Listening to KOL analyze the HOPE ecosystem's profit strategy.

Source: HOPE

HOPE is a one-stop DeFi ecosystem based on the native distributed stablecoin $HOPE in the encryption industry. It aims to provide everyone with accessible, open and transparent next-generation financial infrastructure and services. Protocols and features such as HopeSwap, staking, and DAO are now online. For more information, please visit here.

HopeSwap is an AMM liquidity protocol, which is the exchange market for the decentralized stablecoin $HOPE, and it is currently the only channel for ordinary users to obtain stablecoins. For more information, please visit here.

On the eve of the launch of HopeSwap, six heavyweight industry experts and senior evangelists of HOPE gathered together to discuss how to maximize the revenue of stablecoin projects. This article will fully summarize the views of these experts:

6 Community Experts Introduction:

Big Orange: Hello everyone, I am Big Orange. I am glad to be here at the HOPE event today. I have been in the industry since 2013 and am considered an old-timer in the cryptocurrency industry. I have also known Mr. Wang for some time and have learned about options trading from him. So, I am here to participate in the HOPE event and chat with everyone. Thank you.

Bit Wu: Hello everyone, I am Bit Wu. I have experienced a lot in the industry and have many stories to share. So, I am a story blogger with this tag, and you can all treat me as such. I am personally very interested in this AMA. We have been researching stablecoins and exploring the best direction for stablecoin development. I hope to discuss this with you today and also learn more about the stablecoin industry.

Tuao Dashi Xiong: Hello everyone, I am Tuao Dashi Xiong from Macau. I joined the blockchain industry in 2016 and have been mainly active in the Australian region. Today, I am very interested in the field of stablecoins. In the past few years, stablecoins have been one of the most successful applications in the blockchain industry. Various countries, including Australia, are also paying great attention to stablecoins and are studying relevant laws. Therefore, I am looking forward to hearing what can be done in this field, including listening to everyone's analysis from the perspective of various teachers. I believe that this field may be a very large market and may bring more fresh blood to the blockchain industry. Therefore, I am very happy to communicate and learn with everyone here.

JamesX: Hello everyone, I am mainly a DeFi analyst and currently serve as an advisor for various DeFi projects. Today, I am delighted to participate in this discussion and explore stablecoins with industry experts, as well as learn how to build the HOPE stablecoin ecosystem. At the same time, I also look forward to discovering more stablecoin investment strategies within this ecosystem.

Meta-Universe AQ: Hello everyone, I am AQ. I entered the blockchain industry in 2017. I am very interested in the stablecoin field, so I came to this HOPE event today to communicate with everyone and explore the future direction of this stablecoin track, hoping to find a better direction in this field. Thank you all.

Wang Lao Shi: Hello everyone, I am Wang Zai, also known as Wang Lao Shi. I entered the blockchain industry in 2018. Initially, I was involved in options and trading, and later co-founded DeWei University with a few friends, which is a community that explains options trading. At that time, I used the pseudonym Wang Zai, and later people habitually called me Wang Lao Shi. Today, I am very happy to chat with everyone about HOPE.

Recent market hotspots and investment opportunities worth paying attention to

Big Orange: Personally, since the beginning of this year, I have mainly been bullish. Before the Hong Kong conference, I was also quite firm in my bullishness. My view is that there are signs of a turning point in US inflation, because this kind of trend is always early. So overall, I think we can still expect a positive trend in the future. I suggest my friends around me to do regular investments in bear markets and buy coins in bull markets. Now is definitely the stage for regular investments, and you can also do some additional income while doing regular investments, such as buying ETH for staking, or shorting BTC, ETH and other currencies for some currency-based additional income. Of course, if there are some HOPEs that can be combined, they can also be shared.

JamesX: Recently, I have been paying attention to various Layer2 investment opportunities. Although the overall on-chain yield is definitely not as high as before, there are many low-risk yield opportunities, including the relatively high mining yield rate in the previous period. In addition, the Layer2 ecosystem will also bring high expectations, with many new ecosystems and reputable teams entering, which will also bring some mining opportunities. Overall, the market is still unstable, and I personally will not make too many investments. I suggest that everyone adopt a broad investment strategy.

