The Waves Platform: A Decentralised Asset Exchange

If you have been following blockchain developments recently, then you will most likely have heard of the Waves decentralised platform.

This company completed a crowd funding for its platform last year way before ICOs were the vogue. They managed to raise an impressive 30,000 BTC. At the time this was worth about $16m.

Now, with the rapid appreciation of Bitcoin since then, the company has numerous plans afoot for implementing their new technology.

What is Waves exactly and why is it considered one of the most revolutionary technological advancements?

What is Waves?

The Waves platform has described itself as an open blockchain platform. It wants to take the existing Bitcoin blockchain as a base and improve on its functionality considerably.

The team at Waves wanted to build out a platform that would allow for value transfer. More particularly, the Waves platform was designed so that assets such as Bitcoin, Fiat currencies and other physical assets can be issued.

Once they have been issued, the platform can also act as a decentralised exchange where they can be traded among individuals. There is also the opportunity for companies to crowd fund through the Waves client.

Decentralised Value Transfer

While there are already a number of Decentralised exchanges, they are not the most user friendly nor robust platforms. Moreover, there is no easy way for the user to quickly and easily convert tokens into a Fiat currency.

This is something that Waves wants to change. Through the use of their own Waves fiat gateway, users can exchange their fiat for crypto tokens and vice versa.

These fiat gateways are done in partnership with particular gateway operators which are similar to payment providers which allow these users to easily convert their funds into the tokens.

These are termed "Fiat tokens" which can then be sent onto the Waves platform (wUSD, wEUR etc). Given that they are crypto tokens, the transfer happens much more quickly and with lower fees than traditional banking.

Once the users have recieved their Wave fiat tokens, they can then be withdrawn and exchanged for Fiat currency once they have been recognised on the blockchain.

Of course, as a decentralised asset exchange, there are other assets that can be tokenized on the platform. The chief one among them is Bitcoin. Users of the Waves platform can tokenize Bitcoin (wBTC) which is backed by physical Bitcoin in a ratio of 1 to 1.

Centralised Speed

Waves also wants to allow for faster value transfers and trades than is possible on most decentralised networks. In fact, the Waves team has claimed that they want their exchange to operate as if it were a centralised exchange.

In order to achieve this speed, the Waves platform makes use of Matcher enabling HFT, asset for asset trading and an innovative token approach. This allows for faster block creation and increases in effective bandwidth.

This technology also enables the Waves platform to withstand the high loads that is placed on the network at times of ICOs or cryptocurrency airdrops.

Through the use of this technology, the Waves platform is able to achieve the speed and efficiency of a centralised trading platform with the safety and security that is associated with decentralised blockchains.

The Waves Wallet

Trading on the Waves platform can be done through the use of the Waves lite wallet. This will allow users to interact with the blockchain without having to download it all.

The wallet can either be downloaded as an html file or it can be run as a Chrome browser plugin. They have also released a "lite" version of the wallet which can be run on Android.

Image via wavesplatform.com

What is really helpful with the Waves lite client is that it allows new users a gentle introduction to cryptocurrencies and the underlying blockchain technology.

For example, they could only deal with Fiat currency and other more traditional commodity backed assets to start with. Yet, when they feel that they are ready to make the transition to digital assets like Bitcoin, they can easily make the switch.

As an alternative to ICOs, the Waves wallet will also give developers and companies an effective means of raising funds from the investors. These investors can receive their tokenized shares on the blockchain.

Waves tokens can also be "mined" by network nodes. There is a limited supply of Waves tokens and users will be rewarded tokens if they host a full node and reap the transaction fees as a reward.

Current Status of the Platform

Although the Waves platform is still in development, many of the features that have been mentioned are already active on the platform (asset issuance for example).

These assets are termed Custom Application Tokens(CATs) and can be distributed to a large number of people or to only a few individuals. This is why they will most likely be used for crowd funding.

Another feature which is unique to Waves and is already up and running is the payment of transaction fees in custom tokens instead of native currency. This makes things much easier for applications built on Waves.

Waves has already set up their Bitcoin gateway which will allow users to send their Bitcoin directly to waves and convert it into the Waves tokenized version (wBTC).

Something that is still being worked on is the decentralised exchange. The Waves team is also still working on the Fiat gateways with the Euro one most likely to be launched first.

Future Developments

The team at Waves also has other interesting proposals that they would like to include such as the Bitcoin NG protocol. This allows for latency to be minimized while throughput is maximised.

The NG protocol is an alternative that aims to increase the number of transactions per block without increasing the number of required forks. It does this through the use of two different types of blocks.

With the large war chest of Bitcoin startup funds along with some of the smartest minds on the project, the Waves platform has already attracted a number of important companies.

Names such as MobileGo, ZrCoin, Chronobank amoung others have realised the massive potential of raising on the Waves platform.