Founder of HOPE, Flex, explains the HOPE ecosystem and economic model in detail.

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On March 22nd, the distributed stablecoin project HOPE held its first AMA on Twitter Space. Founder Flex discussed various aspects of HOPE stablecoin and HOPE ecosystem that are worth looking forward to with the audience during the event. This article excerpts some of Flex's insightful views from the AMA.

From CeFi to DeFi, Flex's new HOPE

HOPE will strive to make DeFi more user-friendly, accessible, and versatile.

The thinking behind this project stems from the recent collapse of the CeFi ecosystem, which has affected many well-known companies. The rapid and large-scale growth of DeFi highlights the need for more user-friendly infrastructure and applications. To make DeFi more accessible to more people, the focus should be on creating universal payment tools and building user-friendly applications.

The second reason is the importance of stablecoins in the DeFi environment. Although there have been many attempts at stablecoins in recent years, various events have exposed the problems and risks faced by centralized stablecoins. I believe we need a crypto-native stablecoin that is supported not only by fiat currency or algorithms, but also by widely recognized assets as reserves.

The future of stablecoins belongs to the native of the cryptocurrency industry

Finally, the increasingly intense geopolitical tensions and trust issues in cross-border payments and financial activities require a decentralized stablecoin solution. We hope that the HOPE ecosystem can provide frictionless financial services for everyone, connecting traditional finance with the new digital era.

Facing an increasingly polarized world, blockchain technology and applications are a natural choice for solving many real-world problems.

HOPE's short-term goal is to become an important collateral

First of all, HOPE is a native encrypted stablecoin that is distributed. In the initial stage, it was backed by Bitcoin and Ethereum and synchronized with their price trends. The main goal of the first stage is to establish HOPE as an important collateral in the DeFi world and connect it with the use cases of CeFi and TradFi.

HOPE aims to become the most important payment-oriented cryptocurrency in the world in the future.

During the initial launch period, the reserve price of HOPE will start at around half a dollar and increase as the value of reserve assets such as Bitcoin rises. From 2023 to 2025, we will establish a robust liquidity and interest rate market for HOPE by creating a series of application scenarios. This will help HOPE become a reliable collateral choice in the DeFi field. Collateral is the infrastructure for creating financial instruments and improving transaction credibility, and it plays a critical role in TradFi, CeFi, and DeFi. Previously, stablecoins like USDC have been used as collateral for DeFi. However, recent events have shown that centralized stablecoins may be susceptible to traditional financial problems. The emergence of HOPE can solve this problem.

From 2026 to 2029, as the reserve asset value of HOPE rises, HOPE will become a stablecoin backed by native asset reserves with an expected collateralization ratio of around 110%. The goal during this phase is to develop HOPE into a payment tool that provides financial services to everyone, including those without bank accounts. For example, African farmers currently have to pay high commission rates when dealing with intermediaries in the supply chain. With HOPE, these individuals can bypass the high intermediary fees and access more equitable financial services.

In short, HOPE will be supported by a dual-token mechanism in the ecosystem, and will first focus on becoming an important collateral for DeFi, CeFi, and TradFi, and ultimately transform into a global payment tool.

Hope, born towards the "light"

Let's talk about economic models below.

With the growth of HOPE reserve value, governance becomes crucial. As HOPE is a community-driven stablecoin, we need a governance token - LT (Light Token). The value of LT will increase with the growth of HOPE reserve size, HOPE issuance size, and HOPE ecosystem size. In addition, as the value of Bitcoin, Ethereum, and other reserve currencies rises, the price of HOPE will be anchored, and the overflow value brought by the continuous growth of reserves will be reflected in the value of LT. LT will play a key role in the growth of HOPE reserves, benefiting all LT holders.

LT holders can participate in several aspects of governance, including HOPE's monetary policy, such as maintaining the anchor and managing reserves. For example, if we initially issue 10 billion HOPE, the total reserve value will be approximately 5 billion US dollars. As the value of assets such as Bitcoin increases, the reserve value may grow to 50 billion US dollars, resulting in an excess reserve of 40 billion US dollars. The community will decide how to handle the excess portion through proposals.

One possible proposal is to change the reserve to stable assets like Hong Kong bonds and Singapore bonds to increase the potential application of HOPE. With a stable reserve of $50 billion, it means we can issue more HOPE and allocate more excess value to LT holders. In addition, 50% of the transaction fee income generated by various protocols in the HOPE ecosystem will be distributed to liquidity providers, and the other 50% will be distributed to community members who hold LT in custody.