Tuao Big Brother: Actually, I have been repeatedly emphasizing on my own community and Twitter since February that the market trend is not a rebound, but a reversal. At that time, I was challenged and criticized by some people privately. But now, it seems that my judgment is basically correct. Therefore, in the next period of time, my view is similar to that of Big Orange. I personally think that the market will experience a process of shock and upward movement. However, there may be a pullback in this process, but I don't think it will be particularly large. Therefore, I personally believe that every pullback is a good opportunity for value storage. I suggest that my community should operate in this way.

Additionally, speaking from a market perspective, I believe there are three main areas of interest in the cryptocurrency market. Firstly, I think one of the most interesting areas in the current cryptocurrency market is Layer 2 solutions, especially Optimism. Personally, I am very optimistic about the prospects of this project because it has a lot of potential to solve the bottleneck problems in the current Ethereum network, and has already attracted some important projects such as Uniswap and Synthetix. In addition, Optimism's recent fundraising was also very successful, receiving over $300 million in investment, indicating that the market is very bullish on its prospects.

Secondly, I think the most interesting area in the current NFT market is the metaverse. The metaverse is a very large concept, but I believe the most promising area currently is blockchain-based gaming. Especially games like Axie Infinity, which have already achieved great success in the market, and I think this is just the beginning. In fact, I believe there will be more similar games emerging in the future, especially within the framework of the entire metaverse, which could become a very large market.

The third area is about on-chain derivatives and options markets. I am personally very interested in this market because I believe that over time, this market will become very important. I have already started to gradually move towards on-chain derivatives since GMX. In terms of experience, it is much better than during the last bull market, including depth and user experience. Currently, there is no project that can match GMX in this market, but I firmly believe that this direction definitely has opportunities, and in the future, it is expected to take away a large part of the trading volume from centralized trading platforms.

Metaverse AQ: Currently, I want to make a market judgment. Actually, I have my own preference for the overall market, which started in January and February this year. I felt it was about right. From the highest point of Bitcoin to now, it has been about 18 months, which also conforms to the periodicity of this bear market. I think we are now entering a stage of outflow from the bear market. In the next period of time, I personally think that the market will go through a stage of oscillation and correction, constantly oscillating upwards. The correction may drop to 20,000 or just over 10,000, 18,000 or 17,000, which will be a very good opportunity. In normal upward movement, I think the best case scenario for this year may be up to around 37,000 or 38,000. So my current operation is constantly laying out Layer2 during the correction.

Since last year, I have been working on some early projects on Layer2, including mining and trading. I also made decent profits from OP and secondary airdrops. Currently, I am mainly focused on early projects on Layer2 and continue to follow the development of L2. Recently, the Shanghai upgrade has been completed, and everyone can withdraw their Ethereum.

With the upgrade of Ethereum, I believe that Layer2 will reach a tipping point. As the upgrade progresses, the improvement proposal EIP4844 is the most important point. Once this is completed, the cost of Rollup technology on Layer2 will be greatly reduced, and there is still a lot of room for improvement. Now, Layer2 has become the focus of expansion, replacing technologies such as state channels, sidechains, and Plasma. Currently, Rollup, OP, and ZK are the most popular. Currently, many developers prefer to build their projects on ZK, but OP currently accounts for possibly 90% of TVL. Therefore, I am currently more focused on Rollup projects on Layer2 and continue to look for such projects because I am optimistic about the performance of Layer2 after the upgrade.

Looking at the stablecoin architecture and its advantages and disadvantages

Bit Wu: Stablecoins have always been a topic of great concern. Today we mainly discuss the history of stablecoins, including the pros and cons of centralized and decentralized stablecoins. First of all, centralized stablecoins have certain limitations. For example, stablecoins such as USDT have always been hanging over everyone's heads, and their collateral assets are stored in banks, which also carry the risk of bank failures and high unpredictability. Since last year, with the advancement of compliance and the sanctioning of USDT, the entire cryptocurrency community has begun to reflect on centralized stablecoins and consider the possibility of decentralized stablecoins.

In the field of decentralized stablecoins, the earliest one should be MakerDAO's DAI, which is based on over-collateralization. Over-collateralization means that, for example, only 90 out of 100 Ethereum can be borrowed, with Ethereum as collateral. However, the value of the collateral will be affected by market fluctuations, bringing potential risks. Later, MakerDAO introduced centralized stablecoins such as USDC, which extended the risk. Currently, LUSD and RAI are both optimized improvements of the MakerDAO model, such as whose liquidation line is lower and whose capital utilization rate is higher. However, over-collateralization also has scalability issues, such as only being able to borrow less than the value of the collateral, which is relatively inflexible.

