Why use the Waves protocol for DeFi applications?
In this article, Vladimir Zhuravlev, Waves developer advocate, explains the advantages of the Waves protocol for building DeFi apps.
When Waves was founded five years ago, it was hard to imagine, in what direction the blockchain space will move. Decentralized finance (DeFi) was still in its formative phase, and many contemporary DeFi tools had not yet been invented.
But Waves’ approach has always centered on high throughput and low fees. And today, when DeFi is all the rage, these advantages make the Waves ecosystem one of the DeFi pioneers. A number of successful DeFi apps have been built on the Waves protocol, including Waves.Exchange, the AMM service Swop.fi, Decentralized Forex and the Neutrino stablecoin protocol.
Why are developers choosing the Waves protocol for their DeFi apps?
Just about everyone has complained about exorbitant fees on Ethereum. There have been numerous jokes about that from prominent people, including this one, from the Binance founder:
True, only major players can currently afford even basic Ethereum transactions. A simple transfer of ERC-20 tokens will set a user back $10, and a swap in MetaMask requires a fee of at least $50. Binance Smart Chain offers much lower fees, under $1, which has lately been a factor winning over many former Ethereum users.
Waves offers an even better deal. In addition to guaranteed low fees, the chain allows users to stop worrying about gas fees. All network fees are fixed regardless of any factors, except for network overload. This feature was made possible by the very design of the protocol and its smart contract language: all transactions have a predictable complexity and execution time, and there is no need for gas.
Do you want to transfer tokens on Waves? Rest assured that you’ll have to pay a fee of only 0.001 WAVES (less than $0.01). For transactions involving the smart contract, the fee will be just 0.005 WAVES.
This is very convenient for dApp developers who can guarantee cheap transactions for their users regardless of the network load. This feature, for instance, came in handy for the development of Swop.fi, attracting users from other networks.
Apart from fixed low fees, Waves is a fast and scalable blockchain. The protocol enables up to 1,000 transactions per second, which is very important for DeFi apps, with many users and often small transactions.
The block generation time on Waves is 60 seconds, but, thanks to the Waves-NG technology, microblocks are available, to which transactions are written every 5 seconds. Not a bad speed for such cheap transactions, eh?
The Waves protocol is based on the LPoS (Leased Proof of Stake) consensus algorithm, enabling WAVES token holders to collect a passive income from staking their tokens. WAVES staking became especially lucrative after the adoption of a monetary policy, and, for the last 18 months, it has been offering an APY of above 5%. This feature facilitates the creation of DeFi apps for staking and yield farming. One example of such a product is the stablecoin Neutrino USD (USDN), which offers its holders an APY of 10%+, since WAVES tokens locked in the smart contract as collateral, are staked.
Any DeFi app developer can use WAVES staking to improve the logic of their service, enabling an income from assets locked by users in DeFi apps.
A difficult entry for new users has long been a major problem in the blockchain space. I think, because of that problem, DeFi has been unable to have a break outside the crypto community despite the fact that decentralized finance is supposed to resolve regular users’ problems caused by flaws in the traditional banking system. Therefore, an entry for regular users should be easy, and they shouldn’t need any tech skills or knowledge.
Today, to start using DeFi apps, a user has to study a range of tools: first, to create a crypto account, then to deposit funds to it and figure out how the signing of transactions works and, finally, to actually use a DeFi service.
In turn, the Waves ecosystem’s advantage is a single entry point, and learning about all the tools would only take about an hour and setting up an account and depositing funds to it takes just minutes. This easy entry is achieved thanks to Waves.Exchange, a DEX offering email registration, payment for crypto by card and simple trading tools. In addition, MetaMask, a wallet used in the Ethereum network, is integrated into Waves.Exchange, making it a user-friendly entry point not just for crypto novices, but also for experienced users from other ecosystems.
But, in addition to an easy entry, a blockchain ecosystem needs to be easy to use. Therefore, Waves.Exchange offers integration with Waves Signer, which facilitates the use of Waves.Exchange for transactions in external apps. For instance, Waves Signer is used in the Waves DAO, offering users access without installing browser extensions: you can just log in and cast a vote. Similarly, you can access Swop.fi using your Waves.Exchange login.
The Waves protocol is convenient not just for end users, but also for DeFi developers, offering a wide range of tools for adding blockchain to apps. Apart from above mentioned Waves Signer, the Waves ecosystem has several wallets, the browser extension Waves Keeper, developer libraries and much more. By combining these tools, a developer can build an app and add blockchain to it, using just a few lines of code, just like I did in Proof-of-Concept Certificado.
Separately, I should mention a major developer tool on Waves, the programming language Ride and an ecosystem around it. Ride also offers several auxiliary instruments, such as VS Code Plugin, Surfboard and a full fledged online IDE.
You can check out the entire range of the Waves ecosystem’s tools in Awesome Waves, which is supported by the community and Maxim Smolyakov, the QA Lead in the Waves protocol core development team.
The main development direction for the Waves ecosystem is interoperability, that is enabling DeFi apps to operate in any blockchain. The Gravity protocol has already connected the mainnets of Waves and Binance Smart Chain, offering developers a convenient bridge named SuSy. Currently, integrations with other platforms, including Ethereum, Solana, Fantom and Ergo, are in the works.
Moreover, centralized bridges have been developed that facilitated the arrival in the Waves network of the wrapped tokens CRV, ETH and others. These tokens can be used in dApps on the protocol, for instance, they are available in Swop.fi.
Easy integration with other networks is one of the advantages of the Waves protocol, implemented in several aspects. For instance, the smart contract language Ride has a function of validating cryptographic signatures on the Ethereum curve, which makes it possible to validate an Ethereum account’s signature in a dApp on Waves. This function has already been used by the Gravity team to develop a concept for using a MetaMask account on Waves.
The Waves protocol is open for all developers — from experienced ones to novices. The latter could benefit from various resources, including courses on Coursera and Stepik, a selection of Medium articles and even a book!
Around the protocol, a sizable community of developers has formed, who support each other and answer questions in the Dev Chat and on the forum. Let’s move the DeFi segment forward together, using the Waves protocol! #keepOnWaving