I spent the past few weeks doing a deep dive into the WAVES project and let me just state this outright: WAVES is one of the most impressive blockchain projects out there. The project was started by Russian entrepreneur Alexander (Sasha) Ivanov. Its ICO concluded in June 2016 raising 30,094 Bitcoins ($16 million then). This made WAVES the third largest crowdfunded blockchain project at the time.
WAVES is a Proof-Of-Stake blockchain (released and operating publicly for almost a year now) heavily optimized for the digitizing of assets into tokens on the blockchain. Unlike Ethereum, where custom tokens are implemented using smart contracts (ERC20 standard), WAVES has the creation and transfer of custom tokens baked right into its protocol. In other words, custom tokens are not just a convenient feature of a smart contract system, as is the case for Ethereum, but are inherently part of the blockchain, as is the case for WAVES. One use case for custom tokens is the hosting of assets external to the blockchain on the blockchain, similar to how currencies or company stocks are represented as numbers in the databases of banks and stock brokers respectively. Once on the blockchain, these assets become just as liquid and secure as a cryptocurrency. A vastly more popular use case for custom tokens right now is the easy issuance of completely new assets on the blockchain… which is exactly what ICOs are all about. Regardless of use case, custom tokens is arguably the most popular and valuable application of blockchain technology so far.
WAVES was designed from the ground up to be heavily optimized for custom tokens. One of the end goals for WAVES is to have real world assets be represented on the blockchain. Obviously this is currently a ways off, not only for WAVES but for the blockchain ecosystem as a whole. That is not to say that WAVES hasn’t made any progress on this front as the platform currently has tokens backed 1:1 for the Euro, US dollar, Bitcoin and Ether as well as respective, licensed gateways into its blockchain for these assets. Being optimized for custom tokens, it’s not surprising that WAVES is most used to host ICO tokens right now. It is, in fact, the second largest platform hosting ICO tokens next to Ethereum.
I’ve only provided a sneak peak into how awesome WAVES is. The platform has so many impressive properties, features, and accolades. The project has a clear and compelling mission, a well defined and realistic roadmap, and an active and high performing team led by an outspoken and popular leader.
As with my previous blog posts, I’m going to run through an in depth list of properties of the WAVES project. The end goal is always to give the reader a holistic understanding of the project.
More details on the WAVES blockchain
As mentioned above, WAVES is a Proof-Of-Stake blockchain. However, it uses its own flavour of Proof-Of-Stake that it calls Leased Proof-Of-Stake (LPOS). With LPOS, in order to run a mining node, a user needs at least 10,000 WAVES in their wallet. In an official blog post, the team claims that the 10,000 WAVES requirement is actually a security feature since “allowing many small nodes introduces vulnerabilities to the network”. This is weird, since a blockchain’s security comes from the expectation that there will be many nodes securing the blockchain through redundancy. How would allowing more nodes in a blockchain actually reduce security? This is an important red flag for me that I hope can be answered by someone knowledgeable about the technology.
To answer this question, it seems that this is WAVES’s way of “fixing” the nothing-at-stake problem inherent to POS systems. Basically, since it requires very little effort to mine POS blockchains, in the event of a hard fork, miners can quickly switch between multiple chains without much cost. This can be disastrous as bad actors could easily mine on multiple chains at the same time and prevent consensus from being reached. This is not possible with Proof-Of-Work blockchains as you’d have to pay significantly more electricity to mine on multiple chains. WAVES’s solution of requiring miners to have significant WAVES at stake is a solution rooted in game theory. The assumption is that one is less inclined to be a bad actor if they have a lot at stake.
In any case, if you’re a user with 10,000 WAVES or more, you can run a POS miner node. Other users that want to participate in mining can “lease” the WAVES in their wallet to a miner node and earn a proportion of the income based on the proportion of WAVES they leased. Hence the name Leased Proof-Of-Stake. Leasing WAVES does not entail actually sending WAVES to some foreign wallet, which is convenient.
