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From CeFi to DeFi, Flex's new HOPE

HOPE will strive 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 well-known companies. The rapid and massive growth of DeFi highlights the need for more accessible infrastructure and applications. For more people to use DeFi, the focus should be on creating universal payment tools and building user-friendly applications.

The second reason is the importance of stablecoins in the DeFi environment. Although there have been many stablecoin attempts over the years, various recent events have exposed the problems and risks faced by centralized stablecoins. I believe we need a crypto-native stablecoin that is not backed by fiat currencies or algorithms, but rather a widely recognized asset as a reserve.

The Future of Stablecoins Belongs to Crypto-Natives

Finally, rising geopolitical tensions and trust issues in cross-border payments and financial activities call for a decentralized stablecoin solution. It is hoped that the HOPE ecosystem can provide everyone with frictionless financial services, linking traditional finance with the new digital era.

In the face of a gradually polarized world, blockchain technology and applications are a natural choice to solve many practical problems.

The short-term goal of $HOPE is to become a significant collateral

First, $HOPE is a crypto-native distributed stablecoin. The initial stage is held by Bitcoin and Ethereum as a reserve and synchronized with their price trends. 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, TradFi.

$HOPE aims to become the world's most important payment cryptocurrency in the future

Initially, the reserve price of $HOPE will start at about half a dollar and rise as the value of reserve assets such as Bitcoin rises. During the 2023-2025 cycle, we will establish a stable liquidity market and interest rate market for $HOPE by creating a series of application scenarios. This will help $HOPE develop into a reliable collateral option in 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 in DeFi. However, a string of recent events has 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 value of $HOPE's reserve assets increases, $HOPE will become an over-collateralized stablecoin backed by native assets, and we expect the mortgage rate to be around 110%. The goal of this phase is to build $HOPE into a payment instrument that provides financial services to everyone, including the unbanked population. For example, farmers in Africa currently pay high commission rates when dealing with middlemen in their supply chains. Through $HOPE, these individuals can bypass high intermediary fees and obtain fairer financial services.

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Hope, born to "light"

Next we can talk about the economic model.

Governance becomes critical as the value of the $HOPE reserve grows. Since $HOPE is a community-driven stablecoin, we need a governance token - $LT (Light Token). The value of $LT will grow with the growth of $HOPE reserve scale, $HOPE issuance scale and HOPE ecological scale. In addition, as the value of Bitcoin, Ethereum, and other reserve currencies rise, the price of $HOPE will be anchored, and the spillover value from the continued rise of reserves will be reflected in the value of $LT. $LT will play a key role in the growth of $HOPE's reserves, benefiting all $LT token holders.

There are several aspects of governance that $LT holders can exercise, including the monetary policy of $HOPE, including maintaining the peg and managing reserves. As an example, if we initially issued $10 billion of $HOPE, 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, resulting in an excess reserve of $40 billion . The community will decide how to deal with the excess through proposals.

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HOPE ecology is a real neighborhood

I know the above might be a bit confusing. Next, I will continue to explain. As mentioned earlier, in the first stage, we hope that $HOPE will become a common collateral for TradFi, CeFi and DeFi; in essence, we hope to build a bridge between these fields to provide a wider and more lossless application space. 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 app, HopeSwap, followed by our lending protocol, HopeLend. Afterwards we will launch two protocols aimed at connecting the worlds of DeFi with TradFi and CeFi: HopeConnect and HopeEcho.

You can think of HopeSwap as a fancy office building, and HopeLend as a residential building. In this ecosystem, people who want to rent these buildings need to pay rent or service fees to the landlord. Initially, the landlord is the management team that is building the ecosystem. However, as the project develops, 70% of the management share will be allocated to tenants. These tenants can obtain community management rights through the rewards obtained by participating in activities.

Different agreements within the community will charge for services, such as residential buildings, office buildings, hospitals, etc. As land values ​​increase, so does the value of community management rights, which is beneficial to tenants. Tenants pay rent and receive a fee subsidy, ultimately gaining management of the building. As the value of the property grows, so does the value of management rights, which in turn further subsidize tenants.

We are building an ecosystem combining various protocols. This combination creates a higher value for the community than individual buildings. When different buildings are combined, such as office buildings, hospitals, schools and residential buildings, their total value will be greater than that of individual real estate projects.

I would also like to give a special mention to HopeConnect, which acts as an on-chain custodian that enables the movement and settlement of assets. This will help reduce the counterparty risk associated with centralized exchanges and custody services.

We acknowledge that fully decentralized exchanges like dYdX may be the way of the future, but centralized exchanges can still provide better liquidity and a more efficient order matching engine. By combining the advantages of DeFi and CeFi, we can provide customers with more valuable services, allowing them to trade on exchanges without entrusting assets to centralized institutions.

Through HopeConnect, users can first use chain deposits on centralized exchanges to conduct more secure and effective transactions; the second function is to provide management products for non-custodial assets, so that users do not need to entrust funds to the centralized platform; third , and a more critical stage is to connect TradFi with DeFi. Through the HopeConnect protocol, users will be able to access global financial services.

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Asset safety is the primary consideration

The issue of asset security is one of everyone's top concerns. Our teams take a variety of approaches to keep assets safe. First, we partnered 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 assets are introduced into the system.

We also cooperate with several centralized custody service providers to provide custody services and improve asset security. While this may be seen as a compromise of centralization, it is critical to attracting traditional financial institutions to our platform. By offering regulated products and partnering with reputable custodians, we can attract more of the cryptocurrency community and traditional financial institutions.

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$HOPE will not be limited to Ethereum

We all know that Ethereum users often face high transaction fees. What I want to point out is that the scope of application of $HOPE is not limited to Ethereum; the essence of $HOPE is a stable currency reserved by distributed custody. The HOPE ecological protocol can also be very distributed. Initially, these protocols will be built on Ethereum. However, we also see the need for distributed reserves on other blockchains as well.

Distributed reserves mean that different projects can mint stablecoins by reserving Bitcoin, Ethereum or other assets on different blockchains. For example, if other blockchain Layer 2 solutions want to build their own stablecoin DeFi ecosystem, we will be more than willing to assist, but they first need to become a distributed custodian. They can reserve encrypted assets and mint $HOPE on its chain, and use it in various applications. While we're starting with Ethereum, we certainly hope to expand to other blockchains. It depends more on the demand for HOPE from other blockchains. In short, as long as there is a blockchain that needs to reserve assets and mint stablecoins, we will provide support.