Dialogue Coinversation: The Breakthrough Path of DeFi Synthetic Asset Track

Since the development of DeFi, liquidity mining has promoted the financialization of cryptocurrencies, leading to the emergence of synthetic assets. As a new form of on-chain financial derivatives, synthetic assets not only increase the composability of on-chain assets but also greatly enrich the investment choices for DeFi users.

This time, Paul, the Product Director of Coinversation, will share exciting insights on the characteristics and advantages of Coinversation, its strategic layout, and the future market development landscape. We hope this will help and inspire you in the DeFi aggregation protocol track.

Chain Catcher: Could you please introduce Coinversation's specific practical explorations in the industry and what stage the project is currently in?

Paul: Coinversation is a synthetic asset and metaverse NFT aggregation protocol platform built on Polkadot. In this upgrade, we have integrated the metaverse NFT aggregation into the entire product map of Coinversation. From a macro perspective, the Coinversation Protocol shows a very clear development path for blockchain-wide product planning.

First, we have planned three modules for the protocol layer of Coinversation: DEX, synthetic assets, and NFT aggregation. This protocol layer will be fully open-source in the future, allowing more ecological Dapps to use it directly. Among these three sections, DEX is the foundational module, providing the ecological and user consensus basis for synthetic assets and NFT aggregation.

The underlying logic of the synthetic asset protocol and the NFT aggregation module is interconnected. The fragmentation of NFTs and liquidity mining is almost the same as synthetic assets, representing a mode of asset regeneration. Therefore, based on the user and asset foundation of DEX, the synthetic asset protocol and NFT aggregation will expand user behavior, creating numerous trading scenarios once users' assets enter Coinversation's Dapp. For example: traditional dual-token staking mining, interesting NFT trading, NFT fragmentation and liquidity mining, synthetic asset and derivative trading, etc. Currently, we have completed the code layer for DEX + NFT fragmentation.

Chain Catcher: What is the original intention of Coinversation in creating an aggregation trading protocol? What are its differentiated characteristics and advantages?

Paul: Our original intention is to hope that NFT fragmentation and DEX, the aggregation of synthetic assets can help users find suitable trading scenarios in derivatives. We currently want to combine NFT fragmentation with DEX to establish a floor price for NFTs, providing these NFT projects with more usage and trading scenarios.

Chain Catcher: The Kaco pioneer network of Coinversation has already launched, and its data performance is very good. Could you briefly introduce Kaco's positioning and strategic layout?

Paul: First, Kaco was launched on the BSC chain, attracting Polkadot asset users to trade in the Dapp and participate in liquidity mining through the BSC chain. By releasing NFT works and launching fragmentation features, we aim to increase high-frequency trading scenarios for users, gradually establishing user consensus.

Secondly, we will deploy Kaco to the Kusama parachain through a cross-chain bridge, bringing BSC's Polkadot assets back to Kusama. At the same time, leveraging the trading and mining scenarios of the Dapp, we will attract large-scale token holders from various parachains to spontaneously trade in the Dapp.

Ultimately, Coinversation will complete the construction and deployment of the Dapp based on the Polkadot parachain, and the protocol layer of Coinversation will be fully open-source for projects in the Polkadot ecosystem to use.

Chain Catcher: Could you elaborate on the relationship between Coinversation and Kaco? Will the assets of the two Dapps be interoperable in the future?

Paul: Kaco launched on BSC on August 24. Within two weeks, the TVL has already surpassed 8 million, with the price nearing 2.2 USD. The overall performance aligns with our team's overall planning and expectations for this project.

Kaco is the pioneer trading platform deployed by Coinversation on BSC and Kusama. Coinversation will be directly deployed as a synthetic asset protocol and NFT aggregation protocol on the Polkadot parachain. It can be understood that Coinversation is the protocol layer of Kaco, with most of Kaco's functions and code relying on the underlying protocol of Coinversation.

From an operational perspective, the CTO will prioritize supporting the establishment of liquidity pools on Kaco after launch. Additionally, if Coinversation participates in Polkadot slot auctions in the future, Kaco will also serve as the incentive token supporting Coinversation's slot auction, and Kaco will compete to become a validator node for Coinversation.

We will continue to promote the diversification of trading pairs on Kaco and increase the depth of liquidity mining. At the same time, Kaco's NFT fragmentation will also be unveiled in the next two months.

Chain Catcher: Recently, many media outlets have reported that Coinversation will soon launch an NFT fragmentation trading market. What are the upcoming plans regarding NFTs and the metaverse, and what are the main development obstacles currently?

Paul: Strictly speaking, this year is the explosive year for NFTs. NFTs are indeed a very high-quality concept that can quickly attract a large amount of traffic. Therefore, we can see that the growth rate of the NFT track has exceeded many people's expectations. For example, the early NFTization of artworks last spring and the recent popularity of NFT blind boxes have attracted a lot of attention in a short period.

