23 August 2020

Bitcoin is the blockchain’s original implementation. Brilliant as it was, it proved a use case. As developers continued to explore blockchain possibilities, the range of opportunities became more apparent. 

Ethereum was the next major breakthrough in this industry by actualizing smart contracts and enterprise blockchain utilities. As they say, change is constant in life.  The progress made still wasn’t enough. Adoption still wasn’t as fast as expected and the rate of real-world asset and service tokenization fell short of idealists’ timelines.

For blockchain solutions to compete with centralized, high throughput versions, while remaining secure and completely decentralized, a solution had to be drafted from the ground up. 

What is Waves Protocol?

This is when Waves Protocol (also known as Waves Platform) came to the picture. The project introduces better value propositions and ways of making blockchain secure and ready for business adoption. On one end, Waves is promoting scalability and prioritizing adoption and on the other, it wants to bring forth a modern solution that’s familiar even for newbies. 

The Waves Platform  has optimized smart contracting mechanisms for dealing with various assets by implementing a new smart contracting language called RIDE. Through this fine-tuned language, new features like the addition of accounts and assets as categories within self-executing codes are possible. 

Deployment of smart contracts doesn’t require Gas—like it is in Ethereum or NEO. Instead, a flat fee is charged. To prevent unnecessary forks, Waves activated the Waves-NG protocol which speeds up block generation time, inadvertently improving the network’s scalability through a two-tier system made up of full and light nodes.  While these were pressing concerns, Waves is still competing with other smart contracting platforms.

Core Features of Waves: DEX and Custom Tokens

Like most, Waves has a native currency (WAVES) that oils its smart contracting ecosystem. The coin is used for payment when deploying smart contracts.

This is fitting enough especially when the core objective of the platform is to promote adoption through asset tokenization, versatile creation of custom tokens—often generated from supported initial coin offerings, and trading of supported coins and tokens securely and cheaply. Often, custom tokens generated after an initial coin offering (ICO) aren’t liquid as expected. 

Besides, the process of crowdfunding, an integral part of the open-source nature of blockchain, is not easy. To resolve illiquidity and ease crowdfunding, there is the Waves Decentralized Exchange (DEX). 

The waves DEX not only enable simple, trustless, and cheap conversion but also serve as a gateway to fiat currencies like the USD, Chinese Yuan, and the Euro. Also special is how the DEX supports exotic coins like Bitcoin and Ethereum. This means, at any time, investors can easily get in and out of BTC or ETH to Waves or any of its token cheaply.

Waves has introduced an interesting concept called colored coin method enabling easy management of tokenized real-world assets by associating them with a specific address. Consequently, by coloring tokens, Waves tokens can be pegged with fiat and other valuable assets like precious metals and even stocks. 

Differentiation for Blockchain Adoption

Thanks to this unique feature in Waves, businesses can create custom tokens to serve their needs within a given project, or for general crowdfunding without being tied to any smart contract which demands an audit. There is immediate liquidity as well since new tokens created via the Lite Client are readily tradeable at the Waves DEX.

This is only because transfers using custom tokens are done as attachments or plugins to new transactions and not as the core of the client software needed for the management of transfers. 

Waves, therefore, succeeds in eliminating the need of creating new transaction types within the network which typically increases the chance of forking the network. The introduction of plugins or attachments requiring users to relay and include them as part of the on-chain transaction types without the need of updating the client software translates to flexibility especially for third-party developers who are free to transact within a familiar environment resembling an ordinary application store.

To Wrap It Up

Waves is slowly but surely leaving its mark in the crypto industry. By improving on the advancement of Ethereum, this project offers unique possibilities not available on previous blockchains. It will be fascinating to monitor the progress over the next few years.

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Edmund McCormack
Tech industry veteran and blockchain technology investor. Simplifying cryptocurrency for almost a decade.

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