I am very surprised to hear that Waves completes the on-chain foreign currency exchange through Neutrino, because either the bond market or the currency market is larger and more macroscopic than the stock market. Has the process of decentralized market developed so fast already? Can this market allow investors to obtain benefits from the currency market?
Tonight, we will hold AMA with Steve, head of Waves Chinese Community to share more information about it.
Steve, could you please introduce yourself to the group?
Steve: Hello everyone, I’m Steve. I entered the cryptocurrency industry in 2017. I have done 2 jobs, one in NEM (New Economy Movement) and the other in WAVES. I witnessed a big bull market in NEW in 2017 where the price of $NEM rose 280 times throughout the year and plummed after Coincheck hack in 2018. I started to look for potential public chain projects in early 2020 and found that WAVES is a very promising project after searching lots of targets and many chains. Then, I decided to promote WAVES and introduce it to more friends
I will share with you and analyze why the WAVES project is a good project that can make long-term value investment in the following AMA.
Thanks for Steve’s self-introduction, let’s start our AMA now.
Q1、While I am surprised that Waves can carry out such foreseeable research, I would like to ask Steve why Waves develops a new stablecoin-driven trading model-Decentralized Fore (DeFo)?
Steve: DeFo is an extension to the Neutrino protocol, which operates on the Waves blockchain. DeFo stable assets are backed by WAVES coins.
DeFo is a crucial step in Waves’ ecosystem development as it opens up opportunities for ordinary people to interact with familiar fiat instruments through blockchain technology. DeFo has only been launched recently so it is too early to draw conclusions on how the ecosystem has changed, but even over that period the value locked in DeFo has already exceeded $1 million.
Defi is something that currently only ‘crypto- people’ understand. It’s impossible to reach mass adoption without erasing barriers- legal, technological and mental ones. You must either teach untrained and unskilled crypto users a complex and new technology, or bring the technology closer to such users, by simplifying the interface and mechanics and giving them tools that they know and are familiar with.
From Waves’ perspective, Defo represents an easy entrance into crypto for non-crypto users. They have an opportunity to operate with currencies that are familiar to them, they can hedge their possible risks with a diversified investmen portfolio, they obviously deal with a more stable financial system which is ensured by decentralisation and finally, they get opportunities to earn passively through staking.
Q2: The Neutrino protocol is a crucial core protocol for Waves to complete the development of Decentralized Forex (DeFo). Could you please briefly introduce the functions and features of Neutrino?
Neutrino is the base technology for the DeFo. Let me briefly introduce these features
Staking mechanism — Neutrino protocol is using Waves staking mechanics — all Waves locked as collateral are used for Waves block generation.Staking rewards are paid daily.
Neutrino is a multipurpose protocol and allows for the tokenization of real-world off-chain and on-chain assets, through collateralized debt positions (CDP), by algorithmically maintaining the economic stability and parity of the synthetic asset rate. The first synthetic asset released was a token tied to the U.S. dollar, USD Neutrino (USDN), built using our smart contract language RIDE.
The aim of the protocol is to release a token which is backed by so-called collateralization, the process of locking an amount of Waves tokens in a smart contract, equal in value to the amount of ‘stable tokens’ issued. For example, the total combined amount of USDN issued will always be backed by an equal combined amount of Waves and NSBT (a governance token designed to ensure the stability of the USDN reserves). What’s interesting, is that every $WAVES token acting as Neutrino collateral, is still earning more LPoS staking rewards. Those rewards are automatically converted to USDN, and paid out only to all staked USDN tokens, yielding attractive interest rates.
However, Neutrino is just a piece of the DeFi puzzle and asset tokenization is a step towards reaching the integration of DeFi into our daily lives. Recent DeFo (Decentralized Forex) is another part of this puzzle. Decentralized Forex (DeFo) — an open-source extension on the Neutrino protocol, facilitating seamless swaps and staking of stable-price assets pegged to national currencies, indices and commodities. A network of secure oracles constantly supplies up-to-date currency prices from fiat Forex exchanges.
Basically, using Neutrino protocol as a technological foundation we created something new and extremely easy to understand for using stable coins in our everyday -life. Leveraging a hard peg and an architecture for all stable coins that guarantees stability, we built the smart contract that generates different assets and makes instant swaps between them, it’s frictionless and charges an almost zero fee. Being an open-source solution, it can be integrated into any interface and allow for the creation of frictionless bridges between crypto and fiat.
