On January 15, Biyuanchain formally released the "MOV Stable Financial System White Paper 1.0" .
This paper proposes a stable coin financial system based on the MOV cross-chain ecology. From the perspective of basic economic principles and the construction of MOV infrastructure, a diversified collateral framework is developed, a comprehensive stability mechanism and clearing system is established, and the concept of risk bonds is introduced. Risk control models and theories in the traditional financial field comprehensively build a new vision of on-chain modern finance and multilateral trade.
The white paper points out that the stable financial system in the digital asset world should not overstep the boundaries of its own liabilities to replace or impact the national currency payment / settlement / delivery system, but rather play a role in the early days of the birth and promotion of central bank digital currency (DCEP). This kind of role of assisting popularization and coordinated development should also constantly compete for accurate positioning in the financial system of native digital assets that is dedicated to them, and develop a stable clearing system, transaction medium and value store that belong to their own ecology.
Compared with the current stable financial system solution, the MOV white paper has three highlights:
1. Multi-asset collateral is based on cross-chain, not just cross-chain
The MOV white paper proposes a stable solution based on collateralized BTC, ETH, USDT, and BTM. The four digital assets have different liquidity risks and market risks, and the risk of correlation is not too high. Users can choose the type of collateral and the four assets are independent. Mortgage, risk isolation, and discount rates are calculated separately.
The MOV ecosystem is a stable financial system based on cross-chain assets, not to create a speculative asset, but to allow diversified mainstream assets to form a value consensus and convergence under the folding and synthesis of the framework, so that it can become a “steady transfer of debt supporting economic transactions” "To accelerate the promotion of stable financial systems and the exploration of business scenarios (on-chain and entities), bringing more credit expansion and social acceptance to cross-chain assets.
The MOV stable financial system was born from cross-chain, but not just cross-chain. From the perspective of comprehensive ecological construction, MOV is not only creating a more stable digital stablecoin, but also building a stable financial infrastructure that is truly in line with the future development of the blockchain, and promotes broader multilateral trade on the chain. System formation.
2. Multi-role incentive cycle mechanism
The current stable financial projects have not stood at the height and intention of building a complete ecology from the beginning, thinking about the overall supporting facilities that stablecoins should have. As a result, both in terms of infrastructure attachment, rich collateral framework, and application scenario expansion, they have begun to stretch their heads. They are unable to determine whether their positioning is supporting lending or transaction media, and they ignore the core of establishing a stable financial system-clearing and pricing power.
The MOV stable financial system is divided into 10 roles, such as mortgagor, lender, and liquidation arbitrage. Full consideration is given to all the roles of direct and indirect participation in the stable financial system. Different roles bear different responsibilities and profit from the system. Greatly maintains the stability of the system.
In fact, the arbitrage space can stimulate the enthusiasm and liquidity of market participation to a certain extent. MOV introduces a three-level clearing system. The internal stability mechanism is built on the basis of risk clearing and risk bonds. The system and official level risk intervention behaviors and reserve mechanisms are retained, which not only encourages the market to participate in the spontaneous risk response behavior of liquidation arbitrage, but also reduces User loss and defense against Black Swan incident.
3． First all-weather risk measurement system
The design of a stable financial system needs to consider core elements such as balance sheets, qualified collateral, liabilities and equity, stabilization mechanisms and risk transfer, and unique ecological scenarios. The MOV Stable Financial System white paper proposes a comprehensive all-weather risk measurement system based on the trinity of experience (scenario hypothesis and analysis), data (internal data and external data), and model (risk indicator), which fully incorporates the assessment from people, systems, and processes. And the risk sources of external events and their loss effects.
Based on the Markov chain risk rating model, MOV first proposed and established an on-chain decentralized financial mark-to-market (MTM) risk model to explore a solid theoretical basis for the stable and orderly development of the financial system and DeFi. On the other hand, MOV is based on the “credit” level of on-chain finance of smart contracts and over-collateralized borrowing and integrates into the mainstream modern credit risk measurement (rating) model, combining market risk, credit risk, operational risk and macro factors to analyze and reflect Stability of loan quality in the financial system and future trends.
It is worth noting that the model is not static, nor is it just a regression analysis based on historical data. The MOV stable financial system is like a naturally growing ecosystem. There are births and deaths, and loans are created, and loans are eliminated. Therefore, to predict the global state and trend of a system, it is necessary to build a model of the actual birth and death process.
Looking back at 2019, the overall layout of the original chain gradually became clearer. Last year, the first multi-side architecture Bystack was released in May last year. The Bystack-based decentralized cross-chain Layer 2 value exchange protocol MOV was launched in September, and the testnet was launched in November. "The development of MOV is nearing completion, the testnet has been running steadily, and the mainnet can be online at any time after legal compliance," said James Bi, the CTO of the original chain.
According to the official 2020 roadmap given by BiyuanChain, decentralized cross-chain asset interaction is one of the goals for the first quarter. "The open gateway protocol based on a multi-signature and threshold hybrid cryptography scheme supports decentralized asset cross-chains that will be more mainstream than the original main chain, side chain and Bitcoin, Ethereum and other mainstream public chains." MOV today is stable The release of the financial system white paper has undoubtedly laid a solid theoretical basis for this.
White paper download link: https://cdn.bytom.io/res/MOV-Stable-EN.pdf