Even though the crypto industry is becoming increasingly more popular, the use of digital assets is still a thing for the more tech-savvy people. The majority of the recently launched projects continuously fail to find a practical solution to this problem.
Fortunately, in less than four years, one such crypto project called Waves has managed to bring back the faith in digital assets’ mass adoption.
Keep reading our guide to find more about Waves’ vision and commitment to the industry.
Waves is a blockchain-based platform and cryptocurrency launched in 2016 by Russian entrepreneur Alexander Ivanov. The project had an auspicious start and raised $16 million through its crowdfunding.
The main objective of the whole project is to improve the management of cryptocurrencies on the blockchain and make the tokenization process of these assets accessible even to laypeople:
Introducing the blockchain as a foundation for digital cash attracted a great deal of attention to the technology, putting regulators and governments worldwide on high alert in the process. There is no doubt that Bitcoin will establish itself as a valid monetary system. But it is also obvious that there should not be too many blockchain tokens in use as money at the present time, since the low liquidity and high volatility this causes prevent the use of emerging blockchains as a secure store of value. (Waves’ White Paper)
Waves believes that the focus of blockchain-based projects falls too much on smart contracts and applications that although crucial, are by no means the main use case of the technology. Therefore, Waves decided to unleash the untapped potential the team sees in custom tokens, which can be used for things like decentralized trading and national currencies transfer.
How Does Waves Work?
Waves is definitely not the first project to develop so-called colored coins or metacoins, i.e. digital coins made by repurposing Bitcoin or its altcoins to create another store of value. However, Waves has a more sophisticated protocol.
The main problem of creating custom tokens with blockchain attachments was the necessity to perform hard forks all the time to update the software. If someone has the old software, he/she won’t be able to access the new transaction types.
Waves has found a more practical solution: “WAVES approaches this problem by offering an extensible solution, in which new transaction types are introduced through plug-ins that are not included in the core software module, but are instead installed as an extension on top of it” (Waves’ White Paper).
If you haven’t installed the new plug-in, you can still receive these transactions because they’re not treated as part of the “core” software but rather as “extensions”.
This opens up space for software developers to contribute to Waves’ ecosystem with their own transaction types, creating what Waves calls “an Appstore-like ecosystem”.
The core software module supports only basic transaction types such as:
- Custom token creation, deletion, and transfer.
- Trading tokens on a decentralized exchange by matching Bid and Ask transactions on the network.
- Anonymous order books.
- Asset-to-asset trading.
The Technology Behind Waves
Waves’ blockchain uses a two-tier architecture that includes full nodes and low-capacity or lightweight nodes that don’t have the resources to download and store the whole blockchain. Even though they rely on full nodes, they can turn into full nodes themselves when they gather enough resources.
The infrastructure of this approach is explained in the white paper: “WAVES is built on the Scorex platform, which develops an approach based on using current network state as an alternative to full transaction history. A simplified payment verification procedure will be realized for the lightweight node, adding another security layer.”
Moreover, Waves relies on the Proof of Stake (PoS) consensus mechanism or Leased PoS, an enhancement of the standard protocol which helps reduce the transaction processing time and increase the throughput.
In Waves’ blockchain, it’s quite obvious that the staking should be done by full nodes. To avoid centralization and increase security, lightweight nodes are able to lease their balance to a full node of their choice.
Waves believes this is a great way to make a just distribution of staking power. Moreover, the lower number of staking nodes that can produce new blocks enables faster confirmation times and low-latency.
Waves Use Cases
Some of the most important use cases for Waves are:
- Crowdfunding and ICOs.
Waves sees crowdfunding and ICOs as really important for the crypto industry and the development of new projects. This is why the platform aims to support cost-effective ICOs without much of a learning curve. To prevent malicious actors, the process will include some kind of AML/KYC check.
- Custom token trading.
The platform also made an effort to design a user-friendly decentralized exchange called WavesDex and its built on Waves’ blockchain. The exchange supports trading any cryptocurrencies for the native token WAVES or other currencies, including the most popular fiat gateways such as USD and EUR.
Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.