Waves in the industry
Waves founder Sasha Ivanov doesn't believe in CeFi
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임준혁
임준혁 2022년 9월12일 18:00
Waves founder Sasha Ivanov. Photo provided by Waves.
Waves founder Sasha Ivanov. Photo provided by Waves.

Sasha Ivanov, founder of the Waves blockchain, describes himself as a “physicist by education” who’s been involved in various IT projects ranging from AI to trading and gaming systems.

"I became interested in crypto around 2013, because it was a technology that I'd never seen before. I understood immediately that this was something that happens only once in a lifetime. Paradigm shifts are rare."

Ivanov explains that all technologies that had been developed before crypto were based on centralized systems. He says crypto offered a "totally new paradigm." After founding the exchange Coinmat, he decided to build the Waves blockchain in 2016.

"I realized there was a demand for something simpler, something more accessible. Chains like Ethereum are too sophisticated for most people."

I’m speaking to Ivanov in a sleek Seoul hotel room during Korea Blockchain Week (KBW) 2022. He mentions that he’s met with people from Upbit, Korea’s largest crypto exchange, as there’s been an inordinate amount of Waves trading. It also turns out that Koreans comprise one of the largest cohorts of Waves token holders. 

He mentions that Waves is seeking to onboard developers and build a local team of around five or 10 to work in Seoul. At the time of the interview (Aug. 12), Waves was interviewing people for this team. He also says he’s looking to incubate Korean projects. 

Waves' ICO was back in 2016, meaning it was one of the industry's first -- well ahead of the 2017 boom and the 2018 crash. The project started out based in Russia, but has since moved to Dubai and the US "due to the political situation."

Ivanov also hints that the new version of the Waves network will hit markets towards the end of 2022. He says the new version will solve the problem of scalability.  

"Without scalability, mass adoption of crypto is simply not feasible. We may be an old project, but we're just getting started."

 

Blockchain for the people

I ask Ivanov to describe the foundational vision behind Waves. He says Waves is a Layer 1 (L1) chain that focuses on accessibility and scalability.

When Waves first launched, they managed to process up to 1,000 transactions per second (TPS), making it one of the fastest chains of its time. Ivanov says that the founding team wanted to provide an easy way for regular people to issue tokens. He acknowledges that the ease of the process led to "a bunch of useless tokens" being issued. However, he is proud that Waves was able to "educate people"  on the process.  

"In the simplest terms, Waves is the blockchain for the people. It's accessible to regular users. A lot of people came into crypto through Waves, because it was simpler than other chains."

Ivanov says that Waves differs from other chains in many ways. For starters, Waves' smart contract language doesn't have gas. To clarify, I ask if Waves has no transaction fees. Ivanov responds that Waves has transaction fees, but they're fixed.

"You always know what you're going to pay."

He says that Waves has a DEX (decentralized exchange) integrated into its system.

"Our DEX is built into the core of the Waves system. It's not built on top of it. We launched it in 2017, so it's one of the oldest DEXes." 

Ivanov says he doesn’t want to do the same thing as everybody else. Emanating an air of intense intellectual curiosity, he considers my questions carefully before answering them. His Russian-accented English is fluent and precise.

"We're trying to do things differently. This is important, because we show alternative approaches to development."

I ask Ivanov to elaborate on how Waves is more accessible than other chains. He says that users can launch a token in five seconds. They can get the community to vet it through a vote. Once it's vetted, they can launch a pool for it. He says that you can do everything on Waves.

“You can basically launch your own projects without hiring coders."

I ask what Waves is doing to solve the scalability issue. Ivanov says he doesn't really believe in sharding, although that seems to be the most common approach these days. He thinks the technology is too complicated, which presents too many "engineering problems." He points to the continued delays of the Ethereum Merge as the prime example.

"We're looking into alternative approaches to sharding. It's too early to share what they are, but you can expect some announcements in September or October of this year."

