Russia is in trouble, WAVES is soaring? A detailed explanation of the Russian local public chain WAVES

**PANews editor’s note: **WAVES is a local Russian public chain. At the beginning of the Russian-Ukrainian war last year, the Russian legal currency, the ruble, depreciated sharply. Under this panic, Russian investors chose to buy WAVES as a hedge, which led to the price of its tokens Soaring; the same plot happened again, the Russian private armed group Wagner “rebelled”, the ruble devalued again, and the price of WAVES tokens skyrocketed again. This article is a reissue of an old article, first published on March 30, 2022. This article will explain in detail the WAVES public chain known as “Russian Ethereum”.

Author: TinyHand

Source: Y2Z Capital

foreword

1. Origin

2. Market value and price

3. Stablecoin USD-Neutrino (USDN)

1. Market value and distribution

2. Stable currency system design

3. How USDN maintains stability

4. How to solve the impact of reserve asset price fluctuations on USDN

5. The impact of USDN on the price of reserve assets

6. Hidden risks and solutions

7. Summary

4. Waves ecology and main applications

1. Basic introduction

2.Waves locked asset distribution

3.WavesEnterprise

4.Vires Protocol

5.WavesExchange

6.WavesKeeper

7. Gravity protocol

8.WavesDucks

9.Swop.fi

10.WavesAssociation

11. Future plans

Conclusion

Preface

**Many people associate the Russo-Ukraine war with the rise in the price of Waves tokens. Regardless of the hype at the news level, from the analysis of product functions, the current Waves can indeed meet people’s needs for property hedging, and can meet different needs experience. **

Waves’ price soars amid Russia-Ukraine war

The reasons are as follows:

1. Waves has its own exchange through which USDN stablecoins can be directly purchased through Waves Exchanges. This exchange integrates the functions of centralized exchanges and decentralized exchanges, which meets the needs of people to directly purchase USDN with fiat currencies and has a good reputation trading experience.

2. The stable currency system of Waves is relatively perfect in design. The introduction of NSBT has greatly solved the problem of insufficient USDN reserves and further guaranteed the stability of USDN. When the SWIFT international settlement system or other payment infrastructure is closed, USDN can play the role of legal currency value transfer.

3.Waves owns DeFo (Decentralized Forex). Different countries can exchange USDN with EURN, RUBN, CNYN, JPYN, UAHN, NGNN, BRLN, GBPN, TRYN and other algorithmic stablecoins through DeFo tools, which meets the needs of various stable asset transfers.

4. In addition to property transfer, the ecological construction of the Waves public chain is also very complete, including secondary markets, loan savings, NFT, games and other projects, and developers rely on Waves development tools to build more usage scenarios, satisfying people’s financial needs service and entertainment needs.

5. Some time ago, there was an event that the exchange froze the Russian account assets. The probability of such an event happening on Waves is extremely small. WavesEnterprise, an enterprise-level service platform under Waves, has been cooperating with many Russian industrial asset companies for many years. The business involves enterprise-level and government-level business, ranging from the transfer of industrial assets to the record of office property. The ability to undertake this kind of business is currently Only WavesEnterprise has a blockchain platform. For an enterprise-level blockchain platform, Waves will not easily do things that make corporate and government customers panic.

WavesEnterprise partial list of Russian customers

6. In addition to serving large enterprises like Microsoft through private chain technology, Waves is also relatively complete in public chain ecological construction, and has developed a variety of public-oriented applications such as DeFi, NFT, and game wallets.

Therefore, it is logical to choose a public chain as a property hedge. Although new public chain concepts are emerging in an endless stream at this stage, Waves is one of the few financial public chain projects that has been tested for many years.

**1. **Origin

Waves was founded in 2016 by Ukrainian scientist Sasha Ivanov.

Ivanov majored in theoretical physics for 7 years in college, and worked in the direction of artificial intelligence for 7 years after graduation. In his spare time, he has been active in the network community mainly composed of scientists. Later, the blockchain community became more and more active. Ivanov was deeply involved, and then decided to develop enterprise-level blockchain applications.

Waves founder Ivanov

Ivanov’s goal for Waves is very clear—to apply the blockchain to financial and pan-financial fields such as securities, crowdfunding, and legal currency transfers, so as to create a financial public chain.

Today, the Waves ecology not only realizes the small cycle within the ecology, but also excels in the solution of cross-chain solutions. It has achieved a large cycle of interaction with other public chains. The stable currency USDN issued by it also supports ETH, BSC and other chains. market circulation.

