On-chain TVL surges, a detailed explanation of the development background and ecological projects of Waves

Source: Hive Tech

Original Title: 《Did the Russia-Ukraine War Increase Waves Chain's On-Chain TVL?》

According to data from DeFiLlama, on March 3, the total value locked (TVL) of crypto assets on the Russian native public chain Waves increased by 53% over the past week, reaching $1.59 billion, while its native token WAVES surged by 108% in the same period, currently priced at $18.5.

Waves was originally launched in 2016 by Russian Ivanov, with the intention of allowing traditional businesses and their end users to benefit from blockchain technology, enabling individuals to have control over their own assets, data, and privacy. Over six years, Waves has evolved into the largest multi-purpose blockchain network in Russia, hosting various use-case DApps.

In addition to providing developers with open-source code and a decentralized environment, Waves offers a variety of specialized tools, including smart contracts, cross-chain protocols, oracles, token issuance, and DApps. These tools make it easier and more scalable for developers to create and run DApps.

Interestingly, this long-established public chain did not emerge during last year's crypto bull market until the outbreak of the Russia-Ukraine war in February this year. First, there was a rapid increase in the price of WAVES, followed by a surge in the on-chain TVL of the Waves public chain.

Some voices suggest that the Russia-Ukraine war has driven the growth of the Waves chain's ecosystem, as Russia faces economic sanctions, and decentralized finance (DeFi) may help Russia evade these sanctions. Waves itself is built by Russians and is the largest on-chain ecosystem in the country.

This speculation has been refuted by Waves officials, who attribute the growth of the public chain to technological upgrades. Waves developers stated on their official Twitter that the Waves chain has upgraded from 1.0 to 2.0, with improved features including compatibility with Ethereum EVM, one-click migration of Ethereum on-chain smart contracts, and collaboration with the cross-chain bridge Allbridge to attract more crypto assets into the Waves ecosystem. Additionally, Waves plans to launch a $150 million decentralized finance fund in the first quarter of 2022, aimed at investing in DeFi products built on the Waves public chain and supporting their development.

Regardless of the Russia-Ukraine war, DeFi has already been unfolding on the Waves public chain. Before the upgrade, Waves could not interact with other on-chain applications, making its ecosystem relatively closed and hindering its prosperity. Recently, the compatibility with Ethereum EVM and plans for a cross-chain bridge have provided a growth opportunity, leading to the emergence of new applications on the chain. This issue of DeFi Hive will review the mainstream DeFi applications on the Waves public chain.

Decentralized Exchange Application Waves Exchange

Introduction

Waves Exchange is the earliest decentralized exchange (DEX) established on the Waves chain. Although it adopts the basic model of DEXs, "Automated Market Maker (AMM)," this application integrates features of centralized exchanges (CEX), providing a more user-friendly experience. Users can enter Waves.Exchange to use the common limit trading mode of CEXs or the AMM mechanism of DEXs.

Waves.Exchange Trading Page

To help users adapt to on-chain trading, the display of Waves.Exchange is similar to that of CEXs, featuring candlestick charts and real-time trading volume and depth indicators for assets within the Waves ecosystem. Additionally, users can directly purchase crypto assets such as BTC, ETH, and WAVES using fiat currencies like USD and EUR within the application.

WX is the native token of Waves.Exchange, used to incentivize users to contribute liquidity to the DEX market. The application has introduced a WX staking mechanism, where users stake WX to receive a certificate gMX, which represents their rights to participate in community governance and has practical functions such as "accelerated rewards" and "guiding reward distribution."

Operational Data

According to the official website, the TVL of Waves.Exchange is $500 million, with 32,000 participating trading addresses, bringing users a reward income of $49.7 million.

Algorithmic Stable Asset Generation Protocol Neutrino

Introduction

Neutrino is an algorithm-based stable asset generation protocol that can create stable assets pegged to real-world assets, such as fiat-backed stablecoins.

The principle behind Neutrino's generation of algorithmic stable assets is to lock a certain amount of blockchain-native tokens (such as WAVES, ETH, ATOM) as reserve assets through smart contracts, and then algorithmically peg them to real-world assets to maintain price stability.

USDN is an algorithmic stablecoin created using the Neutrino protocol, pegged to the US dollar and backed by WAVES. For every 1 USDN issued, a smart contract locks WAVES worth 1 dollar.

Neutrino Protocol

Operational Mechanism

The Neutrino system is coordinated by three core tokens: WAVES, USDN, and NSBT.

WAVES ------ The underlying token of the Waves chain, also the collateral (reserve asset) for the mainstream stablecoin USDN on the chain, with a market-driven price that is volatile.

