As we have now entered the last month and the current year is coming to a close, we wanted to give you a brief update on the various projects and communities that we’ve engaged with as part of our collaboration efforts.
In the past few months the Horizon Protocol team took part in several community AMAs with BNB Chain, or the Innovation Talk Tour as it was called. During these Q&As we were represented by our Educational Director, Stanton Wong. Following is a recap of this tour.
The Innovation Talk Tour took us to the BNB Chain communities of Italy on October 13th, India on October 27th and the joint Singapore/Malaysia community on November 9th. You can click on the links if you wish to read them back in their entirety.
Finally, another event that took place on November 9th was our very first offline event! The BNB Chain Innovation Meetup held in Buenos Aires, where we joined BNB Chain and several other projects.
When added all together, this brings the total amount of BNB Chain events we’ve joined these past months to 8!
- Horizon Protocol Basics
- Horizon Genesis
- Horizon Exchange
- Community and Expansion
- Security and Long Term View
- Roadmap and Future Developments
Horizon Protocol Basics
1. Could you introduce yourself?
My role is to develop content to help people better understand synthetic assets, their potential use cases, and generally how to more easily navigate Horizon Protocol services. My background is in software development and product management, but I have been involved in crypto since 2016.
2. What are synthetic assets and what can I do with them?
Synthetic assets are tokenized derivatives. In traditional finance, derivatives include options, futures, swaps, etc., which have a huge market capitalization, estimated at $1 quadrillion dollars.
So synthetic assets are basically cryptocurrency financial derivatives. A simple example of a synthetic asset is a mirror asset, which uses oracles (i.e. from Chainlink) to track the price movement of stocks (APPL, TSLA), commodities (gold, oil), currencies (USD, Euro), cryptocurrencies (BTC, ETH).
Since there are no limits to what a derivative can be, there are many other possibilities as well, including unique market indices, such as the S&P500 for cryptocurrencies or baskets of NFTs.
The Horizon Protocol essentially allows users easy access to buying financial exposure to these assets without going through the traditional red tape.
3. How does Horizon Protocol work, can you explain to us the difference between Genesis and Exchange?
Horizon Genesis is the backbone of all synthetic assets in the Horizon Protocol ecosystem.
Horizon Genesis is used to create Horizon Protocol’s first synthetic asset, the zUSD, which is minted using HZN as collateral. All zAssets are backed by this collateral pool. This pool is maintained by stakers on Horizon Genesis, who receive incentives for doing so.
Horizon Exchange hosts a decentralized exchange for zAssets using industry-leading oracles to track price movement. The exchange allows simple market transactions of typical underlying assets including commodities, stocks, bonds, forex currencies and cryptocurrencies. And with upcoming updates it will also allow access to advanced derivative trading tools such as shorting, futures and options.
And the best part is that anyone can access all these investing and trading options by simply acquiring zUSD or zBNB on the open market and connecting a supported wallet.
4. Who might your users be? Why should anyone be interested in your project?
I love this question because synthetic assets are still hard to pin down how to use them. There are probably two main types of users:
- Stakeholders who want a good dividend yield on Horizon Genesis in the form of either HZN and zUSD tokens.
- Retail Investors, who want easier access to a broad range of investment options, including stocks, commodities and indices from around the world, available in the form of synthetic assets on the Horizon Exchange.
And they can do this by simply connecting their wallet and performing simple transactions such as selling and buying.
5. There are many synthetic asset projects, what makes Horizon Protocol unique?
I think as of right now, one of the unique parts of our project is that we are currently the only fully functional synthetic assets exchange on the BNB Chain. The low costs for each transaction match our mission around easy access, so everyone can trade and invest without much cost.
I also want to mention that to fulfill our mission, Horizon Protocol needs to make synthetic assets and DeFi derivatives more accessible. To do that, we take a user-centric approach and have a strong focus on UI/UX design.
An example of our focus on UI/UX might be Horizon Genesis 2.0. Genesis 2.0 consisted of us adding a lot of new features to improve the user experience. And the best part of it was that almost every feature was made based on the feedback and suggestions provided by the community.
