What is Velo?

Velo is designed to reshape cross-border transactions and bring financial inclusivity to the underserved communities of Southeast Asia. With its mission to create a decentralized settlement network that facilitates safe and transparent value transfers among partners, Velo offers a unique solution that bridges the gap between traditional banking infrastructure and the rapidly evolving digital landscape. By acting as a guarantor for digital credit transfers and utilizing the Stellar blockchain network, Velo enables seamless cross-border transactions, lower fees, and faster processing times.

What is Velo?

Source: official whitepaper

Velo is designed to establish a guaranteed decentralized settlement layer on a federated permissioned blockchain, connecting Trusted Partners such as banks, remittance providers, and e-wallets. This network aims to revolutionize the remittance market by streamlining cross-border money transfers between various types of institutions and service providers.

History of Velo

Velo was conceived to address the challenges and limitations of traditional cross-border financial transactions. By enabling trustless and secure digital credit transfers, Velo removes friction and barriers from the current value transfer process, allowing businesses, migrant workers, and end-consumers to enjoy better services at lower costs.

To provide a wide range of financial services, the Velo Network employs smart contracts on the Stellar blockchain, one of the best networks for digital asset transactions. This approach facilitates the expansion of Stellar’s blockchain adoption and enables cross-chain solutions through EvryNet.

Stellar Blockchain and Velo

The Stellar blockchain was chosen for issuing VELO tokens due to its speed, efficiency, cost-effectiveness, and security. Compared to other major blockchains like Bitcoin and Ethereum, Stellar can process up to 1,000 transactions per second, making it particularly suitable for financial scenarios such as remittances and payments.

Underlying Distributed Ledger Technology

The Velo Protocol is the financial infrastructure that issues digital credits based on distributed ledger technology (DLT). DLT creates a decentralized system for trust and transaction validation using consensus, whereby multiple nodes agree on a proposed transaction and then update the ledger held by each node. Transactions in the Velo Ecosystem will be validated by implementing the proven Stellar Consensus Protocol.

At its core, Velo is an open protocol that allows Trusted Partners to receive digital credits on a distributed ledger, collateralized by VELO tokens that link the credits to fiat deposits. The primary components of the Velo Protocol are the Digital Credit Issuance mechanism and the Digital Reserve System (DRS). The DRS ensures that digital credits will settle anywhere in the network and are always backed by the right amount of VELO token collateral.

Velo uses a set of smart contracts to issue credit linked to fiat deposits and backed by VELO tokens on EvryNet. The VELO token is issued on the Stellar blockchain network, which handles transaction settlement and clearance. Trusted Partners can instantly receive digital credits equivalent to fiat deposits by posting VELO tokens through the Velo Protocol as collateral.

The Digital Reserve System (DRS) is crucial in maintaining the stability of digital credits backed by VELO, as it manages the number of VELO tokens held as collateral. The goal is to keep the relationship between token value and digital credit value as close to 1:1 as possible.

Velo’s focus on fostering a high-quality business network and ecosystem are central to its commercial and technological development. Trusted Partners can seamlessly utilize each other’s functionality, driving quick adoption of the Velo Protocol and distributed ledger technology in general.

The Role of Vstablecoins and VELO in Velo’s Ecosystem

Vstablecoins Minting: Ensuring Trust and Confidence

In light of recent failures of prominent stablecoins, Velo is modifying how it mints Vstablecoins and manages the collateral for the stablecoins’ underlying value. Velo will mint new stablecoins explicitly after receiving assets in the form of other stablecoins (such as USDT or USDC) to exchange with, which will be held by a third-party custodian. This process provides a reserve proof, enhancing confidence in the value of Vstablecoins issued by Velo.

Role of Velo Treasury: Managing Growth and Stability

The Velo treasury manages the Vstablecoin supply, including the minting of Vstablecoins and the administration of VELO as collateral/insurance. It can also enact policies that expand the ecosystem, such as an adapted version of Quantitative Easing (QE) used by central banks. In Velo’s quantitative easing, the government can mint additional USDV using Velo as collateral at a predetermined ratio, ensuring a healthy reserve.

Source: official whitepaper

How does Velo work?

Velo Protocol is a comprehensive financial ecosystem that aims to revolutionize how businesses and individuals transfer value by leveraging the power of blockchain technology. It offers a range of services and features designed to enable seamless, secure, and efficient transactions.

Use Cases and Features

Digital Credit Issuance and Management

One of the core features of Velo Protocol is its digital credit issuance mechanism. Trusted Partners can obtain digital credits by depositing VELO tokens as collateral. These digital credits are tied to real-world fiat deposits and are backed by VELO token collateral, ensuring secure and trustless settlement throughout the network. The Digital Reserve System (DRS) manages the token supply and collateral levels to maintain the stability of digital credits.

