What is XAR Network? Framework for Decentralized Finance on Cosmos & Fantom
The XAR Network could be one of the tools that is used to create new financial systems all over the world. Instead of working as a single network, the XAR Network allows developers to create their own systems and also has an innovative staking model.
According to XAR Network:
“XAR Network public chain is a permissionless decentralized network with a focus on DeFi (decentralized finance). Based on Lachesis and the TxFlow protocol, Fantom Foundation’s consensus mechanism allows high responsiveness with almost instantaneous full finality (~1.2 seconds), at very high transactional throughput (processing in excess of 20,000 transactions per second).”
The ability to build local financial networks is a great feature, and the architecture that allows the XAR Network to function is open to being adapted to specific tasks. Some entities may want to use it to clear transactions, while others may use it as a means of creating a return on tokens.
XAR Network Addresses the Need for New Finance
The vast majority of people have simple financial lives. Past a few retirement accounts, people just need to earn money and keep in in a stable asset (like a national currency). Bitcoin was designed along these lines. Bitcoin can be exchanged for goods and services, and also saved on its public blockchain.
Unfortunately, when it comes to the more complex parts of the financial system, a relatively simple monetary system isn’t enough. Numerous companies have popped up to try and fill in the gaps, but most of these solutions introduce counterparty risk.
For example, if you want to hedge your exposure to Bitcoin, your easiest options will be with a third-party exchange. The value of your hedge will only be as good as the exchange (your counterparty), and if you have to pledge Bitcoin as collateral, those tokens would be at-risk.
XAR Network is addressing these challenges directly.
XAR Network explains:
“XAR Network’s public chain allows you to deposit any supported digital asset, collateralize it, mint Collateralized Stable Currency Tokens (CSCTs) based on this collateral, and then use these CSCTs to stake and earn rewards. All the while maintaining ownership of your underlying collateralized asset. Staking CSDT allows you to receive rewards from the fees pool, proportional to your share of the total CSDT stakes in the network.”
XAR Network allows users and developers to create a range of financial tools with its platform, and achieve a much higher level of autonomy. If Bitcoin allowed people to trade and save without a third party, XAR network is working to create a platform that would remove the need for third parties from financial transactions almost entirely.
Decentralized Finance (DeFi) is the Future
As the recent breakdown of the US FED’s ACH clearing system demonstrates, any system that relies on centralized authorities will be vulnerable to outages that can have unexpected consequences. The ability to hold assets and trade them is the base of the modern economy, but these abilities are increasingly falling under the control of governments.
The ongoing trade war between the US and China has disrupted the global economy and shredded numerous sectors of the economy in both nations. If the situation continues to progress in this way, people may begin to question the ability of governments to effectively manage trade laws.
DeFi gives people, companies, and even nations a way to circumvent the existing financial system, and do business over the internet. Instead of being bound by an increasingly politicized global financial system, DeFi makes transactions possible, regardless of the parties involved.
XAR Network is a Deep System
XAR Network has a unique staking function that allows supported assets to be collateralized and traded. While the platform is new, as support for it develops, this could be a very powerful system for finance.
XAR Network explains the staking mechanism:
“CSSR is the staking mechanism used to increase rewards for stakers participating in securing the XAR network. CSSR allows you to take any supported asset, collateralize it, mint Collateralized Stable Currency Tokens (CSCTs) based on this collateral, and then use these CSCTs to stake. All the while you maintain ownership of your underlying collateralized asset. Staking allows you to receive rewards from the fees pool, proportional to your share of the total stakes in the network. These rewards are paid in a stable currency token, such as CSDT (collateralized stable dollar token), not in an inflationary token as in some other networks.”
Once an asset has been collateralized, it doesn’t matter if it operates on a slow blockchain. As a CSCT, it can be traded, or used in any way on the XAR Network. In a way, this system is a workaround for the limitations of earlier blockchain systems, like Bitcoin.
The platform also allows people to gain from their token holdings without speculation, which is another issue that tokens have faced.
Many investors don’t want to speculate with their cash, just to receive a return. The platform that XAR Network is building creates many options for low-risk rewards, which may appeal to more conservative investors.
A Non-Inflationary Staking System
XAR Network has identified one of the issues with staking and created a solution. Many people think that staking is inflationary, and XAR Network has designed a way for staking to exist without driving up the supply of tokens. While there is no consensus about the inflationary nature of staking, the XAR Network’s staking system address this concern.
From XAR Network:
“Staking in its current form is unsustainable, and inflationary. This means it creates more supply out of nothing. If there are currently 10 tokens, and inflation is 10%, there will be 11 tokens. When supply increases, price decreases. So if there are only 10 tokens and the price per token is $1, the total available USD for this token is $10. If you increase it to 11, with no additional new source of USD, the price would change to $0.91 This is disadvantageous to early holders, who end up paying more per unit in an increasing supply.”
Room for Innovation with XAR Network
XAR Network is creating tools that allow people and organizations to move away from traditional financial systems, and create monetary systems that work for them. There is a lot of potential for positive change, and anyone who wants to get involved with XAR Network can find more information about the system here.
DeFi is a new idea and is built on the back of the first generation of decentralized blockchain assets, like Bitcoin. While these blockchains were groundbreaking, people need more functionality from a financial platform, if it is going to challenge existing payment systems, like Visa.
Not only can XAR Network handle a high number of transactions, it has a very powerful collateralization feature that may make it a clearinghouse for cross-chain transactions that don’t involve a third-party custodian.
The solution that XAR Network has created may not be a perfect fit for on-chain fanatics, but it does remove counterparty risk to a large extent and creates a public record of transactions.
If you want to know more about how XAR Network works, or how you can become a part of it, there is loads of information about the project here. The platform is open to anyone, and if you are looking for a flexible way to build complex financial systems, XAR Network is worth learning more about.
The post What is XAR Network? Framework for Decentralized Finance on Cosmos & Fantom appeared first on Blockonomi.
OhNoCryptocurrency via https://www.ohnocrypto.com/ @Nicholas Say, @Khareem Sudlow
