Expect Privacy. Haven Protocol is the world’s only network of private stable assets. Source: Haven
Expect Privacy. Haven Protocol is the world’s only network of private stable assets. Source: Haven

Haven Protocol (XHV), the confidential offshore vault allowing the creation of private tokens

What is the Haven Protocol?

The Haven Protocol provides a virtual offshore vault with a variety of synthetic assets. Asset transactions and exchanges are private, but they rely on a specific system.

Haven was founded in January 2018 and began trading on cryptocurrency exchanges in April of the same year. Its design enables it to establish an uncollateralized digital offshore storage based on Monero (XMR), of which it is a fork.

Through a “mint and burn” mechanism, XHV tokens can be transformed into other supported assets in a secret manner, i.e. without disclosing the amounts.

The project was taken up by a new team after some challenges with the construction of the first testnet and subsequently the departure of the first two anonymous developers with the premined funds.

Expect Privacy. Haven Protocol is the world’s only network of private stable assets. Source: Haven

The Haven Vault’s first traded asset, xUSD, became live on the mainchain in July 2020. Since then, it’s been feasible to burn XHV to mint xUSD and the other way around. Oracles provide conversion rates. The first was ChainLink, which was phased out in February 2020, and since November 2020, Band Protocol has been the primary method of communication.

A Haven debit card will be announced in February 2021. Gold, silver, and numerous currencies are among the new assets offered at the start of the year. Beginning in May 2021, the xBTC will be available for purchase.

The Haven Protocol Ecosystem: The Vault

The Haven protocol blockchain, like Monero’s, is opaque: transaction wallets and amounts are kept private by default. The Haven protocol’s entire purpose is to provide a private digital safe on top of everything else. It allows you to store XHV tokens, but more importantly, to trade them for xAssets, which are synthetic assets. And it’s all done in complete secrecy.

The operation of the vault’s exchange is straightforward. Oracles establish all exchange rates, which is why assets are uncollateralized. The xUSD is a currency that is backed by the US dollar. If Alice needs 100 xUSD and the price of XHV is $10, she must burn 10 XHV to achieve her goal. If Alice wishes to reverse the trade and the price of XHV is $5, she must burn 100 xUSD to get 20 XHV (20*$5 = $100). If the price of XHV is $50, however, it only reaches 2 (2*$50 = $100).

As a result of this system, there is endless liquidity. The only thing that changes is the amount of XHV in circulation. However, transaction fees and exchange validity must be considered.

The actual price of the XHV token. Haven protocol

What is the XHV token used for?

The protocol is built around the XHV token. Indeed, it is he who allows xAssets, which are synthetic representations of assets, to be created. Early developers premined 90,000 XHV, but they were resold. The quantity of XHV tokens mined for every block rapidly drops, reaching a tail emission of 0.6 XHV per block, similar to Monero. The minting and burning method of xAssets, on the other hand, totally alters the monetary emission curve.

In the third version of the whitepaper, many possibilities for the evolution of the number of XHV tokens in circulation are considered. This amount is determined not only by the exchanges of XHV tokens for xAssets, but also by the price fluctuations of the assets represented. In any event, the protocol guarantees to trade 1 xUSD for 1$ in XHV.

The amount of XHV and xActives in circulation was supposed to be unknown at first. This does seem appropriate for a protocol where all communications are kept private. However, after great deliberation and consultation with the community, the decision to be open about the amount of money in circulation was made. It’s all about trust, visibility, and avoiding attacks.

How to buy XHV?

KuCoin and Bittrex are two venues where the XHV token may be purchased.

We recommend KuCoin since its markets offer superior liquidity and allow you to acquire XHV tokens directly from the Haven project.

KuCoin Token (KCS) Kurs, Grafiken, Marktkapitalisierung | CoinMarketCap
Kucoin CEX to buy the XHV token. Source: Kucoin

Creating a Haven Chest

A Haven Chest is where XHVs and xActives are stored, converted, and transferred. There are three types of vaults:

>> a web interface,
>> a desktop program,
>> and a developer and advanced user version.

The procedure is the same for web and desktop applications. You must first create a safe by giving it a name and a password after opening the application. After that, a 25-word seed is generated in order to be able to recover the content in the event that the password or the device used is lost. The safe must then be synchronized with the blockchain in both circumstances.

The initial synchronization of the web application may take several hours. If the site or session data is not wiped manually or automatically by the browser, it will be faster. You should also avoid using your web browser’s incognito mode to avoid having to redo all of the synchronizations.

The Haven network must also be synced with the desktop app. To do so, you must first create a safe and then identify yourself before selecting a node. It is possible to create a local node, but this requires using the developer application, which also requires more hard disk space.