샘 뱅크먼 프라이드 FTX 최고경영자(CEO) 출처=코인데스크US
샘 뱅크먼 프라이드 FTX 최고경영자(CEO) 출처=코인데스크US

Spat with Sam Bankman-Fried on WAVES token

I mention the WAVE token’s sharp price fluctuations that occurred shortly after Russia’s invasion of Ukraine. There was a Twitter spat between Ivanov and FTX CEO Sam Bankman-Fried, in which the former accused the latter and Alameda Research of price manipulation. Certain rumors tried to connect the WAVE token's price to the Russia-Ukraine war. Ivanov dismissed the war-related rumors. He believes that trading firm Alameda Research was clearly involved, but demonstrates a live-and-let-live attitude. 

"I'm not interested in pointing fingers, but there was a lot of price manipulation regarding the WAVES token. It was clear. They (Alameda Research) probably made a lot of money, but it's okay. We weren't the only project affected. What can you do? You have to live with it."

 

USDN depegging vs. UST depegging

Waves’ stablecoin, USDN, was depegged back in April, around a month before the UST/LUNA fiasco. Some have conflated the two incidents. I ask Ivanov for his thoughts. Ivanov says that the two resembled each other only superficially.

"UST had a hole in their logic. You could launch as many LUNA tokens as desired to support the price of UST. There was a kind of death spiral integrated into the LUNA architecture."  .

Ivanov mentions an earlier stablecoin project that Terra founder Do Kwon launched called Basis Cash, which failed. He views UST as a mere reiteration of Basis Cash. He admits that he was also inspired by Basis Cash, but took a different approach from LUNA and UST.

“Do Kwon just rehashed Basis Cash. I was also inspired by the same protocol, but I didn't follow UST's path.”

Ivanov explains that USDN is backed by the WAVES token. Unlike LUNA, however, the supply of WAVES is limited.

"WAVES can't be issued arbitrarily."

Ivanov tells me that WAVES is controlled by a "system of checks and balances" that would make a UST situation impossible. He does admit, however, that Waves’ DeFi lending protocol Vires suffered a liquidity crunch when people borrowed a lot of USDT and USDC backed by USDN.

"I had to assume a lot of those loans personally. We're currently liquidating those loans by slowly liquidating USDN.”

권도형 테라폼랩스 대표. 출처=코인에이지 유튜브 채널
권도형 테라폼랩스 대표. 출처=코인에이지 유튜브 채널

According to Ivanov, people withdrawing liquidity from Curve pools led to the depegging, but arbitrage traders took it back to its peg. People who tried to manipulate the price of USDN because they thought it was the same system as LUNA/UST were disappointed.

“When collateral went down, there was a mechanism that allowed arbitrage traders to add more collateral and profit from it, which brought collateralization back to normal levels. During the depegging, they couldn't add more. There was a separate governance token that had a limited supply, which was used up.”

Ivanov says that Waves has since launched a second governance token that exists only in situations when the protocol is undercollateralized. When collateral becomes stable, the second token is burned.

Ivanov does admit that the depegging exposed weaknesses in the system. He says that the protocol became undercollateralized when the price of WAVES and USDN went down. He says his team has since improved things to help normalize collateralization.

“The depegging was a learning experience, not only for us but for all developers. As we continue to improve things, I I think we'll eventually be able to make USDN totally undepeggable."

 

DeFi or die

Ivanov stresses the importance of algorithmic stablecoins, adding that "backed coins like USDC and USDT have their own issues." He says it's difficult to trust the transparency of the finances of centralized entities like Circle, and adds that people have successfully attacked USDT.

"Algo stablecoins have the potential to be completely decentralized and basically unkillable. You can always kill a centralized product."

Every chain needs a certain set of DeFi products. swaps and loan protocols. Vires is cheaper than Aave. Transactions are less than a cent, with similar functionality.

"We wanted to show that, using a different smart contract language, you can do the same things you have on Ethereum but for cheaper on Waves."

