Coinversation’s first community AMA just ended last Thursday. Our product manager, Hyman, came and shared lots of details about Coinversation. He also answered five questions provided by the community from Twitter. Here is the recap of that night’s sharing:
- Can you briefly introduce the Coinversation project?
Coinversation is the first synthetic asset project in Polkadot’s ecosystem. It was officially released in August 2020 and received Web3 Grants in October.
The core members of the team come from tier-1 technology companies such as Alibaba, Ant Financial, Google, etc., including engineers with more than ten years of development experience and early Ethereum developers.
The Coinversation Protocol allows users to pledge CTO which is issued by the project and Polkadot’s DOT as collateral, to synthesize any cryptocurrency or off-chain assets such as stocks, bonds, and gold through smart contracts and oracles.
From the perspective of Coinversation’s economic model, first of all, it can solve many problems in traditional centralized exchanges, such as security issues and transparency issues. It is what we often say, if the exchange funds are stolen or the exchange runs off, investors will suffer very heavy losses. At the same time, the high transaction rate is also a recurring pain point. It is also an old problem that centralized exchanges misappropriate users’ coins for short selling to manipulate the market. So Coinversation is a decentralized exchange to solve the key problems of traditional financial exchanges.
Secondly, Coinversation also aims to tackle the problems of “traditional decentralized exchanges”, namely transaction speed, depth and liquidity. Through the design of the collateral pool, users pledge CTO or Polkadot DOT to generate synthetic assets and their profit and loss is calculated by their respective debt ratio in the system. In this way, there is no need for a counterparty when trading, and users do not have to consider the issue of transaction depth because they can independently form a transaction.
Coinversation expands the traditional single liquidity pool into multi-liquidity pools, which provides more business opportunities and unlimited combination possibilities, eventually will also attract a broader and diverse user group.
2. Why did the team choose the two modules of synthetic assets and decentralized exchanges to build the product?
We paid very early attention to the Polkadot ecosystem and were very interested in its governance mechanism, so we were thinking about how to participate in Polkadot. DeFi is the fastest track where we can land with a DApp, and it can be seen that this track has a lot of room for development, and there are many problems worth exploring and solving.
In simplest terms, choosing synthetic assets and decentralized transactions, Coinversation is a DEX and synthetic asset protocol that integrates Balancer and Synthetix. This is a 2B+2C model that can maximize user group and asset liquidity.
We hope to be the best decentralized exchange in Polkadot ecosystem. Primarily we can serve more projects like ours, and better enable all kinds of projects to land on our DEX. The landing of synthetic assets creates links to stocks, foreign exchange, commodity and other financial products so that a vast number of traders and retail investors can trade on DEX.
3. There are a lot of Dex on the market. Regarding the balancer + synthetix model adopted by Coinversation, can you specifically talk about the uniqueness of this 2B+2C model?
2B+2C can maximize user groups. Of course, Defi’s core operational goal is to maximize liquidity. So, we first lay out 2B business, and then introduce C-end users, which is the fastest way we can establish product consensus under our current assessment.
For the project team or institution, users can create their own liquidity pool to do IDO (using a liquidity pool that dynamically adjusts weights, similar to the Dutch auction method). The team controls all assets by itself, which can help the team to allocate and manage assets more effectively.
For KOLs in many markets, or professional secondary market traders, ETFs can be created through multiple liquidity pools, such as the NFT open-end fund on Polka, or the average fund of Polka’s official Grant fund, for ordinary users to invest. Retail investors can buy a token of an ETF fund according to an Index method to indirectly invest in a series of specific token combinations.
Part of our Balancer model is based on the fact that our team has a large number of project incubation attributes, and can customize their liquidity allocation and distribution models for these teams. After constructing a solid DEX, we also want to face high-frequency traders who trade off-chain assets and that’s why we build Coinversation based on the characteristics of Polkadot and our own advantages.
For retail and general trading users, multi-liquidity pools, in comparison to single liquidity pool, are more difficult to be manipulated centrally. The assets in multiple liquidity pools can also be transformed into each other. Therefore, when a centralized large adjusts the price of a single liquidity pool, the creators of other liquidity pools can use arbitrage to counter the centralized operation of large investors. In this way, retail investors will be easier to avoid or reduce the risk of being cut by larger dealers.
4. Can you briefly introduce the development progress of the project at this stage?
At present, our DEX part of the protocol is completed. It is being tested and docking with Plasm (Astar).
5. What is the project plan for Coinversation in Q3? When will it go online?
In Q3 we will continue to expand the team and improve our functions and the distribution mechanism in terms of token liquidity mining. It is expected that in Q3 we will complete the front-end development and overall testing of the DEX module. The launch time is still uncertain. We need to comprehensively evaluate the community construction and product development progress. Once there is news of the launch, we will update the progress of the project on twitter and telegram as soon as possible. Please pay attention!
6. Slot auctions are very popular recently. Will Coinversation consider participating in the slot auctions? Have you considered which parachain to deploy on?
At the current stage, Coinversation is still focusing on the development of smart contracts, and test running the DEX module as early as possible. Later on we will comprehensively evaluate the slot auction situation and market conditions before making a decision. For parachain we have reached a cooperation with Astar and are also in contact with some other chains, such as Crust and Bifrost.
It is true that slots are very hot, but based on our current situation, we are more willing to cooperate with these parachains. In the future, we do have plans to bid for our own parachain, but it depends on the development of our project.
7. What is special for your security? Are you audited?
We have reached a collaboration with LINK, and the audit will be submitted before going online to ensure safety.
8. What stablecoins and other tokens that Coinversation platform support ?
At first, we will support most of the stablecoins in the DOT ecosystem. Currently, we intend to support USDC and USDT. This needs to be verified in terms of the cross-chain bridge function of Polkadot ecosystem and whether USDC and USDT will be issued on Polkadot ecology… or other stablecoin issuers.
9. What are your plans for the product to be better in the future?
In the first stage of the product, DEX must be done well. As well as for the liquidity, we will gradually launch our corresponding products based on the growth of users in the future. This requires continuous progress.
10. Why decided to base on the Polkadot ecosystem to develop?
Currently the infrastructure on Polkadot is still relatively lacking. The Substrate-based framework can break the limitations of the existing Solidity / EVM technical framework and better expand and extend its functions. The high degree of freedom of the agreement means that more complex functions can be implemented. Now everyone is waiting for the Polkadot parachain to be fully online. Everyone is equal at the starting line. So for entrepreneurs, Polkadot is a very good place at this stage.
11. Do you only focus on the Polkadot network ? Any desire to integrate into other networks eg Bsc or Ethereum?
We will only deploy on Polkadot in the first step. Currently, the team does not consider deploying on other networks, but we may deploy on multiple parachains.
Coinversation Protocol is the first synthetic asset issuance protocol and decentralised contract trading exchange based on the Polkadot contract chain. It uses the token CTO issued by Coinversation Protocol and Polkadot(DOT) as collateral, and synthesizes any cryptocurrencies or stocks, bonds, gold and any other off-chain assets through smart contracts and oracles. The assets minted by all the users correspond to the liabilities of the entire system, and the proportion of each user’s liabilities has been determined at the time of forging, so that their respective profits can be calculated. Because such a collateral pool model does not require a counterparty, it perfectly solves the problems of liquidity and transaction depth in decentralised exchange(DEX).