Understanding WaykiChain's decentralized synthetic asset protocol Wayki-X in one article
1. The birth background of Wayki-X
From the traditional monopoly financial model, to the financial technology innovation promoted by the mainstream players in the industry, to the open finance led by the community, the whole world has an increasingly strong demand for financial inclusion, and people urgently need an open, transparent and permissionless financial structure.
To achieve open finance, there are two solutions:
(1) Moderate improvement, which advocates reforming on the basis of the original financial structure. This improvement has not brought much change to ordinary investors. A small number of people still control the dominance, and the design of the financial system is still subject to their own interests.
(2) Radical innovation, dare to touch their cheese, create a brand new financial system, so that most people can participate in the investment of global assets without hindrance, and truly enjoy the dividends brought by finance. This is WaykiChain Go The starting point and future vision of the centralized synthetic asset protocol Wayki-X!
2. What is the decentralized synthetic asset protocol Wayki-X
"Decentralized Synthetic Assets Protocol Wayki-X" involves two key words: synthetic assets and decentralization, which need to be explained first.
Synthetic assets refer to a digital asset designed based on the price of a benchmark asset (primary asset or initial asset). The price of the two is basically the same, which is guaranteed by the oracle. The oracle captures the price information of the benchmark asset, comprehensively processes the data and then prices the corresponding synthetic asset. This process is called price feeding. Since the price of the benchmark asset may be different in different exchanges, it is necessary to consider which value is the price of the synthetic asset.
The Wayki-X oracle feed price currently uses the median. If the BTC quote on OKEx is $9999, Huobi is $10,000, and Binance is 10,001, the oracle captures the data and provides the median of $10,000 to Wayki-X, thus pricing xBTC at 10,000 Dollar. The price feed of the oracle machine is executed in real time and automatically, which can ensure timely tracking of the price of the benchmark asset.
In fact, the trading profit and loss of synthetic assets is relatively easy to understand. When you trade synthetic assets and lose money, this part of the loss is earned by the fund pool and will be shared by all mortgagers according to the debt ratio. On the contrary, if you make a profit from trading synthetic assets, the fund pool will bear this part of the loss, which will be shared by all mortgagers according to the debt ratio, and the fund pool is composed of ROG mortgaged by users at a mortgage rate of 800%.
Decentralization is a prominent feature of the public chain, and Wayki-X is an application system developed based on the WaykiChain public chain. The mortgage, transaction and other contracts involved in Wayki-X are all decentralized, ensuring that it is open And transparent, which is very different from the disadvantages of black-box operations and non-disclosure in traditional finance. Simply put, the decentralized synthetic asset protocol Wayki-X is a decentralized synthetic asset issuance protocol based on the WaykiChain public chain. ROG (Rods of God) is an important support and value endorsement for all synthetic assets in Wayki-X.
3. Wayki-X function and mechanism
From the above definition of Wayki-X, it can be seen that it has two important functions: issuing synthetic assets and trading synthetic assets, and its corresponding users are mortgagers and traders. Of course, it can also be a mixed user, who can not only mortgage ROG to generate xUSD, but also use xUSD to trade various synthetic assets such as stocks and stock indexes in various countries.
1. Issuance of synthetic assets: Mortgageers mortgage ROG at a mortgage rate of 800% to generate xUSD, a stablecoin synthetic asset. This process is relatively simple, but behind it involves many more complex mechanical issues.
(1) Why do users mortgage ROG? Users can obtain three parts of income by mortgaging ROG: ① Additional reward ROG. Wayki-X's economic model has been designed from the very beginning to use the inflation model to motivate users who hold ROG to mortgage. After users mortgage and generate debts, the system will distribute ROG additional issuance rewards every week according to the debt ratio of the mortgagee. ② Transaction fee reward xUSD. Whenever a user exchanges one synthetic asset for another, a 0.15% transaction fee will be generated, which will be deposited into the reward pool. ROG stakers can claim xUSD in the reward pool as transaction rewards every week according to the debt ratio. ③The trading income formed by the loss of synthetic asset traders. Of course, if synthetic asset traders make profits instead of losses, ROG stakers will not be able to obtain this part of the income.
(2) Where did the ROG mortgaged by the user go? All mortgaged ROG flows into a pool to form a mortgage fund pool, which is the basic premise for trading various synthetic assets.
(3) What is the function of xUSD? xUSD has two important functions: one is to trade other types of synthetic assets, and the other is to obtain the stable currency WUSD through the xUSD/WUSD trading pair, and then realize it.
(4) Who can be a mortgagor? Anyone who owns ROG can become a mortgager.
(5) How do users obtain ROG and how to realize it? During the genesis period, users can participate in WaykiChain's "Fire Phoenix" mining program, and stake WICC or WGRT to obtain ROG. After mining ROG, you can use the ROG/WUSD on the WaykiChain decentralized exchange or the ROG/USDT trading pair on the Anyin AEX trading platform to sell the stablecoins, and then use the stablecoins to realize cash.
