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James Wu, chief architect of Velo protocol, introduced Velo ecology, token design, protocol advantages and future planning.
Interviewee: James Wu, Chief Architect of Velo
On September 16, 2020, Satoshi Mamoto, Winkrypto and Velo jointly organized an AMA event. This AMA invited Velo’s chief architect James Wu, who introduced the Velo ecosystem, token design, and protocol differentiation advantages And future plans. Let’s take a look at James’ wonderful answer in this AMA:
- When the influence of the Velo ecosystem grows, the demand for digital credit grows, and more and more users are served, Velo tokens can achieve a virtuous circle of market demand and increased pledge volume, reduced circulation, and increased market prices.
- The core goal of the Velo agreement is to empower the existing commercial/financial market, not to replace it. As far as partners are concerned, Velo has currently cooperated with Lightnet Group to help it enhance its ability to conduct cross-border remittance services in Southeast Asia.
- VELO tokens currently do not support any form of “mining”. The main purpose of VELO tokens is to serve as collateral for the issuance of digital credit, and to become a bridge asset for value transfer between the traditional world and the digital world. The core mission of the Velo protocol is to help and enhance business capabilities, so we design the function of the Velo token for adoption, not for speculation.
Question 1: From your perspective, can you briefly introduce the VELO project to our community partners? How does it work, and what is its vision and mission?
Velo Protocol is a next-generation open financial protocol. By issuing fully pledged and customized digital credits on distributed ledgers, it creates a trustless credit network for enterprises (mainly banks and payment service providers), enabling them to be mutually secure and timely And transparently exchange equivalently.
When Velo’s partners (banks and payment service providers) apply Velo technology, people who have not fully used banking services in these areas will benefit a lot: they will be able to enjoy more than traditional cross-border remittance methods. Low remittance transfer fees, faster transaction speed and wider coverage. The realization of all this does not require end users to understand Velo technology, nor do they need them to purchase VELO tokens.
Question 2: Can you share your personal background? How did you get in touch with cryptocurrency and blockchain, and when did you create/join the VELO project? Where do you think cryptocurrency and blockchain attract you the most?
I have been working in Silicon Valley for the past 20 years, focusing on large enterprise systems. My first personal exposure to cryptocurrency and blockchain was in 2015, when I wanted to use cash to send a bitcoin red envelope to my brother living in Shanghai. This is an inefficient process that took several days to complete, and the cost is higher than traditional banks, including the transaction fees and deposit and withdrawal costs of the exchange. After that, I started to get closer to the industry because I wanted to know if there is a better way to use this technology.
I joined Velo in June of this year and I am very excited about the improvements it will bring to people who do not have a bank account and who do not have access to banking services in the world. I haven’t experienced much money transfer, but it is at least achievable for me, and transaction costs have not affected my quality of life. Blockchain technology and cryptocurrencies like Velo are likely to have a direct and profound impact on the lives of many people in Southeast Asia and other developing countries. I am very much looking forward to seeing us provide high-quality and affordable financial services to those who have never enjoyed financial services before.
Question 3: How is the function of VELO realized? Can you introduce the components of the VELO ecosystem and how to achieve these great visions?
The Velo agreement will mainly implement a variety of business scenarios with payment as the core through two mechanisms: the digital credit issuance system and the digital reserve system.
Digital credit issuance system:
The Velo protocol supports a digital credit system secured by Velo tokens. To put it simply, after obtaining Velo tokens, trusted business partners in the ecosystem can pledge Velo tokens to obtain digital credit with a stable ratio of 1:1 to the value of the standard legal currency. Companies can use these digital credits to meet their operational and strategic needs. Application scenarios include but are not limited to remittance, payment, loans, and point systems.
Digital Reserve System (DRS):
The Digital Reserve System (DRS) is a set of algorithm rules in the Velo ecosystem that manages all aspects of the Velo protocol. This system will ensure the value stability mechanism of digital credit issuance. At the same time, the Digital Reserve System (DRS) will ensure that the ecosystem achieves stable and effective token supply management, and maintains the digital credit that is fully guaranteed by the 1:1 Velo token equivalent to the value of legal currency. The main function of the digital asset reserve system is to ensure that the price system of digital credit uses the smart contract of blockchain technology to run these financial rules.
