What is ColorTrace? ColorTrace is a new technology Chia by the LayerZero platform with many extremely potential applications. So, if there's anything interesting about ColorTrace, let's find out together in the article below.
To better understand ColorTrace, people can refer to some of the articles below:
ColorTrace Overview
The reason for the birth of ColorTrace
Look at a typical example in today's market of USDC. Circle , the issuer of USDC , has signed an adjustable agreement with Coinbase to Chia USDC profits based on Coinbase's contributions to the success of USDC. With this factor, Coinbase has earned almost $1B per lien thanks to the success and popularity of USDC.
However, the success of USDC is not only the hand of Coinbase but also the participation of Uniswap, Curve, Balancer and Binance. However, we do not have a solution to know how much other parties like Uniswap, Curve or Binance contribute to the success of USDC?
This is why ColorTrace was born.
What is ColorTrace?
ColorTrace allows the protocol to mark the color of each Token printed by a certain party. That means that each Token Mint and put into circulation by an organization, protocol, or even user will be marked with a color that represents the issuer.
Basically, with the example of USDC , when Binance mints USDC , it will be "colored" yellow, Coinbase "colored" blue, Curve "colored" white or Uniswap "colored" pink. Based on this color we can observe:
- Which unit issues the most Stablecoins?
- Which unit's stablecoin is most active such as participating in AMM, Lending & Borrowing, Bridge,...
From there we can balance the benefits of the participating parties. The clearer the benefits, the stronger the party will participate, thereby creating a huge revenue stream, which continues to be Chia based on the correct contribution, thereby creating a great flyweel.
ColorTrace's journey
In fact, there have been many solutions proposed before. The oldest is Colored Coins - however the problem initially thought to be easy is actually extremely complicated. Until LayerZero offers 4 solutions to choose from including:
- ColorFloat.
- ColorTrace.
- rho.
- ColorAge.
However, with the research of Verified USD Foundation, the chosen solution for their Stablecoin USDV will be ColorTrace.
Verified USD Foundation uses ColorTrace technology
Verified USD Foundation has used ColorTrace technology to build and develop a main Stablecoin USDV that is 100% backed by real world assets. Some assets supporting USDV include:
- Cash.
- Overnight Repo - short loan that only takes place within 1 day.
- Short-term bonds.
With the use of ColorTrace technology, Verified USD Foundation can easily identify the units participating in support and the level of support for USDV and then have appropriate incentive programs.
Summary
Is LayerZero ambitious to build its own Stablecoin when they already have the full infrastructure? Hopefully through this article everyone can understand more about what ColorTrace is?
The post What is ColorTrace? LayerZero Dedicated to Stablecoin Development appeared first on HakResearch .