Chest creation page, available here

Using the Haven Chest

The dashboard allows you to check information of account assets, convert assets, transfer assets, and change settings once you’ve been identified in one of the applications and the synchronized blockchain. If the features appear to be mundane, we must pay particular attention to a nuance in the asset transfer and conversion protocol.

Transfer of property

The Haven protocol, like Monero, is based on the CryptoNote technology. The way transactions are conducted on the network differs from more standard cryptocurrencies in order to preserve transaction confidentiality.

In the case of Bitcoin, wallets show “available” funds but also, often, “pending” funds. Indeed, after having carried out a transaction towards an address, it is necessary to wait for a certain number of confirmations (of mined blocks) so that the funds can be spent. The same is valid for receiving transactions of XHV tokens or xAssets.

The CryptoNote protocol’s uniqueness is crucial when it comes to sending money. The way financial transactions work is similar to how banknotes work. If Alice sends Bob 10 XHV without costs, Bob receives a 10 XHV note. If Bob wants to send Alice 5 XHV, he must first send his 10 XHV and then wait for the 5 XHV to change. As a result, the exchange transaction must have enough confirmations for Bob to transfer his remaining 5 XHVs if he so desires. It takes 10 confirmations, or roughly 20 minutes, at the moment. This limitation is essential for maintaining the confidentiality of communications.

As a result, while receiving and transmitting funds from blockchains that use CryptoNote, they may be put on hold. The presentation of monies is then divided between those that are “available” and those that are “blocked” to demonstrate this subtlety. By separating the deposits, you can get around the restriction on spending funds at the same time. Assume that instead of sending 10 XHV to Bob, Alice sends 2*5 XHV. In this situation, Bob can spend 5 XHV twice in the same turn without having to wait for the change. The division of funds, on the other hand, necessitates just as many extra transactions, accumulating the costs.

Conversion of xAssets

It is not possible to swap XHV directly with xAssets; instead, you must go through xUSD. Conversions from XHV tokens to xUSD or xUSD to xAsset, and vice versa, incur a conversion cost in addition to the usual transaction fees. All of these fees are paid in the transfer or exchange’s native currency.

A fee of 0.3 percent of the converted value is charged when converting xUSD to xAssets. The transaction is reported as a traditional transfer, and the funds are similarly secured.

The conversion between XHV and xUSD, as well as vice versa, is more complicated. It’s tough to spot attacks because everything is kept secret except the amount of XHV and xActives in circulation. Rapid conversions, for example, can be used to manipulate pricing by drastically altering the amount of XHV tokens in circulation. To dissuade such attacks, a unique fee structure has been implemented.

The conversion charge between XHV and xUSD is determined by the transaction speed, or the time it takes for the money to lock. The quickest option, 6 hours, demands a 20% fee, while the most expensive option, 7 days, costs only 0.2 percent of the converted currency.

Table of conversion fees between XHV and xUSD, available here

Conversion employs the same process as normal transactions, aside from this special lock. When portion of a deposit is converted from XHV to xUSD or vice versa, the full account is locked until the lockout period expires. If Alice only has 500 XHV in her account and pays the minimum charge to trade 1 XHV for xUSD, the remaining 499 XHV will be locked for 7 days!

When a transaction is issued, all conversions are made. As a result, users are aware of the current conversion rates and fees. However, until the funds are released, prices may change dramatically. The project governance portfolio is responsible for all conversion costs. They’re used to fund the project’s development, infrastructure, and marketing, much as 5% of the usual transaction fees.

Our opinion on the Haven protocol

The Haven Protocol appears to have taken a new direction after a turbulent start. While some of the features are comparable to those found in other protocols, the key difference is full confidentiality.

However, the protocol’s lack of nuance compared to public options may make adoption difficult for those who are unconcerned about privacy. People who consider it as additional security or seek to speculate through value reserves indexed to other assets, on the other hand, see it as a substantial asset.

Haven Protocol, The Confidential Offshore Vault Allowing The Creation Of Private Tokens

  • Through a “Mint and burn” mechanism, XHV tokens can be transformed into other supported assets in a secret manner, i.e. without disclosing the amounts.
  • The quantity of XHV tokens mined for every block rapidly drops, reaching a tail emission of 0.6 XHV per block, similar to Monero.
  • In any event, the protocol guarantees to trade 1 xUSD for 1$ in XHV. The amount of XHV and xAssets in circulation was supposed to be unknown at first.
  • We recommend KuCoin since its markets offer superior liquidity and allow you to acquire XHV tokens directly from the Haven project.
  • A Haven Chest is where XHVs and xAssets are stored, converted, and transferred.
  • The same is valid for receiving transactions of XHV tokens or xAssets.
  • Rapid conversions, for example, can be used to manipulate pricing by drastically altering the amount of XHV tokens in circulation.
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