nor bears the risk of it since CNHT is an offshore yuan-backed stablecoin. According to the ongoing discussions and measures being made by the central bank, authorities harbor a prudent and positive attitude towards the digitization of the Chinese yuan. It remains to be decided by the trends of policy, the grand economic environment and the market needs.

Nonetheless, we are quite optimistic about the future of CNHT.

CT: What is the significance of Tether creating a yuan-backed stablecoin?

ZD: After the Bitcoin halving in 2020, we think there will be tremendous growth in blockchain users. RenrenBit aims to be the engine of the coming bull market, attracting more people to use blockchain services, expanding financial passes and increasing stock assets.

A Chinese yuan-backed stablecoin is rather user-friendly to the Chinese market in terms of valuation, trading and financial passes. CNHT is pegged one-to-one to the offshore Chinese yuan and regardless of exchange rate, CNHT would be the best choice when we have a rapidly growing user base that is ten times larger than what we currently have.

CT: What does this mean for Chinese cryptocurrency investors?

ZD: CNHT filled in the blank space of a Chinese yuan-backed stablecoin. It will allow cryptocurrency traders to use it as a charge unit to store value, eliminating the interference brought by exchange rate fluctuations and encouraging domestic capital to make investments.

For the Chinese market, CNHT is a way of trading with the best user experience and it is a financial pass with liquidity and the lowest friction cost.

For Chinese investors and especially new users, CNHT lowers the threshold of user education from high above the ceiling down to the ground floor.

CT: What does this mean for blockchain and crypto startups looking for ways to raise capital?

ZD: CNHT avoids the risk of USDT under regulation. It provides a more reasonable way to establish value, trade and make an unimpeded financial pass for investments. CNHT brings liquidity to the trading market and makes the process steady and smooth. This is a safe space where every crypto startup will benefit.

CT: Won’t those interested in digital currencies choose to use China’s central bank digital currency instead of Tether and other digital assets?

ZD: As far as we know, China's central bank digital currency is still under design. It's too early to make any conclusions. Nevertheless, the fact that the central bank is taking digital currency seriously already showed their approval of the cryptocurrency industry and blockchain technology.

Eventually, a central bank digital currency will bring another big growth phase to the market, rather than grabbing portions from CNHT markets.

CT: Does ‘centralized wallet services’ mean that investors do not have custody of their private keys when they use the RenrenBit wallet, or is this just referring to assets that are part of the C2C lending platform?

ZD: The platform has three types of wallets integrated into one App: Cloud Wallet (centralized), HD Wallet (decentralized) and a Multisig Wallet. Users can choose which to use on their own. 

The HD Wallet is for those who desire full control of their accounts and will secure the private keys by themselves. The Cloud Wallet is an alternative that does not require users to memorize complex strings. Regardless of which wallet is used, the Proof-of-100%-Reserves system ensures the security of all digital assets stored on the platform.

Furthermore, the Know-Your-Customer process is required for all users and investors from the U.S., Canada, Iran and North Korea are prohibited from accessing the platform. 

CT: What is the Proof-of-100%-Reserves system?

ZD: The reserve system is a user-accessible catalog of all the digital assets stored on our platform for users to withdraw. The reserve rate is equal to the reserve volume divided by the total volume of users' assets.

Generally, the reserve rate of traditional financial institutions is below 20% and our 100% reserve means the reserve rate of the platform is more than or equal to 100%.

You might ask, how can we prove a platform offers 100% reserves? The easiest way is publishing both reserve volume and total volume of users' assets. The platform also uses Merkle tree and we’ve encrypted the asset data generated a Merkle tree and made it public. This means any user with a wallet balance can verify their assets whenever they please.

For those looking for proof of this, RenrenBit’s Proof-of-100%-Reserves solution is open source on GitHub.