**Second, **market value and price

In 2016, Waves conducted an ICO in the form of receiving bitcoins for donations, raising 30,000 bitcoins (approximately US$16 million), which once became the third largest blockchain crowdfunding project after The DAO and Ethereum at that time.

As of March 17, 2022, referring to the data of coinmarketcap.com, the market value of Waves is $3,422,333,753.19, ranking 45th in total market value, and it is currently the largest public chain project in Russia.

Waves Market Cap Trend

Waves price chart

The Waves currency price reached an all-time high of $41.86 in May 2021,

In recent trends, Waves experienced a 10-week decline in October 2021, falling from $32.44 to $8.02. On February 21, 2022, when the overall market fell, Waves began to rebound strongly, rising sharply for three consecutive weeks, from $8.2 It rose to $32.93, an increase of 300%, and is now close to the historical pressure around 32-34.

3. Stable currency****USD-Neutrino (USDN)

1. Market value and distribution

USDN ranks 8th in market capitalization in the stablecoin category. Compared with Terra USD, which is also an algorithmic stablecoin and also has its own ecology, it has only half of its market capitalization.

Almost all USDN on the ETH chain and BSC chain are used to provide liquidity in the Curve protocol, and the amount of USDN held by the ETH chain is much higher than that of BSC.

(Note: Ellipsis.finance is an authorized branch of Curve.fi, which provides Curve’s StableSwap protocol for users on the BNB chain.)

Comparison of the first USDN quantity in ETH and BSC wallets

2 Stable Coin System Design

At present, the most popular stablecoins in the market, such as USDT, USDC, etc., their biggest problem is that they need to rely on real-world physical funds as reserves, which is still not decentralized enough. The Neutrino protocol is mainly designed around solving this problem.

First of all, Neutrino does not use fiat currency as a reserve like Tether’s USDT, but adopts an algorithmic stablecoin protocol and uses on-chain assets as collateral as a reserve. The current main collateral asset is Waves. Secondly, the principle of Neutrino to solve the shortage of reserves is still “automatically adjust by using the market’s profit tendency”, but unlike Terra’s UST, Neutrino has added the “secondary marketization of reserves” by issuing NSBT “**.”

**This stable currency system consists of Waves, USDN and NSBT:

（1）Waves

The core token of the Waves ecosystem, used to pay transaction fees. It is based on the consensus mechanism of lPoS (Leased Proof of Stake), which can serve as collateral for USDN in the Neutrino system.

（2）USDN

An algorithmic stablecoin pegged to the U.S. dollar that can be used as collateral against other assets.

The maximum supply of USDN depends on the maximum capitalization of Waves tokens.

There is no pre-allocation or pre-mining of USDN. The increase and decrease of USDN supply is also controlled by the market.

（3）NSBT

Neutrino’s governance token is generated through smart contracts, and its parameters depend on the reserve deficit value of USDN, which can be used to maintain the stability of USDN. The market price of NSBT is determined by a combination of supply and demand dynamics on cryptocurrency exchanges and Neutrino smart contracts.

In addition to acting as a stable intermediary between Waves-USDN, NSBT tokens can also be used as payment for protocol operations, creating collateral positions (generating USDN against Waves) and paying fees to form “hedge funds” to generate new types of synthetic assets, such as GLDN (Gold), EURN (Euro), etc.

Waves Token Structure Diagram

3. USDN****How to maintain stability

(1) State of Balance

The generation of USDN is automatically realized through the smart contract system. When a certain value of Waves tokens is locked in the account of the smart contract, USDN of the same value can be minted. Ideally, when the market value of USDN and locked assets are equal, the market value will be balanced.

(2) Arbitrage mechanism

When the demand for USDN in the market increases, the price of USDN will be higher than $1. At this time, traders can convert Waves tokens into USDN through the Neutrino protocol, and then sell USDN at a higher price on the exchange to make a profit. Such arbitrage will increase the supply of USDN in the market to maintain the price back to $1.

Arbitrage Mechanism

On the contrary, the exchange’s USDN supply will increase significantly, which will cause the price of USDN to be lower than 1 US dollar. Traders can buy USDN in the market, convert it into Waves through the Neutrino protocol, and sell it to make a profit.

This is similar to the arbitrage mechanism of Terra UST. The difference is that the Neutrino protocol also uses NSBT to solve the problem of price fluctuations in reserve assets.

4 How to solve the impact of reserve asset price fluctuations on USDN

When the price of Waves increases, the market cap of the reserve asset Waves begins to exceed the market cap of the USDN stablecoin. In this case, the smart contract will detect excess reserves and generate a corresponding amount of USDN to repurchase NSBT to increase the supply of USDN.

