Mr Kwibs (Pursuit of privacy) : Q1: Can you briefly describe Haven’s history to our community?
xKleinroy (Haven): Haven was started in early 2018 by two anonymous developers with the aim of delivering a stablecoin that offers user privacy.
The codebase was forked from Monero, which is considered to be the gold standard of privacy coins. The development reached early testnet where they came up against challenges beyond their knowledge.
The project was briefly abandoned before a group from the community stepped up to take over the development work. It included several highly experienced mathematicians and developers who, after 18 months of hard work, delivered the world’s first (and only) private stablecoin to mainnet in July 2020.
This is the core product of the Haven ecosystem and is under continuous development and refinement as the network and crypto evolves.
Haven continues to be the only network of privacy focused stable assets available and is driven by a highly committed community of like minded people who believe in its importance.
Mr Kwibs : Thank you, crystal clear👍 Haven has just successfully completed the hard fork for the implementation of Haven 3.0.
Q2: Can you explain the reasons for this development?
xKleinroy : Since the release of our algorithmic stablecoin xUSD back in July 2020, our protocol has been subject to a number of exploits, which took advantage of weaknesses in the conversion code and our tokenomics. Between June and November 2021, the conversion code was rebuilt to make it a lot more secure. The code and math was audited by Cypher Stack, a company led by skilled Monero developers and mathematicians. With this, the protocol continued under Haven 2.0, and although things were going well for a while, the start of the bear market exposed weaknesses in Haven’s tokenomics, which led to XHV’s circulating supply being inflated and was in danger of hyperinflation.
There were three main factors that contributed to the weakness in our tokenomics: https://havenprotocol.org/2022/10/03/haven-3-0-tokenomics-proposal-light/
1.) A 24 hour Moving Average (MA) being used inside the vault
The 24h MA allowed anyone to see a future price of XHV on exchanges compared to the price inside the vault. This gave users an advantage and the opportunity to convert between XHV and xUSD before the price in the vault started moving towards the spot price.
2.) Short conversion periods
The 6, 24 and 48 hour unlock times for conversions were far too short, even with higher fees, and this gave everyone, including whales, the opportunity to perform many conversions inside the vault in a short period of time.
3.) Low liquidity and volume on Exchanges
While XHV’s demand across exchanges remains low, it’s all too easy to manipulate the price.
Eventually, this combination in our tokenomics led to a sustained attack on the protocol, which would have ended in a death spiral, similar to Terra Luna.
The Economics Working Group made the decision to halt conversions in June 2022 and to start work on a completely new design of the tokenomics.
Mr Kwibs : Yes I followed the debate about the conversion code a bit last year. Its great to see you guys proceed with the idea to make it a success.
Don’t you think that the complexity of Haven’s stable coin mechanism may create more attack vectors?
xKleinroy : The real challenge in Haven’s stablecoin mechanism has already been solved and implemented through Mint & Burn whilst maintaining complete privacy, using the well-established Monero technology.
Furthermore, the code was audited by Cypher Stack and this gives us a lot of reassurance that the stablecoin mechanism for conversions is robust and safe.
We also have a Bug Bounty program running and we encourage anyone who believes to have discovered a weakness or an exploit through the code, to take advantage of this and to contact Haven.
Mr Kwibs : Aren’t the goals of the Haven project too ambitious and too complex to implement?
xKleinroy : It is undoubtedly one of the most ambitious projects in crypto, but we believe that we have the right fundamentals, technical ability and the ambition to take this project to its full potential.
The most complex part of the project has already been implemented, an algorithmic stablecoin with default privacy.
We also believe that with the introduction of VBS, we have solved the next challenge in this project, our tokenomics.
While this has yet to be proven to work, we are confident that through VBS, we have secured the protocol and we can look forward to growing the project.
Mr Kwibs : Can you briefly explain what VBS stands for?
xKleinroy : Vault Backed Shoring
Put simply, it’s the collateral required when doing a conversion between XHV and xUSD.
