On July 17th, WaykiChain strategic analyst and AEX community co-held a live stream sharing the process of WaykiChain stablecoin. The transcript of the sharing session is reproduced below for our WaykiChainers all around the world.
AEX: Speaking of ecological fundamentals, WaykiChain also will release its own stablecoin WUSD in May this year. Could you please share with us the significance and original intention of issuing WUSD ?
WaykiChain: In order to achieve sustainable and sound development, the competition of stablecoin will be carried out from two aspects of compliance and competition of application scenarios. As a leading public chain project, in order to achieve diversification of scenarios. The fundamentals of the project itself is necessary. Stablecoin is a certain advantage to continue to lay a good foundation.
Now we need to improve and develop our infrastructure. This will involve two aspects: First, financial infrastructure, our stablecoin; And then there’s the technical infrastructure, to empowering developers and then enabling the application layer.
The metaphor for technical infrastructure is that it’s like building a house and laying the foundation first. As for the stablecoin, it is more like some functions that need to be used in the house, such as water pipes and electric wires in order to make our future planning better and achieve faster, the stablecoin must be used as the financial infrastructure to help us achieve our goals.
There are three aspects of WaykiChain’s general plan, one is the development of public chain ecosystem, especially the development of DApps; the second is decentralized exchanges; the third is asset issuance. These three points all need a stablecoin to link them together, which provides a good exchange of value in these businesses.
AEX: What kind of stablecoin does WUSD belong to? How does it complete the closed loop of WaykiChain ecosystem business?
WaykiChain: There are several types of stablecoins. WUSD is a stablecoin issued by mortgaging encrypted assets. The mortgage asset we use WICC, the public chain asset of WaykiChain. As the development continues, we will consider and include more valuable cryptocurrencies.
We already talked about the overall technical architecture of WaykiChain. The public chain will empower developers and application layer.
With the entry of more Dapps, users have demands for value exchange in the process of application of these Dapps. In short, a stablecoin is needed to measure the value of services provided by these Dapps. Users pay for services, such as playing games and socializing, in these applications through stablecoin. At this moment, WUSD has an actual application scenarios.
So how to generate WUSD? It is generated by mortgaging WICC in the stablecoin system. There will also be a lot of users who only want to use WUSD but do not want to pledge WICC. At this time, the one to produce WUSD to provide to those who do not want to pledge themselves comes for help. We generally call them as acceptor. Of course, in addition to DApps and other circulation application scenarios, this stablecoin system, as a financial tool, allows users to better invest in cryptocurrency, is also a big application scenario. After all these application scenarios are developed, WICC’s demand will rise and WICC can gradually realize that the demand exceeds the supply, which means that WICC’s value will be increasingly higher.
In general, we are developing the foundation of WaykiChain public chain, promoting the use of DApp by users outside the industry, enriching the application scenarios of stablecoin, increasing the collateral of WICC, making the demand of WICC gradually exceed the supply, and thereby improving the value of WICC.
AEX: In the pledge process of WaykiChain stablecoin system, there is a concept called “CDP”, can you explain the meaning and rules of this concept?
WaykiChain: CDP refers to the concept that will be involved in the operation of multiple functions in the whole stablecoin system. Of course, users can easily operate the system even without understanding the technology behind it. There are three involved in general: mortgage assets, redemption of assets, and forced liquidation.
The redemption interest in WaykiChain stablecoin system is called the stable fee. Stable fee is used to destroy governance coin , let the all who hold governance coin be benefited. What is the governance coin? We can understand it this way: this is a decentralized system, there will be a lot of people together to make decisions rather than just one person. And the stable fee is used for benefit all the governance coin holders.
Let’s talk about the liquidation mechanism. Since WICC’s price is floating, when WICC’s price drops, the system will sell the mortgaged WICC at a discount price to the liquidators in the market. 1）Part of the proceeds from the gain will be used to supplement the WUSD assets lent out by the system；2) the other part will be used as a stabilization fee to destroy the governance currency; 3) the third part goes into the risk fund (the risk fund is only open in the event of a black swan event).4) the remaining WUSD assets are used to repay the borrower. In this way, the losses of the borrowers will not be too big, and the value of WUSD will remain stable.
Notes: users of mortgaged assets need to pay close attention to the value change of their assets in real time. Only in this way can the mortgaged assets be prevented from being forcibly auctioned by system and have the opportunity to redeem them.