When the price of Waves falls, the reserve asset will be lower than the corresponding value of USDN. In this case, the smart contract will detect insufficient reserves, which can be eliminated through an auction where NSBTs are generated and requested to be purchased in Waves (NSBT/Waves trading pair).

In order to facilitate the understanding of the operating mechanism of NSBT, let us give an example:

If USDN is currently worth $1 million, the price of Waves as a reserve falls by 10%.

In this way, the Neutrino protocol only has a reserve fund of 900,000 US dollars to pay USDN.

To fill this $100,000 void, the smart contract will issue NSBT. How many NSBTs are issued will depend on the order books and their discounts from traders.

Suppose at this moment only one trader placed an order with a suggested discount of 20%. This means paying the equivalent of $100,000 in Waves gets you $125,000 in NSBT.

When the Waves price rises again, traders will be able to liquidate NSBT at $125,000 or more via pending orders. This would put the trader’s profit at $25,000 or more. In the process, the arbitrageurs made a profit, and the Neutrino protocol filled the $100,000 reserve gap.

5. The impact of USDN** on the price of reserve assets**

When USDN starts to circulate in the market, Neutrino’s mechanism will in turn affect the tokens used as reserves (take Waves as an example).

(1) Deflation

The size of the Waves reserve determines the amount of USDN issued. Conversely, when USDN is in short supply, due to the adjustment of the market and the Neutrino mechanism, the number of Waves as a reserve will increase, the circulating supply of Waves in the market will decrease, and Waves will experience deflation , resulting in an increase in the Waves price.

It is worth mentioning that the Neutrino protocol is not only applicable to Waves, but can also provide a deflation mechanism for DeFi-oriented blockchain platforms such as Ethereum, EOS, and Cosmos.

(2) Lossless transaction

In the traditional token conversion, the conversion of Waves to USD and then to Waves will cause a certain price drop. Unlike other third-party exchanges, Waves**'s own ecological smart contract can avoid** due to spreads or liquidity when trading The price change caused by the low stability can guarantee that the conversion from Waves to USDN will not cause any loss in value to Waves.

6 Hidden risks and solutions

Some of the identified risks and corresponding risk resolution plans are listed below:

7 Summary

By introducing NSBT, Waves balances the market value of USDN and reserves, thereby solving the problem of insufficient reserves, and expands our thinking in the design of algorithmic stablecoins. Although Waves has its own security protection mechanism, it still faces the above risks.

The market value of USDN lags behind UST, which is also an algorithmic stable currency, not only because the market value of USDN is closely related to the market value of Waves, and the upper limit of Waves’ market value determines the upper limit of USDN’s issuance, but also because of the application scenarios and narratives, which are similar to Terra’s UST , when the Waves ecology is more widely used, the USDN narrative will become larger, and the market value of the two will spiral up.

4.Waves Ecology and Main Applications

1 Basic Introduction

At present, the main applications of Waves include Waves enterprise service platform, Neutrino protocol, Gravity protocol and other applications in DEFI and pan-financial fields, in addition to NFT collection and game applications.

Waves Ecosystem Overview

At the same time, Waves launched its own Ride programming language and supporting developer tools for developers

Waves Developer Kit

2. Waves****locked asset distribution

According to statistics, the number of protocols in the Waves ecology is far behind the top 9, but TLV has already ranked in the top 10, and the main locked assets are concentrated in the ETH chain, followed by the Terra chain. (Statistics from defillama.com)

Ranking of total locked assets in the public chain

Ranking of assets locked by Waves in each chain

Waves Major Protocol TVL Ranking

It can be seen that assets locked in the Waves ecosystem are currently mainly distributed in Neutrino (NSBT) and Vires Finance (VIRES).

3. Waves Enterprise

WavesEnterprise is a platform that focuses on providing blockchain technology services for enterprises and governments.

WavesEnterprise uses a hybrid model, which means that the public chain and the private chain are integrated in an ecosystem, combining the advantages of the public blockchain and the private blockchain. In this way, Waves** not only retains the security of decentralization, data storage and privacy, but also takes into account legal compliance**.

Many people can’t tell the relationship between WavesEnterprise and Waves. WavesEnterprise is an independent project with an independent team, which is ideologically consistent with the Waves ecosystem and can share the Waves ecosystem through the Gravity protocol. The WavesEnterprise technology used to be a fork of the Waves protocol, but with a different target audience, so the intersection of technical aspects will disappear over time.

The application fields of WavesEnterprise blockchain service solutions include: manufacturing, retail, art, health care, oil and gas, financial technology, education, etc. Enterprises can order according to their own needs.