Specifically, because the price of Velo tokens fluctuates, the Digital Reserve System (DRS) automatically adjusts the amount of Velo tokens in the pledge pool by an algorithmic balancing method to ensure the anchor between digital credit and Velo tokens1 :1 value relationship. If a trusted partner wants to obtain a certain amount of digital credit through the Velo protocol, they must deposit the same value of Velo tokens in the system; if the price of Velo tokens rises due to market fluctuations and is higher than the corresponding digital credit type , The pledge pool will reduce the number of Velo tokens, and the corresponding reduced Velo tokens will be returned to the reserve pool.
Simply put, the digital credit issuance system will act as a hub for the transfer of Velo’s ecological value, and the Velo digital reserve system will ensure the order of system operation and value stability. Velo Protocol uses these two key mechanisms to implement various business scenarios such as cross-border remittance, payment, lending, and points.
Question 4: Why did you choose to issue VELO based on Stellar in the first place and then build your own agreement? How will VELO integrate into the Stellar ecosystem?
Stellar was chosen as the technology for issuing VELO tokens because it is one of the fastest, cheapest, most efficient and secure blockchains on the market. Looking at various mainstream blockchains, Bitcoin can only process 3-4 transactions per second, and Ethereum can only process 20 transactions per second. From the perspective of transaction costs, Ethereum and Bitcoin are expensive for small payments due to their high network activity. The Stellar blockchain can complete 1,000 transactions per second, which is particularly suitable for financial scenarios such as remittance and payment.
Stellar and Ripple have some similarities in blockchain technology, but Stellar has a slightly lower transaction cost than Ripple under the same performance, and also has higher scalability. It is a unique and sustainable Decentralized financial product and service platform; Ripple focuses on improving the traditional banking system to replace SWIFT; and Stellar’s goal is to directly serve people who do not have bank accounts and cannot enjoy adequate banking services, and provide them with a wider range of financial services .
At the same time, since Stellar does not support complex smart contract logic, Velo Labs also integrates smart contract platforms such as Ethereum and Tendermint, and cooperates with the smart financial service platform Evrynet to develop a cross-chain protocol Warp. From the perspective of the overall architecture, the Stellar blockchain provides real-time and reliable digital asset transfer, and smart contract chains such as Ethereum provide the ability to deploy and execute smart contracts. The Wrap cross-chain protocol is responsible for the Stellar blockchain and smart contracts. Interaction to provide support for the establishment of the digital reserve system.
Question 5: How is the project’s token economic model designed? How does VELO’s token capture network value? For token holders, what is the role of tokens?
VELO token is a practical token that can be used to execute smart contracts or as collateral for value transfer, thereby providing protection for digital credit settlement issued within the ecosystem. VELO tokens can be used as “bridge assets” and become a bridge connecting the real world and the digital currency world.
When a trusted partner issues stable digital credits to meet their own development needs, the company needs more Velo tokens to pledge. Ideally, when the influence of the Velo ecosystem grows, the demand for digital credit grows, and more and more users are served, Velo tokens can meet market demand and increase in pledge volume, decrease in circulation, and increase in market prices. A virtuous circle.
As mentioned above, trusted partners are the main holders of VELO tokens. By acquiring VELO tokens, trusted partners can use them as collateral and receive corresponding digital credits in the Velo ecosystem for commercial transactions in the ecosystem.
Question 6: There are also various cross-border remittance blockchain solutions on the market. What do you think are the main advantages of Velo? How do you differentiate from the project in terms of positioning?
On the whole, Velo has an extensive business network (such as CP Group and its affiliates, and other companies listed above), while other companies do not. In terms of business, Velo’s business and application areas are not limited to remittance transfer and payment, but a wider range of financial services. Velo’s unique advantages are mainly:
The landing scenario is clear: The core goal of the Velo agreement is to empower the existing commercial/financial market, not to replace it. As far as partners are concerned, Velo has currently cooperated with Lightnet Group to help it enhance its ability to conduct cross-border remittance services in Southeast Asia. In addition, we are also cooperating with digital service organizations such as the Swiss SEBA Bank to enhance the Velo ecosystem.
Velo’s investors/partners/shareholders: Velo has a rich network of investors and partners. Our investors include Thailand’s CP Group, Interstellar, Hanwha Investment & Securities, Hong Kong’s Hashkey Capital, Stellar Development Foundation (see the detailed list below). Our partners include Swiss Bank SEBA, Kyber Network, Interstellar and other companies. Below is a list of our partners and investors:
- Zheng Da Group
- Carry Protocol
- DU Capital
- Inception (Thailand)
- Signum Capital
- United Overseas Bank
- Unity (investment)
- Kyber Network
- Everest Ventures Group
- Lightnet Group
Compliance: Since our mission is to empower existing businesses/financial markets rather than replace them, the Velo agreement requires itself to comply with laws and regulations from the early stage of its design and development, and at the same time ensures the credibility and business of all business participants Mechanism of transparency.