2. Trading synthetic assets: Use xUSD to buy or sell other synthetic assets such as xBTC and xETH.
(1) Why trade synthetic assets? For ordinary investors, the threshold for investing in benchmark assets is high or even impossible to participate in, and Wayki-X synthetic asset transactions can break through these barriers. If you are bullish on the stock Facebook, non-American ordinary investors are limited by foreign exchange and account opening, so they cannot make a difference by buying Facebook and then selling it. However, Wayki-X can break this transaction barrier, allowing everyone to invest in the world Various assets.
(2) Digital currencies can be traded without barriers in major exchanges. Why does Wayki-X launch synthetic digital currencies? The reason why digital currency synthetic assets such as xBTC and xETH are launched is that Wayki-X has the characteristics of unlimited transactions and zero slippage. Suppose an investor wants to spend $50,000 to buy 5 BTCs, but the market sell order is as follows: 4 BTCs at $10,000 and 1 BTC at $10,000.1. Therefore, A can only buy 4.9999 bitcoins (without considering the handling fee). If you want to buy 5 BTC, you need to spend 50,000.1 US dollars, which is higher than the expected cost. The price deviates and requires two counterparties to complete the transaction. The transaction depth is lacking.
On the contrary, in Wayki-X, user transactions have only one counterparty, which is the ROG fund pool, and the transaction is completed in real time by interacting with the smart contract. The transaction depth is unlimited and the transaction can be completed in time; xUSD equivalent to 50,000 US dollars can be destroyed to generate 5 xBTC in full amount, the transaction cost has not deviated from expectations, and the zero slippage of the price can help users reduce the wear and tear of the price difference, which is very attractive for large-value transactions. In addition, large transactions on exchanges such as Huobi or OkEx require a large number of counterparties to undertake. Once they fail to handle it, it may cause market panic. However, Wayki-X uses the entire fund pool as the counterparty, and its ability to undertake transactions is higher than that of ordinary individuals and The institutions are much stronger, which is conducive to stabilizing the market.
(3) What is the transaction process of synthetic assets? If the current market price of BTC is 10,000 USDT/piece, use 2,000 USDT to buy the benchmark asset BTC on Huobi and the synthetic asset xBTC on Wayki-X. The trading of Huobi benchmark assets adopts the order book mode. The specific process: the user enters the price of 10,000 USDT and the quantity of 2 in Huobi. Whether the transaction is successful can be divided into three situations: ① Someone places a sell order for 2 BTC at the price of 10,000 USDT, then the trading system The transaction will be automatically matched; ②There is no sell order at the price of 10,000USDT, so you can only wait until there is a pending order to complete the transaction. ③ At the price of 10,000 USDT, there are only some sell orders, such as 1 BTC, then only 1 BTC will be sold, and the other 1 will continue to be placed. Different from this, the user only needs to enter the quantity 2 in Wayki-, and the smart contract will automatically destroy 20,000 xUSD and generate 2 xBTC at the same time (the above do not consider the handling fee). Wayki-X facilitates quick transactions for users without spending time waiting for transactions.
(4) What is the profit and loss mechanism of synthetic asset trading? In the benchmark asset transaction, user A's profit and loss are borne by himself, which is the same as ordinary transactions. However, the fund pool is a whole, and its profit and loss are shared by all ROG stakers. If user A buys xBTC at a price of 10,000 xUSD, sells xBTC at a price of 8000xUSD and loses 2000xUSD, the fund pool will make a profit of 2000xUSD, and the system will automatically destroy 2000xUSD, reducing the entire debt pool, increasing the ROG mortgage rate, and mortgagers can use more With less xUSD redeeming ROG, ROG stakers get more ROG indirectly, which is the situation where the fund pool makes money. On the contrary, if the synthetic asset trader makes a profit, the fund pool will lose money as the counterparty, which will lead to an increase in the entire debt pool and a decrease in the ROG mortgage rate. Mortgagers need to use more xUSD to redeem the same amount of ROG, and ROG mortgagers indirectly Lost part of ROG.
4. Product Composition of Wayki-X
At present, Wayki-X version 1.0 has 3 categories of synthetic assets, with a total of 26 types. In addition, more synthetic assets will be added in subsequent versions of Wayki-X, including foreign exchange, gold, commodities, etc.
(1) Digital assets: xBTC, xETH, xEOS, xBCH, xLINK, xETC, xLTC
(2) Stock Index: S&P 500, Dow Jones Index, Nasdaq Index, Hang Seng Index, State Enterprise Index, Red Chip Index
(3) Stocks: Microsoft, Apple, Amazon, Google, Alibaba, Facebook, Tesla, Netflix, Boeing, Sony, Baidu, Bilibili, Pinduoduo
(1) Birth order: the benchmark asset appears first, and then there will be synthetic assets. For example, you must first have BTC to have the synthetic asset xBTC, and you must have BABA (Alibaba stock) before you can have xBABA.
(1) Birth order: the benchmark asset appears first, and then there will be synthetic assets. For example, you must first have BTC to have the synthetic asset xBTC, and you must have BABA (Alibaba stock) before you can have xBABA.
(2) Value basis: Different native assets have different value bases. For example, stocks are based on the company's performance, while synthetic assets in Wayki-X are based on the ROG token.
