As cryptocurrencies become mainstream, organizations and institutions across the globe are starting to see a wide range of benefits in adding a cryptocurrency token to their portfolio.
Waves seeks to provide an easy-to-use platform for individuals or groups to create and launch their own custom coins and enter the world of Decentralized Finance.
What is Waves?
Waves is an open-source, decentralized, custom token blockchain platform with a decentralized exchange built into the platform. Waves focuses on the easy tokenization of digital and real-world assets with easy exchange options. It has smart contract and dApp capabilities and provides the tools to develop them with ease.
Rather than focusing on becoming yet another form of digital money in the cryptocurrency landscape, Waves has taken the route of facilitating custom tokens and providing a platform for Initial Coin Offerings. With the Waves platform users can easily create their own tokens with little coding or technology background.
Waves has a native cryptocurrency called WAVES. This token is used as a medium of exchange between fiat currencies and other cryptocurrencies, as a staking token, to power creating custom tokens and for real time transactions on the network.
Waves also runs its own Decentralized Exchange (DEX) where users can trade with any of the tokens created on its network as well as fiat currency and the more popular cryptocurrencies. This is different to many other DEXs where there is no entry point to buy cryptocurrencies with traditional fiat currency.
Waves was founded by Sasha Ivanov, a Ukrainian theoretical physicist and entrepreneur who was involved with Coinomat.com and the Nxt blockchain. Ivanov set up Waves Platform AG in 2016 in Moscow to develop and fund the Waves network. Waves held an Initial
Waves Use Case: Staking WAVES
WAVES holders can take part in the creation and validation of blocks on the Waves blockchain. Waves uses a variation of the Proof-of-Stake consensus mechanism called Leased Proof-of-Stake (LPoS). It is quite similar to the Delegated Proof-of-Stake which is used by many popular blockchains including TRON, EOS and Cardano.
With Proof-of-Stake (PoS) token holders with enough tokens can stake their tokens as an assurance to become a node for validating transactions. This is a much more scalable consensus mechanism than Proof-of-Work as the computational resources required are much lower.
However one drawback of PoS is that it is inaccessible to the average token holder who may not have the required amount of tokens. As a result, most of the power is held by “whales” and they receive most of the rewards.
Waves seeks to tackle this with their LPoS consensus mechanism. WAVES token holders who do not have the full amount of tokens required can “lease” their tokens to users who run nodes for a fee.
To become a node, a WAVES holder must stake at least 1,000 WAVES tokens and have the computational resources necessary. Other users can lease their tokens to a node so that they can reach the required amount of tokens.
A node is then selected by the consensus algorithm to validate a block and rewarded based on the amount of WAVES tokens staked. A percentage of this is then given to the token holders who have leased their tokens. So any WAVES coin holder can earn rewards and take part in the consensus mechanism.
Waves Use Case: Creating Custom Tokens
Ethereum and many other blockchains facilitate the creation of custom tokens on their network. On the Ethereum network, users can create their own ERC-20 tokens. However, often the creation of these tokens can be quite difficult involving in-depth knowledge of smart contracts and programming. They can also be difficult to trade as most major exchange platforms will not accept a new token until they have moderate success.
Waves aims to be a major competitor in the field of custom tokens. Any WAVES token holder can easily set up their own custom token on the network. To create a custom token a user has to pay a fee of 1 WAVES token and use a simple portal on their exchange app. There is no need for programming background or coding and once the token is created it is instantly traded on the Waves DEX.
The Waves platform also supports the Initial Coin Offering (ICO) that some of these tokens will have to raise funds for the development of the new token and distribute the newly created token. Most ICOs tend to involve a very complicated process involving a lot of coding and work but with the custom token portal the ICO can be set up within minutes. The portal provides all the options necessary to customize your token with total supply, decimal places, name, smart asset characteristics, and issuing details.
Thousands of tokens have been set up using the Waves platform. One notable example is the Whoppercoin which was launched in Russia by Burger King in 2017. This token functions as a loyalty scheme coin for customers.
Burger King customers receive Whoppercoins when they spend money in Burger King and these coins can be redeemed in-store or traded online. 1,700 Whoppercoins can be redeemed for one Whopper Burger. There have been many other uses of the Waves platform for customer loyalty and discount schemes worldwide.
Waves Use Case: Waves DEX
One important aspect of the Waves ecosystem is its decentralized exchange (DEX). This is an online exchange where there is no intermediary or third party to exchanges carried out on the platform.
Most online exchanges work by the centralized exchange holding many different token pools and reserves to can carry out the trades that users want. The exchange often takes a cut out of the trade as a fee for the transaction. There is less anonymity and users who care about decentralization and anonymity may choose not to use these.
Decentralized exchanges, however, work by pairing users who wish to trade together or creating pools out of user funds who receive rewards for providing the liquidity necessary. Transactions are often carried out by smart contracts for security. Most DEXs do not have an option to exchange fiat currency for cryptocurrency which can be a barrier to usage. Users have to purchase cryptocurrency on a separate platform such as Coinbase or Binance to use the exchange.
Waves Exchange retains all the benefits of a DEX but provides the option to purchase cryptocurrencies using fiat currencies such as USD and EUR. Users can purchase WAVES tokens using a credit or debit card and start trading online straight away. This element of the exchange is centralized and run by Coinomat (a company also founded by Sasha Ivanov). However, the rest of the platform is a decentralized exchange.
It also supports major cryptocurrencies such as Bitcoin, Ethereum and Dash. Users can trade WAVES and many other tokens without an intermediary. Transaction fees are 0.003 WAVES (about $0.04), which is much lower than what is available on centralized exchanges.
Waves Exchange uses an Automated Market Making system to facilitate trades on the platform and carry out the smart contracts involved in the trade. Users can stake their WAVES tokens to provide liquidity to the exchange and receive rewards in return. These are paired with other staked tokens to form a Liquidity Pool. When users trade their tokens on the DEX, it is the Liquidity Pool they are trading with.
Waves also allows users to create their own match making systems. Waves holders can pair buyers and sellers together and carry out trades. Nodes who do this receive WAVES tokens as a reward.
Waves and the Future
Waves has maintained a position in the top 100 cryptocurrencies since its launch in 2016. This is a difficult feat as the majority of cryptocurrencies created around the 2017 boom have sunk in popularity or failed altogether. A huge component of this is that Waves focuses on mainstream adoption of its platform for groups or individuals to enter the cryptocurrency landscape rather than becoming yet another form of digital money.
Its native token, WAVES, is used within the Waves ecosystem to power the creation of custom coins and transactions. It can also be bought using fiat money on the Waves exchange, providing a gateway into the cryptocurrency landscape. With an extremely user-friendly interface and a platform that is easy for the average user or non-tech savvy businesses to use, Waves looks poised to continue growing into the future.