However, despite the hype, we have found through extensive research that the biggest problem with non-fungible tokens (NFTs) is still the lack of liquidity. This is the fundamental issue that determines whether any transaction can extend its lifecycle and form a flow circulation.

If we split NFTs into a bunch of fragments and put them on a trading platform, we can effectively price NFTs through the market. So far, we have seen the rise of some NFT fragmentation protocols, such as NIFTEX and Unicly. However, most of these projects are deployed on Ethereum, and there is a similar demand for NFTs on BSC. This is one of the main reasons for Kaco to add the NFT fragmentation module.

From the initial positioning of our entire product line as synthetic assets, NFT fragmentation and liquidity creation will also become one of the most interesting and imaginative parts of the synthetic asset module. This is also our most important plan moving forward. Currently, our biggest concern is still the liquidity issue, and we plan to address this by increasing the mining coefficient.

Chain Catcher: Recently, slot auctions have been very popular. Will Coinversation consider participating in slot auctions? Which parachain will be prioritized for deployment?

Paul: We have been closely monitoring slot auctions. Coinversation will not consider participating in the Kusama slot auction in the near term, but participating in Polkadot parachain slot auctions has always been in our plans, and we will announce our parachain slot auction plans at the appropriate time. As I have mentioned before, Kaco is the testing ground for Coinversation. We hope to use Kaco to validate the functionality and user appeal of all modules planned in the Coinversation protocol layer, thus laying a solid foundation for the entire ecological product path in the future.

Chain Catcher: Recently, there have been frequent security incidents in DeFi. How does Coinversation control risks and ensure the safety of user assets through mechanisms and technologies?

Paul: There is no need to worry about security issues. Recently, our project has passed the code audit by CertiK. Specific audit report information can be found on the CertiK official website or by clicking this link: https://www.certik.org/projects/coinversation.

Additionally, our contracts are non-upgradable, and we have implemented a 12-hour time lock. The contracts for user funds have also had their management rights removed. Our token also has a hard cap, so it cannot be arbitrarily inflated, similar incidents like Bunny will not occur.

Chain Catcher: Governance has always played an important role in the crypto world. What designs and ideas does Coinversation have for incentivizing early community users?

Paul: We indeed hope that some thoughtful users will participate in our community. We are currently looking into how governance can be more effective. We hope that even before voting, we can vote to change contracts, which I think is very cool. It’s not a process of voting and then writing code, but rather "I have written the code, what does everyone think?" From a developer's perspective, I like this design. I do not like proxy upgradable contracts. However, I do like the idea that rules can be changed on-chain before contract execution.

But this requires a lot of work. We hope to eventually allow community governance to develop itself without any restrictions. This is the state I aspire to.

Chain Catcher: How does Coinversation plan its development roadmap moving forward? What are your goals?

Paul: In August, we began deep cooperation with Astar, marking the official start of our efforts to deploy Dapps on the Polkadot ecological chain. In fact, we reached a cooperation agreement with Astar back in May and have been advancing the deployment testing of Wasm contracts. This collaboration aims to deploy Kaco Finance on Astar's Shiden Network by the end of September. Once deployed, Kaco will become the first DEX on Shiden to offer liquidity mining and the first DEX to participate in Dapp staking on Shiden.

Those familiar with the Polkadot ecosystem should know that there are currently few trading outlets for assets in the Polkadot ecosystem. Deploying Kaco on Shiden will provide a trading venue for a large number of SDN, KSM, and other Polkadot asset holders. The Astar team will also actively promote user engagement in Kaco trading and participation in liquidity mining. This is a win-win solution for both projects and ecosystem users. Everyone can look forward to Kaco's Dapp on the Shiden parachain.

After deployment, we will spend some time on basic operations and improvements. Then, we will immediately promote the deployment of a cross-chain bridge with the Astar team, which will truly realize the asset interoperability of Kaco on BSC and Kusama. If all goes well, Kaco will become the first Dapp to bring BSC assets into the Kusama ecosystem.

Chain Catcher: As an important track for the future development of DeFi, what do you think the market will look like in the future? Where will the next breakout point be?

Paul: We will see more and more one-stop aggregation platforms. Everyone hopes to consolidate their strengths into one project rather than spreading value. I have always believed that the next breakout point will be cross-chain bridges. Because the difficulty of chains has already decreased, a chain without assets has no value. The transfer of assets between chains is the core, which is why we are deploying on BSC first to experiment and prepare for cross-chain deployment to KSM.

I often discuss with developers from excellent projects like Celer and Anyswap, cross-chain bridges will become the focus in the future, and the security and speed of asset transfers across chains are both very important.