Decentralized Crypto Exchange (DEX)

The Velo Decentralized Crypto Exchange (DEX) is a key component of the ecosystem. It facilitates the trading of VELO tokens, digital credits, and other digital assets to ensure liquidity and efficient value transfer. The exchange features a robust order book, allowing vetted participants to provide liquidity and contribute to the overall stability of the market.

Decentralized Lending

Velo Protocol envisions a decentralized lending platform that enables peer-to-peer lending among businesses. By utilizing digital credits as a medium of exchange, participants can access dynamic lending rates, transparent pricing, and a fair marketplace for borrowing and lending.

Community Governance

Velo’s future includes the potential to transform certain treasury decisions into a DAO, allowing decisions to be made through voting among token holders. This transition will likely occur once there is a healthy spread of Velo token holders, ensuring decentralized voting power.

Reputation System

Velo Protocol intends to establish a reputation system that evaluates Trusted Partners based on their historical usage of the platform. High Reputation Scores unlock additional benefits and access to specific features, while low scores may result in penalties and limited access.

Fiat to Digital Asset On/Off Ramps

To facilitate seamless integration with the traditional financial system, Velo Protocol aims to establish a global network of digital banks, regulated cryptocurrency brokers, and exchanges. These partners will provide fiat-to-digital asset on/off ramps, ensuring that the VELO token and digital credits can be easily exchanged for real-world currencies.

Phases of Velo Protocol Development

The development of the Velo Protocol is divided into four distinct phases, each focusing on the implementation and enhancement of specific features and services within the ecosystem.

These four phases represent a comprehensive and phased approach to Velo Protocol’s development. By implementing and enhancing various components over time, Velo aims to create a robust, usable, and secure financial ecosystem powered by blockchain technology.

Phase 1: Digital Credit Issuance and Digital Reserve System

Source: official whitepaper

In Phase 1, Velo Protocol lays the foundation for its core components - the Digital Credit Issuance mechanism and the Digital Reserve System (DRS). During this phase, a limited number of Trusted Partners operate within the remittance and money transfer space. The VELO tokens are listed on multiple exchanges, and both the Digital Credit Issuance mechanism and the DRS are tested under active use. An independent foundation oversees the Velo Protocol and employs a third party for additional oversight.

Phase 2: Decentralized Crypto Exchange and OTC

Source: official whitepaper

Phase 2 focuses on developing the Decentralized Crypto Exchange (DEX) and the over-the-counter (OTC) trading service. This phase aims to enhance the liquidity of VELO tokens and digital credits by facilitating deep cross-asset liquidity. The DEX and OTC services attract additional partners, such as liquidity providers and market makers, to participate in the exchange, promoting higher transaction volumes, tighter spreads, and widespread adoption.

Phase 3: Decentralized Lending and Community Governance

Once the Velo Ecosystem has a broad range of Trusted Partners with actively engaged users, Phase 3 introduces decentralized lending solutions for digital credit borrowers. The increased flow of digital credits allows Velo to develop smart lending functionality, connecting participants securely and reliably. Additionally, this phase introduces a mechanism for community voting on specific parameters of the Velo Protocol, such as new functions, asset types, and lending rates.

Phase 4: Reputation System and Global Fiat On/Off Ramps

In Phase 4, Velo Protocol implements a Reputation System to evaluate Trusted Partners based on their historical usage and adherence to the platform’s guidelines. This system allows partners with favorable terms for digital credit issuance, lending, and access to specific features. Furthermore, Phase 4 focuses on building a global network of fiat, digital credit, and VELO token on/off ramps to enhance real-world liquidity and interoperability for all Trusted Partners and end-users.

The Future of Web 3+ Financial Services

In February 2023, Velo Labs updated its whitepaper including new products in their Web3 ecosystem.

Source: official whitepaper

Supercharge Money Velocity

Supercharge Money Velocity provided individuals and companies with access to a global pool of funds in order to accelerate the flow of money through the provision of streamlined financial services that are supported by their Web 3+ ecosystem.

Source: official whitepaper

Bridging the Traditional and Digital Financial Ecosystems

On/Off-Ramp Service: Making the Leap from Fiat to Crypto

The On/Off-Ramp service is a core component of Velo’s offerings, serving as a bridge between traditional fiat currencies and the expanding digital crypto ecosystem. This service facilitates a smooth transition to Velo’s platforms by streamlining the process for users to convert between these two domains. Velo intends to collaborate with various partners to offer more channels for the On/O-Ramp service, making it easier for users to convert in and out of the ecosystem. In addition, Velo intends to integrate central bank digital coins (CBDCs) in the future and to use the On/Off-Ramp service as the primary mechanism to assist financial institutions in utilizing Velo as a blockchain-based clearing house.

FCX: Empowering Cross-Border Business Activities

FCX is a vital component of the Velo ecosystem, providing a streamlined method for companies to engage in cross-border transactions. FCX provides businesses with a frictionless, secure, and efficient means of conducting international operations by leveraging the power of blockchain. It further supports Velo’s vision of a Web 3+ world by facilitating a trustless and borderless business environment.

