Waves — Update I

04.03.2019

TL;DR. Ecology:5 (5). Technology:5 (6). Decentralization:5 (5). Valuation:5 (7). Rating:5/10 (6/10)

Six months have passed since the last BD Ratings article on Waves. Let's continue to explore the project.

2018-09-04: USD 2.31, Satoshis 31 269.

2019-03-04: USD 2.60, Satoshis 69 445.

On 4th of August  -  the same day that the initial article was posted  - Waves support was added to the popular Ledger hardware wallets. This was hailed as an important milestone as it reduces total risk of owning WAVES tokens considerably. On the 21st of October 2018, the Waves team decided to test the newly implemented Waves-NG code. Mainnet processed 6.1 million transactions during a single day.

A month later, on the 3rd of December, a three-day Waves hackaton in Moscow was announced. A new iOS and Android app was developed and then released in December as well. The Waves DEX was integrated in the app, making seamless, semi-decentralized trading from a smartphone possible. On the 19th of December, the Vostok Project was announced. Securing a USD 120M investment from private and institutional investors, Vostok is an attempt to integrate a private Waves blockchain to enterprise and government IT-systems. The existing Waves ecosystem participants were to get a 3% (of total supply) air drop of Vostok System Tokens (VST). Plans for a public Vostok token sale were also drafted. The whole project is still vague and more details on its merits are expected in the future.

Only two days later, the Waves team also announced the first beta release of Tokenomica's tool providing what the developers claimed to be compliant solutions for security token offerings (STO's). With Tokenomica, users were able to first pick what type of token they would like to issue, and then also for what jurisdictions the tokens would be legal.

On January 29th, Waves was integrated to Microsoft Azure Cloud, facilitating easier smart contract development and operation. At around this time, the team also focused on RIDE  -  Wave's smart contract programming language. RIDE was to encourage the development and use of dApps on Waves; smart contracts had been used prior to this but had been templates rather than a result from generalized smart contract development. With RIDE, contracts like stable coins and DAO's could be created in a close to Turing complete manner. The project essentially seems to have aimed at becoming more similar to Ethereum.

In a move to partly support community members who had filled the roles as ambassadors, partly show the new 'smart assets' feature of Waves, Waves Reward Token (WRT) launched. By introducing WRT, Waves aimed at encouraging the community to keep track of ambassadors' activities, and to reward them for good work. The token was going to be airdropped to WCT holders, and could be redeemed at Waves Labs for WAVES tokens by white listed ambassadors. In this regard WRT is similar to the MRT miner subsidies, which currently are also redeemable for WAVES.

Ecology

The official subreddit is not very active, and team members are posting a majority of all threads. On-chain activity is still relatively high however, and a third party measurement of total activity on the chain currently lists Waves as #9. Total number of transactions per day seems to be in the tens of thousands which is acceptable these days.

The release of an iOS and Android wallet app was a good step towards better ecosystem infrastructure. It makes on-boarding new users easier, and encourages blockchain activity. The release of Tokenomica is another step towards higher economic activity on the Waves blockchain. Although the tool sounds complicated in a sense that having up to date legal data integrated in it ought to be really difficult, it certainly does encourage tokenization ventures. The future will tell if projects deem it useful enough to shift some ICO activity from Ethereum to Waves.

Somewhat related to the Tokenomica push is Waves's introduction and improvement of RIDE, which ought to make dApp development easier. More dApps mean more economic activity in the long run, which obviously is good for an Ecology grade.

As Waves Labs has initiated a grants program where funds are allocated to what they deem to be promising projects built on Waves, total activity can be expected to get a small boost. Some results of this program can be seen here. With certain similarities to the above, Waves Labs also encouraged developers to share their Waves projects in order to win WAVES tokens.

Grade: 5

Reasons: Ok on-chain activity. More tools and infrastructure launched.

Technology

Waves GitHub activity remains very high. The total number of developers that contribute seems to be high as well. By organizing developer meet-ups and hackatons, the Waves team help maintain technical quality.

In the prior Waves article, BD Ratings brought up the issue of newly introduced tokens like WCT and MRT. Waves had in a way failed to construct a feasible incentive scheme to stakers/miners, so the team decided to dilute regular WAVES tokens by introducing MRT instead. In a recent reddit thread, it is apparent that the whole scheme was not well thought out, as even the Waves Community Manager fails to explain the full purpose of MRT. This is honestly embarrassing and not worthy a project of this size. The Waves team needs to define exactly the long term implications of these ad hoc token additions. They can't just play around with the economics of the public blockchain in this manner. The buy-back program in place for MRT, where the Waves team buys back tokens in exchanges for WAVES, can only be a temporary measure since the team does not have unlimited funds.

Although RIDE may boost economic activity on the Waves blockchain, it may also increase the number of attack surfaces. Ethereum experienced a number of attacks on the blockchain itself, stemming from wrongly priced computations. Only time and trial will make sure these new features are not too dangerous.

Finally, the Waves-NG stress test must be hailed as a success. With no obvious centralization aspects, having the network process over 6 million transactions in a day is really impressive. BD Ratings will continue to monitor these aspects when it comes to Waves' Bitcoin-NG implementation. It may very well be the case that it advances the decentralization/throughput frontier.

Grade: 5

Reasons: Active GitHub. Multiple developers. Bitcoin-NG technology. Implementation of new untested features like more generalized smart contracts. Still 'broken' mining subsidy program.

Decentralization

Looking at the distribution of blocks produced as of end of August 2018, no pool had even close to a staking majority.

Other decentralization aspects seems to have remained more or less unchanged. The team now holds slightly less WAVES due to bounty prices, and there has been no clear instance of Waves Labs trying to centrally control the ledger. BD Ratings still awaits on-chain governance features that has earlier been discussed by the team.

Grade: 5

Reasons: Unchanged parameters affecting decentralization.

Valuation

At time of writing, total valuation of all WAVES is around USD 260M, which puts Waves at #21 on coinmarketcap.com. Waves has solid fundamentals which BD Ratings mapped in the initial article half a year ago. Yet, a lot of changes have been introduced lately; RIDE changes Waves to a degree, and the non-discussion with regards to miner subsidies is also a point of concern.

BD Ratings needs to have evidence of long term blockchain construction soundness by applying what Waves is today, to the test of time, as earlier discussed. Attackers may very well try to break aspects of Waves with the newly added features. All this, combined with a more than 100% price appreciation (in Satoshis), lowers the Valuation rating somewhat.

Grade: 5

Reasons: Price appreciation. Similar fundamentals.