What is Waves?
Waves is a multi-function blockchain that lets anyone quickly and easily create a new token, even if they don’t have blockchain development experience. Once the token is created, traders can exchange it for other tokens on the Waves exchange.
In this article, we’ll explain how Waves works, its advantages, and the purpose of the WAVES token.
The Waves Blockchain
The introduction of the Ethereum ERC20 token standard was revolutionary. Instead of having to create their own blockchains, developers could quickly create a token on top of Ethereum. These tokens are freely tradeable throughout Ethereum’s large and quickly growing ecosystem.
The downside of the ERC20 standard is that although it’s easier to create a token than a blockchain, some coding experience is still required. For example, creating a new ERC20 token is not as easy as creating a new WordPress website.
Anyone who wants to create a token on Ethereum either needs to have blockchain development skills, or pay someone who does. That’s where Waves comes in.
Waves’ objective is to let anyone create a custom token, even if they’re not a programmer. In fact Waves makes the claim that you can create a custom token in just a few minutes, the entire process is no more difficult than creating a Facebook account and setting a profile picture.
The Technology behind Waves
CAT stands for Custom Application Tokens. That’s basically a fancy phrase for the custom tokens that users create using Waves.
Anyone who wants to create a token can do so with the Waves exchange. This platform can be accessed via a computer, but it also works on an Android or Apple mobile phone. The Waves team has made it as easy as possible for anyone to create a token. Creating a new token costs 1 WAVES coin, currently valued at $6.36.
Similar to other cryptocurrencies, there are two types of nodes on the Waves blockchain. Full nodes store a complete archive of all of the transactions that have ever taken place on Waves. Lightweight nodes don’t keep a copy of the blockchain. Rather, they connect to full nodes to retrieve any information that’s required.
Waves uses a Leased Proof of Stake (LPOS) consensus mechanism. In a traditional POS blockchain, a user needs to run a full node to stake in a traditional POS blockchain. However, with LPOS users can choose to “lease” their Waves to a full node staker.
Once that staker adds a block and is compensated, the block reward is split with anyone who has leased their tokens to the block producer. This is similar to Delegated Proof of Stake (DPOS), the consensus mechanism securing the EOS network.
The Benefit of Waves
The primary benefit of Waves is that anyone can create a token for any reason. For example, a restaurant could create 50 tokens and make each token worth a free meal. The restaurant could distribute these tokens to whoever is on their email list, as an incentive to get people to stop by for dinner.
That’s what can happen at a local level, but it gets even more interesting to think about how tokens can work on a national level. Let’s say that Burger King creates and distributes 50,000 tokens where each token is worth one free Whopper.
Some percentage of the people who receive the Whopper token will have no use for it. If that’s the case, the token holder can use the Waves Exchange to trade their token for something else. For example, someone could swap their Whopper token for a Big Mac token, or they could swap their Whopper token for WAVES.
For any of this trading to happen efficiently there needs to be a liquid market and that doesn’t exist yet. There just aren’t enough people trading tokens on the Waves Exchange, however the potential is there. In five or ten years you might be able to swap Whopper tokens for Starbucks points or frequent flyer miles.
It’s actually really cool to think about everything that’s possible with Waves. Since creating a token is simple and inexpensive, this platform can work for everyone from small business owners to large enterprises.
The WAVES Token
The main reason that Ethereum can be so frustrating is that the transaction fees can get totally out of hand. During peak demand it can cost $5 or more just to send a simple transaction. Making a trade on a DEX can run $20 or more.
On the Waves platform there is a flat fee for transactions, ensuring that anyone can use the platform at any time. All transaction fees are payable in the native WAVES token.
Besides transaction fees, there are a couple of other uses for WAVES. Investors can use the token to stake and earn a passive income. Currently the ROI for staking is about 4.3%. WAVES tokens are also used to pay the fees associated with creating new tokens.
Waves was launched with a $16 million ICO. Each WAVES token sold for about $0.19 at the ICO, giving investors a very profitable return. WAVES are currently trading at over $6 per token.
Binance is the most liquid exchange for trading WAVES, with WAVES/USDT being the most popular trading pair.
The Potential of Waves
Waves is one of those cryptocurrencies that has a very obvious use case. A platform that lets anyone create their own token has a lot of value and there are tons of different ways that these custom tokens can be used.
So far Waves has not generated much interest and the WAVES token has a daily trading volume of about $20 million. However, if Waves can get more people and businesses to use the platform, there’s a possibility for significant growth in the future.
This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.