Q3、Could you explain the functionality of DeFo? How does the community participate in the governance for product direction?
There are a dozen of stable-assets already available on Waves Exchange like US Dollar, Euro, Russian Rubble, Japanese Yen, Chinese Yuan and newly popular ones like Nigerian Naira, Brasilian Real and Ukrainian hryvnia. All of them are available for trading, staking and swaps with Waves. On average, every week the Waves Exchange community is voting for new stable coins to be added.
The interesting part about these stable-assets is that they generate a high yet sustainable yield. APY for almost all available tokens is more than 10%, which makes this offer very attractive. For some assets it makes much more sense to use DeFo than fiat money, let’s take Japanese Yen as an example. An average deposit rate in Japan was -1.05% in March. Compare it with Neutrino’s 13.63% APY (last 30 days average).
Community participates in governance through NSBT (Neutrino System Based Token). Assets for DeFo are chosen by the community. Voting for prospective stablecoins is regularly carried out on the Neutrino website with the NSBT token. Everyone in the community is welcome to share their ideas about future assets to participate in the voting.
Link to DeFo FAQ — https://waves.exchange/defo/faq
Q4、For traders who understand or want to understand the foreign exchange market, how should they participate in Defo ?
Neutrino protocol allows for seamless swaps and staking of stable-price assets pegged to national currencies, indices and commodities. A network of secure oracles constantly supplies up-to-date currency prices from fiat Forex exchanges. All this is incorporated in DeFo.
DeFo can be potentially integrated into any interface and allows for creation of frictionless bridges between crypto and fiat if we talk about entities. And it opens up opportunities for high-interest savings and cheap remittances, leveraging the Waves blockchain’s high speed and low fees, and enables easy access to financial instruments, such as savings, investments and currency exchange to overcome unfavorable conditions of traditional banking systems.
What are the main advantages one can get from DeFo?
l Bearing interest. A stable-priced instrument for earning daily staking rewards with a high APR (12–15%) is attractive to stakers and may act as a practical alternative to bank deposits.
l Trading. Traders use Neutrino stablecoins to trade popular cryptocurrencies (BTC, ETH, WAVES) and hedge against market volatility during instability periods.
l Utilising multiple assets. USDN, EURN, JPYN, CNYN, RUBN, UAHN and NGNN are utilized by dApp users as a means of payment due to its pegging to USD and fast transactions.
l Inter-chain DeFi in the future. Neutrino stablecoins are the pinnacle of cross-chain DeFi experimentation. Currently, it acts as a base layer for the Waves-Ethereum bridge and is already available for staking in the Ethereum ecosystem. More blockchains are expected to join inter-chain DeFi.
How can one start utilising it? Oh, it’s very easy.
The easiest way to start profiting from DeFo is to to open Waves Exchange DeFo page and follow instructions there — https://waves.exchange/defo.
There are ways to exchange your crypto (Bitcoin, Ethereum, Waves, etc.) and fiat to DeFo stable crypto assets and stake those to start earning 10%+ APY.
If you will have questions feel free to ask on the Waves Exchange website or read the short and concise DeFo FAQ — https://waves.exchange/defo/faq
Q5、As the entrance of new decentralized market funds, how will Defo affect the current market?
Adoption for blockchain-based financial products has happened historically much more easily in countries that have seen a drastic devaluation of their national currency, since the need for on- and off-ramps into accessible monetary assets are needed for a sudden large group of people. It’s these semi-black swan events, that people realize how important it is to have actual ownership over your financial reserves, including the right to transfer and exchange it for other assets, should this be needed. However, in scenarios like the prior, that is hardly the case. Blockchain, being permissionless, allows for anyone to exchange their money into crypto, not only in such disastrous times, but also in normal, everyday life. DeFo will not take over global forex markets, but it will matter precisely where it’s most needed, for those left with little to no other option, as we move into a more hostile world day after day.
Here comes our Free Q&A session. We will select 1 question for the guest to answer.
User: About your code quality, is it safe? DeFi has frequent code quality problems recently, and some tokens have lost tens of millions of dollars due to code problems.
Steve: Code quality is one of the most concerned issues. WAVES official partners including Kaspersky Lab have passed detailed investigations and released WAVES security reports and assessments, which fully demonstrates the security of WAVES.
Thanks Steve for joining our AMA and sharing so much valuable information with us. Thank you all for watching this AMA. EncryptClub will work hard and bring more wonderful content for you in future.