The Haven Protocol ($XHV)
What is Haven?
Haven is essentially a private, decentralized, offshore bank that is accessible to everyone with an internet connection. Users can store their money in their private vault in a stable way by converting their XHV tokens into synthetic assets like xUSD and others that are going to be released very soon.
What are the distinguishing characteristics of Haven?
Haven is built on top of Monero, which is widely considered to be the leader in privacy coins. It uses Monero properties like Ring Signatures and Bulletproofs to ensure ultimate privacy for the sending and receiving parties in each transaction.
Coins with privacy features can be viewed as a negative because there are fears that governments will look to shut them down using the excuse that people are using privacy only for nefarious reasons. While this is potentially true that bad actors could use privacy to their advantage, I’d argue that privacy eliminates more bad behavior than it causes. Transactions, holdings and personal information on the Haven Protocol are private, bad actors can no longer see how large transactions are or the addresses of the people involved like they can on other public blockchains, thus protecting its users.
Haven guarantees that “1 xUSD will always be redeemable for $1.00 worth of XHV” in their white paper. Haven uniquely allows users to shift back and forth between volatile (market based pricing of XHV) and stable synthetic assets (1 xUSD = $1 USD). The synthetic asset is “indirectly backed” by XHV through the Mint and Burn algorithm.
3. Mint and Burn Algorithm
Haven uses a Mint and Burn Algorithm during each transaction. For example: I have 500 XHV and I want to convert that to offshore storage in the synthetic asset xUSD and the price of XHV is $2.00. I burn (remove from supply) the 500 XHV, and mint (create) the dollar equivalent amount of xUSD, which is $1,000 xUSD. The value of xUSD stays consistent with the value of the dollar while the market based price of XHV continues to fluctuate. If I want to access my stored xUSD and change it back into XHV when the price of XHV is $1.00, then I will burn the $1,000 xUSD and mint 1,000 XHV. This can all be done within each individual’s Haven Vault (the wallet). This algorithm means that the true value of the Haven network needs to be measured as the price of $XHV * supply of XHV + the total value of xAssets stored.
Haven has integrated with Chainlink as the pricing oracle provider in order to ensure pricing is decentralized.
5. Grassroots origin and strong community
The project was originated in early 2018, but the first attempt essentially failed when weaknesses were detected and the creators left the project. In 2019 the project was taken over by original community members. These current team members are constantly posting updates and interacting with the community on social media. They are very responsive to people’s questions and ideas about the project. There was no ICO, premine, or any venture capital associated with this project. The team only takes a 5% block reward and offshore exchange fees to fund the project.
Recent Accomplishments of Haven
- Partnered with Travala — XHV can be spent on Travala to book travel. They are hoping to integrate xUSD as a payment option as well in the future.
- Rereleased the Web Vault for Haven — This gives everyone the ability to have an offshore bank on any device connected to the internet. It is well designed and easy to use.
- Partnered with Ternio to issue a Haven debit card — This is a completely optional feature that Haven is adding. There has been some confusion among people seeing this feature being added because the funds being used on the debit card will not be completely private. To clarify, users can choose whether or not to use the card and only the funds that the users decides to allocate to the card are no longer completely private. The user’s main vault stays private.
Upcoming Important News for Haven
- New synthetic assets in Q1 of 2021 — The new assets they have been working on are xGOLD, xSILVER, xEUR, and xCNY. These assets are almost ready for release. There is no theoretically no limit to the number of assets that Haven can add because of their use of coloured coins.
- Integration with WooCommerce — to allow users to pay for goods in XHV and even more notably in xUSD and the other new xAssets.
- Integration with ThorChain — This integration is extremely important and would allow users to swap XHV for other cryptocurrencies and provide important liquidity.
- There are Haven blog posts that point towards the possibility of debit cards, loans, and other financial tools that would increase the value and utility of the coin. They are already partnered with Ternio for a debit card.
Why should you own XHV?
In my opinion, the suite of xAssets that Haven will provide is a total game changer in the defi space. Currently only xUSD is up and running, but with the plan to release four other xAssets in Q1 of this year, it is hard not to imagine that the Haven network will be able to provide theoretically unlimited synthetic assets that can track any real world asset in the future because of their use of coloured coins. This will enable holders of $XHV and xAssets to have a completely private portfolio of assets all within their own Haven Vault. Imagine the possibilities of a private portfolio of synthetic assets pegged to any asset in the real world that is accessible anywhere you have an internet connection with no slippage fees and infinite liquidity within your own vault. A user this year has already converted over a million dollars worth of XHV into xUSD and paid such an insanely minimal fee!
