Wayki-X 101: WaykiChain Decentralized Synthetic Asset Protocol
I. Wayki-X Background
Starting from the traditional monopoly model to the fintech innovation promoted by industry leaders, and then to open finance led by the community, the world has a growing demand for financial inclusion. People need an open, transparent, and trustless financial architecture.
There are two solutions to realize open finance:
1. Moderate improvement: transformation when the original financial framework remains the foundation. Ordinary investors haven’t seen much change due to such improvement. The original minority still controls most of the power and the whole financial system serves their own interests.
2. Radical innovation: bold moves to create a new financial system and allow most people to invest globally without barriers and truly enjoy the dividends of finance. This is square one for WaykiChain’s decentralized synthetic asset protocol Wayki-X!
II. What is Wayki-X?
The “Decentralized Synthetic Asset Protocol Wayki-X” involves two major notions: synthetic assets (synths) and decentralization.
A synth is a digital asset created according to the price of a benchmark asset (primary or initial asset). The price of the two is basically the same. Oracles ensure this. An oracle collects the price information of a benchmark asset, processes the data comprehensively, and sets the price of the corresponding synth. This process is price feeding. Since the price of the benchmark asset may be different across exchanges, it is important to select the value that becomes the synth price.
Wayki-X price feeding currently uses the median. If BTC quote is USD 9,999 on OKEx, USD 10,000 on Huobi, and USD 10,001 on Binance, the oracle gets this data and then takes the USD 10,000 median and feeds it to Wayki-X. Thus, xBTC price is USD 10,000. Oracle price feeding is real-time and automatic to ensure timely tracking of the benchmark asset price.
The concepts of synth trading profit and loss are also easy. When you lose money trading synths, it goes to the fund pool which shares it among pledgers as per their debt ratio. Vice versa, if you make profit by trading synths, the fund pool bears this loss and shares it among pledgers as per their debt ratio. The fund pool includes ROG pledged by users at 800% C-Ratio.
Decentralization is the key feature of public chains and Wayki-X is an applied system developed on WaykiChain’s public chain. Pledging, trading, and all other contracts of Wayki-X are decentralized for openness and transparency. This is polar different from the black-box operations and non-disclosure of traditional finance. Wayki-X is the decentralized synthetic asset issuance protocol based on WaykiChain’s public chain. ROG (Rods of God) is an important support and value endorsement for all synths in Wayki-X.
III. Functions and Mechanism of Wayki-X
As you can see from brand positioning, Wayki-X has two main functions: issuance of synths and their trading. Its users are pledgers and traders. You can also be a mixed-type user who both pledges ROG to generate xUSD and uses xUSD to trade various synths like stocks and indices.
1. Synth issuance: Pledgers lock ROG at 800% C-Ratio to generate the stablecoin synth xUSD. The process is quite simple but has a sophisticated mechanism behind it.
(1) Why do users pledge ROG? Users pledge ROG to get three types of income:
a. ROG rewards by inflation. Wayki-X tokenomics uses an inflationary model from the start to motivate ROG holders to pledge it. After users pledge and generate debt, the system allocates ROG rewards by inflation as per the pledger’s debt ratio weekly.
b. xUSD transaction fees. Whenever a user exchanges a synth for another synth, a transaction fee of 0.15% is collected and goes to the reward pool. ROG pledgers can claim xUSD from the reward pool as a trading reward weekly as per their debt ratio.
c. Trading income from losses by synth traders. Naturally, when synth traders have no loss but make profits, ROG pledgers cannot get this income.
(2) Where does the ROG pledged by users go? All pledged ROG goes to the collateral fund pool that is the foundation for synth trading.
(3) What are the functions of xUSD? xUSD has two important functions: it is the tool for trading other synths and the means of cash-out through exchange to WUSD stablecoins.
(4) Who can be a pledger? Anyone who holds ROG can be a pledger.
(5) How do users get ROG and cash it out? During genesis, users can join WaykiChain’s Phoenix Yield Farming and pledge WICC or WGRT to get ROG. When you get ROG in Yield Farming, you can convert it to WUSD on Wayki-DEX or to USDT on AEX. Then you can cash out the stablecoins.