The number of WAVES is fixed to 100,000,000 WAVES. As such, the WAVES that miners earn comes only from transaction fees and the issuance of new assets on the blockchain. WAVES has also introduced another asset as reward for mining called the Miners Reward Token (MRT). MRT is rewarded to miners after mining a block and its role is to incentivize mining even if there is a lack of transactions. This is a stop gap solution and will be phased out in the near future when it’s assumed that there will be heavier utilization of the blockchain resulting in more transaction fees.
WAVES’s current blocktime is 1 minute and each block can contain up to 100 transactions.
Public blockchain, core features complete, proven technology
WAVES has a public blockchain with all the core features released. It has a healthy ecosystem of users with many ICOs hosting their tokens on WAVES. At the time of writing, 4635 custom tokens have been issued. Users are also using the platform’s decentralized exchange feature. At the time of writing, the exchange has a 24 hour volume of $417,162 (obviously a far cry from existing centralized exchanges and even decentralized, Ethereum-based exchanges like Etherdelta, but WAVES is also 1/60th of Ethereum’s market cap).
It is clear that WAVES not only has a product but product adoption as well. This puts WAVES way ahead of most other cryptocurrency projects in terms of project progress. Even if we just limit our comparisons to burgeoning blockchain platforms like Stratis and NEO, WAVES still comes out ahead. For example, Stratis has a public blockchain but most of its features are incomplete. NEO has a public blockchain but it’s a 2 year old project with no serious dApps running on it and OnChain and the NEO Council are still the only entities allowed to run consensus nodes.
Emphasis on user interfaces
A core mission of WAVES is to have a great user interface. This might sound exceedingly simple and insignificant but the lack of great user interfaces in cryptocurrencies is a huge hurdle in the road to mainstream adoption. This sentiment has been echoed by cryptocurrency thought leaders like Vitalik Buterin and Andreas Antonopoulos. Checkout this cointelegraph article titled User Interface - The Missing Link to Mainstream Adoption of Blockchain.
WAVES is actively seeking to alleviate this problem by building great user interfaces. A good example is the ease at which one can issue a custom token in WAVES’s light wallet. It looks something like this:
- Navigate to the “Asset Creation” page from the top navigation menu
- Fill in 5 simple form fields
- Hit submit
It’s that easy. Even easier than signing up for Facebook. Compare this to Ethereum where one needs to program an ERC20 smart contract and then upload the program onto the blockchain.
Additionally, Sasha, the founder and CEO of the company developing WAVES, has said many times that he wants a user interface for WAVES that mirrors existing financial applications. People accessing their WAVES wallet should feel like they are on their bank’s website instead of interacting with a blockchain.
Great user interfaces will be crucial in getting WAVES ahead of other blockchain platforms. The team knows this and are actively working towards this goal.
Second largest ICO platform next to Ethereum + compliant legal framework for ICOs with Tokenomica
Many people do not realize this but WAVES is currently the second largest ICO platform next to Ethereum. It’s attracting hundreds of ICOs. You can see the ongoing and upcoming ICOs on WAVES here. I don’t have enough time to dig up a website with a historical record of all ICOs on WAVES but one can get a good sense of the scale of WAVES’s ICO markets by checking out their official Twitter account and joining their official Slack group’s #ico-discussion channel.
Given that one of the biggest factors for Ethereum’s meteoric rise over the past few months is the large number of ICOs conducted on Ethereum, the wide (and growing) adoption of WAVES as a platform to host ICO tokens cannot be ignored.
Additionally, WAVES has recently revealed their plans for greater regulation and compliancy of ICOs on their platform. With many governments around the world beginning to regulate the ICO market, this news comes just in time. Check out the Tokenomica project. It’s a venture capital organization developing a centralized platform on top of WAVES to provide a “100% compliant legal framework for different types of token crowdsales, including private equity crowdsales.” According to the project’s website, they are working with “top legal firms” to develop the platform.
Details about Tokenomica are vague right now but we do know that Sasha has a keen interest in the project and they are working very closely together.