6. Why did Horizon Protocol choose to build on BNB Chain, and how can we as community members get involved?
We chose BNB Chain back when Ethereum was the only real game in town and L2s were not available yet. We wanted to make sure that whatever we built on provided transactions at a reasonable cost.
The other thing we were considering was more long term. We believed that Binance had a long term role to play in crypto because of its CEX. CEXs are absolutely necessary to interface between traditional finance and crypto and Binance was the biggest at the time, and still is. There’s also a lot of room to grow with the BNB community, which was still nascent when we started and we are very excited to be partnering and engaging more often via these innovation talks.
7. What does Horizon Protocol’s inflation policy look like?
We have a timeline for inflation that will gradually take it down to 2–3%. This timeline is designed to give us enough time to build out the project and bring in liquidity so that the project can make enough off of exchange and other fees to offset the current inflation distributed to our stakers.
You can find the details on Horizon Academy.
8. How do synthetic assets help manage risk in a highly volatile market?
Synthetic assets are essentially crypto derivatives. From a TradFi perspective, synthetic assets allow for interesting financial products that can hedge against market movement in interesting ways. Options, CDOs, Futures, etc. are all synthetic assets that help hedge against volatility. Note that these are very powerful tools and typically only understood by expert finance experts.
Our protocol essentially acts as a base layer to fund and create synthetic assets, so as more of TradFi moves onto DeFi, the better our opportunity is. This will take time though as DeFi still needs to prove itself in regards to security.
Of course, we are not the only ones, but this is also not a winner takes all market. The more projects that work on the problem, the better the selection for users. And we believe that we can be one of the teams that makes it.
9. Is Horizon Protocol platform suitable for beginners in crypto, or does it only appeal to advanced users?
I think that to understand DeFi and smart contracts, you need to use it. Horizon Protocol could be a good one to learn with because there are so many parts to it.
- Learning about staking and how it works.
- Learning about how to trade on a DEX.
- Learning about synthetic assets.
- Learning about hosting your own wallet instead of hosting your tokens on a centralized exchange.
- And in the near future, learning about perpetual futures and other ways to interact with DeFi.
Start with a small amount and play with the protocol. Crypto becomes more interesting once you get comfortable navigating through how wallets work, including signing transactions and getting comfortable with fees (BNB chain fees aren’t bad).
Once you get comfortable, all of DeFi becomes open to you and that’s when it really becomes fun.
10. Could you explain which staking options are available?
There are two main options for users to stake and earn passive income on Horizon Genesis.
The first one, which is critical for the protocol, is staking HZN to mint Horizon Protocol’s synthetic assets. As mentioned above, these are known as zAssets. The specific zAsset that will be minted is a stablecoin: zUSD.
Getting into a bit of specifics here, but by minting zUSD, stakers provide collateral for the creation and backing of all the synthetic assets in Horizon Protocol. They receive two types of rewards, HZN tokens from the inflation policy and zUSD collected from the fees of Horizon Exchange. Note that this is an active staking strategy and requires weekly actions to claim rewards. The weekly action of balancing the collateral is important in keeping the protocol safe from financial attacks.
The second one is to provide trading liquidity to the key tokens of the protocol: HZN, zUSD, and zBNB.
This can be done easily by creating Liquidity Pool Tokens (LP tokens) on PancakeSwap or Ellipsis. Stake these LP tokens in Horizon Genesis — Earn to receive extra rewards in the form of HZN tokens. There are three active pools at this moment: HZN-BNB, zUSD-BUSD, and zBNB-BNB.
So the first one requires “active staking”, while the second option allows for a “stake and forget” approach.
I want to quickly share a comparison of the different staking options on Genesis so anyone can easily evaluate the APYs, risks, and activity levels they are willing to partake in. If you take a quick look you will see that APYs go from a range of 31% to 81%, and two of those come from stable pools, which makes them very attractive staking options. Guides are available on Horizon Academy and you can always ask for help in one of our community channels.
