The Islamic Development Bank Institute (IsDBI) is collaborating with blockchain company SettleMint to develop an algorithm to maintain the stability of assets traded on organized markets, including financial assets or digital currencies.
Known as a smart stabilization system (SSS), the system is designed to help stabilize organized asset markets without compromising efficiency. This is done by managing the gap between supply and demand to reduce the volatility of the price while maintaining the role of the gap in equilibrating the market.
According to the IsDBI, the patent pending SSS is unique in managing the pressure on price before the price changes. The system is forward-looking, while most other stabilization systems are backward-looking. The SSS is also self-financed, and investors’ rights are fully protected.
“The world is moving fast on the digitalization of financial transactions. This requires a robust stabilization system in place to minimize the instability associated with fast movements of funds, as has been proven by the recent banking crisis,” explained Dr Sami Al-Suwailem, the acting director-general of the IsDBI.
Founded in 2016 in Belgium, SettleMint has more than 60 enterprise blockchain implementations worldwide. It offers a full-fledged blockchain-platform-as-a-service solution. IsDBI, the knowledge arm of the IsDB Group, on the other hand, has already secured patents for three fintech mechanisms.