AMA Answers with Horizon Protocol Team
Thank you very much for all the questions! There were a lot of good ones and our team had a 4 hour long meeting (and a lot more cleaning up all the text) to discuss our answers in-depth. Below are the answers, organized by categories.
- General Knowledge
- Horizon Exchange — Debt Stability
- Horizon Exchange — Access
1. How will zUSD rewards be calculated when Horizon Exchange is live?
Once Horizon Exchange is live, there will be additional rewards from the exchange in the form of zUSD. Rewards are based on your proportion of debt to the global debt pool, the same way HZN is distributed now in Horizon Genesis.
2. When will the roadmap of 2023 be updated with more specific points and what will be the core focus?
We imagine that we will probably have enough visibility to update our 2023 roadmap by the 3rd quarter of 2022. As we accomplish more of the milestones on our current roadmap, the future path will become more clear for the team and the community.
With the fast-paced nature of crypto, longer-term goals become inaccurate, oftentimes due to uncontrollable forces (market movements, interests, regulatory changes, etc.), so we want to make sure that we remain flexible enough to adjust and to try our best not to make any promises we are unable to keep.
3. From your perspective, what are the main advantages over similar projects?
We think there are several obvious technical fundamentals that we could list out from our litepaper, FAQs, and documentation, but we believe what actually sets us apart is our commitment towards setting a higher standard of user experience that we believe is lacking in our space, as well as our dedication towards empowering our community through education.
Our team is composed of multiple people with a UI/UX background and multiple people with education backgrounds. We have a very well rounded team, some with technology backgrounds, start up, corporate, marketing, etc.
The goal is to make sure that we can take something that is very complex and make it easy to use and understand. We are also curious to hear your perspective as well, please let us know!
4. My main concern is: how will the team convince that Horizon Protocol should be used and not other similar projects?
We understand your concern given the fast growing environment of crypto. Firstly, there are very few projects doing synthetic assets and secondly, most other synthetic asset projects are on other chains and there will be different users on different chains. We are operating on BSC; the second biggest DeFi chain by far.
Our current strategy and focus is to become the highest standard for synthetic assets on BSC and then bridge to other chains. Because we are on BSC, we currently gain all the advantages BSC offers over ETH (the leading DeFi chain). We’re also looking to expand the sector with education and marketing in the synthetic asset and DeFi space. This will lower the barriers of entry and accessibility in a space where there’s a large lack of knowledge.
It is important to remember that this is not a zero-sum game and more than anything, our goal should be to grow the pie instead of fighting for the scraps. We are creating a story that is backed by fundamentals and we are committed to delivering it.
5. Recently, Binance Smart Chain is quite often experiencing lagging, delays, and other issues, which could negatively influence Horizon Protocol users (cannot buy/sell in time, etc.) What’s the approach in such situations?
Thanks for your question as this is on many BSC user’s minds. The best approach in times of congestion on the BSC would be to increase your gas threshold, this usually gets your transaction through faster. In fact, BSC lagging actually shows how popular the chain is and how active its user base is.
Regarding the concern of not being able to buy or sell ‘in-time’, this is more based on the oracle price update intervals and not necessarily the blockchain speed itself, since Horizon Exchange does not use order books. We will provide material that further explains the underworkings of Horizon Exchange in the near future!
Horizon Exchange — Debt Stability
6. Once Horizon Exchange launches, what are the initial expectations for the users and the capital (base debt pool)? Are there any plans on providing initial capital/MM to avoid big debt movements?
Good question! Due to the design of the system, the amount of capital itself doesn’t directly influence the volatility of the global debt pool. The volatility of the global debt pool will be based on the composition of assets in the pool and price movements of those assets. The initial list of tradable zAssets available on Horizon Exchange is focused on the less risky and higher market cap assets to minimize the impact of extreme price movements that could cause large fluctuations in the global debt pool. The plan is to slowly introduce more zAssets overtime as to not cause too much of a dramatic change to the global pool.