USDN ------ Pegged to the US dollar, its supply and market value are limited by the market value of WAVES.

NSBT ------ The governance token of the Neutrino protocol, which ensures the stability of the collateral reserve.

In the Neutrino system, based on the assumption that the market price of WAVES is always above zero, as long as a certain amount of WAVES is locked in the smart contract, USDN worth 1 dollar can be minted. However, since WAVES is a volatile asset, it could potentially go to zero. Even if it does not go to zero, a significant price drop could cause USDN to deviate from its peg, necessitating a large supply of WAVES to maintain USDN's value at 1 dollar. NSBT is introduced for this purpose, regulating through a "reserve collateral" mechanism.

NSBT is a token that can only be generated through smart contracts and specific algorithmic programs, with algorithm parameters depending on the deficit value of USDN's collateral reserve.

When the price of the collateral WAVES drops, the smart contract detects the insufficiency of this reserve asset, generating NSBT and purchasing WAVES from the market to replenish the reserve pool, maintaining the price stability and market supply of USDN. Conversely, when the amount of reserve asset WAVES is too large or its market value rises, the smart contract will liquidate NSBT, allowing for a certain amount of USDN to be exchanged at its market price for each NSBT liquidated, thus maintaining the supply and price stability of USDN.

NSBT is produced solely based on the supply and demand relationship of the other two core assets within the system and the algorithm, with no pre-allocation. Although there may be fluctuations in the secondary market, the supply and demand relationship within the Neutrino system will also affect its price.

DeFiLlama data shows that the TVL of the Neutrino protocol is $850 million, making it the largest application by TVL on the Waves chain due to the presence of stablecoins as a foundational DeFi infrastructure.

Lending Application Vires Finance

Introduction

Vires Finance is the first decentralized lending application on the Waves chain, providing users with a decentralized, non-custodial peer-to-peer lending solution. In this application, depositors earn interest income by depositing assets into the market, while borrowers can take out loans with over-collateralization, similar to Aave on Ethereum.

Unlike common lending applications, Vires Finance supports not only single assets as collateral but also LP assets. Users can export LP assets as vTokens and then deposit vTokens into Vires Finance as collateral to borrow the required assets.

Vires Finance Deposit and Loan Page

Currently, Vires Finance supports the deposit and borrowing of seven assets: WAVES, USDN, USDT, USDC, EURN (a stablecoin pegged to the euro), BTC, and ETH. It also supports the deposit of vTokens such as vUSDN and vBTC.

VIRES is the governance token of Vires Finance, primarily used to reward users for "depositing" while subsidizing part of the interest expenses for "borrowing" users. Users can stake VIRES to receive gVIRES, enhancing the yield of liquidity contribution rewards.

The Vires Finance official website shows that as of March 3, its TVL is $859 million.

Automated Market Maker DEX Swop.fi

Introduction

Swop.fi is also a decentralized exchange (DEX) application on the Waves chain, utilizing an automated market maker (AMM) mechanism. Like Uniswap, it allows users to instantly swap crypto assets within the Waves ecosystem without the need to create orders or wait for transactions to execute. Users can earn platform governance token SWOP rewards by providing liquidity to Swop.fi, currently supporting liquidity pools such as USDT-USDN and USDT-ETH.

Swop.fi Official Website

Additionally, Swop.fi serves as an IDO application, allowing new projects on the Waves chain to issue tokens. Users can obtain participation tickets by staking SWOP.

The Swop.fi official website shows that the application has a TVL of $19.7 million, with a 24-hour trading volume of $1.92 million.

NFT Game Waves Ducks

Introduction

Waves Ducks is an NFT digital pet breeding game built on the Waves chain, featuring digital pets that resemble little yellow ducks. Players can collect various ducks, and the collectibles can be shared with other players or continuously nurtured into rare ducks. The game also includes a trading market for little yellow duck NFTs.

To participate in the game, players first need to own the main character, the little duck, which can be purchased using the ecosystem token EGG of Waves Ducks. EGG can be bought on the secondary market or earned by completing game tasks, such as sharing or liking other players' collectibles or using game products.

After obtaining the little duck NFT, players can breed high-quality ducks on their own or collaborate with other players, and they can also use the little duck NFT for "mining" to earn EGG rewards.

Waves Ducks Official Website

All characters, items, and resources in the Waves Ducks game are NFT assets, allowing players to freely buy and sell ducks and various breeding equipment on the market. Throughout the game, players primarily earn income by participating in different game segments to earn EGG or by persistently feeding the little ducks and nurturing them into rare NFTs for profitable sale.

Related Reading: 《Waves Li Shigeng: The Evolution Path of a Technical Public Chain》