Stablecoin is a type of cryptocurrency whose value is anchored to another asset to ensure price stability. The most common stablecoin currently is collateralized stablecoin, whose value is determined by collateral, thus limiting its scalability. To solve this problem, algorithmic stablecoin emerged in the decentralized industry. The value of this stablecoin does not depend on collateral, but on market consensus and game theory to maintain stability. The scalability of this stablecoin theoretically can be unlimited, and the pioneer of algorithmic stablecoin is AMPL (Ampleforth).

However, currently there is a problem with the real utilization rate of decentralized algorithmic stablecoins, as no one wants to hold stablecoins that could potentially drop to zero or crash at any moment, since the key feature of stablecoins is "stability". Therefore, I am currently pessimistic about holding decentralized algorithmic stablecoins. Additionally, overemphasizing the significance of decentralization is not very meaningful, as decentralization and centralization can be merged.

Regarding the future of the stablecoin market, I personally believe that we should look forward to the emergence of a disruptive decentralized stablecoin. Centralization and decentralization do not necessarily have to be isolated from each other, as they can intertwine, confront, cooperate, and compromise with each other. If we want to make improvements in the stablecoin field, we don't have to see centralization and decentralization as contradictory entities, as they are more like two interrelated things.

Finally, if there is a need to improve stablecoins, one option to consider is introducing real-world assets, such as RWA. However, if RWA is involved, centralization cannot be avoided.

As a forward-looking statement, I believe that it is possible to establish a decentralized credit system in the stablecoin market. Social data can be used to establish this credit system, similar to the way social IDs are created. Although this idea is still in the early exploration stage, some DeFi lending giants have already begun to try this direction, such as Aave's Lens social. The social credit system conforms to the laws of human social development and does not require sufficient collateral. For example, social credit ratings like Lens can borrow stablecoins on Aave without collateral. Another solution is to introduce credit ratings from real-world payment systems, anchor identity through KYC on DID, and leave records on the chain if overdue, similar to real-world dishonest executors. These records can be sued by the court and recognized in the real world. This will establish a strong connection in the external and external 2 or external 3 worlds. It is possible to explore the participation of trading platforms in this matter. They can jointly establish a credit system, connect with each other through on-chain and off-chain, and let these top trading platforms arbitrate. These are all directions that can be further explored.

Wang: I think actually many people often ask me this question, which is what stability means for stablecoins. I think there is a saying in risk management that risk never disappears, it only transfers. So actually what we commonly call stablecoins is just a perspective, for example, it is anchored to a stable currency like the US dollar, but whether the US dollar itself is stable, let's not discuss that for now. But there are some expectations that I think are very unclear, for example, the incident where USDC was run on, then the asset side behind it, which is debt, whether it made a profit or loss, and when it was run on, whether the entire floating profit and loss of the debt would be accounted for. These things are actually a kind of existence where risks are deliberately hidden in order to make it stable, so I think for the concept of stablecoins, it may not necessarily be called stable just because the price is stable.

Stability, what else does it need to achieve? It's expected stability, which means what you're playing with, what risks you have, and what kind of expected stability there is. I think it's also a kind of stability, including USDC and USDT, which are currently stable in terms of price. But why are people a little afraid of it? It's because its expectations are unstable, and you don't know when that sword will fall. In this regard, I think in the process of risk management or defining stability, we actually need to use some decentralized means, such as open books, transparency, decentralized issuance, and management, etc. I hope to achieve this kind of stability, and not suddenly come up with something that makes everyone suddenly realize that the previous values and worldviews have all collapsed. So I think that at the beginning of our HOPE, everyone may not feel that it is a stable coin, but I believe that everyone can feel that its expectations are stable.

JamesX: Stable interest systems based on on-chain stablecoins or on-chain DID credit systems are not feasible in the current situation where traditional finance and chain commercial finance have not yet truly connected. In traditional finance, the core indicator of credit scores is not the credit score of personal payment accounts, but low-risk certificates that financial institutions use to measure each person's limit. The final settlement guarantee still needs to be enforced in conjunction with the legal and authoritarian system in the real world. Therefore, even stablecoin systems supported by on-chain credit loans or credit systems may not be feasible in the short term, possibly within the next five years. Other on-chain stablecoins still rely mainly on stablecoins supported by centralized institutions. The most promising decentralized stablecoin in my opinion is the CRVUSD stablecoin system that customers may release, because it is based on the largest stabilizer value-pegged liquidity platform. Once released, it may extend to protocols of all sizes. Although its underlying core logic is still over-collateralization, its liquidation mechanism is product-driven to ensure dynamic excess value. However, it still has not broken through the logic of executing credit-supported stablecoin value basis on-chain.