The best way for a user to reduce/eliminate their risk to the fluctuations of the global debt pool is to hold a zAsset portfolio that largely matches the global debt portfolio.
That being said, there are things that could be done where capital can be used to buy less volatile zAssets, which would increase the ratio of those assets in the global portfolio and ultimately reduce the volatility of the global debt pool.
We are open to discussing with the community on the potential use of the Community & Ecosystem Fund to help in this endeavor if the fluctuations of the global debt pool ends up being of large concern.
7. What are the options when someone wants to only stake HZN? How to defend against debt movements when inverse zAssets will be available later?
As mentioned in question #6, the safest method to reduce your exposure to the volatility of the global debt pool is to hold the same zAssets as the global portfolio.
The more similar the zAssets you have are to the global portfolio, the more similar your debt will fluctuate in comparison. This strategy also will protect you regardless of the shorting assets that will be introduced at a later time. Note this only hedges against debt movements in Horizon Protocol and does not help with the price movements of HZN itself, nor does it help you profit from the fluctuations of the global debt pool.
To be successful, you will still need to actively manage your portfolio once Horizon Exchange launches. Additionally, you can also manage your portfolio to outperform the global portfolio and earn zUSD as profit to better manage your C-Ratio or sell on the open market!
We are exploring methods to allow users to more easily match with the global portfolio and we have started working on guides that might help everyone better understand the different approaches that they can make.
8. Any plans on something like Horizon Exchange index token (index of all assets) or Debt token? And its inverted version?
We love this idea and are very keen on introducing new index fund tokens in general that represent and segment crypto and global markets in interesting ways. Some examples of index tokens that we have planned for Horizon Exchange; NFT baskets, industry-segmented crypto Indices, Traditional Indices, shorting of all index token offerings, auto-balancing indices etc. But one thing to note is that we can leverage external oracles for all of these index funds, which is the intention. Furthermore, we do plan to offer shorting options for all these assets as well.
In regards to a Horizon Exchange Index Token, implementation would prove difficult as the index token itself would become part of the global debt pool, and would recursively affect itself and the global debt pool. An alternative to this would be to introduce functionality that makes it easier for users to easily copy the global portfolio, or other user portfolios, with a simple blockchain transaction.
Ultimately, we’re looking to provide as many useful tools to the user as possible to empower them to take their strategies to the next level.
Horizon Exchange — Access
9. Will the trading of standard stock zAssets pause along with global markets or will they also be trade-able during weekends?
Standard stock zAssets will only be tradable when markets are open in the beginning.
The reason is because the oracle we will be using only provides price feeds during standard market opening hours, therefore, zAssets will correspond with the open and closing hours of their market. Additionally, there is the possibility of allowing for trading at the closing price during closing hours, or simply allowing after hours trading to happen on a DEX, outside of Horizon Exchange. For example, if there is a liquidity pool of zCOIN/zUSD on PancakeSwap, the market can speculate on the price during closing hours, similar to futures markets in traditional markets.
10. Why no Chinese stocks for launch?
We are open to adding Chinese stocks in subsequent zAsset releases, but decided to look at the safest bets for our initial equity offerings. Additionally, the oracles that we are working with have limited options for Chinese stocks and further cooperation and time is required to have these price feeds available. As usual, if the community really does wish to incorporate Chinese stocks ASAP, we can fast track our efforts to make it happen.
11. Will there be an option to place limit orders later like how it works on CEX?
When Horizon Exchange launches, only market orders will be initially available In the future, limit orders AND stop losses are something that we definitely want to incorporate into Horizon Exchange. The current LIMITation is identifying cost effective ways to maintain those systems, which require a bot and very frequent blockchain checks, but it is something we will implement with time.
12. Any plans to deploy on other EVM compatible blockchains? For example, Moonriver is a place that could be adopted by HZN.