Mr Kwibs : Thanks! When I see the tokenomics of Haven 3.0, I am afraid that there are too many constraints and that few people will use it, except for speculation (fees at 1.5%, collateral can be very important, possible very high blocking time for offshore…). What is the opinion of the Haven team on this matter ?
xKleinroy : The problem with previous iterations of our tokenomics was that it allowed and encouraged users to use the vault as a trading tool. This led to XHV’s circulating supply being inflated and its price being manipulated by a handful of whales.
We also have one or two holders in possession of the majority of xUSD in circulation, which is a threat to XHV’s supply without the proper tokenomics in place.
With the release of Haven 3.0, we’re starting the protocol with the highest possible constraints, which will allow conversions to be opened whilst ensuring that XHV cannot be inflated, thus avoiding a possible death spiral.
In time, these constraints will be eased and further iterations of VBS will make shoring more favourable.
Fees through conversions are currently the only source of income for the project.
The 1.5% fees are required in order to replenish our treasury funds, which have been depleted since conversions were paused back in June 2022.
Fees will be lowered as soon as we are able to operate the protocol financially without a struggle.
It’s important to remember that we are only charging fees to run the project, not to profit from.
The collateral requirements depend on the health of the protocol, which is measured by the ratio of Total xAssets market cap to the ratio of XHV’s market cap. This means that a rise in the price of XHV, or a reduction in the Total xAssets market cap, will lower the collateral value, making it easier to on/offshore.
The constraints for onshoring (converting from xUSD to XHV) are much higher than for offshoring (converting from XHV to xUSD), in order to prevent hyperinflation. These constraints will also be lowered eventually.
The 21 day unlock time is important to stop rapid inflation through systematic conversions. Once the protocol has grown in market cap and liquidity, we will be able to lower the unlock times.
Mr Kwibs : As you look for solutions to counter attack vectors, won’t you discourage the use of Haven by a system that has become too complex for users to understand and use?
xKleinroy : The challenge of ever-more-sophisticated attacks on Haven have led us to pursue the most rigorous standards in identifying potential exposure, and acting to close those down.
This is exemplified in our use of Cypher Stack – who have acted as auditors for Monero and Firo – as Haven’s external auditors.
Moreover, most if not all of the effort to close down attack vectors is actually behind the scenes and not even known about by consumers.
VBS does impinge on the user experience, but it was a necessary step to stop the damage being done by select individuals whose interests and efforts were contrary to those of the project and the Haven community as a whole.
Mr Kwibs : The oracle system is provided by Chainlink. Don’t you think it would be important to diversify the sources of oracle to avoid the system imploding in case of a temporary shutdown of chainlink?
xKleinroy : Chainlink is one of the best oracles in the market and it provides a great product right now, but there is always the potential for the community to decide if they want to incorporate another oracle as a backup or even as the primary option.
This will have to be carefully researched in the coming months, but we agree that we need a fall back in case one fails.
Mr Kwibs : Great, lets move on to the steering committee.
Can you tell us about the governance council and the steering committee? Where do you stand today and how are decisions being made about the future of Haven?
xKleinroy : We started work on our governance almost a year ago, but like everything else, this was also put on hold when the market took a turn for the worst and we had to suspend conversions.
We set up the Haven Oversight Committee (HOC), which we have been operating through and making important decisions.
We also tried to set up the Haven Steering Committee (HSC), but the number of applicants was too small to create this group, partly down to negative sentiment and a lack of engagement during the bear market, so we decided to invite successful applicants for our HSC into the HOC group.We’re hoping that once engagement and trust returns to the protocol, we will be able to create the HOC and HSC groups, and these in turn will start work on creating « working groups », who will be responsible in driving the project forward through Marketing, Design and Development.
Mr Kwibs : What is the status of the integration of Haven with Thorchain? Can you give us any news?
xKleinroy : Thorchain integration was initially started by their developers in late 2020, but was taken over by our developers shortly after because Thorchain couldn’t allocate enough time or resources for this.
