Waves Li Shigeng: The Evolution of Technology-Oriented Public Chains

This article was published on September 20, 2020, on the public account IPFS100

At the Entrepreneurs Conference on September 20, 2020, at the Luda Island sub-forum, Li Shigeng, the head of WAVES China, delivered a speech titled "The Counterattack Path of Technology-Oriented Public Chains," introducing the current status, planning, and value of the project.

Li Shigeng's core viewpoint: Blockchain is the underlying infrastructure of the Web 3.0 era. The original intention of the Waves public chain and what it is currently doing is to create a developer toolkit and solutions for Web 3.0. The underlying protocol of Waves has derived the Neutrino protocol and Gravity protocol sections, covering the DeFi and cross-chain fields, and generating stable assets through the staking of volatile assets for DeFi staking.

The following is the transcript of the speech:

Hello everyone, I am Steve. Today, I am very honored to discuss the development of blockchain with you here. As blockchain has developed to this point, we have reached a consensus that blockchain is the underlying infrastructure of Web 3.0. The original intention of Waves in creating a public chain and what it is currently doing is also to create tool-level solutions for Web 3.0.

Next, I will share my understanding of the Waves project from the perspectives of the Waves underlying protocol, ecosystem, cooperation progress, and the economic value brought by technology.

Since entering the blockchain space in 2017, I have always been fond of technology-oriented public chains, and the founder of Waves, Sasha, is a tech geek eager to change the world through blockchain. Our views align perfectly. Sasha's vision for Waves originates from the NXT community, and in 2016, he founded the Waves project, raising over 20,000 bitcoins in the public offering. Recently, the focus of Waves public chain development will be on cross-chain DeFi networks.

When talking about the Waves project, I need to introduce three terms: Waves, Gravity, Neutrino.

Waves in Chinese means "波" (wave). We know that waves are a common physical phenomenon, whether light waves or sound waves, they are everywhere in our lives. Translated to the internet, the transmission of network data relies on infinite radio waves, which also expresses the team's vision for Waves, hoping to bring infinite energy supply to the industry's development.

Gravity in Chinese means "地心引力" (gravity). In 2014, there was a science fiction space movie called "Gravity," and Waves chose this word as the carrier for its oracle and cross-chain functions. The Gravity protocol is the core of the cross-chain part of the Waves ecosystem, enabling Waves to be compatible with almost all other blockchain networks.

Neutrino in Chinese means "中微子" (neutrino). Neutrinos are fundamental particles that play a crucial role in the macro origins and evolution of the universe, and among the 12 basic particles that constitute the material world, three are neutrinos. In the Waves ecosystem, Neutrino plays a core role in DeFi and decentralized forex (DeFo).

The Waves protocol, Gravity protocol, and Neutrino protocol together build the Waves ecosystem.

The Gravity in the Waves ecosystem, which is comparable to the LINK protocol, has a very well-designed technical architecture and high compatibility with different blockchains. The team's idea is to create a no-coin oracle protocol and cross-chain protocol, allowing various connected public chains to operate without conflicts.

Neutrino, which is comparable to DeFi protocols, issues stablecoins through the staking of assets, meaning that volatile new assets are transformed into stable assets through algorithms. The existing technology allows staking Waves to obtain USDN. Currently, the locked yield of USDN is a fixed annualized rate of 13.25%, while the corresponding lending yield of USDT is around 10%.

Assuming we lock 1,000 Waves to issue 1,500 USDN. This portion of Waves will generate an annualized yield of 6%. The corresponding 1,500 USDN, since not all are used for staking mining, will only partially share this 6% Waves yield, thereby enhancing the mining yield of USDN. According to the mechanism of the Neutrino protocol itself, this mining method will not incur liquidation risks due to the fluctuations of Waves itself, allowing users to exchange for safer and more stable returns.

If users stake Ethereum or other assets to mine DeFi tokens, Ethereum itself has fluctuations, so when staking for DeFi, there is a risk of loss due to price drops. For friends in China, the only risk is the exchange rate risk between the US dollar and the Chinese yuan. Currently, Neutrino allows obtaining stable assets through staking volatile assets, providing a risk-free stable return, which is quite different from most industry protocols, and in the future, more stablecoins will be issued on Neutrino.

Waves Platform, Ecosystem, and Cooperation Progress

The Waves enterprise platform, supported by a strong technical team of 200 people in Moscow, is now the largest blockchain application landing platform in Russia and Eastern Europe. Partners include Russia's largest private bank Alfabank, Russia's largest oil company Rosneft, and the world's largest power grid company Rosseti. Last month, it was also announced that a plan was established with Microsoft to jointly create an asset tokenization platform in Russia. The Waves enterprise platform will also have a series of significant developments in China.

The entire Waves ecosystem is currently focused on cross-chain and DeFi. After about three to four years of evolution, the ecosystem will expand to include sections derived from the Waves underlying protocol, mainly including: WAVES protocol, Neutrino protocol, and Gravity protocol. The ecosystem map of Waves is advancing the entire Waves public chain project through a combination of DeFi and cross-chain. Currently, we are moving forward in this manner.

Waves has deep cooperation with Microsoft Cloud, deploying a project in Russia. At the same time, we also hope to collaborate with Alibaba Cloud to create a project for enterprises that provides one-click tokenization based on Alibaba Cloud.

The main issue faced by asset tokenization is security, specifically how to ensure that financial assets are not attacked or threatened once they are on-chain. To solve this problem, the requirements for the underlying blockchain are very high. Waves has established a Kaspersky-certified laboratory in Russia, certifying the enterprise platform through one of the largest antivirus software in Russia, ensuring high security. Currently, the team is relatively mature in the Russian market and hopes to bring the solution to China to promote the implementation of the entire solution with domestic partners.

Economic Value Brought by Waves Technology

Waves has a mechanism that creates 6% inflation. Now, by locking Waves on the Waves chain using the Neutrino protocol, a TOKEN can be issued that can be exchanged at a 1:1 ratio. At the same time, the Neutrino protocol is a stability algorithm protocol that ensures price stability based on an arbitrage mechanism. The source of this yield actually comes from the USDN issued by staking on the Waves chain. If you obtain USDN, you will enjoy 6% of Waves.

Some Waves have been exchanged for USDN at around 1 dollar, and later when Waves doubled in value, the yield based on Waves was originally 6% annually, but now it has become 12% annually. Therefore, pushing to USDN achieves an annualized yield of 12%. If we consider the increase in Waves, the yield can reach 23% to 28%. In August, we recorded the highest yield at an annualized rate of 29% in dollar terms. Currently, the yield from USDN locked mining appears to be quite high.

Most importantly, the entire mechanism is risk-free. A decline in Waves will not force liquidation and cause asset loss because it is held in fiat currency. A decrease in Waves will lead to a decline in yield, but it will not result in a loss of principal. USDN mining yields between 6% to 15%, with no risk of liquidation. Currently, the yield rate is 13.25%. As the mainnet matures, it will also connect the networks of different public chains.