We wanted to lay out our thoughts on 2022 and also describe the challenges, goals and vision for 2023 and beyond.
Thoughts on 2022
2022 has been an interesting year for the crypto space with the revelations of many ‘trusted’ centralized entities misappropriating user funds and going under for it. We believe that these events have added tremendous clarity for the world to understand why it needs access to a trustless, transparent, and borderless financial system, which is ultimately what Horizon Protocol and the larger DeFi community are building to achieve. It is common in human nature for people to only take action and cultivate change when things become broken enough to affect them on an individual level, and the events of this year have set a clear path forward and the motivation to make the necessary changes that will only strengthen the crypto industry in the longer term.
As the need and opportunities for DEXs and DeFi continue to grow, our goal is to position ourselves to offer unique and competitive solutions with an emphasis on user experience (UX) and helping to bridge the gap between the Web 2.0 and Web 3.0 worlds. In adoption terms, Web 3.0 and DeFi are still in their infancy and there is still vast room for growth as the barriers for Web 2.0 mainstream users to migrate into Web 3.0 are systematically resolved.
Despite all the noise, Horizon Protocol has been consistently hunkered down and BUIDLing. We launched Horizon Exchange, released new versions of Horizon Genesis and Horizon Dashboard, launched new zAssets to where now we offer the most synthetic trading options on the BNB Chain, connected with many other communities, and we now have our own Horizon Podcast, Blog website and a completely revamped main homepage — all of which are setting us up for an even bigger release schedule in 2023!
Horizon Protocol in 2023
Looking ahead to 2023, let’s take a moment to identify key areas of focus for the project, including our business model and our technology focus, and then create a plan of action to ensure success.
Areas of importance we plan to focus on:
- Increase open market liquidity / access points for HZN and zAssets
- Increase product usability and usage
- Increase project awareness
- Improve protocol utility
- Improve protocol robustness
- Continue our longstanding focus on security
Horizon Protocol’s Business Model
To understand the lens in which the project sees itself through to address these areas, it’s important to understand the business model of the protocol itself. With the publication of our business model on Horizon Academy, we sought to provide clarity on how the protocol can generate value and ensure its sustainability in the long term. The protocol incentivizes the staking of HZN through fees generated from the usage of the protocol and supplements that with inflationary rewards. The goal is to increase the fees generated and dilute the dependance on inflationary rewards over time. Fees are generated from the general usage of the protocol, so it is important to both increase the overall dollar volume usage as well as find new use cases to generate fees.
To increase the fees generated by the protocol, both a B2C and B2B approach is necessary as the protocol offers solutions for both.
How we plan to address these areas:
- Release new features and capabilities on the protocol level (B2C + B2B)
- Improve/revamp the UX for all front end products to increase usability (B2C)
- Work on partnerships and integrations with other protocols in the DeFi space (B2B)
- Create more educational content, more user guides to support new users (B2C), and better documentation for 3rd party integrations (B2B)
- Building a stronger community ecosystem by further integrating into the broader community (B2C + B2B)
On the B2C front, a key focal point is to reduce barriers of entry for new users to enter the ecosystem by further improving product UX, introducing new protocol-level functionality, and creating more educational materials and documentation. To aid in liquidity issues, the project aims to also improve market making activities to enhance the experience for users to traverse in and out of the Horizon ecosystem. This will also unquestionably help us in our goals to get more listings on CEXs.
On the B2B front, the primary driver will be to increase partnerships with other DeFi protocols such as DEX aggregators, yield optimizers, borrow lending platforms, cross-chain bridges and others. An example of this would be with the introduction of the dynamic trading fees mentioned in our smart contract update features, the protocol will be able to eliminate the price oracle waiting period when trading thus creating opportunity for external DEX aggregators to leverage the zero slippage aspect of Horizon Exchange to create favorable trades for their users.