This release of new synthetic assets is important for two reasons. First, it proves that the protocol is going to be able to add many other synthetic assets down the line like indices, other cryptocurrencies, etc. Second, more options besides xUSD for conversion will drive more users to convert their money into the synthetic assets they desire. In order to convert to synthetic assets, users will have to burn XHV to mint them. This will cause the price of XHV to rise, potentially drastically, during an expansionary phase of xAssets.
Currently the most popular stable coins are not private meaning that they can be frozen or seized. Other stable coins, like Tether, have also had problems with maintaining a credible peg of value. For example, Tether claimed that they had a 1–1 ratio of USDT to USD reserves, but when people kept pushing Tether they kept changing the wording on their website until it became clear that they were counting cash equivalents and loans to 3rd parties as part of their reserves.
xUSD solves both of these problems. First of all, it is completely private as it was built off of the Monero network, which is the standard for privacy in the crypto world. This means that no entity will be able to freeze or seize assets in a user’s vault. Secondly, its peg of value is guaranteed because there are two ways to extract the value from it. You can either burn your xUSD and re-mint your XHV at the current market price of XHV, or in the future you will be able to sell it on the open market once the ThorChain integration is complete.
This integration is critical and seems to be just around the corner. Once it is completed xUSD and other xAssets will have liquidity on the open market. This will provide them access to a cross chain exchange where they will have an advantage as one of the first non-ERC20 stablecoins in existence. This integration is especially important because right now xAssets are essentially illiquid outside of the users personal vault. A lot of exchanges are worried about listing privacy coins because of ramifications it could have with governments who hate not being able to track people’s assets. This integration with a non-KYC cross-chain DEX will provide much needed liquidity for xAssets and cause the demand for them to increase along with it. More and more XHV will be burned to create more synthetic assets causing the price of XHV to increase significantly.
Other Banking Functions
As the Haven team mentioned in a recent blog post, they have realized the potential that they have to implement various traditional banking functions to their ecosystem. If the Haven team can figure out how to implement functionalities like loans or debit cards then they expand their utility even more and users would be able to perform day to day functions of their lives by using synthetic assets, thus keeping users in the Haven ecosystem. This has already been demonstrated by their partnership with Ternio to deliver its users access to a debit card.
Concerns about Haven
The blog post that mentions the possible debit cards and loans down the line is titled “Haven Foundation announces $1,000,000 Donation”. The concern is simply about where that came from. They state that it came as an anonymous, “no strings attached” donation that was given to them simply so that they can continue to grow and develop the project. Hopefully that is truly the case.
Period of Contraction
Haven has the potential to increase very rapidly as the demand for synthetic assets increases and the supply of XHV decreases, but it also has the potential to do the complete opposite. If users decide to exit the ecosystem in great numbers then the price of XHV will decrease quickly as the supply inflates. Fortunately, as more xAssets are added, liquidity is increased, banking features are added (i.e debit cards), and more partnerships with merchants are integrated, users will be disincentivized to leave the ecosystem.
ThorChain integration and xAssets in testing phase
These two critical components to the protocol’s success are still in their testing phases. Signs point to both components being implemented successfully, but until they are operational it is hard to say with 100% certainty.
My Take on Haven
Haven gives users the ability to have a completely private off-shore bank in their pocket. If everything goes according to the protocol’s plan, everyone who owns XHV will have the ability to have a private portfolio tied to any asset in the world from anywhere in the world with an internet connection. As people are looking for a place to store all the gains they have made in crypto, this will create a big demand for xUSD/xAssets because it is safe, private, and stable. Storing your gains in more volatile assets like Bitcoin and Ethereum is too risky compared to the stablecoin that Haven provides. Because you need XHV in order to create synthetic assets in your vault, an increase in demand for xAssets leads to an increase in demand for XHV plus a shrinking XHV supply.
There is only a supply of 14.2M XHV right now with approximately $2.9M more stored in xUSD leading to a market cap of $157M and a total Haven Network Value of about $160M. As the demand for xAssets increases because of the integration with ThorChain and the release of more xAssets, an increasing amount of the relatively small 14.4M supply of XHV will be burned to mint xAsset supply causing the price to increase drastically and quickly.
XHV has many things working in its favor right now. The protocol this month alone is expecting to release fully functional xAssets to their user’s vaults, integrate with ThorChain, add an option for a debit card (pre-registration is open now), and complete its integration with Woo Commerce. All of these milestones would increase the demand for xAssets and help reduce the need to ever exit the Haven ecosystem. If everything goes as the team expects, the price of XHV will take off as the supply diminishes. This protocol is not nearly as well known or talked about as much as it should be even within crypto. I suspect that will change in March if all goes according to plan.