Waves (WAVES)

Waves

Type	Decentralized exchange and crowdfunding

Basics

• Founded in: 2016
• Mainnet release:
• Based in:

• A platform which makes it easy to create your own crypto token in a very user friendly way and provides a decentralised exchange for these tokens called the Waves DEX
• Waves released its purpose-designed programming language RIDE on its mainnet in 7-2019 — enabling global developers to create fully-fledged decentralized applications on the Waves blockchain.
• Has notably focused on gaming applications in the past.
• The CEO is (7-2019) considering a token buyback. He announced it through a Twitter poll.

History

• Split off from NXT, devs originally worked on the NXT project but had differences. Has pretty similar traits.
• From this article (25-5-2017):

"The Waves Platform was founded in early 2016 by a theoretical physicist Sasha Ivanov, whose appreciation for gravitational waves reportedly inspired the name. The project’s philosophical and technical roots come from the Nxt blockchain project, upon which Ivanov had built decentralized businesses such as Coinomat, which was launched in 2013. Ivanov saw potential in Nxt’s innovative and powerful features but, frustrated by the platform’s limitations and the project’s direction, he decided to create the Waves platform to better serve the needs of businesses building and operating decentralized applications."

Governance

• From this article (25-5-2017):

"Waves touts decentralized voting as a feature of its platform. Despite being slated for a Q1 2018 delivery in the Waves Roadmap, very little public information about this or any governance feature of Waves currently exists.

In October 2017, Waves announced its participation in a collaborative effort to create a blockchain-based voting system, based on the concept of liquid democracy. The system would allow voters to cast votes directly or delegate their votes to others on an issue-by-issue basis. No subsequent information on this project appears to have been made public."

• The following comes from a post (29-10-2019) by competitor Komodo (which is the creator of AtomicDEX), so should be read sceptically:

"The Waves DEX was introduced by Waves project. Waves has its own blockchain and a token with the same name (WAVES) which is an integral part of its decentralized exchange platform. 

All the fees are paid in the WAVES token, and you can create your own token by paying 1 WAVES, which automatically gets listed on the Waves DEX. Waves DEX has optional KYC but, if you want to make fiat on-ramps available, then KYC is mandatory. 

While Waves’ order matching engine is open source, order matching is still centralized. The Waves DEX documentation admits the order book Matcher is “the only centralized design element of our DEX.” Independent nodes can match orders to earn fees in Waves. These order-matching nodes match orders and sign them using their own private key. Mining nodes validate each Matcher’s signed transactions and send them to the Waves blockchain. At that point, the user account balances are changed according to the amount and price of the order and the trade is settled.

Waves DEX is a non-custodial exchange but it is centralized in several other respects. Specifically, the order books and order matching processes are both centralized. This means that trades are not directly peer-to-peer. Instead, trades are made through a Matcher, an intermediary of sorts, are therefore not made on-chain. The Matcher makes the transfers on-chain before settling the swap between the two traders. 

Anyone can set up a Matcher node so this process is not fully centralized but it is certainly not fully decentralized, either. It seems most accurate to call Waves a distributed exchange, rather than a decentralized exchange."

Token

Launch

• From this article (25-5-2020):

"Waves held an ICO that ran from April — June of 2016 and raised 30,094 Bitcoins. At the time, this was equivalent to about $16 million USD, making Waves the third largest crowdfunded cryptocurrency project behind Ethereum and The Dao. After the completion of the ICO, Waves was able to quickly launch its mainnet by leveraging ideas and code from multiple projects including Nxt, Scorex, SuperNet/Komodo, and BitShares."

Stablecoin

• Has Neutrino (USDN) building on top of it (1-8-2020).
• From Tally (16-4-2022):

"A sudden buildup of leverage within the Waves ecosystem triggered a bank run, and while USDN is recovering the Vires money market protocol remains under pressure. The USDN stablecoin, based on the Waves blockchain, dipped as low as $0.70 last week before recovering to around $0.98 at present. USDN uses an algorithmic backing mechanism on top of the Waves blockchain’s native token. While this is somewhat similar to Terra’s UST, the specific backing mechanisms differ. USDN includes a separate equity token, NSBT, to recapitalize the system by purchasing additional WAVES whenever backing falls too low.