BURGER KING - Whoppercoin
It’s so easy to issue tokens on WAVES that even Burger King Russia has done it. The token is called Whoppercoin and will be part of a new loyalty program from the fastfood giant. The tokens will be rewarded to customers after each purchase of a Whopper. Once a customer has collected enough, s/he can trade in their tokens to redeem more Whoppers. Burger King Russia’s head of external communications was quoted to have said: “Now Whopper is not only burger that people in 90 different countries love – it’s an investment tool as well. According to the forecasts, cryptocurrency will increase exponentially in value. Eating Whoppers now is a strategy for financial prosperity tomorrow.”
In order to facilitate the distribution of Whoppercoins, Burger King Russia is set to release an app on the Apple Store and Google Play later this year where the coins can be rewarded, transferred, or used to redeem Whoppers.
This is incredibly bullish for WAVES and very likely a sneak peak of what’s to come. Having hundreds of ICOs issue tokens on the platform is one thing, but having a large corporation like Burger King Russia issue a token on the platform is a whole other ball game.
Bitcoin NG protocol - 100 transactions/second
WAVES NG is a protocol upgrade set to be released next month that will increase WAVES’s maximum theoretical transactions per second from 1.7 to 100. Given that Ethereum has a max tx/s of 5 and Bitcoin has 3, this is a massive upgrade. WAVES NG is an on-chain solution, not an off-chain solution like the Lightning or Raiden networks proposed to scale Ethereum’s and Bitcoin’s tx/s respectively.
WAVES NG is based off of the Bitcoin NG protocol developed by a group of Cornell University professors including Emin Gün Sirer, who runs a blog and is quite popular within the crypto community. Bitcoin NG is, not surprisingly, developed for Bitcoin’s Proof-of-Work system and the WAVES team had to adapt it for their LPOS system.
If you’re interested in an in depth description of how the protocol works, you can read about it in Gün Sirer’s blog post here.
Although 100 tx/s is still a far cry from VISA’s 2000 tx/s, it’s a massive improvement from the typical 1-10 tx/s common with blockchains. With such a large base, any future tx/s improvements for WAVES will have a significantly higher rate of return than when it had a max 1.7 tx/s.
Check out the count down to the release of the upgraded protocol here.
USD, EURO, BTC, and ETH gateways
WAVES gateways are centralized systems where users can deposit external assets in order to obtain corresponding WAVES custom tokens. The gateways maintain a 100% reserve ratio and guarantee a 1:1 exchange rate back to the external asset from its corresponding WAVES custom tokens.
Once the external asset is converted to a WAVES custom token, users can transact with them on the WAVES blockchain like any other custom token and even trade them on WAVES’s decentralized exchange. I cannot understate the significance of this. Gateways bring external assets into the WAVES ecosystem and introduce the same borderless, hyper liquidity and security of cryptocurrencies to the external asset. They are a key step in WAVES’s core mission to become a platform where digitized external assets can be traded efficiently and securely.
WAVES currently has 4 licensed gateways for these assets: USD, EURO, BTC, and ETH. An LTC gateway is in the works. Although WAVES isn’t the first blockchain to host fiat-backed tokens (i.e. USD Tether on Bitcoin), the fully licensed and regulatory compliant nature of its gateways make it a pioneer in bringing real world assets onto the blockchain.
Decentralized exchange - WAVES DEX
WAVES is a platform designed to host a large number of assets. As such, it only makes sense to have the blockchain host a decentralized exchange. It’s known as the WAVES DEX and is not just a promise, but a fully functioning feature. At the time of writing, the exchange has a 24 hour volume of $417,162.
The DEX works like so: users can run matcher nodes, similar to miner nodes, to facilitate the matching of orders in the exchange. Users pay a set fee in WAVES for each matched order in the DEX and this fee is given to matcher nodes. As such, the DEX is actually a partially decentralized exchange. The matcher nodes act as centralized matching software for the sake of efficiency, but unlike centralized exchanges, the matchers do not store its users’s funds. A user’s funds remain in his/her wallet.
Currently, the only other blockchain with a functioning decentralized exchange is Ethereum. Having a DEX is a huge win for WAVES, especially since Ethereum is 60 times the market cap of WAVES.
