Crypto NYC hosts Havven

On Tuesday, September 11th, Crypto NYC hosted Justin Moses and Kain Warwick from Havven at our new office near Bryant Park. Havven is building a decentralized payment system and stablecoin. Recent market volatility combined with longstanding concerns about Tether have made stablecoins a prominent field of discussion in the crypto community. Havven, which completed a $30 million ICO in February 2018, is based in Sydney, Australia. It was founded by Warwick, an entrepreneur with a longstanding interest in cryptocurrency.

Havven grew out of project Warwick founded called BlueShyft. BlueShyft is a network of payment systems run on iPads that have been installed throughout bodegas in Australia. BlueShyft began providing access for retail clients to buy crypto using their retail network. While crypto was becoming increasingly popular with the retail community in Australia, price volatility was preventing crypto from being used as true payment network. Havven was created to solve this problem.

Warwick and Moses met during high school, and they became longstanding friends. While Moses moved to New York almost a decade ago he began working with Warwick as a consultant building out BlueShyft. Moses joined Havven 18 months ago as CTO.

Moses began the presentation by laying out the current three models for stablecoins. The most prominent model is what Havven calls the “IOU” model, in which stablecoins are backed by a pool of real-world assets, to which each token has a claim. Tether is an example of this model, where each Tether token is tied to (in theory) one dollar held in a bank account. Moses and Warwick believe that Tether’s centralized model represents a huge source of risk for Tether, notwithstanding longstanding concerns about whether Tether truly has a one to one asset to coin ratio.

“We see them [Tether] as having a real risk of being taken down by the US government. It’s two point five billion, allegedly of US dollars sitting there in banks and the question is … can they even access the money? $3 billion is a lot of money sitting there, locked away, and if the US government decides to do something about that that could shock waves into the system,” Moses said.

Another IOU model coin which has been making headlines has been the new stable coin issued by Gemini, the firm famously founded by the Winklevoss twins. The Gemini coin received regulatory approval from the New York Department of Financial Services, and will hold its dollar assets at State Street.

The second model, which Havven uses, is a stablecoin that is backed by collateral “on-chain.” Another example of an on-chain collateralized stablecoin is the Dai stablecoin, which is backed by a locked supply of ETH. The third model is based on algorithmic seigniorage, where algorithms attempt to manipulate the supply of the stablecoin to ensure rough parity to a benchmark. Coins using the algorithmic seigniorage model include NuBits and Basis.

Each stablecoin model features unique pros and cons. An on-chain collateralization model benefits from the fact that, aside from the price oracle, the system is censorship resistant and decentralized. The primary drawback to an on-chain model is that it requires higher level of collateral to ensure the system is resistance to price declines.

Havven’s system uses a dual token and stablecoin system to maintain price stability. Havven tokens (HAVs) serve to collateralize the system and must be held by those that wish to issue stable coins. Currently HAV tokens allow holders to issue USD stablecoins, called Nomins, with Nomins targeted to peg to USD at a 1:1 ratio.

For HAV holders to mint stable coins, they must pledge their tokens as collateral using the Havven tool, which they are calling Mintr. The Havven team expects the initial launch of Mintr to deploy in the next few weeks. Using Mintr, HAV holders can issue stablecoins at a 5:1 ratio. Moses explained that this over-collateralization is required to ensure the system remains fully collateralized in the event of major price declines.

The freshly issued stablecoins are then free to be sold or traded on the open market. Havven charges small transaction fees (approximately fifteen basis points) on each transaction made by the stablecoins. These transaction fees are then remitted to a global fee pool. The fee pool is then distributed to HAV token holders who have staked their tokens into the system, providing remuneration and incentives for participants to continue collateralizing the network. Market participants who have staked HAV into the network will be rewarded based on how effectively they are contributing to the target 20% collateralization rate.

To unlock collateralized HAV tokens, token holders need to buy back Nomin coins to burn. Burning the Nomin coins insures that the total level of collateralization in the system remains consistent. HAV token stakers will also have to dynamically adjust their HAV to Nomin ratio as the market price of HAV changes. If HAV prices were to decline, HAV stakers would either need to buy and burn some of the Nomin coins they had issued or purchase more HAV to keep their collateralization ratio consistent.

Havven uses a price oracle to calculate collateralization ratios for the entire system, collecting an aggregated price from exchanges that provide HAV and Nomin liquidity. To provide easy access to both HAV and Nomin, Havven has built a tool called Swappr, which allows for easy conversions between ETH, HAV and Nomin coins.

The Havven team currently has a pool of one hundred and eighty whitelisted market participants who can mint Nomin but expects to open the process to the wider community soon. The Havven team expects that the HAV staking process will largely be managed by market professionals who have experience running and managing risk.

There are currently a plethora of stablecoins vying for market share. Moses and Warwick believe that the crypto market will eventually support multiple stable coins, although they suspect that the market will eventually trend towards more decentralized solutions rather than IOU model solutions such as Tether.

“We do see a proliferation of stable coins and we expect that you will see a lot more de-centralized ones. Those centralized ones [coins] are problematic and we think that Gemini’s coin, for example …. only allowing it to trade on their exchange and calling it the same name as their exchange, it definitely adds some utility, but it is hard to see that taking over the market,” Moses said.

Havven will be rolling out new tools, including the Mintr tool, soon. To keep track of updates to their project, you can follow them on social media or join their discord group.

Photo by Casey Horner on Unsplash