2. Synth trading: with xUSD, you can buy or sell other synths like xBTC and xETH.
(1) Why trade synths? For regular investors, the investment threshold for benchmark assets is high or impossibly high. Wayki-X synth trading overcomes this barrier. When analysts are bullish on Facebook stocks, ordinary investors outside of the USA have restrictions like Forex, and account opening. For them, buying or selling Facebook makes no difference. On Wayki-X, everyone can invest in global assets freely.
(2) I can trade cryptocurrencies on major exchanges without barriers. Why does Wayki-X launch synthetic cryptocurrencies? We launch synthetic assets like xBTC and xETH on Wayki-X because it has unlimited transactions and zero slippage. For instance, investor A wants to buy 5 BTC for USD 50,000 but the market sell book is: 4 BTC for USD 10,000 and 1 for USD 10,000.1. Thus, A can only buy 4.9999 BTC (gross, no transaction fees included). If A wants to buy 5 BTC, it needs to spend USD 50,000.1. This is higher than the expected cost, the price deviates, the process requires two counterparties to complete a transaction, and transaction depth is poor. On Wayki-X, users have only one counterparty in transactions, the ROG fund pool, and orders fill in real-time through a smart contract. The transaction depth is unlimited and orders fill in a timely manner. When you burn a USD 50,000 equivalent of xUSD, you generate exactly 5 xBTC. The transaction cost does not differ from expectations and zero slippage reduces the price friction, which favors large transactions. Exchanges like Huobi or OKEx require a large number of counterparties for large-scale transactions. When the available number of counterparties is unable to handle a big amount, it can easily cause market panic. Look at Wayki-X where the entire fund pool is the counterparty. It can handle more orders than separate individuals or institutions and thus helps stabilize the market.
(3) What is the trading process for synths? Assume the current BTC market price is 10,000 USDT. You use 20,000 USDT on Huobi to buy the benchmark asset BTC and on Wayki-X to buy the synth xBTC, respectively. Huobi adopts the order book model. On Huobi, the user enters the price (10,000 USDT) and the quantity (2). Whether the transaction is successful or not depends on three situations:
a. If someone places a sell order for 2 BTC at 10,000 USDT, then the trading system automatically matches the orders;
b. There are no sell orders at 10,000 USDT, so you can only wait until someone places such order;
c. There is only a partial sell order at 10,000 USDT for 1 BTC. Only 1 BTC is traded and the unfilled amount is still 1 BTC.
On Wayki-X, the user only needs to enter the quantity (2) and the smart contract will automatically burn 20,000 xUSD and generate 2 xBTC (gross) instantly. Wayki-X favors fast transactions, since users spend no time matching or waiting for or match orders.
(4) What is the profit and loss mechanism of synth trading? In benchmark asset trading, user A itself bears its profit and loss. This is the traditional way. However, in Wayki-X, the fund pool is a whole. It shares its profit and loss will all ROG pledgers. If user A buys xBTC at 10,000 xUSD, sells xBTC at 8,000 xUSD and loses 2,000 xUSD, the fund pool will make a profit of 2,000 xUSD. The system will automatically burn 2,000 xUSD and the overall debt pool will decrease. ROG C-Ratio will increase and the pledger can use less xUSD to redeem ROG and indirectly gets more ROG. The fund pool makes profit in this case. Vice versa, if a synth trader makes profit, the fund pool will lose money as the counterparty, the overall debt pool will increase and ROG C-Ratio will decrease. The pledgers need more xUSD to redeem the same amount of ROG. ROG pledgers indirectly lose a part of ROG.
IV. Wayki-X Composition
Wayki-X 1.0 has 26 synths across three big categories. Later versions will add support of more synths (Forex, gold, commodities, etc.).
· Cryptocurrency: xBTC, xETH, xEOS, xBCH, xLINK, xETC, xLTC
· Stock indices: S&P 50, Dow Jones, NASDAQ, HSI, HSCEI, HSCCI
· Stocks: Microsoft, Apple, Amazon, Google, Alibaba, Facebook, Tesla, Netflix, Boeing, Sony, Baidu, Bilibili, Pinduoduo
On Wayki-X, any user in the world can invest in the above assets and earn spread, undertaking the risk of asset price fall. It needs stressing out that benchmark assets are the original assets and synths are pegged in price to the original assets. Synths are tethered assets. In fact, those are two separate asset types different in the following three aspects:
1. Generation order: a benchmark asset generates before its synth. You need to have BTC in order to create xBTC, BABA to create xBABA, etc.
