Wemade CEO Henry Chang: "Wemix$ will become a new history of stablecoin."

What are the three key elements of stablecoin?

 

At TOKEN2049 held in Singapore, WeMade CEO Henry Chang gave a keynote speech titled: “The Digital Economy and the Stablecoin: Wemix3.0 and Wemix$” and spoke about stablecoin.

 

In the August of 2021, Wemade published Mir4 Global. 20 million users played the game and the game recorded 7 million monthly active users as well as 1.4 million peak concurrent users. The in-game sales exceeded 160 million dollars while it remains on the top charts in sales in Philipines, Brazil, Singapore, UK, Sweden, Belgium, etc.

 

As the sales show, many people around the world played the game, using DRACO to trade with Wemix, activating the economy, but no one was able to speak about a clear and fixed price for DRACO. About this, Henry Chang recognized the necessity of stablecoin.

 

It is impossible to set an exact price per unit in tokens, NFT, and DeFi. This is not an issue limited to Mir4 and its game token DRACO — it goes past Wemix and regards all blockchain games.

 

For example, when you mention a coin, they say 0.0135 Ethereum or 0.00867 Bitcoin, but as the coins’ prices are fluid, the value constantly changes depending on when you check the price. Due to this quality, people tend to get confused about the exact price and value.

 

“If no one can state the exact price of NFT, could that economy be activated and expand? That’s why stablecoin is needed. In the digital economy based on blockchain and in the expanding currency market, stablecoin is compulsory,” said Henry Chang.

 

 

Then what’s the key element that stablecoin needs to have? Henry Chang had three key elements in mind.

 

“For the digital blockchain economy to be activated and be successful, the stablecoin is compulsory. To create a successful stablecoin, there are three key elements: stability, stable/native reflexity, and scalability.”

 

Stablecoin’s first key element: Stability

First of all, stablecoins need to have stability. To have stability does not mean non-volatility. Even the key currency we use every day has volatility — the currency exchange rate changes depending on the time and situation.

 

The essence of stability that stablecoins must have are based on the following three questions. Is the currency actually used? Does it maintain its value? Can you get its worth if you have that currency?

 

For example, if the stablecoin is pegged to USD, the issuer would evaluate the coin’s value in USD and trade it. Therefore, the issuer must hold the coin’s worth in USD in reserve so it can be exchanged for USD in any case — which makes it “stable”. 

 

Accordingly, Wemade fixed the Wemix dollar to USDC — if 100 million Wemix dollars are issued, it means that exactly 100 million USDC is reserved.

 

Henry Chang asserted that stablecoin must have the exact same amount in reserve in the fiat currency it is pegged to, and that if this isn’t properly aligned, it shouldn’t be called stablecoin in the first place.

 

Stablecoin’s second key element - Stable/Native Reflexivity

 

The second key element Henry Chang mentioned was stable/native reflexivity. If a stablecoin is successful, it should affect the native coin. The native coin must be able to capture the demand and trade of stablecoin, and through this, the reflexive relation between stable coins and native coins must be structured.

 

If the demand for the Wemix dollar increases, the value of Wemix would rise, and based on reflexive mechanism, the Wemix ecosystem will be expanded. Ultimately, the demand for the Wemix dollar will rise even more. This is Wemade’s ideal scenario.

 

“The increase in Wemix Dollar trading volume due to the expansion of the Wemix ecosystem leads to an increase in value for Wemix holders. Depending on how qualitative and quantitative the Wemix ecosystem grows, the benefits for Wemix holders will increase, and the value of Wemix will increase accordingly”

 

“ The trade volume of stablecoin will truly reflect the size and healthiness of the ecosystem, and it will determine the value of the native coin. That is how an integral economic system will be built.” 

 

Stablecoin’s third key element - Scalability

 

The third and last key element was scalability. As mentioned above, stablecoins are fixed to fiat currency. If only 100 million USD can be raised in reserve, the issuance of stablecoin is limited to 100 million dollars. If the system is only designed like this, the ecosystem won’t be able to grow because the supply of money can’t keep up with the scale of the ecosystem. 

 

Then in what situation would people want to buy Wemix dollars for more than a dollar? The answer to this question lies in the potential of the wide range of usage. If people can use a good DeFi service through that stablecoin, or if they can purchase tokens/NFTs in blockchain games, the demand for the Wemix dollar will naturally increase.

 

If the demand for the Wemix dollar increases, the ecosystem of Wemix will expand, and the demand for Wemix will exceed the supply. To resolve this issue, Wemade developed the “DIOS Protocol” which issues and burns stablecoins.

 

Wemade will give the Wemix holder a certain share of the Wemix dollar fee, and to do this, they will run a staking program called DIOS Staking. For example, when the Wemix dollar is valued at 1.1 USDC, there is a surplus of 0.1 dollars. This becomes the basic reward of DIOS staking — the surplus funds generated through DIOS Staking returns to the Wemix holder community as a reward for staking.

 

DIOS fluctuates the issuance of WEMIX Dollar according to the economy of the ecosystem, thus making Wemix Dollar sustainably scalable. And according to the size of the economy, the ecosystem expands and scales.

 

 

Concluding the keynote speech, Henry Chang spoke confidently about the success of the Wemix dollar, mentioning that it will settle as a dominant stablecoin along with USDC, and that it will be expanded horizontally in Wemix Euro, Wemix Won, etc.

 

“Good stablecoins are bound to become the key currency. Valuable and sustainable things eventually succeed. Hopefully, Wemix dollar will become a new history of stablecoin, and that history will be the cornerstone of the digital blockchain economy.”

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