USDN earns a base yield based upon the WAVES native staking rewards rate and current WAVES to USDN collateral ratio, which serves as an additional demand incentive. But this is somewhat pro-cyclical, as declining WAVES price causes both declining collateralization ratio and USDN yield (which may lead some USDN holders to swap for other stablecoins during a market drop). At the beginning of April, the leverage fueled rally got overextended and public opinion began to turn against USDN due to some high visibility critiques. As sentiment turned negative, market maker Alameda became embroiled in the drama when it emerged that they had been borrowing WAVES tokens from Vires (likely as part of a delta neutral strategy rather than outright short position) and the Waves blockchain founder advocated to forcibly liquidate their position. In the following week since the initial depeg event, Alameda has closed their borrowing position and USDN has largely returned to peg. But while on the surface conditions have improved, the pent up leverage present on Vires remains with over $500 million in outstanding USDC and USDT loans (primarily against USDN collateral).

The presence of 100% yields for over a week, without new deposits or loan repayments freeing up liquidity, indicates low market confidence in Vires’ solvency. If the loans on Vires were to be forcibly unwound today, this would quickly deplete available liquidity in Curve and other decentralized exchanges and could kick off another bank run on the Waves protocol."

Tech

• Whitepaper can be found [insert here].
• Code can be viewed [insert here].
• Programming language used: From this article (25-5-2017):

"The first phase release will provide a highly constrained scripting language that, similar to Bitcoin’s scripting language, provides a limited set of operations for constructing simple predicates that can be efficiently evaluated to determine whether or not a transaction is valid. This language is powerful enough to support many common use cases without the complexity of gas metering or the broad attack surface of a Turing complete language such as Solidity. Waves is planning to build into its client the ability to configure and deploy pre-built smart contract implementations for most popular use cases without having to write code."

Transaction Details

• Capacity (TPS): From this article (25-5-2017): "Waves once claimed to be the “fastest decentralized blockchain” platform in the world. This claim was based on a stress test of the Waves testnet in which an average throughput of 33 tx/sec and a peak throughput 283 tx/sec was measured. From this data, Waves extrapolated an expected throughput of 100 tx/sec"
• Latency:

How it works

• Consensus: Leased PoS.

• From this article (25-5-2017):

"A large development budget enabled Waves to quickly roll out important UX and scalability features, such as an integrated decentralized exchange, gateways to support the trading of external fiat and blockchain currencies, and an implementation of the Bitcoin-NG protocol.

LPoS effectively serves the same purpose as PoW mining pools, allowing users with a small stake (and thus a small probability of winning the right to produce a block) to pool funds and share profits, so that payouts are more consistent overtime. Instead of contributing hash power to the pool, users lease WAVES tokens to full nodes (analogous to a mining pool operators) that do the work of validating transactions and maintaining the ledger. Participation in consensus is open to any full node that has at least 1000 WAVES (currently about 6K USD) leased to it. The node gets selected to produce blocks with a probability proportional to its total leased stake, and earns transaction fees which it normally shares with its lessors. Once funds are leased they begin earning rewards after 1000 blocks (about 16 hours). Unlike some PoS systems where every time interval is associated with a block producer, in Waves LPoS a long and variable time may pass before some node becomes eligible and produces a block. During this time transaction serialization is indefinitely paused, resulting in a relatively low transaction throughput (on par with PoW systems)."

Scaling

• From this article (25-5-2017):

"Waves has implemented the Bitcoin-NG protocol for scaling. Bitcoin-NG allows transactions to be continuously serialized throughout the long and variable periods of leader selection. The miner who finds a solution to a cryptographic puzzle produces a single key block, which contains their qualifying solution. This grants the miner the right to extend that block with a sequence of microblocks that serialize additional transactions and earn the miner transaction fees until a new leader emerges by publishing a valid key block on the latest microblock. To incentivize miners to build key blocks on the longest chain of microblocks rather than serialize existing microblock transactions into their own microblocks, Bitcoin-NG splits the transaction fees in a chain of microblocks between the miner that produces it (40%) and the miner that builds on it (60%)."

Their Other Projects

Gravity

• From their FAQ (1-6-2020):

"Gravity is a blockchain-agnostic protocol that handles communication of blockchain networks with each other (interchain) and with the outside world (through data oracles). It is focused around interchain communication, establishing a solid foundation for the creation of gateways and cross-chain applications and providing a solution to blockchain scalability challenges through the mechanism of sidechains."

DEX

• From this article (25-5-2017):

"One of the novel features of the Waves platform is a built-in decentralized exchange (DEX) that supports direct swaps of custom tokens issued on the platform. This is achieved by combining a centralized Matcher with decentralized settlement on the blockchain. Users who wish to exchange tokens submit signed limit orders to the Matcher, who maintains an order book.

