Velo Labs 2020 Roadmap Status Update! The Velo Protocol!
2020 will be remembered as a defining year for Velo Labs. Despite navigating the unexpected difficulties presented by the COVID-19 pandemic, the Velo Labs team issued the VELO token, listed VELO on its first exchange and forged meaningful partnerships with world class companies like Visa. However, 2020 will be remembered, first and foremost, as a year of development.
Early in the year, the Velo Labs team published an extensive roadmap. The team indicated that Velo Protocol, Testnet, Dashboard, Wallet and Mainnet milestones would all be hit prior to the end of the year. This update covers the Velo Protocol.
What is the Velo Protocol?
In the simplest terms, the Velo Protocol is a financial protocol that issues digital credits pegged 1:1 to any fiat currency. It is made up of two primary components: the Digital Credit Issuance Mechanism and the Digital Reserve System
Digital Credit Issuance Mechanism
The Digital Credit Issuance Mechanism issues digital credits pegged to any fiat currency by staking VELO tokens in collateral pools.
Digital Reserve System
The Digital Reserve System automatically rebalances the VELO token collateral pools to maintain a 1:1 value ratio between issued digital credits and their related fiat currency.
Both the Digital Credit Issuance Mechanism and the Digital Reserve System require Turing-complete smart contracts. As VELO tokens are Stellar-based tokens, and the Stellar Network does not support Turing-complete smart contracts, Velo Labs uses the Hermes Warp Protocol to engage a proprietary blockchain called Evrynet to achieve these vital functions.
The Hermes Warp Protocol
The Hermes Warp Protocol is a cross-chain protocol that bridges the Stellar Network, Evrynet and Ethereum. The Hermes Warp Protocol allows digital assets to “move” from one blockchain to another. Technically, a given digital asset exists on all chains simultaneously. However, while a digital asset is active on one chain, it is automatically locked on the others. More detailed explanations about the Hermes Warp Protocol can be found here.
Why is the Velo Protocol important?
Velo Labs is building a Federated Credit Exchange Network. This network is powered by the Velo Protocol. Velo Labs’ Federated Credit Exchange Network is a distributed network with regulated entry points. Network participants issue digital credits pegged to any fiat currency for use in their day-to-day operations. More detailed explanations about the Federated Credit Exchange Network can be found here.
One of Velo Labs’ most important partners, the Lightnet Group, is also using the Velo Protocol to power their international remittance ecosystem. Lightnet Group has already onboarded several banks and other financial service providers.
What is the current status of the Velo Protocol?
Development of the core components of the Velo Protocol has been completed and audited! The first version of the Hermes Warp Protocol is also working and able to bridge the Stellar-based VELO tokens and Evrynet-based VELO tokens.
What still needs to be done?
Both the Digital Credit Issuance Mechanism and the Digital Reserve System will undergo optimizations and upgrades in 2021.
The Hermes Warp Protocol will be upgraded to add an additional bridge linking Stellar-based VELO tokens and Evrynet-based VELO tokens to Ethereum-based VELO tokens by the end of the year.
This is the first in a five-part series providing updates on Velo Labs’ current status and latest developments.