Meta-Universe AQ: I'm here to learn about stablecoins. I don't have much research on stablecoins, but I believe that the development of stablecoins will be diverse, not just the development of centralized stablecoins or decentralized stablecoins, because centralized stablecoins are usually held by institutions, and reserve assets like USDT and USDC are usually held by these institutions. It has higher stability and is easier to accept and use. However, centralized stablecoins have regulatory and security risks.

Decentralized stablecoins can be divided into collateralized and uncollateralized. Uncollateralized stablecoins maintain their value stability based on elastic supply, and their issuance will be automatically adjusted according to market demand to maintain price stability. Although collateralized stablecoins do not have the risk of a large category, their liquidity may be insufficient, and they cannot refuse to accept the stablecoin because its value is stable.

From the perspective of security and transparency, decentralized stablecoins are safer and more transparent. I believe that market demand, technical architecture, and regulatory environment should be considered in the architecture of stablecoins. Therefore, I would like to know about how to adapt to the latest developments and innovations in this area.

Comparatively promising stablecoin projects

Big Orange: I believe that there are mainly three types of stablecoins in the current market: one is collateralized stablecoins, such as Ethereum collateralized stablecoins; the second is centralized stablecoins, such as USDT and USDC; and the third is algorithmic stablecoins. HOPE may be a decentralized collateralized stablecoin based on these three types of stablecoins. I think this kind of innovation is worth exploring and trying, and I am optimistic about its future development. The three types of stablecoins mentioned earlier all have various problems, such as USDT and USDC not being supported by US banks, and there is a centralized risk; while algorithmic stablecoins also have stability issues. Therefore, I personally believe that HOPE's innovation may become a better choice.

Tuao Big Brother: I think the previous speeches were very good, especially when it comes to stablecoins and other directions related to credit. I think these are very interesting directions. However, from the perspective of implementation, it does take time. If stablecoins are really implemented one day, then no matter where you are, you can directly connect to some local applications just like using Alipay and WeChat. Although this situation has not yet appeared, at least relatively large applications can be directly connected. If this application can directly connect to real-world assets, will there be some good collisions in the future? I am optimistic about whether this direction can be realized.

Actually, I have seen many examples of this kind around me. In 1994, when I was in Australia, many people around me started using stablecoins, especially USDT, to buy houses and exchange currencies. Later, many shopping websites also began to support cryptocurrency payment methods.

I believe that stablecoins are a very promising part of the cryptocurrency market. If done well, stablecoins may have more disruptive properties than other cryptocurrencies, including Bitcoin, because they actually solve some problems. I am currently paying attention to both the USDC decoupling last time and the recent cryptocurrency bills, as various countries have already introduced things in this regard, which puts stablecoins in a rather awkward position. In addition, stablecoins are developing very quickly, and more resilient and stronger stablecoins may emerge from the mechanism.

In this market, stablecoins need to be both good and super decentralized. However, in fact, no stablecoin has truly made people feel comfortable holding it, despite stable development for so long. Therefore, I look forward to seeing projects that can make huge contributions in this field. Although this is not an easy entry point, if there is enough vision and foresight, this thing may be done very well. Stablecoins are not a short-term project, but require long-term planning and continuous efforts.

Existing stablecoin projects all have their advantages, but there are still limitations, such as Curve's stablecoin ecosystem pool being difficult for outsiders to accept. He is very interested in this issue, and it is still difficult for insiders to accept this concept.

HOPE Ecosystem Design and Gameplay

Mr. Wang: HOPE is a reserve stablecoin, with its reserve assets being cryptocurrencies, specifically Bitcoin and Ethereum. The price observation was completed on April 17th, and the determined ratio is 100,000 HOPE tokens to 0.108 Bitcoin and 1.08 Ethereum, with a Bitcoin to Ethereum ratio of 1:10. Through the subscription and redemption mechanism, all subscriptions and redemptions are settled through the delivery of actual assets before the price of Bitcoin doubles.

