Cross-border Trade Using XDR: How It Works A real-world example of an XDR-based transaction between South Korea and Russia
The XDR stablecoin is a useful tool for cross-border transactions and global trade without the use of expensive fiat money transfers. It's capability as an alternative to the existing system is already on display following the first ever legal transaction using XDR. This transaction occurred between the South Korea-based Mile Unity Foundation (MUF) and KARMA.RUS, P2P lending platform from Russia.
Here are key features of the deal:
- The transaction occurred in October — December 2018
- The deal was legally made in XDR, which is linked to the highly stable IMF reserve currency Special Drawing Rights (SDR)
- The size of the deal was 400 XDR (about 540 USD)
- This amount included a 10% tax, according to the Korean law
- The deal was signed by Mile Unity Korea, the operator of the Mile Unity Foundation brand.
- The Mile Unity Korea agreed to provide marketing and translation service in exchange for the XDR payment.
For KARMA.RUS, the whole deal was separated in two simple parts:
- Purchase XDR
- Use the XDR as a payment method.
In the first stage, KARMA.RUS found the seller of XDR in George Goognin, a self-employed entrepreneur. The deal was officially registered in KARMA.RUS bookkeeping, according to IFRS standard (XDR could be linked as an IFRS 5 Non-current assets held for sale, or IFRS 9 Financial Assets).
After the purchase of XDR, the Russian P2P platform signed the deal along with Mile Unity Korea. After Mile Unity Korea fulfilled its end of the contract, the XDR was remitted and payment was registered in the both companies financial records.
Here are all the documents made throughout the entire process:
- Contract to buy XDR between self-employed entrepreneur George Goognin and KARMA.RUS
- Account statement of the first deal with Goognin of KARMA.RUS
- Contract to buy services in XDR between KARMA.RUS and Mile Unity Korea
- Account statement of the second deal of KARMA.RUS
- Account statement of the second deal of Mile Unity Korea
The deal became the first legal payment agreement in the world using the XDR stablecoin. In addition to the zero cost cross-border payments, XDR is highly stable because it is tied to the IMF SDR, which has only changed in value by 11% since 1981. Because of these benefits, the daily turnover of XDR already exceeds 30 million XDR
(more than 41 million USD). Transfers and transactions in XDR are effective ways to solve the global problem of high commissions in cross-border remittances. According to the latest World Bank data
, the commission for sending money from one country to another is almost 7% worldwide, and exceeds 20% in some African countries.
XDR offers a much-needed alternative to the existing system and provides currently marginalized economies the means to meaningfully engage in global commerce on a level playing field. See more info here