TL;DR
Cycles is a proposal from Informal Systems for a decentralized clearing system, led by Ethan Buchman, co-founder of Cosmos.
The system aims to eliminate traditional intermediaries (such as banks) and allow any user to participate in a blockchain-based multilateral settlement process.
The launch is scheduled for 2025, with challenges such as integration with traditional accounting systems and competition from similar projects like Yellow Network.
Informal Systems, the blockchain infrastructure firm led by Ethan Buchman, co-founder of Cosmos, has presented its proposal for a decentralized clearing system called Cycles.
This system aims to transform the way debts are settled without the need for traditional intermediaries like banks or clearinghouses. Through a technical document, the company outlined how this system could allow individuals and businesses to resolve their financial obligations more efficiently and economically, without relying on centralized entities.
https://twitter.com/cyclesmoney/status/1859612788165099758
A Revolutionary System
Cycles seeks to solve a key problem in current finance: the exclusion of small businesses and the general public from the liquidity savings that banks obtain through their closed clearing mechanisms. Traditionally, banks have used these systems to reduce operational costs, but this benefit has been out of reach for most people. The new system aims to democratize this process, allowing any user to participate in a blockchain-based multilateral clearing process.
The operation is based on a concept called “atomic multilateral settlement,” which allows multiple participants to resolve their debts simultaneously without the need for direct transactions between them. This technology has the potential to reduce users’ financial stress by optimizing cash flows and decreasing reliance on late payments or working capital. Additionally, Cycles would be capable of handling different types of currencies, making it easier for those who do not use the same currencies to benefit from the system.
Cycles Will Be Launched in 2025 and Must Compete with Yellow Network
The launch of Cycles is scheduled for 2025, and while the project brings a promising premise, one of the main challenges will be integrating the system with traditional accounting systems, ensuring that settlement processes are intuitive and accessible to a wide range of users.
Despite its aspirations, Cycles is not alone in this field. Projects like Yellow Network, backed by Ripple, are working on similar solutions, which suggests competition in the market. However, the Cycles proposal stands out for its focus on eliminating intermediaries and optimizing multilateral settlements