Bridge assets: The Velo protocol is the first federal financial network that connects real settlement and digital networks under a fully interoperable universal credit and settlement network.
Question 7: How is VELO’s initial token distribution method? How can investors obtain VELO tokens? Recently, many DeFi projects have conducted “mining” to distribute tokens. What do you think of this design?
The distribution of VELO tokens is as follows:
Investors can obtain Velo tokens in three ways:
- Purchase via digital currency exchange
- Purchase through a foundation that oversees the Velo network
- In some cases, the foundation will also grant certain teams and projects VELO tokens to support their development or services in the Velo ecosystem
VELO tokens currently do not support any form of “mining”. The main purpose of VELO tokens is to serve as collateral for the issuance of digital credit, and to become a bridge asset for value transfer between the traditional world and the digital world. The core mission of the Velo protocol is to help and enhance business capabilities, so we design the function of the Velo token for adoption, not for speculation.
Question 8: Can you share your financing situation? What are the main investors and institutions? How do you like each other?
Velo’s investors include UOB Venture, Uni-Presiedent, HashKey Capital, Hopeshine Ven-tures, Signum Capital, Du Capital, and many other large Asian multinational companies and first-line investment institutions.
Investors and partners join the Velo ecosystem because they believe that Velo’s mission is to establish a global decentralized value transfer system, through which Velo can create value for themselves.
Question 9: On the track of remittance payment solutions, the promotion of the project’s business relationship and ecological construction are very important to the project. Can you talk about some of VELO’s partners? How do you use your own resources to build ecology?
At present, many partners who have reached a cooperation intention with Velo can form a strong synergy with Velo in terms of commercial resources and ecological construction.
From the Velo partner ecosystem just shared, we can see a lot of end-user-oriented store resources. For example, Uni-President Asset Holdings is the investment department of Uni-President Enterprises Corp., which is still in Taiwan, China, and The Philippines has more than 9,000 7-11 convenience stores and Starbucks. Velo’s other partner, Lightnet, was founded in Thailand by members of the CP Group, which owns all 7-11 convenience stores in Thailand and several mainstream large shopping malls and supermarkets. Therefore, Lightnet will be able to provide its transfer services supported by the Velo agreement through various convenience stores.
Question 10: When will VELO products go online? How can we take the test? After the product goes live, where will your next plan focus?
This is a very good question, let’s take a look at our development roadmap first.
- In the second half of 2020, we can see the completion of Velo Protocol’s TestNet, Dashboard, Wallet and Mainnet.
- In the first quarter of 2021, we expect to launch the first part of the Velo agreement, which includes the upgrade of the digital credit issuance system and digital reserve system.
- In the second quarter of 2021, we expect to enter the second phase of development and complete Velo decentralized transactions and Velo OTC services.
We still have a lot to do and I am very excited about the next few years.
In the future, we will launch a fortnightly product and technology development update. Please join our community to learn about the latest progress of our product development.
The following are free questions asked by members of the Satoshi Mamoto community to guests:
Question 11: Are there any exchanges planned? What is the initial circulation of Velo tokens? What is the speed of token release?
Question 12: Can you introduce the current situation of the team? How will the team make money in the future?
Project core members and consultants can refer to our official website (velo.org). Because the core vision of VELO protocol is to realize the cross-border value transfer of trusted partners on its platform, the main revenue of the project will come from the fees paid by trusted partners. The handling fee mentioned here includes transaction handling fee, OTC service handling fee, loan handling fee and so on.
Question 13: How safe is Velo and what efforts have been made to ensure safety?
The VELO project always puts security in the first place, and has reached a cooperation with the third-party security agency Peckshield to review the project code. In August of this year, the Peckshield team conducted a strict source code review of the VELO project and gave suggestions for revisions. The VELO team made timely changes to the corresponding code based on the audit recommendations. There is no code security risk at present. The complete audit report will be published on Peckshield’s official website shortly. We dare to compare security with other decentralized financial networks in the market and are very confident in the security of our code.
Question 14: Will you consider launching some DEX to add some liquidity, such as uniswap?
Yes, this is in our development roadmap, we plan to develop Velo’s own Federal Credit Exchange.
Question 15: What is the difference between Velo and Celo? It feels that the names are similar, and the mechanism is relatively the same.
Regarding VELO/CELO, the Velo project was actually established in 2018. Before Celo, there was no relationship between the two projects, but the names were similar.
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