Very active GitHub
WAVES has one of the most active GitHub repos for a blockchain project I’ve ever seen. I was impressed with QTUM’s GitHub repo but WAVES is even more active. Over the past year, WAVES’s GitHub repo has consistently had 35-60 commits per week. Although QTUM has often times met this pace, there are many weeks when WAVES has significantly outpaced QTUM with commits.
Obviously commits is not the best metric in measuring code update frequency given that commits can be of varying size (0 to infinity). However, it’s still a good enough proxy.
WAVES plans to add a smart contract system using a non-Turing complete programming language sometime in 2018. The rationale for a non-Turing complete programming language is that it would be significantly harder for programmers to program insecure smart contracts, while still having sufficient expressiveness for general smart contract use cases.
The integration of smart contracts to WAVES will be a massive improvement to the platform and once it happens, expect WAVES to seriously challenge Ethereum. Given how active WAVES’s development team is, I am quite confident they will be able to deliver on schedule.
Significant community outreach and active community
While WAVES’s developers have been hard at work improving the platform, Sasha has been doing a lot of work promoting the platform. He does hour-long Q&A sessions on YouTube every few months and has been making the rounds in prestigious financial and cryptocurrency forums and conferences giving talks on WAVES. They include:
- June 2017 - St. Petersburg International Economic Forum (SPIEF) as a speaker in the “Explosive Impact of Blockchain Technology” program
- July 2017 - lecture on blockchain technology at the Boris Yeltsin Presidential Center in Yekaterinburg, Russia
- October 2017 - BlockchainHunt 2017 speaker
- September 2017 - ICOSummit speaker in the panel discussion, “State of ICO Market – Cutting through the Hype”
- September 2017 - interviewed on CNN’s program, “CNN explores Russia’s bitcoin craze”
- September 2017 - Genesis Moscow Conference giving a talk on WAVES
- … and many more, too tiring to research and list
Russian government support of cryptocurrencies
Although the WAVES platform is inherently decentralized and borderless due to its blockchain technology, it’s still developed by a Russian company situated in Russia. As such, it’s appropriate to call WAVES a Russian project. This is actually a huge plus for WAVES. The Russian government has significantly warmed up to blockchain technology over the past year and is now actively promoting its adoption across the country.
For example, Putin actually invited Vitalik Buterin, the founder of Ethereum, to discuss blockchains and Ethereum earlier this year in June. In August, a company co-owned by an aide to Putin, announced plans to launch an ICO to raise as much as $100 million in order to help Russia challenge China’s Bitcoin mining supremacy. The ICO will issue the Russian Miner Coin (RMC) in exchange for Bitcoin and Ether. The funds will be used to build mining infrastructure in Russia. RMC token holders will have the rights to 18% of the revenue generated by the company’s mining equipment.
After Putin’s meeting with Vitalik Buterin in June, the Russian airline S7, with the support of Russia’s Alfabank, began selling flight tickets through the Ethereum blockchain. Burger King Russia is also one of the first major companies in the world to create a loyalty program on the blockchain (Whoppercoin on WAVEs, as described above). It’s clear that many Russian businesses are experimenting with incorporating some form of blockchain technology in their products and business processes. This is most likely the result of a top down initiative from the Russian government rather than a grassroots business movement.
Russia is very open to the adoption of blockchain technology right now and given that WAVES is a homegrown project, it should see significant support from the Russian government and have a lot of room to grow.
Working with Russia’s National Settlement Depository
Kommersant, a nationally distributed daily newspaper published in Russia mostly devoted to politics and business, reported on July 28th that Russia’s National Settlement Depository (NSD), the central depository for the Moscow Exchange, was developing a blockchain platform in partnership with WAVES to provide deposit and settlement services for digital assets.
The platform would enable the NSD to issue a cryptocurrency for banks, pension funds and retail investors, one which would also enable the exchange of those assets for paper currencies. This is currently slated to launch early next year.
Not entirely sure what this means for the WAVES platform per se but it definitely highlights the previous point of greater Russian government support for blockchain technology and this translating to greater government support for WAVES.
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