HOPE is an asset that is pegged to a combination of Bitcoin and Ethereum, similar to GBDC, but HOPE allows for physical delivery. In addition to HOPE, there is also an LT Token that serves as a governance token. It can be obtained by participating in community activities and staking LT Tokens to vote as veLT Tokens. Voting rights include protocol revenue, governance direction, and mechanisms. The entire ecosystem requires participation from everyone, which is a very long-term goal, such as establishing its own exchange rate system, interest rate system, and benefit system. In the future, whether HOPE can be used as collateral and whether it can be used as a settlement currency for everyone are various usage scenarios that need to be gradually introduced. One key issue is how to make participants earn money. To address this issue, a yield model has been designed based on previous product experience and deep thinking about trading or financial reserves. Through this model, each participant can obtain what they want, thereby achieving a dynamic balance of the entire yield.

Regarding the application scenarios of stablecoins, in my opinion, the most important thing is to make it more common so that it is no longer a new thing. It would be even better if we could directly use stablecoins for payment one day. However, to achieve this state, we need to do a lot of work. I previously used Lao Tzu's words to describe it, "The Tao gives birth to one, one gives birth to two, two gives birth to three, and three gives birth to all things." The Tao gives birth to one means that this project will be stable, and its core energy is the lowest cost. But what do one, two, and three mean? It means that ultimately, there must be exchange rates and interest rates, and liquidity is also very important.

It is necessary to calculate the cost of funds, and with these two things, there can be the so-called second and third, which is the clearing and settlement agreement. This is somewhat similar to Alipay, which solved the problem of buyer and seller credit in 2016 by confirming receipt of goods before payment. HopeConnect also stores money on the chain in this way, and then can go to decentralized trading platforms to leverage, buy Maotai, buy cars and houses, and use the bank cards we provide. Only with these things can we gradually use it as a new algorithmic currency in various application scenarios to achieve the goal of creating wealth from everything.

With the HopeConnect protocol, all applications are made possible, and this is also our development plan. Stability comes first, and then comes everything else, leading to Connect. As long as this issue can be resolved, people can trade derivatives, speculate in traditional stocks, buy securities, buy bonds, or even buy clothes, cars, and houses using the value of stablecoins without any worries when there is hope for the future. This is a simple process, but it can only be achieved when the project succeeds.

HOPE ecosystem can pay attention to gaming opportunities

Wang: First of all, if it is coin-based, for investors who hold Bitcoin and Ethereum, if they think Coinbase is trustworthy, they can choose to exchange their Bitcoin for HOPE and mine on HOPE. Since HOPE has an SRE mechanism to ensure that the subscription and redemption process is almost lossless, it is only necessary to choose the pool with the highest yield when mining. After mining enough LT, investors can keep it, because LT is actually a future breeding option, and sell it when the bull market comes. This method can be regarded as "free riding".

The second method is based on BTC and ETH trading. Since HOPE itself tracks the prices of BTC and ETH, investors can engage in triangular arbitrage by buying or selling ETH on a trading platform when HOPE is at a certain discount or premium to the exchange rate of ETH or USD, and then exchanging it back to HOPE. This method can also be considered using LT obtained through mining.

When choosing a mining pool, investors should pay attention to staking pools, as they may have the highest volume in the entire ecosystem. However, when investing in the entire ecosystem, mining pools and LT can also be considered. Investors need to evaluate the potential returns and current prices of LT, then choose the highest yield among different pools, and consider whether they can cover the loss without compensation. These methods may all have opportunities, but investors need to have certain abilities and means to bear the loss without compensation.

When investing funds in the entire ecosystem, it is possible to obtain a higher proportion of the overall weight by investing in LT or in the swap pool. Therefore, investors should evaluate the potential returns or current prices of LT and choose where to invest their funds to achieve the highest yield. In addition, they should also consider whether they can cover any uncompensated losses.

These methods may all have opportunities, but investors need to have certain abilities and means to bear the loss without compensation. When choosing a mining pool, investors should pay attention to staking pools, as the largest amount may be on them in the entire ecosystem.

Finally, Teacher Wang mentioned that individual investors may not have a deep enough understanding of these things, so veteran investors or experts may need to lead them to understand these methods. They need to evaluate the returns and risks of different pools and determine the best investment strategy.