Speaking of centralized products, I mention the recent liquidity crunches that have brought down centralized platforms like Celsius and Three Arrows Capital (3AC). Ivanov admits that even decentralized platforms like Aaves and Vires could have suffered similar fates, even though Aave managed to dodge it this time. He says that Waves is implementing checks and balances to prevent future liquidity crunches, such as placing a limit on how much people can borrow. He also mentions setting a “utilization level” that would prevent the protocol from utilizing liquidity above a certain level.

“The next step is working on guaranteeing liquidity at all times. Nobody else is working on that problem besides us.”

Since Ivanov wants to make blockchain simpler and easier for the common user, I ask him what he thinks is unnecessarily complicated about crypto and DeFi right now. He says it’s too complicated to launch a token on Ethereum, that gas is complicated for developers. He also says that interfaces need to be more similar to those on Web2. He says that Waves’ DEX employs an email authorization system that superficially resembles those of Web2 platforms. He emphasizes that “the authorization is decentralized, but superficially it looks similar to a Web2 platform.”

"Don't ditch Web2 interfaces completely. Just make them useful somehow in Web3."

Ivanov argues that the main roadblock to mass adoption, however, isn't a lack of understanding among users. It's simply that the technology isn't mature enough to provide a seamless experience.

Since he believes that Web3 should try to mimic Web2 interfaces, I ask Ivanov if he believes in hybrid services that mix elements of DeFi and CeFi. He strongly responds, “No.” He describes Web3 and Web2 as "completely different approaches to life." To Ivanov, trying to mix the two is like trying to squeeze Web3 into Web2.

"Centralized exchanges are doing fine, but they won't last forever."

To Ivanov, the problem with centralized services and CeFi isn't necessarily technical. It's a much more human problem: the temptation to start abusing users' funds is too great. This is when "project developers become traders."  

"When the market is good, you just want to bet on the market."

He says the idea of a "supercycle" is ridiculous. People will always take their money off the table when they can. Ivanov makes his stance clear: Choose one direction, DeFi or CeFi. Correction: Go DeFi or don’t do crypto at all. To him, CeFi won't work, because there are no checks on the protocol level.

I ask Ivanov about the current bear market, and whether he thinks it's any different from former ones. Unlike most people I've interviewed, who nonchalantly shake off my question by saying something like "This isn't the first winter I've seen," Ivanov says that the current winter is the worst one he's experienced.

"There are new actors this time that were not in crypto before. When big Wall Street funds come in, it changes things. They have more money than previous actors had. They can afford things previous guys couldn't. This means more room for manipulation, and the crypto market is easily manipulated."

Despite the presence of such manipulative forces, however, Ivanov believes that a solid protocol is the ultimate answer.

"It all comes down to technology. If it's worthless, nothing will save it. If it makes sense and provides value, it will prevail, no matter how much people try to manipulate it."

I ask him if it's the job of regulators to prevent manipulation. Ivanov says regulators should play a role in protecting small investors, but thinks that it's ultimately the developers' job to create a robust protocol that can withstand market swings and the efforts of bad actors. He thinks many protocols are designed to work only in bull markets. 

"For instance, if you create a DeFi protocol where you can just bribe people to vote for your pool, that needs to be corrected on a technical level."

출처=플리커
출처=플리커

Crypto isn’t about money?

To Ivanov, the current crypto industry doesn't have many new ideas. It's simply realizing ideas from 10 years ago. He offers a stern warning against such stagnation.

"Without new ideas, crypto might actually fail."

Ivanov says that Waves is working on a DAO launch and exploring "new approaches to governance." He views the monetary side of blockchain technology as a mere fraction of its value and potential.

"Right now people focus on monetary applications, but the most important thing is governance. It's not about money, it's about decentralization."

Ivanov says that blockchain technology gives people the ability to create transparent systems that are controlled by communities. He thinks DAOs will eventually evolve into entities that can compete with governments and states.

"Governance can change the fabric of social interaction."

제보, 보도자료는 contact@coindeskkorea.com



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