2. Value foundation: different benchmark assets have different value foundation. For stocks, it’s the company performance. For synths in Wayki-X, it’s ROG.
3. Rights and interests: a stock of a benchmark asset is a shareholder’s certificate that entitles to the rights of voting and dividends, while a synth stock has no such rights. If you buy Microsoft stocks and Microsoft performs well this year, you will receive a dividend of USD 1 per share at the end of the year. All stockholders will get dividends, while users who bought Microsoft synth stocks won’t have them.
V. Wayki-X Process Flow
Wayki-X provides financial services to both pledgers and traders. To use it, download WaykiTimes app and go to the respective interface.
1. Pledge interface: MINT, BURN, PLEDGE, and Claim Rewards.
a. MINT: you can pledge ROG to mint the xUSD stablecoin (xUSD is pegged to USD @ 1:1). The current required C-Ratio is 800%. Assume ROG price is USD 1. When you pledge 800 ROG at the 800% C-Ratio, you can mint 100 xUSD.
b. BURN: when your C-Ratio is below 800%, you can decrease your debt by burning xUSD to increase the C-Ratio to the required level. Assume ROG price fell to USD 0.5 and the debt pool stayed the same. Your C-Ratio became 400%. You need to burn 50 xUSD to make the C-Ratio 800% again. In fact, the debt pool size fluctuates in real time due to three key factors: ROG rewards by inflation, trading fees, and synth trading. When the debt pool expands, you need to burn more than 50 xUSD. Likewise, when the debt pool shrinks, you need to burn less than 50 xUSD.
c. PLEDGE: when your C-Ratio is below 800%, you can increase it to the required level by pledging more ROG. Assume ROG price fell to USD 0.5 and the debt pool stayed the same. Your C-Ratio became 400%. You need to pledge another 400 ROG to make it 800% again. Similarly, when the debt pool expands, you need to pledge more. When the debt pool shrinks, you need to pledge less.
d. Claim Rewards: you can claim ROG rewards by inflation and xUSD trading fees only when your C-Ratio is 800% or more. When it is less than 800%, there is no margin call but you do not qualify to claim rewards. Keep the C-Ratio above 800% and you will be able to claim rewards every time.
2. Trading interface: use xUSD to trade any synth directly on Wayki-X same as in crypto trading. Buying or selling xBTC or other synths with xUSD is the same as doing so with USDT. To get xUSD, you can pledge ROG and mint or go to Wayki-DEX and buy it with WUSD.
Please note: when the market of a benchmark asset is closed, it is impossible to trade its respective synth. For instance, some stock trades 10:30 AM to 5:00 PM HKT. Its synth is tradeable within the same time only. This is due to the absence of price feeding for the respective synth when benchmark asset trading is closed.
VI. Wayki-X Advantages
Decentralized synthetic asset protocols are still in their infancy. The number of projects in the area is very limited. Synthetix is one example. It has no public chain of itself and builds on Ethereum. With the advent of ETH 2.0, it faces a number of issues and uncertainties: synchronization, sharding, miner consensus, etc. Also, keep in mind that once a problem happens in the underlying public chain, it is easily transmitted to the upper applications but is difficult to fix promptly. However, Wayki-X is based on WaykiChain’s own public chain. Synchronization and compatibility are out of the question. If there is a sudden problem, it can be dealt with promptly and efficiently.
Products on Synthetix are limited to cryptocurrency and precious metals like gold. There is no introduction of stocks and indices of traditional finance to the cryptocurrency market. At the same time, Wayki-X has it all and it is important because:
a. The user base and value of the stock market is huge. Synths can attract users of the traditional financial markets and increase the asset scale;
b. It favors the inclusion of cryptocurrency into traditional finance and its user base expansion outside the crypto world.
VII. Wayki-X Prospects & Opportunities
Along with the accelerating globalization of finance, the people’s demand for open finance has been rising constantly and this is when Wayki-X appeared. It uses blockchain to overcome the barriers between exchanges and national and local financial markets. Anyone can invest in global quality products. This suits the current development trend of finance and has bright prospects.
Wayki-X integrates pledging and trading meets the needs of different users and shares its income with them. This unique design unlocks shared finance that is truly free. Don’t forget that Wayki-X builds on its own public chain and has a wealth of products, more advantages, and unlimited potential compared to its competition. Wayki-X couldn’t miss the chance of open finance and has become the bridge for everyone!
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