If the strategy only runs large currencies, then arbitrage experience should already be in place. In subscription and redemption, delivery is physical Bitcoin and Ethereum. For example, buying 100,000 HOPE in Swap caused the entire premium, you can sell the HOPE in hand on Swap, and then buy BTC and ETH long or spot on traditional trading platforms. Next, you can directly subscribe and redeem through dealers or market makers. If you are a market maker, it is even more seamless. This ensures that you can maintain the price difference of the entire secondary market at the primary market price. Therefore, this is a bit like traditional cross-lock arbitrage, except that one end is hung on SWAP, and the other end is a BTC and ETH ETF index or a real Ethereum spot or futures.

Big Orange: Because I have researched many similar projects myself, such as stablecoins, so I may approach it with an arbitrage mindset. My idea is that Bitcoin and Ethereum already have prices for HOPE, so when they rise within double their value, I can exchange Bitcoin or Ethereum for HOPE and receive LT as a reward. If I believe that HOPE will rise above Bitcoin or Ethereum by double, then I can choose to sell HOPE after it has risen by double. Before that, I can redeem HOPE at any time and receive LT as a reward. If I believe in the future development of HOPE, I will hold HOPE, and the future HOPE ecosystem will include applications such as lending and LT. Of course, the success of this process also depends on the development of the entire HOPE ecosystem, including the use of LT as collateral. This is just my idea, and it is uncertain whether it is feasible, but if there is an arbitrage mindset, this idea may be feasible.

Wang: I think your idea is right. The first profit scenario we designed is for users who hold BTC. We can put it into a distributed reserve and pay you the entire LT as interest. Although it may become u after it doubles, you can understand it as a super large dual-currency wealth management that can be subscribed and redeemed at any time and can pay interest every minute and every hour. You can withdraw the principal at any time, but the interest can be paid to your account in real time and you can withdraw it at any time. When you think it is approaching maturity, even if the entire game market has new trading and arbitrage opportunities, our entire interest rate market or the price market of HOPE will become a volatility market, because Big Orange still has a deep understanding of options. When you hold HOPE, in the entire interest rate market, the interest rate is an implied volatility or an option premium market. If you don't want to lose the coin base, but the price of LT is high, you can buy a call or put protection. If the LT yield you can mine every minute or every day is significantly higher than your interest rate, there are still many arbitrage opportunities when you pay the premium. When designing the entire profit scenario, we need to consider every path of the currency price and the possible arbitrage and trading behaviors in the market. I believe that the big teacher can dig out many arbitrage opportunities in it.

Speaking of options, when I receive this option certificate, I need to decide whether I am willing to take the risk. I think there is almost no risk in terms of price. However, I need to consider how much benefit I can get from it, and how to choose between currency-based or U-based, or to operate with the entire option. Everyone has their own game plan, and what we do is to make this mechanism public. At a certain price, it will become a certain attribute, and in a certain pool, I can get how many LTs and how the price of these LTs is determined. In the early stage, I believe that this game is not sufficient, including arbitrage opportunities and possible differences in people's rate of return. This depends entirely on everyone's understanding of the entire mechanism. However, as everyone gradually becomes familiar, a balanced route will eventually be reached. This balanced route will gradually change with the rise and fall of the currency price, including new volatility gameplay and the launch of new protocols. These new protocols can also create new opportunities for each other. Therefore, it is always in a game state. I think the risk may come from the possibility that you may lose to someone else's income. Not because you are the price controller or understand the entire mechanism well enough, this is actually a comprehensive game of the market, a state of mutual willingness. We believe that this may be the best development direction for a project.

I believe that the process of participating in this mechanism can be divided into several stages. First, you deposit Bitcoin into the mechanism and then receive corresponding LT Tokens, regardless of whether the Token rises 100 times or falls 99%, you can withdraw Bitcoin and Ethereum. The key is whether the interest you receive is high or low, and when you can cash out that interest. Some people use 100x leverage to earn higher returns, while others do not use leverage. Some people use structured investment strategies, some think they can't make money, while others think this mechanism is very profitable. Therefore, I believe that in this market, everyone has different perceptions and ways of playing the game, and you need to find a way that suits you to make money.

