Wault Finance: The decentralized banking revolution is coming much faster than you might think


The evolution of financial systems has been a common conversation topic for ages. From the barter system to cash to cashless methods, the aim has always been clear, to create better and more efficient methods of exchanging, investing and storing value. Yet, as behavioural economists unequivocally agree, human desires are insatiable; As a result, this evolution might continue for the entirety of the human race’s existence.

Interestingly, the rapid digitization of currency during the 21st  century has acted as a propellant for creating a degree of ease, efficiency and satisfaction within finance. More specifically, Satoshi’s Bitcoin whitepaper and the emergence of cryptocurrencies are perhaps the most exciting advancements digitization has brought. Since then, cryptocurrencies have evolved not only as an alternate store of value for failing world economies, but they have also become a breeding ground for better banking systems and, ultimately, saner wealth distribution.

Decentralized finance and the banking evolution

The emergence of cryptocurrencies sprouted many use cases across banking and finance, one of the most popularized being decentralized finance. Decentralized finance first became a popular concept in 2017 after Vitalik Buterin, the founder of Ethereum, developed smart contracts on Ethereum’s blockchain network. 

Afterward, decentralized finance or DeFi has become the most important use case of the Ethereum network and has been increasingly popularized on other blockchain networks. So what is decentralized finance all about? 

Decentralized finance, much like traditional banking, provides users with services like lending, borrowing, investing, and saving without using third parties or financial intermediaries.

So evolving from the concepts brought up in the first blockchain whitepaper, DeFi has become a force focused on completely decentralizing capital flow. Nowadays, DeFi removes brokerages and traditional banks and replaces them with computer code—in the form of smart contracts. Smart contracts are verifiable sets of code, usually, on the blockchain network, that automatically execute when certain preset conditions are met. Although smart contracts have long existed, the Ethereum smart contract is the first blockchain-based smart contract.

Stablecoins and their central role in decentralized finance.

In an attempt to properly decentralize finance and have a closed ecosystem where the distribution of assets, trading and execution of every action, in general, are fair, developers in the blockchain ecosystem came up with the concept of stablecoins. A stablecoin is a crypto asset backed by and having its price pegged to the value of a stable asset; often a fiat currency, but sometimes a commodity such as gold or even another stable cryptocurrency.

In essence, stablecoins allow users to store the value of a currency, e.g., United States dollars (USD), in another currency, e.g., USDT, only this time, on an immutable, distributed ledger technology—the blockchain. As the name rightly suggests, stablecoins are generally less volatile than other crypto assets, and the backing asset only determines the value. This stability allows them to be used in various applications and business cases that require more reliable units of account.

However, stablecoins aren’t the only growing force within DeFi. One aspect of DeFi that has been a major trend and also a reason behind DeFi’s growth has been Yield Farming. In Yield Farming, users move crypto assets around in different protocols, providing liquidity, which is lending their assets to users or a protocol in exchange for earning crypto yields. One common example is lending their assets to a decentralized exchange to use in automated market making. Yet, a major challenge for yield farmers is the volatility of crypto assets; They are extremely volatile and subject to bitcoin’s price and several other factors.

Stablecoins are one solution to this instability in yield farming though, and today, Tether (USDT) has grown to become the largest stablecoin with a circulating supply of $61bn. However, Tether and many other stablecoins have come under scrutiny from the government, press and regulatory bodies. Questions have often been raised about the backed assets, transparency and the practicality of their audits.

Wault Finance’s solution: a game-changer for the ecosystem

Wault finance was launched in early 2021, and in just a few months, the Wault ecosystem and its line of financial products became highly trusted and reliable. Wault Swap, the decentralized exchange (DEX), is a multichain product on both Binance Smart Chain (BSC) and Polygon. The non-custodial DEX is not only fully decentralized, but also boasts the lowest swapping fees (0.2%) on both networks, and it has consistently claimed a top five trading volume spot as well.

Wault’s goal is quite simple; ease adoption by creating DeFi products with more intuitive user interfaces and cheaper costs to promote financial inclusion. The project that started solely as a community project, with no VC investors, now has a market capitalization of over $300 million USD. Wault‘s financial products include Wault Swap, Wault Launchpad, and Wault Locker, financial products that help users trade, invest, and generate substantial yields on their funds.

WUSD: New commerce-backed stablecoin project by Wault Finance

As explained earlier in this article, stablecoins play a central role in decentralized finance. While there are several stablecoins and several common models, stablecoins continue to evolve. Wault recently announced the development of a new commerce-based stablecoin, a model that is neither the traditional crypto or fiat-backed, nor algorithmic. Instead, WUSD is backed by the guarantee of active commerce within Wault Swap and Wault’s existing ecosystem.

Unlike fiat-backed stablecoins, WUSD involves only blockchain assets; yet, it is not overcollateralized like crypto-backed stablecoins. The model starts with USDT serving as 90% collateral and the existing WEX token(token for Wault Swap)  as the remaining 10% collateral. However, this model is expected to evolve to use less USDT as collateral over time, improving the system’s capital efficiency. In this stablecoin model, 100% of the token is fully redeemable, and it uses stability mechanisms like a treasury, emissions support, trading fee support, and staking support. (You can read more details on WUSD’s mechanisms here.)

Wault finance has recorded remarkable growth in roughly six months, and its wide range of financial tools have continued to promote decentralization and trust in the ecosystem. Undoubtedly, Wault will not only be another protocol; it will increase the adoption of decentralized finance as a whole.

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