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This article is written by Vite CEO Charles Liu (https://twitter.com/chunming_liu).
It is both an announcement for hard fork, and a part of our Vite Insights series.
As a new digital model for finance, DeFi became a hot blockchain topic in 2020. The difference between DeFi and traditional finance is that the former mechanism removes third-party from transactions, by leveraging protocol and code. This makes the financial process more open and transparent, prevents opaque practices by operators, and allows for easier programmatic access and usage.
Up to this point, DeFi as typified by applications in the ethereum ecosystem, has exceeded expectations of many. This is the case from the perspective of number of useful scenarios, project market cap, amount of users and total value locked. We’re now closer to mass adoption, thanks to the proliferation of decentralized exchanges, stablecoins, and lending businesses.
Simultaneously, we see that, there are many problems DeFi still faces today. Every Defi project has achieved some degree of decentralization from a protocol and code level. And yet, there is a huge disconnect of usage between these projects. It is difficult to transfer value and trust between different public chains; the competition between many stablecoins segments the market, and carves up liquidity; different protocols and applications have their own economic and governance models, thereby creating “islands of value” that disallows interoperability.
For example, if a user holds assets (e.g., Bitcoin) on a certain public chain other than Ethereum, it is difficult to obtain a loan via an Ethereum-based DeFi application; also, if someone borrows USDC from a certain platform to pay off a DAI-denominated loan on another platform, this necessitates the hassle of a conversion; lending platforms are unable to rely on pricing and liquidity on third-party DEX for collateral liquidation; in terms of protocol audit, rule changes, interest rate adjustments, and attack mitigation, current DeFi platforms still rely upon centralized governance.
As we look to the future, DeFi will become more open, from the phase of “Decentralized Finance” to “Open Finance.”
The keyword “Open” in Open Finance can be seen in the following ways:
Borderless transfer of value. In this new system, value such as assets and credit can move freely between different public blockchains and different applications.
Composability of protocols. In the entire ecosystem, protocols for asset insurance, borrowing, decentralized exchange and stablecoin conversion can inter-operate and be composed on top of one another.
Open ecosystem and governance. The community can participate and share proceeds. Anyone can make use of existing protocols and products, participate in the development and audit of protocols, freely compose protocols or types of assets, and affect decisions in a decentralized way.
Vite is one of the earliest proponents and practitioners of Open Finance. Before the term “DeFi” was born circa 2018, we had included “ecosystem of values” in a core goal of Vite chain. The idea is to create basic infrastructure and practical applications around asset issuance, decentralized exchange, stablecoins, payment, and cross-chain asset transfers.
So far, we’ve been able to complete the foundational layer of public blockchain, decentralized exchange, wallet, and payment technologies. And we are upgrading and operating these products. As a next step, we will continue to lead the industry in the area of Open Finance.
Our DEX ViteX became live in July of 2019. Its ability to do on-chain settlements, order-matching, and dividend distribution all owe to the high performance and low transaction cost with Vite chain. ViteX is already completely decentralized and we will look to decentralize governance in the future as well.
ViteX is one of our applications in Open Finance. It provides decentralized financial service via blockchain, creates a more open and transparent financial system, and protects user assets. In the future, ViteX will continue to evolve, and make more contributions to the realm of Open Finance.
In September 2020, the Vite chain will undergo a fifth hard fork, with the code name “Jupiter.” After this hard fork, ViteX will support “friction-less stablecoin conversion.” As such, users will be able to convert between stablecoins with zero transaction fees.
Block height: 39694000
Estimated fork time: Sep 1, 2020 13:00 UTC+8
go-vite version: V2.10.0
Github link: [Link forthcoming]
Why does ViteX support zero-fee conversion for stablecoins?
In 2020, the coronavirus has caused severe movement in traditional finance markets and crypto markets. Investors’ needs for stablecoins have exploded. By July 23, the total stablecoin market has exceed 12 Bn USD. In the first half of 2020, total market cap of stablecoins went up 140%, daily transaction volume rose to 1.5 Bn USD, and total buy-order amounts increased by 50%.
Due to their low volatility, stablecoins are suitable for payment and store of value. The rise of DeFi stimulated the use and demand for stablecoins. More than 2 Bn USD of stablecoins have been locked, including USDT, TUSD and DAI. As DeFi continues to heat up, there will be more different types of stablecoins, thereby boosting the need for inter-stablecoin transfers.
Per our research, there are very few exchanges that enable stablecoin transfers. ViteX will be the first exchange to enable zero-fee stablecoin conversion.
This fifth hard fork is yet another step forward for Vite, in our effort to realize our original vision of “Open Finance.”
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