It was unimaginable a week ago that Circle, the so-called most compliant stablecoin issuer, will be the first to bring panic to the crypto market in 2023.

Last weekend, the bankruptcy crisis of the Silicon Valley Bank in the United States led to the de-anchor of the encrypted stable currency USDC, which once fell to $0.87, which eventually triggered a panic in the market.

Although in the end Circle claimed that the security of funds can be paid rigidly, returning to the anchor, it also saved the market, but this time the crisis of traditional finance has been directly transmitted to the decentralized encryption market, and people have to think about a problem: the stablecoin reserve pool The de-dollarization and distributed reserve storage may be just needed by the market.

Take DAI as an example. As the earliest encrypted native stable currency, DAI was generated by over-collateralized ETH in the early days, but now it is also deeply bound to USDC (nearly 40% of DAI’s asset reserves are USDC). It spread, and once broke the anchor and fell below $0.9, which did not play a good role in the hedging of decentralized stablecoins.

Odaily recently noticed an emerging distributed stablecoin project called HOPE, led by PayPal Finance founder and former CEO Flex Yang.

As an encrypted native stable currency, HOPE is not associated with fiat currency assets. It will be supported by BTC and ETH in the early stage, and other stable assets will be added in the middle and late stages.

In the decentralized encryption market, the demand for decentralized native stablecoins is constantly increasing. The emergence of HOPE may make up for this shortcoming and become the preferred hedging tool in extreme downturns.

1. HOPE Ecosystem: Next Generation Stablecoin Ecosystem

In order to solve the crisis of trust and transparency common in centralized institutions, HOPE came into being.

According to official documents, HOPE is a one-stop DeFi ecosystem. Its vision is to build a global financial portal connecting TradFi, CeFi and DeFi, so that everyone can easily obtain efficient and transparent financial services.

Specifically, HOPE is a dual-token ecosystem consisting of two parts: the distributed stable currency HOPE and the incentive and governance token LT (Light Token). (Odaily will explain its token economy in detail later).

The construction of the entire HOPE ecosystem can be divided into three stages: open infrastructure, deployment of value-added services, and development of supporting applications. Starting from the basic exchange rate market and interest rate market, agreements on exchange rates, interest rates, derivatives trading brokers, and synthetic assets are gradually formed to promote the usage scenarios and user scale of HOPE stablecoins.

In the first phase, the open infrastructure will launch two products: HopeSwap, a DeFi trading platform, and HopeLend, a DeFi lending platform.

The launch of HopeSwap, on the one hand, can provide liquidity and price discovery for HOPE ecological tokens such as HOPE, LT, etc., ensuring sufficient circulation of HOPE. HopeLend allows users to deposit and lend main HOPE and LT tokens, expanding the utilization rate of HOPE ecological tokens.

In the second phase, the deployment of value-added services will launch two products: HopeEcho, a DeFi synthetic asset platform, and HopeConnect, a DeFi derivatives platform.

HopeEcho is a platform that allows the creation of synthetic assets. The connection with the traditional financial system can be realized, which will create a more open and inclusive asset trading market for all. Users need to use HOPE as collateral when minting synthetic assets, enabling the usage scenarios of HOPE stablecoins.

HopeConnect is a highly innovative DeFi+CeFi model derivatives trading platform, allowing users to enjoy the liquidity and user experience of centralized exchanges in a decentralized manner. Users need to deposit HOPE/stHOPE in the HopeConnect protocol to obtain a zero-interest borrowing USD transaction line; then use the USD transaction line as margin for CEX derivatives transactions, and the final profit and loss will be denominated in USD.

The Phase 3 team will be working on developing a companion app, which is planned for the next two years.

There are many directions to explore at this stage, such as decentralized identification (DID), social networks, etc. With the help of infrastructure users will be able to enjoy a simple, safe and transparent Web3 SocialFi experience, etc., build an integrated gateway to connect TradFi, CeFi and DeFi, and provide a seamless transition experience from Web 2.0 to Web 3.0.

2. Dual Token Economic System: HOPE+LT

The HOPE ecosystem is a dual-token system consisting of two parts: HOPE and LT.

The distributed stable currency HOPE will be supported by BTC and ETH as asset reserves in the initial stage. The short-term goal of HOPE is to become a collateral or margin that has high liquidity, low lending threshold, and is generally used in the three major fields of DeFi, CeFi and TradFi. In the long run, with the HOPE reserve price stabilizing around $1, HOPE will be used as a frictionless payment tool, allowing everyone to easily enjoy various financial services in a completely transparent and secure environment.

LT is the incentive and governance token of the HOPE ecosystem. Users can obtain LT rewards by staking liquidity or interacting with other applications; staking LT can generate veLT, and veLT holders can obtain LT rewards and participate in the entire ecological governance.

The following describes the HOPE and LT economic models in detail.

The reserve price of the HOPE stablecoin is currently going through a period of exploration. According to the prices of BTC and ETH during this exploration period, the anchor coefficients of HOPE and reserve prices will be determined first. After the anchoring coefficient is determined, the reserve price of the HOPE stablecoin will start from $0.5 and fluctuate with the price changes of BTC and ETH. In essence, before the price of HOPE reaches $1, HOPE can also be regarded as an ETF of BTC and ETH.

After HopeSwap goes online, ordinary users can purchase HOPE through HopeSwap. As the prices of BTC and ETH rise, the value of HOPE reserves will also increase and gradually reach around $1 (pegged). Assets in the reserve pool are increased, decreased or converted, and HOPE at this time will truly become an encrypted native stable currency.

In terms of economic model, there is no upper limit on the total supply of HOPE, which depends on the size of the reserve pool; users who pledge HOPE to provide liquidity will get stHOPE, and holding stHOPE can get LT incentives, and the more stHOPE they hold, the more LT will be rewarded.

3. Summary

3. Summary

With the recent collapse of centralized institutions, especially the crisis of trust in stablecoins, a new wave of decentralized stablecoins is emerging. For HOPE, which has just started, it is indeed a good time for development. However, compared with mature decentralized stablecoins such as DAI, FRAX, and crvUSD, HOPE still has a long way to go, and it has to go through the test of the market before it can be perfected.