AMA Recap: HOPE Founder Flex Dives Deep into $HOPE and HOPE Ecosystem
On March 22, Flex Yang, the Founder of HOPE, held his first AMA on Twitter Space. He talked about all aspects of the $HOPE stablecoin and HOPE ecosystem worth looking forward to. This article excerpts Flex’s main views from this AMA.
From CeFi to DeFi: Flex’s new HOPE
HOPE aims to make DeFi better, easier to use, and more versatile.
The thinking behind this project stems from the recent collapse of the CeFi ecosystem, which affected many high-profile companies. DeFi’s rapid and massive growth highlights the need for easier-to-use infrastructure and applications. To get more people using DeFi, the focus should be on creating universal payment instruments and building user-friendly applications.
The second reason is the importance of stablecoins in the DeFi environment. While there have been many attempts at stablecoins over the years, recent events have exposed the problems and risks faced by centralized stablecoins. Flex believes that we need a crypto-native stablecoin that is not just backed by fiat currencies or algorithms but should be backed by widely recognized assets.
The Future of stablecoins is Crypto-Native.
Finally, rising geopolitical tensions and trust issues in cross-border transfers and financial activities require a decentralized stablecoin solution. It is hoped that the HOPE ecosystem can provide frictionless financial services for everyone, connecting traditional finance with the new digital world.
With an increasingly polarized world, blockchain technology and applications are a natural choice to solve many real-world problems.
$HOPE’s Short-Term Goal Is to Become an Important Collateral
Firstly, $HOPE is a crypto-native distributed stablecoin backed by Bitcoin and Ethereum as initial reserves and synchronized with their price movements. The main goal of the first phase is to establish $HOPE as an important collateral in the DeFi world and connect it with the use cases of CeFi and TradFi.
$HOPE aims to become the world’s most important payment vehicle for the future.
During the launch, the reserve price of $HOPE will start from about half a dollar, rising as the value of reserve assets such as Bitcoin rises.
During the 2023–2025 cycle, we will build a robust liquidity market and interest rate market for $HOPE by creating a series of use cases. This will help $HOPE develop into a reliable collateral option within the DeFi space. Collateral is the infrastructure that creates financial instruments and increases the credibility of transactions, and it plays a key role in TradFi, CeFi, and DeFi. Previously, stablecoins like USDC have been used as collateral for DeFi. However, recent events have shown that centralized stablecoins may be vulnerable to traditional financial problems. The emergence of $HOPE will solve this problem.
From 2026 to 2029, as the reserve asset value of $HOPE rises, $HOPE will become an overcollateralized stablecoin reserved by crypto native assets, and we expect the collateral rate to be around 110%. The goal of this phase is to turn $HOPE into a payment instrument that provides financial inclusion to everyone, including the unbanked. For example, African farmers currently pay high commission rates when dealing with middlemen in the supply chain. With $HOPE, these individuals can bypass high intermediary fees and obtain fairer financial services.
All in all, $HOPE will first focus on becoming an important universal collateral in DeFi, CeFi and TradFi, and eventually, transform into a global payment instrument under the blessing of the dual-token mechanism of the ecosystem.
HOPE born out of LIGHT
Next, let’s talk about tokenomics.
As the value of the $HOPE reserve grows, governance becomes a critical topic. Since $HOPE is a community-driven stablecoin, we need a governance token — $LT (Light Token). The value of $LT will grow with the size of the $HOPE reserve, the size of the $HOPE issuance, and the size of the HOPE ecosystem. In addition, as the value of Bitcoin, Ethereum, and other reserve currencies rises, the price of $HOPE will be pegged at $1, and the spill-over effect from the continued rise in $HOPE’s reserve value will be reflected in the value of $LT. $LT will play a key role in the reserve growth of $HOPE, benefiting all holders of $LT tokens.
$LT holders can make important governance decisions, including $HOPE’s monetary policy, pegging decisions, and reserve management. For example, if 10 billion $HOPE were issued originally, the total reserve value would be about $5 billion; as the value of assets such as Bitcoin increases, the reserve value may grow to $50 billion, and there is an excess reserve of $40 billion. The community will decide what to do with excess value through a proposal.