The main partners include: Alfa bank (Russia’s largest private bank), RUSAL (top ten aluminum companies in the world), X5 RETAIL GROUP (Russian retail giant with 16,500 retail stores), ROSNEFT (Russia’s largest telecommunications company), Rosseti (Russian State Grid), etc. In addition, the national electronic voting system in cooperation with the Russian government has also been launched.

Waves partners with Microsoft

Most of them are giant companies in Russia’s traditional heavy industry and communication industry, but they are not limited to Russian industries. On July 16, 2020, WavesEnterprise and Microsoft Russia signed a memorandum of understanding on the joint development of enterprise blockchain in Russia, on enterprise blockchain solutions and cloud technology fields A strategic cooperation agreement was reached. The list of such assets is extensive, ranging from heavy machinery to basic office equipment.

Vires Protocol is a lending protocol on the Waves blockchain. Users, wallets, and dapps can participate as depositors or borrowers. Depositors provide liquidity to the market to earn passive income, while borrowers are able to obtain loans in an over-collateralized manner.

In Vires.finance all deposited funds equally participate in interest-bearing activities. The greater the market demand for the borrowed asset, the greater the APY lender’s return. Users can lend and lend the following tokens: WAVES, USDN, USDT, ETH, and BTC. Not only that, Vires.finance also supports direct cross-chain assets, and the technology is provided by WavesExchange.

The founder of Waves tweeted before saying that Vires.finance can provide more than 25% APY, which also reminds people of Terra’s Anchor that attracts users with 20% APY. Similar to the Terra ecology—UST—Anchor Protocol, Waves also formed Fund flow of Waves ecology—USDN—Vires Protocol.

5. Waves Exchange

WavesExchanges is the first decentralized exchange application (DEX) built on the Waves chain. It not only integrates the functions of centralized exchanges, but also adopts the procedures of decentralized automatic market maker (AMM). Users can use the price limit transaction mode commonly used by CEX in WavesExchange, or use the AMM mechanism of DEX.

WavesExchange features:

On WavesExchange, in addition to using wallets, you can also exchange cryptocurrencies, buy and sell stablecoins, and earn passive income through investment. In addition, users can even issue their own cryptocurrencies with one click. It can be said that it is a powerful tool for interacting with many functions provided by the Waves protocol.

Part of Waves Exchange

Waves.exchange pledges USDN to obtain 12-15% income, daily settlement income, and can withdraw at any time.

6. Waves Keeper

Keeper is a wallet tool for the Waves ecosystem. Currently, extensions are available for all popular browsers including: Google Chrome, Firefox, Opera and Microsoft Edge.

Waves Keeper demo page

Users can view account assets and NFT through WavesKeeper, transfer funds in the WavesKeeper interface, and exchange assets directly through WavesKeeper integrated with Swop.fi.

7. Gravity Protocol

The Gravity protocol is an oracle protocol in the Waves ecosystem, which is used to realize on-chain and off-chain data interaction and communication between multiple chains

(1) Real data

Gravity does not issue native tokens, which provides great convenience for other applications to integrate Gravity services. If an application wants to integrate Gravity’s oracle service, they can use the protocol’s own tokens to pay, and Gravity’s nodes will share the revenue. Due to the binding relationship of interests, this node will honestly provide real and effective data.

(2) Open Ecology

Gravity creates a more inclusive open ecosystem, solving the problems of scalability and stability. The Gravity protocol not only helps nodes provide data, but also provides asset liquidity and cross-chain exchange.

At the same time, the Gravity protocol can link any blockchain to the outside world, allowing a fully centralized gateway to be built on top of it to help complete the lock-up of assets and transfer the lock-up information to another blockchain network to complete asset cross-chain transfer.

Gravity improves the liquidity and capital efficiency of encrypted assets, and provides a variety of usage scenarios for building various DeFi products. Ducks is a digital duck chain game that collects NFT. All characters, items, resources and achievements in WavesDucks are represented by NFTs.

At present, the average monthly active users have reached 296,000, becoming the main game of the Waves community. This game also encourages the community to promote the Waves ecosystem together. Specific gameplay includes

(1) Battle: Fight for different farms and get tokens as rewards

(2) Growth: Cultivate ducklings and cultivate them into higher-level NFTs, which can increase the price of NFTs

(3) Breeding: Hatch NFT ducks to expand collections and earn money opportunities. Unlike most NFTs, Ducks generate EGG tokens that can be withdrawn or used in-game. Staking NFTs to generate passive income.

(4) Guild: For each activity organization, WavesDucks has set up communication communities such as telegram groups.