Settlement is not executed in smart contracts (as in Ethereum), but the token swap is performed by executing the built-in Exchange Transaction. Having support for token exchange integrated into the protocol layer makes the settlement process more efficient and cheaper to execute than through a series of smart contracts at the application layer.

Having a centralized Matcher addresses some common problems related to race conditions that occur in decentralized exchanges on Ethereum. Although Waves is designed to allow for multiple matchers, every order must specify a specific Matcher, which eliminates race conditions by ensuring that only one Matcher can successfully execute an Exchange Transaction containing that order."

Upgrades

• From this article (25-5-2017):

"Waves recently announced its first phase support of smart contacts, which will provide built-in support for the most common use-cases to make deploying them simpler and more secure than rolling your own. The next phase will support all possible use cases by implementing Turing-complete smart contracts.

The Waves first phase smart contract implementation was launched on the Waves testnet on April 28, 2018."

Roadmap

• Can be found here.

Audits

• Bug bounty program can be found [insert here].
• CertiK claims to have done an audit for them, according to their website (12-6-2020).

Usage

• From this article (25-5-2017):

"At the end of 2017, Waves announced the launch of Waves Lab incubator to provide advice, expertise, and resources to projects wishing to build on Waves. These developments have attracted dozens of projects from a wide range of industries and countries to launch on the Waves platform. At the time of writing Waves is the second most popular platform next to Ethereum for hosting ICO tokens."

Projects that use or built on it

• National Settlement Depository is building (19-2-2020) on it.
• As of 20202 Q1, it has 28 Dapps, 16 of which are active, 4 were new and about 1254 active users.
• Has Neutrino (USDN) building on top of it (1-8-2020).

Competition

Stellar, Waves and OmiseGo compared (23-10-2017)

• “Stellar, Waves, and OmiseGo all aim to serve very similar use cases. All three platforms have native support for a decentralized exchange. All three platforms support multiple assets. Although Waves is not currently focused on micropayments, remittances, and mobile payments, Stellar and OmiseGo are both gunning for these three use cases.
• It seems that Stellar comes out just slightly ahead of Waves as a multi-asset trading platform. Although Stellar is losing in terms of ICOs, Stellar has many more anchors than Waves has gateways. Most of Stellar’s anchors are operated by external companies that include large financial institutions. Waves, on the other hand, currently operates all of its gateways. Stellar is also currently much faster than Waves. Stellar supports a theoretical of maximum of 1000 transactions/second whereas Waves only supports 1.7 transactions/second. This will change as the WavesNG protocol comes online, but that’s not for another few months and even then, Waves’s maximum transaction throughput is still shy of Stellar’s 1000 transactions/second.

• Stellar will give OmiseGo a run for its money. Almost everything that OmiseGo aims to do, Stellar is planning to do or is already doing it. Not to mention Stellar already has a robust, secure, and fast blockchain already running in the wild whereas OmiseGo is still a farcry away from even launching a public testnet. At this point we have no idea what the OmiseGo blockchain will even look like. Having a functioning public blockchain also gives Stellar a headstart in business integrations. As mentioned above, a multitude of payment companies, especially in Asia and Africa, have integrated with Stellar and are already sending payments through the platform. We also can’t forget the massive IBM and banking integration that was recently announced.“

Pros and Cons

Pros

• Has a built in DEX, which is cheaper than if it has to be done through smart contracts.

Cons

• From this article (25-5-2017):

"Concerns have been raised about certain protocol deviations not being properly disincentivized in Bitcoin-NG because the production of microblocks is relatively free (in terms of electricity in PoW systems). However, since Waves-NG is a PoS system without deposit slashing, all block production is cheap, and protocol deviations are disincentivized only by the threat of losing transaction fee revenue. The PoS implementation that Waves inherited from NXT is vulnerable to multibranching attacks such as the nothing at stake problem.

In June 2018, Waves is planning to activate a new and improved PoS implementation that makes these kinds of attacks less effective. Rather than introduce major changes like requiring miner deposits, the Waves team is trying to improve their current PoS algorithm with a few simple changes that they hope will sufficiently disincentivize these attacks."

Team, Funding, Partners

Team

• Full team can be found [here].
• Sasha Ivanov; Founder & CEO
• Cho, Yiseul; adviser

Partners 

• Is a 'friend' of Polkadot.
• From CoinDesk (16-7-2020):

"Waves’ corporate arm is planning on working with Microsoft’s Russian subsidiary, in part to create an asset tokenization platform for company equipment."

• Is partners (1-8-2020) with Band.
• Is mentioned as a partner on Ontology's website (2-11-2020).
• Is mentioned as a partner on UNION's website (2-11-2020).

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