Since then our developers have worked hard on the integration. Unfortunately, there were many setbacks along the way.
Thorchain was subject to various attacks themselves, which meant that much of the work the Haven team have done over a period of 6 months, had to be rebuilt because Thorchain changed their code after these attacks.
During our own exploits, Haven developers were busy in rebuilding the conversion code, which put Thorchain ‘s integration development on the back burner.
More recently, the integration was put on hold again because our developers spent time working on Haven 3.0, and Thorchain themselves stopped communicating with us.
We are aware of the comments made publicly by certain community members from Thorchain claiming that they are no longer integrating Haven.
We never received anything official from Thorchain and we tried to get some more information from them in regard to this.
In the coming weeks, we are going to make an official statement about the integration.
Kwibs : truly hope the integration will proceed. Would definitely be a huge step forward.
xKleinroy : We hope so too. Once Haven has stabilised, we will be on a much better footing.
Mr Kwibs : Now, something I respect Haven for is that the Haven project is entirely community based, and therefore un-censorable. We
have seen with the Tornado cash event that governments would do everything to stop anonymous cryptocurrencies or smartcontracts allowing to promote a strong confidentiality and avoid the traceability of transactions. This movement will certainly increase in the future. What are your thoughts on this risk and the consequences for the Haven project?
Government regulation is something that all privacy coins have to deal with in one way or another.
We see this happening with Monero, one of the leading privacy coins not listed on some of the largest exchanges like Coinbase, and other centralized exchanges.
xKleinroy : This reinforces our belief as to why it’s so important to have decentralized exchanges become the future of transacting in crypto. Haven is already listed on two DEXs, Polarity and Faithswap, and as part of our growth and development, we will be aiming to join other decentralized exchanges.
During our decentralization process, Haven migrated the Website, Web vault, vault nodes, paper wallet and the explorer onto FluxNodes, making this much harder to censor or block.
Flux is a 3-tier decentralized network of incentivized compute power.
We are also looking into other channels of communication such as GETTR, Element and Session.
Mr Kwibs : Yeah working together with other innovative projects and solutions is the way to go. Excited to see with what type of communications Haven will proceed in the future.
Then the last question: Can you give us an overview of what are Haven’s main plans for 2023/2024?
1.) Rebase to Monero version 0.18
Haven is a fork of Monero, so it’s important to apply the latest release offered by Monero in order to inherit any new functionality and enforce the latest security improvements.
2.) Tokenomics revisions
We will be reviewing our new tokenomics on a regular basis and make necessary adjustments to some of the processes if required. This can include fees, unlock times and changes to collateral requirements.
Finish setting up Haven’s governance with clearly defined working groups.
Once working groups have been established, we will start looking into marketing Haven in a more organised manner.
5.) Longer term plans
We’re hoping to revive some of the developments we had to pause. These include hardware wallet support, Edge Wallet and Embassy Node integrations.
You can follow the roadmap on our website.
As a closing statement, we’d like to remind everyone that Haven is a community driven project, with no external funding, and we’re always on the lookout for people who are able to contribute in whatever way they can, be it marketing, graphics/design, web related, or development.
Thanks to all for your support.
H : To echo Klein – now that VBS is stable and functioning as expected, we can begin building our online presence again. We’re currently putting together a team that can take us to new highs and we’d love to have support from anyone with good ideas
Mr Kwibs : Thankyou for all the extensive answers. It is always a pleasure to have you guys here in Pursuit of Privacy. We wish Haven all the best and recommend people that got excited and have ideas to contribute reach out to the Haven team / join Haven’s channels!
xKleinroy : Thank you, pleasure to be part of this movement.
Thank you for having us, a privacy oriented group likes yours is needed. We need to keep privacy alive!
Mr Kwibs : Yes as long as privacy is necessary we will all keep doing what we do, which is forever haha 🙂
Now we will open the chat again and there will be time for people from the community to ask questions to the Haven team. Please make sure you formulate your question in a proper way so that good answers can be given!