One possible proposal is to switch reserves to stable assets like Hong Kong and Singapore obligatory rights to increase the potential adoption of $HOPE. A stable reserve of $50 billion means we can issue more $HOPE and distribute more excessive value to $LT holders. In addition, 50% of the fee revenue generated by various protocols within the HOPE ecosystem will be distributed to liquidity providers. The other 50% will be distributed to community members who lock their $LT tokens.
I understand that the previous discussion may have been a bit confusing. Let me explain it further. As I said earlier, we want $HOPE to be universal collateral for TradFi, CeFi, and DeFi in the first phase; in essence, we want to build bridges between these areas to provide a broader, more frictionless use case for crypto-native collaterals or stablecoins. To achieve this, we are building a DeFi ecosystem that integrates multiple applications and protocols. $LT will capture the value generated by the entire ecosystem.
In April, we will launch our first protocol, HopeSwap, followed by our lending protocol, HopeLend. After that, we will launch two protocols designed to connect DeFi with the worlds of TradFi and CeFi: HopeConnect and HopeEcho.
You can think of HopeSwap as an elaborate office building, while HopeLend is like a residential building. In this ecosystem, people who want to rent spaces in these buildings must pay rent or service fees to the landlord. Initially, the landlord is the management team that is building the ecosystem. However, as the project grows, 70% of the management fees will be distributed to tenants. These tenants can gain community ownership through rewards for participating in community activities.
Different real estate within the community will charge for their services, such as residential buildings, work buildings, hospitals, etc. As the value of the land increases, so does the value of community ownership, which benefits the tenant. Tenants pay rent and receive fee subsidies, eventually gaining building ownership. As the value of the property increases, so does the value of ownership, which further subsidizes the tenant.
We are building an ecosystem that combines various protocols. This combination creates a higher value for the community than a single building. When different buildings are combined, such as office buildings, hospitals, schools, and residential buildings, their combined value will be greater than the sum of individual real estate projects.
I want to talk a bit more about HopeConnect. with an on-chain custodian, it enables the transfer and settlement of assets. This will help reduce counterparty risks associated with centralized exchanges and custodial services.
We acknowledge that fully decentralized exchanges like dYdX may be the future direction, but centralized exchanges can still provide better liquidity and more efficient order-matching engines. By combining the strengths of DeFi and CeFi, we can provide customers with more valuable services, allowing them to trade on exchanges without entrusting their assets to a centralized institution.
Through HopeConnect, users can use on-chain deposits on centralized exchanges for more secure and efficient transactions. The second function is to provide fund management services for non-custodial assets so that users do not need to entrust funds to centralized platforms. The third and more critical stage is to connect TradFi with DeFi, and through the HopeConnect protocol, users can access various global financial services.
DeFi is a way, not an end. The eventual goal of HOPE is to provide next-generation financial infrastructure to provide frictionless and transparent financial services for everyone.
Security is our top priority
Asset security is everyone’s top concern. Our team has taken several approaches to ensure asset security.
First, we worked with three audit firms and invited white hat hackers to conduct a full audit of our protocol. This is done at the protocol level before any asset is introduced into the system.
We also partner with multiple centralized custodian service providers to provide custodial services and improve asset security. While this may be seen as a centralized compromise, we must attract traditional financial institutions to our platform by offering regulated products and partnering with reputable custodians.
For the first five years, the team will hold and lock in a certain percentage of $LT to guarantee project governance rights. During this period, we will work to establish self-custody protocols and gradually move towards decentralized custody. We will, however, use a regulated custodian initially to secure assets and attract traditional investors.
$HOPE can live on any Blockchain
The essence of $HOPE is a stablecoin reserved by distributed custody, and the protocols of the HOPE Ecosystem can also be distributed. Initially, these protocols will be built on Ethereum. However, we also see the need for distributed reserves on other blockchains.
Different projects can issue $HOPE by reserving Bitcoin, Ethereum, or other assets on different blockchains. For example, if another blockchain or a layer2 solution wants to build its own stablecoin DeFi ecosystem, it can reserve crypto assets into custodians and mint $HOPE on its chain and use it with various applications. While we started with Ethereum, we certainly want to expand to other blockchains. It depends on the demand for $HOPE from other blockchains. In short, we will support blockchains or projects that want to issue $HOPE by creating a reserve.