Velo Finance: The Hub of Decentralized Financial Applications

Velo Finance is an integral part of Velo’s Web3+ ecosystem growth. As a collection of common decentralized applications, Velo Finance offers crypto-centric functionality that enables both individual and institutional investors to participate in DeFi with ease. Through Velo Finance, users can leverage the utility of VELO and USDV tokens, including the ability to swap or exchange a wide variety of popular cryptocurrencies, participate in liquidity pools, and engage in yield farming. Velo Finance aims to simplify user experiences for traders and liquidity providers by providing an infinite number of options for trading, providing liquidity, staking, and earning rewards.

Driving Liquidity and Interoperability Across Blockchains

Warp: A Gateway to Diverse Blockchains

In the cryptocurrency industry, the ability to access liquidity across various blockchains is crucial. Each chain’s developer environment and suite of products and services are distinct. Warp is Velo’s solution for facilitating access to these tokens and a highly liquid network, thereby enabling traders to diversify their holdings. Velo recognizes that multi-chain support is a necessity in the evolving crypto industry and is committed to providing this essential service, especially given that the primary token is on the Stellar network, a chain that is uncommonly supported in the DeFi ecosystem. As new chains or coins/tokens emerge, Warp will continue to adapt.

Nova: The Foundation of Velo’s Core Platforms

Velo operates Nova, an EVM-compatible blockchain, to bolster its core platforms. This mainnet’s gas fee is paid in NOVA tokens, which have no monetary value and are not traded on any exchanges. In order to prevent NOVA hoarding, users can request NOVA tokens to their wallet through a provided faucet when their NOVA balance falls below a specified threshold. Nova chain will streamline the onboarding process for users who wish to trade on Universe, and it will support Orbit payments through a system with a low transaction fee and a quick confirmation time.

Orbit: Reinventing Payment Solutions

Orbit is a proposed expansion to the Velo ecosystem with the goal of simplifying payments. It’s designed to be a mobile payment application that seamlessly integrates with the popular QR code payment system commonly used in Southeast Asian countries. This strategic approach aims to reduce friction for both individual users and merchants, as they are already well-versed with QR code payments. With Orbit, consumers can smoothly transfer their digital assets from their trading activities to make payments, all within the same wallet application. They can opt to pay using Vstablecoins or other cryptocurrencies, depending on the merchant’s acceptance policy. For merchants, Orbit provides an additional payment channel that could enhance the purchasing experience for their customers.

The accumulated Vstablecoins or cryptocurrencies can then be converted into fiat currency through Velo’s on/off ramp services. All payments will be processed on Nova, ensuring minimal costs for users.

Quantum: A New Era of Monetary Policy

Quantum introduces a mechanism inspired by central banks’ monetary policy management. Velo Treasury’s quantitative easing program uses VELO to borrow stablecoins from a lending pool. This process ensures liquidity growth without directly affecting the VELO price. The increased liquidity directly stimulates ecosystem activity, fostering growth.

Universe: A Trading Platform for Individuals

Universe is an integral component of Velo’s Web3+ initiatives, extending its reach to individual traders beyond institutional users such as MTOs, Banks, and Exchanges. Universe combines the key functionality and performance of a centralized exchange with the security and independence of a decentralized, self-custodial wallet. Universe empowers users with total control over their funds, eliminating issues associated with centralized exchanges like sudden halts to trading, deposits, or withdrawals. It also allows for smooth fund transfers between wallets, giving users the flexibility to lock or unlock funds for trading based on their needs.

Initially, Universe will launch with perpetual contract trading with leverage capabilities. It plans to expand its trading offerings to include spot trading for cryptocurrencies and other assets such as commodities, currencies, stocks, and indices in the subsequent phase. This will further improve the trading experience for users by expanding the range of assets that can be traded.

Is Velo a Good Investment?

Source: official whitepaper

Velo is supercharging the velocity of money by combining traditional financial infrastructure and Web3+ technology to break barriers. It is continually building new Web3+ products, making financial services truly trustless, formless, borderless, and limitless. By expanding the Velo ecosystem and the utility of VELO, Velo is stimulating natural demand and ensuring holders can benefit from the growth of the ecosystem and product adoptions.

Investing in cryptocurrencies carries inherent risks, and it is crucial to analyze various factors before making any investment decisions. Based on the information provided in Source 6, we can summarize the key points to consider when evaluating VELO as a potential investment.

How can you own Velo?

Going through a centralized cryptocurrency exchange is one approach to acquiring VELO. The first step is to create a Gate.io account and complete the KYC process. Once you have deposited money into your account, follow the instructions to purchase VELO on the spot or futures market.

Take Action on Velo

• Trade VELO/USDT
• Trade VELO/ETH