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ADR-003: USDC over XLM for Carbon Credit Payments

Field Value
Status Accepted
Date 2024-01-20
Deciders Core team

Context

Carbon credits are priced in USD per tonne of CO2. The marketplace needs a payment token. The two natural candidates on Stellar are XLM (native asset) and USDC (Circle-issued stablecoin).

Decision

Use USDC as the payment token for all marketplace transactions.

Reasons

  1. Price stability — carbon credit prices are quoted in USD. XLM volatility would create accounting complexity for both buyers (corporations with USD budgets) and sellers (project developers with USD costs).

  2. Corporate treasury compatibility — finance teams can approve USDC purchases without hedging XLM exposure. XLM would require an FX desk.

  3. Regulatory reporting — ESG reports require USD-denominated retirement values. USDC makes this trivial; XLM requires a price oracle just for reporting.

  4. Circle's native issuance — USDC on Stellar is issued directly by Circle (not bridged), eliminating bridge risk and maintaining the 1:1 USD peg guarantee.

  5. Existing corporate USDC rails — many institutional buyers already hold USDC for on-chain settlements.

Consequences

Positive:

  • Stable USD pricing throughout the credit lifecycle
  • No FX risk for buyers or sellers
  • Simplified accounting and ESG reporting
  • Trustline requirement is a one-time setup, not an ongoing friction

Negative:

  • Buyers must hold USDC, not just XLM — adds one onboarding step
  • USDC trustline required before first purchase
  • Circle counterparty risk (mitigated by Circle's regulatory standing and reserve audits)