$LT Value Preservation and Reflection

Wang: 60% of LT is allocated to the community, and 10% is used for other purposes. It cannot be sold in the industry, with a total amount of 1 trillion and a fixed amount generated daily. It adopts a linear unlocking mechanism, halving every four years, similar to Bitcoin mining. The daily supply is about 260 million. After being put into circulation, the weight is calculated based on the output of the mining pool and the amount of veLT held to obtain LT. The mining mechanism is similar to Bitcoin, with no other channels except mining. There may be a shortage of LP supply, and a portion may need to be extracted from other channels to supplement it. LT can be traded on swap, but the external supply is limited. The project party cannot take inventory out, and it can only be mined in the market. You can get high returns on LT by taking HOPE, exchanging it for LT on Swap, and then investing it in the LT mining pool with U. This method may have a game LP after a week or a few days. This method is the best because it does not lose the basic position but can get more LT.

The LT Token of the project party is directly locked. The LT released during the four-year lock-up period is immediately locked again for four years and becomes veLT. We plan to lock the LT Token for eight years to express our determination, so LT is a long-term project. Regarding the value system of LT Token, it can be realized through arbitrage and market recognition of its value. From three levels, LT Token has intrinsic core value.

The first level is the Bitcoin held in reserve. After the price of Bitcoin doubles, these excess reserves will be used to invest in staking pools or funds in the entire market, or we can sell them and give back to every LT user. Therefore, each LT Token corresponds to a call option on the future bull market of Bitcoin.

The second level is that people who own LT Tokens can receive half of all our protocol revenue, including revenue sharing from protocols such as Swap, Lend, and Connect. Half of the transaction fees will go to these LT holders, which is the second layer of value for LT, namely the revenue sharing of the entire ecosystem protocol.

The third value is the implicit liquidity value. In three to four years, there may be over 10 billion dollars of available assets in the reserve pool behind HOPE. One dollar in your hand is one dollar, but if one billion people's one dollar is put together, they can have a greater value than one billion. This will create influence, and those who need this influence may need to compete for voting rights, which may lead to an imbalance in the supply of the entire LT market and result in a liquidity premium. Therefore, from these three levels, the value system of LT Token is guaranteed and does not need to be achieved through means such as fund-raising or market manipulation.

Regarding the pricing of LT Token, it can be freely priced through protocol revenue, coin price valuation, implied volatility estimation of options, and market demand for public reserves. This pricing deviation is actually a form of market arbitrage. Therefore, everyone can price LT Token in their own minds. Unlike the value system of other projects, LT Token has actual assets, expected dividend income, and expected implicit scenarios that may occur, among other factors.

HOPE Reserve Asset Custody and Redemption

Wang: The security of HOPE's reserve assets is mainly maintained through distributed reserve points. This means that the reserve assets are stored in multiple different locations, thus avoiding single point risks. In addition, the reserve assets are also sourced from a global range, which increases their level of decentralization and security. The reserve addresses, processes, and institutions are also made public to the market, which helps to improve credibility and transparency. Currently, HOPE's reserve assets are held in third-party custody by Coinbase, and additional reserve points may be added in the future.

Currently, HOPE does not have an automated on-chain redemption system, and all redemptions are completed manually. However, HOPE guarantees that the accounts are transparent and the reserve addresses are decentralized. HOPE must command how much to issue under certain conditions, mainly because BTC, as a reserve, has cross-chain issues that may bring many vulnerabilities and risks. Therefore, our distributed stability refers to the fact that many dealers or users can purchase HOPE on the trading platform or obtain it from dealers in each location. Users can directly purchase HOPE on swap or find a distributor in their region to obtain it.

If the price of Bitcoin drops, what insurance measures does HOPE have in place?

Wang: Many people are concerned about how to exchange BTC and ETH for USDT-anchored tokens in the future. First of all, the entire process must go through a community voting mechanism to generate. This is part of the entire governance mechanism. What to exchange, at what point to exchange, and in what form to exchange, all need to have contingency plans. There are many forces that can come up with many methods, such as throwing ETH into Swap or customer pools for natural currency exchange, or hedging and hedging, or introducing other institutions for price maintenance and real value management. Future exchange reserves can be exchanged for other assets or acquired other on-chain assets. The entire community will come up with a solution that everyone recognizes and has the least impact on the market. The management of the reserve will choose 20 to 30 decentralized operations from 100 methods to ensure the interests of LT holders.

