Dialogue Coinversation: The Breakthrough Path of DeFi Synthetic Assets Track

Since the development of DeFi, liquidity mining has promoted the financialization of cryptocurrencies, and synthetic assets have emerged 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 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 global 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 for more ecological Dapps to use 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 and liquidity mining of NFTs are 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 extend 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 the characteristics and advantages of its differentiated path?

Paul: Our original intention is to hope that NFT fragmentation and DEX, as well as 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 Coinversation pioneer network Kaco 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 Dapps and participate in liquidity mining. 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 Dapps, 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 Dapps based on the Polkadot parachain, and the protocol layer of Coinversation will be fully open-source for projects within 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 went live 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. One can understand that Coinversation is the protocol layer of Kaco, and most of Kaco's functions and code rely on Coinversation's underlying protocol.

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 serve as the incentive token supporting Coinversation's slot auction, and Kaco will also compete to become a validator 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 at present?

Paul: Strictly speaking, this year is the explosive year for NFTs. NFTs are indeed a very high-quality out-of-the-box 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 earliest NFTization of artworks this spring and the recent popular NFT blind boxes have attracted a lot of attention in a short time.

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 trade can extend its lifecycle and form a cycle of traffic flow.

If we split NFTs into a bunch of fragments and place them on trading platforms, 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 major 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 you prioritize for deployment?

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

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

Paul: There is no need to worry about security issues; our project has recently 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 have a 12-hour time lock, and the management rights for the contracts where users store funds have been removed. Our tokens also have a hard cap, so they cannot be arbitrarily issued, preventing incidents similar to Bunny from occurring.

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 do 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 about voting and then writing code; rather, "I have written the code, what do you all think?" From a developer's perspective, I like this design. I do not like proxy upgradable contracts. But I do like the idea of being able to change the rules of the contract on-chain before execution.

However, this requires a lot of work. We hope to achieve a state where the community can govern itself and develop 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 as early as May and have been advancing the deployment testing of Wasm contracts. This cooperation 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 relatively few asset trading outlets 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 ecological 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 achieve asset interoperability for Kaco between 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 explosion 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 explosion point will be cross-chain bridges. Because the difficulty of chains has now 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 for experimentation and preparing for cross-chain to KSM later.

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