Yes! We absolutely have plans to deploy on other EVM compatible blockchains as mentioned in our litepaper and documentation. EVM compatibility looks to be the standard of the future, so it will only be easier for us in the future to expand cross-chain.
As for Moonriver, we certainly appreciate the suggestion and will add it to our list of possible chains to bridge to.
13. If the exchange relies solely on the backing of zUSD and the market cap of the project remains very small, this greatly affects the amount of zAssets that can be created/exchanged. Does the team see this as a problem? Do they have an idea for a solution?
Thank you for this excellent question.
This is definitely a concern in the long term and we are actively looking at several ways to increase the liquidity of zAssets. Some solutions are:
- Getting new users to stake by increasing demand and exposure for the project through marketing and educational content.
- Creating new types of collateral onramps to back the minting of zAssets
- Building onramps to other blockchains and tapping into the liquidity and user base of other chains.
- Increase capital efficiency by lowering the Target C-Ratio
Plans for new assets to lend as collateral in Horizon Protocol are already part of our 2022 Roadmap and we’ll be discussing the lowering of the Target C-Ratio in the near future.
14. Is the delay due to Phoenix Oracle not being ready?
The delay has nothing to do with Phoenix Oracles and is strictly related to us needing more time in order to release the type of product we want for our community. We are committed to only delivering a reliable, secure, and easy to use product, and we look forward to sharing our public testnet soon!
15. What does the team see as the biggest obstacle facing the project going forward?
For the product side, it’s about trying to achieve product-market fit and fulfill our vision of providing our community with a robust suite of derivative instruments to invest and trade with in a secure, trustless and borderless way. By no means a trivial obstacle to overcome.
Aside from product development, one of our central strategies involves expanding the market. Synthetic assets are still relatively unknown and we believe we can help grow the pie by educating the larger DeFi and crypto community. This focus will help us expand our use cases, and broaden the awareness of HZN.
The Horizon Protocol team is constantly working on driving the project forward. We also believe that the community can also play a large part in helping build awareness and providing feedback to push the common vision, thus, one of the priorities in our strategy is community development.
16. What are the plans when in approximately 8 months, vested rewards start to be released (1.2M HZN weekly)? With current liquidity, a market sell of 200K HZN (~$28K) on PancakeSwap moves the price by approximately 4.5%.
As outlined in our answer in question #15, the primary plan is to simply expand our user base by delivering the ecosystem of products and drive awareness through our marketing and educational content strategies. This should drive the price of HZN to be valued properly when the escrow lock mechanism starts expiring. When those tokens are released, we want those tokens to go to more holders because they believe in the project and the returns that it can give them, so we are working very hard to prove ourselves as a community and project before that time comes.
17. According to the team, will the release be better if it happens when the market is bullish?
We know many teams that operate by developing in the bear market and push harder on marketing in the bull market. Our current philosophy is to continuously push out technical developments as soon as they are ready and vary our marketing expenditure based on the market and importance of the release. We want to build trust in the team behind Horizon Protocol by showing consistent growth in our development and highlight that we can hit all our milestones as stated. This strategy allows us to focus on ourselves instead of trying to time an unpredictable market..
For example, with Horizon Exchange, the team definitely feels that it makes more sense to release on mainnet as soon as possible and to build some awareness around it with higher than average marketing effort as soon as possible, instead of delaying it to try and “time the market”.
18. Is Binance or CZ involved in the project in any capacity?
Binance and CZ are currently not directly involved in this project at this time, though we are currently active in reaching out to them to seek opportunities where we can collaborate.
19. When will there be a listing on a decent volume CEX?
We also want to be listed on first tier CEXs but it is important to understand what is required to be listed and stay listed.
Here’s a TL:DR. The short answer is we will push for listings on higher-end exchanges when we have achieved more fundamentals on the product side, as well as on the number of holders, volume, and how strong our community is.