Another issue is that decoupling of cryptocurrencies is a headache, but if the distribution table of assets behind it is completely transparent and the price is open to everyone, then it becomes a game of trading for everyone. If cryptocurrencies are decoupled, this may be reflected in the price in advance, or in the entire price system of the underlying assets. This is the entire backup plan, or the worst case scenario. Everyone has a consistent expectation that if necessary, the reserve will be returned to everyone. As for whether one can hedge or generate any income, everyone has their own way of playing. The entire ecosystem contains the tricks that everyone can explore and play in. The author believes that what we need to do is to make expectations transparent, account books transparent, and the entire mechanism transparent. Finally, the direction that cryptocurrencies may take depends on the market and the optimal result that everyone can come up with through the game. And this is better than anyone designing a rigid line.

How to evaluate USDT/USDC/Luna

Wang: I think different people may have different opinions. Personally, I believe that stablecoins such as algorithmic stablecoins and reserve-backed stablecoins each have their own operating models and mechanisms. However, HOPE operates on the basis of these mechanisms. First, I want to talk about USDT and USDC. In fact, USD and USC are the most enviable stablecoins. They appeared out of nowhere, but their business model is that you deposit dollars with them, and then they use this money to buy assets with high liquidity and low interest rates. In other words, if the entire US dollar interest rate is 5% annually, as long as they have a scale of 60 billion, they can earn a profit of 3 billion US dollars per year. This is also the business model of USDC, including many traditional banks that want to do stablecoins in this way, because they have sniffed out the strong signal of zero-interest deposits and the interest rate difference on the asset side. However, I believe that there are differences in the models between USDT and USDC. USDT has some uncertainties, such as not knowing who its dealers are, not being able to find Tether's headquarters, and not knowing where its assets are located. But because USDT is the first stablecoin, it has been gradually recognized through the settlement scene driven by trading platforms or the entire market volume, so everyone defaults to its existence. The run on USDT is not because people don't want to run on it, but because they can't find it to run on. As a newcomer, USDC wants to surpass USDT and has taken a traditional path. In fact, I believe that neither USDT nor USDC is a central bank. They are both traditional commercial banks, just wrapped in a layer, so we call them coin-weighted central banks. All of their businesses are traditional banking businesses, relying on deposits and underlying assets to buy bonds or slightly higher-rated bonds to make money. USDC can only take one path to surpass USDT, which is to directly serve and promote customers. But this also makes USDC easier for everyone to find together, because it directly faces institutional customers, and there are too many of these institutional customers. Therefore, USDC may also go bankrupt as long as everyone starts to run on it, forcing it to sell bonds or forcing it to provide higher liquidity. These two stablecoins, USDT and USDC, are both built on top of traditional banking businesses.

Regarding Luna, I still admire it. Although I know many people have suffered a lot on it, it actually uses its own computing power and reserves to maintain stability. It is a combination of computing power stability and reserve stability, but its problem is that the speed of printing money is too fast (19.4%), including the expansion of its scale, which makes the income generated within its own ecosystem insufficient to support such a large-scale expansion. When it discovered the problem, it hurriedly bought back reserves or bought Bitcoin as a reserve asset. However, the first problem at this time is that the price of Bitcoin is too high, much higher than now, at an average price of around 40,000-42,000. Another problem is that it bought too late and they have already been heavily squeezed.

So actually, Luna is a reserve stablecoin, but I don't think they have thought about the possible consequences for the entire financial ecosystem, including the control of the speed and pace of expansion. Although they have provided us with many opportunities to learn and think about the mechanisms, they still have some issues. For example, they can directly mint on that chain, but the assets behind them are still based on Ethereum. They are increasingly binding traditional assets, which is a bit awkward. Although it is a stablecoin, it has been swinging in the traditional system, which may be because it is not decentralized enough. So this is also something for us to think about, that is, we must make the whole thing distributed to ensure its neutrality, including in multiple worlds, where there is a balance of games between them, rather than leaning towards or directing to any one side.

Overall, Luna is a very innovative solution. However, in terms of its potential impact on the entire financial ecosystem, including the potential consequences and the control of the speed and pace of expansion, it still requires more comprehensive thinking. In the process of addressing these issues, we can learn a lot of new ideas and experiences.

Speaking of HOPE, holding HOPE means you won't lose your coins, and at the same time, you have the opportunity to obtain call options. If you hold BTC, you may only have a 2% chance of making a profit, but if you use this 2% of funds to purchase call options that never expire, you will have greater returns. In addition, if you pay attention to whether the entire HOPE ecosystem and dream can be realized, you will not suffer any losses.

This article is from a submission and does not represent the views of BlockBeats.  

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