11. Which price feed oracle is used for Horizon Exchange?
We currently use Chainlink. We will only use decentralized oracles as that is part our ethos to building a decentralized finance platform. Chainlink is currently the most robust decentralized oracle available. We are open to other oracles as well, but we would need to vet them to make sure that they are secure and safe to use in the long term.
12. What are some of the benefits of trading on the Horizon Exchange platform?
One of the benefits of trading on Horizon Exchange is that, thanks to the nature of synthetic assets, you can access a wide variety of investment options and build a diversified portfolio that includes stocks like Google or Apple, indexes like the S&P 500, or commodities like gold and oil. And this is only the beginning as we will be adding more zAssets every quarter.
Our only limitation is oracles to get the data feeds from. If a highly trusted oracle can provide the necessary data for a specific asset, we can list that as a new zAsset.
Another important benefit you get by trading on Horizon Exchange is zero slippage on your trades and infinite liquidity because, unlike traditional market exchanges, Horizon Exchange has no need for an order book, nor counterparty matching. All trades are made at the price provided by the oracle using the collateral pool as liquidity.
Something similar that took advantage of the above properties is 1Inch with Synthetix, which is also a synthetic assets DeFi platform, but on Ethereum. 1Inch aggregates trades and looks for the most efficient pathway possible with the least amount of fees and slippage. They leverage Synthetix and Synthetix is able to earn a generous amount of fees from that. This is something we are aiming for as well.
Lastly, you get the benefit of borderless trading with no KYC because we are a DeFi protocol.
13. How can users start trading on Horizon Exchange?
In comparison to Genesis, it is very easy and very straightforward.
First, for most users, the starting point is acquiring zUSD from either Horizon Genesis via staking or trading for it directly on a DEX, like PancakeSwap, and then connecting a supported wallet to Horizon Exchange.
Then, once you have zUSD in your wallet and you are connected to Horizon Exchange, you can select a zAsset to trade from up to 25 available options. This amount will increase while we gradually add new zAssets, based on input from our communities.
Buying and selling is as simple as selecting the zAsset in the MARKET or TRADE sections, selecting the amount of zUSD you want to trade, and finally clicking the “BUY”/”SELL”’ buttons to complete the transaction. And that’s it.
You can repeat these simple steps with any other zAsset to build a diversified portfolio.
On a side note, I’d like to mention that aside from acquiring zUSD first, it is also possible to acquire zBNB via a secondary on-off ramp of the zBNB-BNB pool built on Ellipsis. This might be an easier way to get into Horizon Exchange and trade if you are a BNB holder.
14. How do you plan to make your interface accessible in a manner in which the users who do not have crypto or investment backgrounds can easily assess the risk and benefits of the available funds — especially for the active funds operated by fund managers?
Unfortunately, active fund managers are not going to be enticed by good-looking UIs. They are used to much worse. What they do care about is liquidity and whether or not the platform is safe.
Both liquidity and safety will require the long game. Liquidity takes time to build. Our current focus is to continue evolving the Horizon Protocol ecosystem so that it fulfills all the parts that we imagined for it. This critically includes shorting, futures, and options, which is why those are our main focus right now.
For safety, we are lucky to have forked Synthetix when we started. They have one of the better codebases for a synthetic assets protocol, so we feel good about our starting point. But with each upgrade we do, we need to be very careful and so a lot of development time is spent in testnets and making sure that the smart contracts are bullet proof before they get pushed live onto mainnet.
Community and expansion
15. Is there a way for users to track Horizon Protocol stats in real-time?
Transparency is very important to us, so we did build a public Horizon Dashboard so that the protocol statistics could be easily accessed. Here you will be able to see real-time network data and analytics for Horizon Protocol.
The Horizon Dashboard shows the current total value locked, market price, and the circulating supply of the HZN token. There is also information about the activity of the staking pools, APYs, and rewards distributed each week.