Waves Ducks Community Events

9. swop.fi

Swop.fi is an AMM automated market maker mechanism that allows users to instantly exchange their tokens without creating orders or waiting for trades to be executed. The Waves blockchain guarantees that each transaction can be completed within a few seconds, and the smart contract call fee is only 0.005. The project is open to liquidity providers: any user can replenish the mining pool and earn SWOP rewards. Current project total market value locked (TVL): $ 21,471,027

Users can obtain part of the transaction fees of each pool by putting liquidity into the fund pool. Except for the Waves-BTC pool, all pools use USDN or EURN as one of the transaction assets. The annualized income of USDN pledge is basically 8-15%.

In addition to mining, currency exchange, and governance, Swop.fi can also be used as a project launch pad to purchase tickets according to the amount of SWOP pledged to participate in different projects.

Swop.fiIDO project details

10. Waves Association

The Waves Association is a non-profit organization dedicated to promoting Web 3.0 around the world. It is mainly used to promote research within the Waves ecosystem and provide funding for projects based on the Waves protocol to support Waves technology.

Similar to the Ethereum Foundation, WavesGrants offers a grants program to support individual developers, teams, and startups that serve the Waves ecosystem.

Funding amounts are determined on a case-by-case basis, taking into consideration: technical complexity, details of proposed solutions, developer/team needs, Waves project size and criticality, and other criteria.

All grants are made within the Waves system, and the grant release and award process is carried out through the DAO.

Waves Association Support Program

The Waves Association recently announced a $1 million Waves grant program for projects developed on Waves infrastructure. As a core and binding component of WavesTech, the Waves Association provides governance and support for the entire Waves ecosystem, and cultivates more Web3 talents for Waves.

11 Future Plan

![Russia is in trouble, WAVES is soaring? An article explaining the Russian local public chain WAVES] (https://img.gateio.im/social/moments-69a80767fe-a1dee09ef5-dd1a6f-62a40f)! Russia is in trouble, WAVES soaring? An article explaining the Russian local public chain WAVES

Waves social media all add name suffix (1 ➝ 2)

Waves has formulated the specific content of the 1→2 version iteration, including:

(1) Support Ethereum Virtual Machine

Make Waves more accessible to external teams by providing an infrastructure of extensive development and analysis tools.

(2) Open a new DAO governance model,

Additional rewards are given for participant rewards and the possibility to have ‘skins’ in the game. Waves DAO will upgrade the old futarchy concept, so a new general governance model will be introduced, whose application is said to be far beyond the current blockchain technology.

(3) Cross-chain finance

Extend Gravity as a bridge to all industry chains, creating an integrated combination of universal bridges.

(4) Do more business in the United States

Waves has established a US company Waves Labs in the first quarter of 2022, headquartered in Miami, and the team is currently recruiting experienced engineering, business development and marketing leaders.

In version 2.0 Waves announced that the US is a key market to drive mass adoption by 2022. And to formulate the main KPI is the number of products built on Waves by the team from the United States.

Announcing a $150 million fund and an incubation program this spring to address this need and continue to develop and nurture talent and market opportunities. In addition, an independent DeFi fund will be launched in the first quarter of 2022 to invest in selected Waves-based DeFi products.

Conclusion

The Waves ecosystem is huge, but just like the positioning of the Waves public chain, it focuses on financial and pan-financial applications.

In terms of product composition, the Waves ecology, from the DeFi application Swop.fi to the game Waves Ducks, is connected in series with the stable currency USDN. At the same time, it has its own Gravity oracle machine that can realize stable currency exchange rate reading, cross-chain data interaction, and off-chain data. Functions such as winding. In terms of product interaction, Waves Exchanges and DeFi applications are related to each other, and the ecological experience is relatively smooth.

In terms of business selection, the Waves public chain serves mass consumers, and WavesEnterprise serves enterprises and governments, providing a variety of demand scenarios for the Waves ecosystem, which is an advantage that other public chains do not have.

From the perspective of the public chain, from DEX to DEFI to stable coins, Waves has been following up hot technologies and has certain advantages in technology. These technology accumulations can bring bonuses to other ecological applications. For example, Waves has cross-chain technology that has been accumulated for many years, so USDN and NSBT tokens can also be used in ecosystems such as Ethereum and Binance Smart Chain in addition to the Waves public chain.

On the stablecoin, the USDN algorithm mechanism design with Neutrino protocol addition is relatively complete, but the current market value ranking of USDN needs to be improved. As mentioned above, the impact of USDN on Waves is mutual. When the application of Waves ecology is wider , when the stable currency narrative is bigger, the layout of USDN will attract more capital for Waves, and people will have a stronger consensus on USDN and Waves.