(3) Equity: The stock in the benchmark asset is the certificate of the shareholder, and can enjoy the right to vote and dividends, while the synthetic stock does not have these rights. For example, if you buy Microsoft stock, and Microsoft has developed very well this year, you can get a dividend of $1 per share at the end of the year, and all holders of this stock can get a dividend, but users who buy Microsoft synthetic stocks cannot enjoy this dividend.
5. Wayki-X operation process
Regardless of whether you are a mortgage user or a transaction user, to participate in the mortgage or transaction financial services provided by Wayki-X, you need to download the WikiTimes App, and then enter different pages to perform corresponding operations.
1. Mortgage side, including four types of operations: minting, burning, additional mortgage and receiving rewards.
(1) Minting: Mortgaging ROG can mint the stablecoin xUSD (xUSD is anchored to the US dollar 1:1). The current system requires a mortgage rate of 800%. Suppose the ROG price is $1 and the mortgage rate is 800%. If you mortgage 800 ROG, you can mint 100 xUSD.
(2) Destruction: When your mortgage rate is lower than 800%, you can reduce your debt by destroying xUSD to increase the mortgage rate to meet the system requirements. If the price of ROG drops to $0.5 and the debt pool remains unchanged, your mortgage rate becomes 400%, and you need to burn 50 xUSD to reach 800%. In fact, affected by the three factors of ROG additional issuance, exchange fees and synthetic asset transactions, the debt pool changes almost in real time. If the debt pool increases, more xUSD needs to be destroyed, greater than 50. On the contrary, if the debt pool is reduced, it is enough to burn less xUSD, less than 50.
(3) Additional mortgage: When your mortgage rate is lower than 800%, you can also increase the mortgage ROG to reach the 800% mortgage rate required by the system. If the ROG price drops to $0.5 and the debt pool remains unchanged, your mortgage rate becomes 400%, and you need to add 400 ROGs to reach the 800% mortgage rate. Similarly, as the debt pool increases, more needs to be added; when the debt pool decreases, so much more does not need to be added.
(4) Receive rewards: Only when the mortgage rate is guaranteed to be 800%, can you receive additional issuance rewards ROG and transaction rewards xUSD. If it is lower than this 800%, there is no such thing as liquidation, but you are not eligible to receive rewards. Generally speaking, in order to ensure that rewards can be received every time, the general mortgage rate should be higher than 800%.
2. Trading side: Directly use xUSD to trade any synthetic asset in Wayki-X, which is the same as the normal operation of buying and selling coins. The operation of buying xBTC or other synthetic assets with xUSD is similar to buying BTC with USDT, and the selling process is the same. Among them, xUSD can be obtained by staking ROG minting, or it can be obtained through the trading pair xUSD/WUSD on Wayki-DEX, a decentralized exchange of WaykiChain.
It should be noted that if the benchmark asset does not open for trading, the corresponding synthetic asset cannot be traded either. For example, a certain type of stock is traded from 10:30 p.m. to 5:00 a.m. Beijing time, and the corresponding synthetic asset stocks can also be traded during this period, but cannot be traded outside of this period. The reason behind this is that if the benchmark asset is not traded, there is no corresponding price feed for the synthetic asset.
6. Advantages of Wayki-X
The development of decentralized synthetic asset protocols is still in its infancy, and there are very few related projects, and Synthetix is one of them. Synthetix does not have its own public chain foundation. It is built on Ethereum and faces some problems to be overcome. For example, there are many uncertainties in Ethereum 2.0, which need to overcome synchronization, sharding and miner consensus. In addition, once there is a problem with the underlying public chain, it is easy to transmit to the upper application, but it is difficult to deal with it in a timely manner. Different from this, Wayki-X is based on WaykiChain's own public chain, and there are no problems such as synchronization and compatibility. If sudden problems arise, they can be dealt with in a timely and efficient manner.
Synthetix products are limited to digital currency, gold, etc., and did not introduce stocks and stock indexes in traditional financial assets into the cryptocurrency market, but Wayki-X has done it, which is of great significance:
(1) The user base of the stock market is huge and the market value is also very large. Synthetic assets can directly attract users from the traditional financial market and expand the asset volume.
(2) It is conducive to the entry of cryptocurrency into traditional finance, allowing more people outside the circle to understand and participate in it.
7. Future development prospects, potential and opportunities of Wayki-X
With the accelerated development of financial globalization, people's demand for open finance is increasingly strong, and Wayki-X came into being. Wayki-X breaks down barriers between exchanges, countries or regions, and financial markets through blockchain technology, enabling any investor to invest in various high-quality products around the world, which is in line with the current trend of financial development and has a very broad development prospect.
Wayki-X integrates the two functions of mortgage and transaction, which can meet the needs of different users and allow users to enjoy the benefits of the entire platform. This unique business design allows users to truly feel the spirit of shared finance. In addition, Wayki-X is based on its own public chain and has rich products, which has more advantages than competing products and has unlimited potential. Open finance is an opportunity not to be missed for Wayki-X, and Wayki-X is an essential bridge for everyone to participate in open finance!
