Integration of Encointer and Statemine

The lowest hanging fruit in terms of integration with other Kusama parachains with a promising potential impact would be an HRMP channel to Statemine which allows the transfer of arbitrary cryptoassets from Statemine to Encointer and back for the purpose of selling them in exchange for community-currency (CC) with the help of a DEX (decentralized exchange) deployed on Encointer parachain. This would allow people with no spare capital and no state-issued ID to buy crypto assets and pay with their local CC which they receive as a community-issued income (CII). It is essential that such a system is hosted on Encointer because this will allow users to pay fees in their CC, thereby adjusting fees to purchasing power.

Such a setup will be mutually beneficial for Encointer communities and token issuers: Token issuers can widen their retail token holder base and could even use this for airdrops: Selling their tokens in exchange for community currency and burning the latter. This would also prevent the “if it costs nothing, it’s worth nothing” dilemma of airdrops. Alternatively, tokens could also be offered as a reward for personhood reputation, without asking CC for it.

Encointer communities would benefit because the option of buying/receiving other crypto assets with CC makes participation in the proof-of-personhood protocol even more attractive.

Such a setup could even be leveraged by cash-transfer focused NGOs like givedirectly, who could offer stablecoins in exchange for CC, thereby multiplying their impact because this would back the CC value at the same time, similarly to how fractional reserve banking works. As outlined in our blog “Encointer as a development aid multiplier”.

There is a risk to this, however: If Encointer community members can flee demurrage by selling their CC for crypto, this can harm the circular economy. Therefore, communities shall be able to decide (democratically) if they want to expose their CC to such a market.

Last but not least, such a DEX could also facilitate trade between two Encointer Communities. The requirements for this kind of CC/CC market, however, might be different


Cross posted this to the dotsama audience for the more technical aspects.