It also shows the composition of the total zAsset pool and the trading volume on Horizon Exchange. One thing we want to do is to provide ways for users to see what others are doing. One of the ideas we have to help people better trade is to highlight high-performing wallets, maybe in the form of a leaderboard.
16. How do you see the development of community involvement over time leading up to achieving a Horizon DAO?
Building a DAO takes time. There’s a lot of considerations because we do not want our DAO to be represented by just whoever holds the most tokens. Our main consideration is to build up our community knowledge through education and then gradually open up decision making to the community a piece at a time.
For example, we have asked the community for feedback on future zAssets to add. Gradually, we hope to involve the community in roadmap direction and marketing spend as well.
It is important to note though that the project is still small and some individuals in the community will not necessarily have the long term interest of the project as top priority, they are potentially more interested in the short term. Therefore, the process to becoming a DAO will be very gradual. We are always open to feedback though!
17. What are your thoughts on the Asian market? Does your team have any plans to approach ASEAN?
Our goal is to build towards a completely decentralized and borderless marketplace, so we see opportunity everywhere. We are definitely interested in the ASEAN market since there are a lot of great teams over there, and a lot of people who are interested in crypto. The governments are also very welcoming over there.
We will also be doing a similar BNB Chain Innovation Talk with the Malaysia/Singapore audience.
Security and long term view
18. Many exchanges have been hacked, even though they have a high level of security. So how safe are the funds of Horizon Protocol users?
We initially forked off of Synthetix because when reviewing their code, they had some incredible ideas and a really robust and documented codebase. As we continue to build, we always check to see if there are any fundamental protocol level updates on the Synthetix side so that we can guarantee that we have multiple avenues looking into security for the protocol.
We also take our time when updating our backend and contracts, double and triple checking everything because the success of this protocol will require it to be 100% safe. I have a lot of trust in our dev team as all of them are very detail oriented and also care a lot about security.
19. I’m sure you have some of the best software engineers on your team, but many projects aren’t with us right now owing to financial strategy mistakes. For example because they misused their liquidity on their platform. Do you work with economists who are experts in their respective fields?
We’re not working directly with economists, but we have a few guys with start up experience in the team, so we are very aware of how to operate on a tight budget. Making sure we have a runway, understanding how and when to spend, and planning for the worst case scenario, is something our team has quite a bit of experience in.
In all bear markets, it’s heads down and BUIDL. Our entire team is very bullish on crypto in the long term, therefore, we are not worried in that regard. Right now, the priority is to survive through the bear market and during this time, build up partnerships, content, and features, so that when the bull market is back, we are ready to take full advantage of it.
20. Does the current bear market scare you guys? Do you think you are launching your project in the right time? If so, what’s the reason for your confidence?
I can definitely say that the bear market is not pleasant. The timing was terrible for us because we launched Horizon Exchange right in the middle of the bear market, which means that we slowed down and paused some of our marketing plans because they would have been very ineffective.
The good thing is that we did have contingency plans and we were always in it for the long game, so we never spent money for the sake of hype. We have a few who have entrepreneurial experience in the core team, so controlling budget and spend to have a sustainable project is key to our decision making.
In the long term, we are not afraid, since we believe in our team’s ability and we believe in what crypto can do for the world.
21. A common problem is that nowadays most investors are only interested in initial profits and ignore long-term benefits. Can you give them some reasons why they should buy and hold in the long term?
This is a pretty good question. We agree that crypto is still very much about hype. If you can generate a lot of hype around your project through massive marketing budgets, then it might be possible to generate a lot of interest and get a lot of people to buy in.
Our team believes in the utility of crypto and blockchains in the long term, so we build with that in mind. That means that the process will be slower, but it will also be more sustainable. We will let the project speak for itself by continuing to deliver on our roadmap and build step-by-step. More partnerships, more awareness, build a reputation for trust, all of these will be keys to finding success in the long run.
22. Any major marketing plan, cause the way I see it right now the majority of HZN investors are HODLers for the weekly rewards, only a few are trading on the newly released Horizon Exchange?