Now, for the long answer. We can’t go into anything specific in regards to deals that we are exploring to make because there are NDAs, but the range to pay for an exchange listing can go well into six figures USD, depending on the tier. Exchanges also have different tiers of popularity, volume, and users, so one that is a “decent volume” CEX might be quite expensive.
To keep the listing on the CEX, there is also a common trend to require a certain amount of volume and market value, otherwise, there is potential for delisting.
Therefore, to get listed on a decent volume CEX, we have two potential strategies:
- Build up value and volume first. We do this by leveraging DEXs and marketing to bolster the project alongside product development. All of our trading stats have no artificial inflation (an anomaly in the space where MMs are used to boost trading activity.) This is to reach a point where Tier 1 Exchange listings will become easier and we skip the necessity to pay for less popular exchanges.
- Spend a large amount of money with MMs to list on many CEXs on the way up to Tier 1 exchanges when HZN prices are valued low.
We’re currently operating on the first strategy as it appears more financially and strategically sound at this point in time because this ties into the usage of the Community & Ecosystem Fund that was setup to support this activity and the growth of Horizon Protocol and demands community inclusion in the decision making.
We want to be as transparent as possible and are providing this information to you guys so we can start having serious discussions and progress community inclusion in important decisions. It would be against our community-driven ethos to decide something so impactful without you guys. We welcome thoughts and feedback on this.
20. In terms of getting listed on other exchanges (CEX/Binance), are you currently filling out listing applications for various exchanges or will you wait until our own exchange is launched. Are you willing to pay for listing and if so, what “money” will be used? Community Fund/Allocation? Or are you simply waiting for exchanges to approach you because of our great product? And perhaps list for free thanks to the volume it will bring to that exchange.
Please refer to our long form answer in question #19, but we are happy to reiterate that we want to be careful about how we spend the Community & Ecosystem Fund and make sure that we get the most value out of it. If we don’t see a good potential ROI, then we will likely not want to spend the funds in that way.
21. What are the team’s plans to list on a bigger DEX? Loads of noobs won’t use PancakeSwap and trade solely on bigger DEXs.
PancakeSwap is the largest DEX on the BSC with only Uniswap on the Ethereum chain exceeding it in terms of liquidity. Developing an ERC-20 version of HZN, establishing a reliable BSC-ETH bridge and listing on Uniswap is certainly in our short term plans. According to our most recent roadmap, we are aiming for Q2 2022 to make this happen. Additional DEXs are also in the pipeline as we are committed to our long-term interoperability goal of integrating with many blockchains.
To make this happen though, we would potentially need to seed some initial liquidity, which could come from the Community & Ecosystem Fund, as well as create a yield farm on Horizon Genesis to incentivize users to also add liquidity. When the time comes, it will be very important for the community to come together and discuss if this is the best use of the fund.
22. Will the Phoenix oracle be the only oracle? Is it capable of providing index info like commodities, real estate, etc.?
Our current stance is that we will not be limiting ourselves to one oracle since each oracle has its advantages and disadvantages in different asset classes. We definitely intend to offer commodities and real estate zAssets, and we look forward to Phoenix Oracle’s future mainnet release and their price feed offerings!
23. How do you see the development of community involvement over time leading up to achieving a horizon DAO?
Community is a huge part of our mission and a large part of why we are doing this. The team strongly believes in the crypto ethos of decentralization and community ownership, but we need to make sure that we develop a strong community that can gradually be involved in more and more decision-making.
We believe that community development will require a lot of communication and education, therefore, a large focus in what we do, aside from product development, will be working hard to provide educational content. The better the knowledge and understanding within the community, the more likely for the community to make well-informed decisions in community decision-making.
We are very happy with the questions that have been asked in this AMA. A lot of these took a bit of time to think about because we wanted to provide very thorough answers that also included a bit of educational content. A common theme throughout this AMA is that we need to come together more and engage on the difficult areas that require community consensus to push forward. We want this to happen as much as you guys!