On the tech front our objectives can be broken down into 3 sections:
- Smart Contracts
- Front End
- Security Audit
Mentioned in our previous tech updates, a major focus this year is to launch a decentralized perpetual futures exchange where users can trade using leverage while having competitive fees and no slippage. We are very excited for this feature as it will greatly support the Horizon Protocol business model in generating fees for HZN stakers and greatly improve the utility and volume usage of the protocol.
To address the open market liquidity of zAssets challenge, new ways of collateralizing them is required to increase their circulating supply. With the planned introduction of collateralized loans and token wrappers, users will be able to acquire zAssets using other crypto assets more economically than staking HZN. These features will also increase opportunities for arbitrageurs to profit off of open-market price deviations.
- For loans, users will be able to unlock more potential with their assets by leveraging them to borrow zUSD at 150% C-Ratio or higher, allowing them to acquire more zAssets with the same collateral and potentially using the borrowed funds to generate additional returns.
- With token wrappers, users will be able to directly convert their crypto assets into their zAsset equivalents at a 1:1 basis (100% C-Ratio without risk of liquidation), making for the most efficient way possible to collateralize zAssets.
The implementation of dynamic trading fees will revolutionize protocol usage and unprecedented partnership opportunities by allowing the removal of the waiting period after each trade and eliminating oracle front running opportunities during periods of high price volatility.
Other new features that are being investigated and/or developed (not in any particular order):
- Introduce market basket/indices tokens (such as an NFT basket)
- Allow the correction of the C-Ratio to be automated when claiming each week to allow for a complete stake-and-forget experience
- Introduce Limit Orders (create orders that are executed at a specific price)
- Introduce Stop Losses (create orders that close your position at a specific price)
- Reduce trading fees by exploring other decentralized oracles
- Improve the protocol liquidation mechanism to allow more users to participate in keeping the network healthy
- Simplifying user debt tracking
- Introduce tools for users to hedge the debt pool and to reduce their C-Ratio volatility
To address product usage challenges, a key part is improving the new user onboarding process and user experience. We noticed a limitation to this is occurring due to the fragmentation of all the product and services that users are required to use before they can start trading or staking (i.e. first buying HZN on PancakeSwap, then staking HZN to mint zUSD on Horizon Genesis, then trading zUSD on Horizon Exchange), they must go through 3 different websites with many steps in between to achieve this.
By creating a unified product/frontend that combines Horizon Genesis, Exchange, and Dashboard with a built-in Pancake/Ellipsis DEX frontend, we can make it easier than ever for users to access and utilize HZN, zUSD, and zBNB. This streamlined user journey will make it simpler and faster to get the most out of the protocol, and help remove significant user friction. A one-product redesign can not only improve the user experience, but also provide the opportunity to more easily scale new features such as adding in new front ends for Futures, Loans and Wrappers.
Lastly, if there is interest from the community, there are also opportunities to integrate additional onramps into our protocol by adding an interface that allows crypto holders from other chains to bridge into BNB Chain and buy HZN directly as well as possible fiat onramps via bank/credit cards.
While our current protocol has already been audited, we are taking extra precautions to ensure the security of our users by contracting a secondary audit to review all the changes we are making. We will not launch on the mainnet until we are confident that all aspects of the protocol have been thoroughly tested and audited.
Where We Are At and Next Steps
Our successful and secure deployment of the core products of the protocol (Genesis, Exchange, Dashboard) has enabled us to move forward with expanding the utility and usage of the protocol, creating new use cases and reducing friction.
In 2023, we are thrilled to be building the next evolution of Horizon Protocol’s product ecosystem and are committed to deploying the new contracts and updated front ends to the testnet as early as Q2 (timeline is subject to change). With the Testnet, users will be able to play and test for themselves what’s in store for Horizon Protocol while we battle test the contracts and undergo a thorough security audit to ensure maximum security. Once the audit and the public testnet phase has completed, we look forward to launching everything on the mainnet!
We are incredibly grateful for the amazing support and feedback from our community. We are committed to making Horizon Protocol the leading synthetic asset protocol on the BNB Chain and we are very appreciative to continue to receive your valuable feedback and suggestions to help us reach this goal together!