We do not have a large marketing spend plan right now as we are in a bear market. Our main goals right now are building relationships between projects and build longer lasting content in the form of educational content that can be used later as well, as well as trialing different marketing opportunities to see if they provide good ROI. Other than that, it’s mostly grassroots guerilla marketing.
The main reason for this is that we do not know how long the bear market will last and big spending right now will shorten the runway. Since we believe we are building something of value that will be used in the ecosystem, the most important thing is to ride out the bear market and come out the other side ready for users and investments.
23. There are a lot of cross-chain bridges being developed, could you please tell us what bridges will be supported by Horizon Protocol in the future?
Our long term goal is to become a multi-chain project, but bridges are scary right now. There is still a lot of work that needs to be done to ensure security on them. And as security is extremely important to us, as it should be for all DeFi projects, we are going to be taking it slightly slower on this front. The good news is that since we are built EVN compatible, it will be relatively easy to connect onto other chains when the time is right.
Roadmap and Future Developments
24. What’s next for Horizon Protocol? Can you tell us something about the roadmap?
The most important items on our roadmap will be the ability to short zAssets on the Horizon Exchange and trading Perpetual Futures. Both are very high on our priority list and take full advantage of the flexibility offered by synthetic assets.
In the meantime, we will continue to gradually add more zAssets to the Horizon Exchange to be made available for trading. Additionally, our education efforts will continue as we break down important DeFi concepts and summary resources on the Horizon DeFi Podcast.
We update our roadmap quarterly, you can always find the latest version on Horizon Academy.
25. Some people say that the next crypto boom will be NFTs. What are your views on NFTs?
There’s a lot of potential for both NFTs and DeFi, but I think they will look very different from how we see them today. The nature of NFTs make them perfect for decentralized ticketing purposes and virtual assets, but one of the biggest pain points will be how to connect them with the real world and bind them.
I have a background in sustainable buildings and real estate, so one of the really interesting ways to use NFTs might be for real estate assets. The problem will be that the government will have to play a big role because land is the most valuable asset that a government owns.
With DeFi, a lot of money is already virtualized. I think as DeFi products get more mature, there will be more liquidity flowing into DeFi that will replace some of TradFi. When this transition happens, it is likely that a lot of it will be invisible to typical users of TradFi as they will not be interfacing directly with DeFi.
TradFi will be the interface into DeFi for most users who do not understand crypto, but fundamentally, smart contracts that cannot be manipulated and the transparency of the blockchain provides a much better backbone to the financial system than what is currently in place.
Of course, it cannot replace everything, since the TradFi will still need to be in control of their fiat to maintain their economy, but open market systems will likely fare better on DeFi in the long term due to trust and transparency.
For NFTs, it will also be about trust and transparency, but NFTs will be very public. Every consumer facing organization will be using it, either for ticketing or for digitally stamping real world, physical products. It will also be used in all things digital, including games, online events, blogs, membership tokens, etc.
So I think that the world will be talking about NFTs a lot more than DeFi, but DeFi will run the world.
At Horizon Protocol, we have been looking into indexes for NFTs. As NFTs continue to grow, there will be opportunities to create synthetic assets that follow the average price of certain NFT projects so it becomes possible to get exposure to these projects without buying them directly.
BNB Chain Innovation Meetup Buenos Aires
Besides these AMAs, on November 9th we also sponsored our first offline event: The Innovation Meetup held in Buenos Aires, which was the first one to be held there. We joined the BNB Chain Community and BD team and other projects such as Venus Protocol, Everrise, Wink and SaasGo. Our project was represented by our CM @fixedbug.
We value our partnerships with other projects. We believe that to achieve our goals, cooperating with other projects within the ecosystem is of utmost importance. This is why we are continuously on the lookout to reach out to other communities, as was demonstrated by our previous AMAs with both the Chainlink and BNB Chain communities. In case you missed those, or if you wish to re-visit them, you can do so by following the links below:
Finally, if you haven’t yet: Join/follow/subscribe to our social channels, all links can be found below!
*Special thanks to our community member Miguel for helping out!