HOPE ecosystem is a real-life neighborhood

I know the above content may be confusing. Next, I will continue to explain. Just now, we mentioned that in the first phase, we hope that HOPE will become a universal collateral for TradFi, CeFi, and DeFi. Essentially, we hope to build a bridge between these fields, providing a broader and more lossless application space for crypto-native collateral or stablecoins. To achieve this goal, we are building a DeFi ecosystem that integrates multiple applications and protocols. LT will capture the value generated by the entire ecosystem.

In April, we will launch our first application, HopeSwap, followed by the lending protocol, HopeLend. After that, we will introduce two protocols aimed at connecting the DeFi, TradFi, and CeFi worlds: HopeConnect and HopeEcho.

You can think of HopeSwap as an exquisite office building, while HopeLend is like a residential building. In this ecosystem, people who want to rent these buildings need to pay rent or service fees to the landlord. Initially, the landlord is the management team building the ecosystem. However, as the project develops, 70% of the management shares will be allocated to tenants. These tenants can obtain community management rights through rewards obtained by participating in activities.

Community protocols will charge service fees, such as residential buildings, office buildings, hospitals, etc. As the value of land increases, the value of community management rights will also increase, which is beneficial to tenants. Tenants pay rent and receive fee subsidies, ultimately gaining control of the building's management. As real estate values ​​grow, the value of management rights will also increase, and tenants will receive further subsidies.

We are building an ecosystem that combines various protocols. This combination creates higher value for the community than individual buildings. When different buildings, such as office buildings, hospitals, schools, and residential buildings, are combined, their total value will be greater than that of a single real estate project.

I would like to specifically mention HopeConnect, which serves as an on-chain custodian and enables the movement and settlement of assets. This will help to reduce counterparty risks associated with centralized trading platforms and custodial services.

We acknowledge that fully decentralized exchanges like dYdX may be the future trend, but centralized exchanges can still provide better liquidity and more efficient order matching engines. By combining the advantages of DeFi and CeFi, we can offer more valuable services to our customers, allowing them to trade on the exchange without entrusting their assets to centralized institutions.

Through HopeConnect, users can first use on-chain deposits for safer and more efficient transactions on the centralized trading platform. The second function is to provide management products for non-custodial assets, so users do not need to deposit funds to the centralized platform. The third and most critical stage is to connect TradFi with DeFi. Through the HopeConnect protocol, users will be able to access global financial services.

DeFi is a means, not an end goal. The ultimate goal of HOPE is to provide low-friction and openly transparent next-generation financial infrastructure and services for everyone.

Asset security is the top priority

The issue of asset security is one of the most important concerns for everyone. Our team has taken various measures to ensure asset security. Firstly, we have collaborated with three auditing companies and invited white hat hackers to conduct a comprehensive audit of our protocol. This was done at the protocol level before the introduction of assets into the system.

We also collaborate with multiple centralized custody service providers to offer custody services and enhance asset security. Although this may be seen as a centralized compromise, it is crucial for attracting traditional financial institutions to join our platform. By providing regulated products and partnering with reputable custodians, we can attract more cryptocurrency communities and traditional financial institutions.

During the first five years, the team will hold and lock a certain proportion of LT to ensure early project governance. During this period, we will strive to establish a self-hosted protocol and gradually achieve decentralized hosting. However, initially, we will use regulated hosting institutions to ensure asset security and attract traditional investors.

HOPE will not be limited to Ethereum

We all know that Ethereum users often face high transaction fees. What I want to point out is that the application scope of HOPE is not limited to Ethereum. The essence of HOPE is a stablecoin backed by distributed custody reserves. And the protocols of the HOPE ecosystem can also be very decentralized. Initially, these protocols will be built on Ethereum. However, we also see a need for distributed reserves on other blockchains.

Distributed reserves mean that different projects can mint stablecoins on different blockchains by reserving Bitcoin, Ethereum, or other assets. For example, if other Layer2 solutions on different blockchains want to establish their own stablecoin DeFi ecosystem, we would be happy to assist, but they first need to become a distributed custodian by reserving crypto assets and minting HOPE on their chain for use with various applications. While we started with Ethereum, we certainly hope to expand to other blockchains. This depends more on the demand for HOPE from other blockchains. In short, as long as there are blockchains that need to reserve assets and mint stablecoins, we will provide support.

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