Convergence Crypto: For a long time, security tokens have been considered the next big thing in transferring conventional asset classes to the blockchain.
However, the main impediment to their widespread use has historically been their inaccessibility, limited liquidity, and restrictions on who can possess and trade them.
Everyone who uses Convergence will have the opportunity to gain exposure to real-world assets as the platform seeks to deliver access to previously inaccessible securities.
What Is Convergence Finance (CONV)?
Convergence Finance, a decentralized interchangeable assets protocol introduced in 2021, aims to connect the liquidity of decentralized finance with real-world asset exposure (DeFi).
In essence, it gives DeFi participants exposure to assets in the real world.
Convergence will be the first automated market maker (AMM) to integrate new Wrapped Security Tokens (WSTs) with utility tokens on a single interface that is adaptable and composable with other DeFi protocols, making real-world asset exposure interchangeable in the DeFi ecosystem.
Through Convergence, asset owners can obtain decentralized DeFi liquidity from private/unicorn enterprises or exotic real-world assets via a convergence pool.
Through the Convergence protocol, DeFi users can access new investment options while enjoying the outstanding liquidity and flexibility of using an AMM.
Users can use the ConvergenceAMM, for instance, to exchange dogecoin (DOGE) for SpaceX publicity.
However, Convergence’s concept goes beyond this by combining more DeFi legos and utility tokens to enable innovative and new use cases further.
A team with experience in traditional finance, tokenization, and digital securities founded Convergence.
The idea behind the initiative is an increasing need for real-world asset exposure in the market as traditional finance and DeFi’s relationship to digital assets converge.
Convergence aims to support this impending boom as more crypto-native investors become interested in real-world asset exposure over the coming decade, such as private companies and crypto-native unicorns, in addition to existing products like tokenized real-world assets, derivatives, or prediction markets.
Wrapped Security Tokens
The foundation of the protocol is the WST. These real-world assets have been tokenized so they may be freely exchanged and traded on a blockchain.
WSTs also can be fractionalized, which is a capability shared by all digital assets.
Fractionalization lowers the entry hurdle for potential investors by enabling them to hold just a portion of a WST, depending on how much risk they are ready to take.
Anyone can start their own WST if they want to use the blockchain to commercialize some of their initiatives.
Convergence AMM Infrastructure
The protocol can preserve a decentralized, peer-to-peer exchange of WSTs thanks to convergence AMM.
The AMM infrastructure automatically matches buy and sell orders without the involvement of a third party, eliminating the need for order books.
From a somewhat more technical standpoint, the AMM model first gathers the liquidity that is already there from various sources connected to the exchange to give platform traders the best offers for their WSTs.
The protocol’s use of Ethereum’s smart contracts and virtual machines makes this possible (EVM).
This is also intended to help connect the platform with additional compatible blockchains, including Moonbeam and Binance Smart Chain.
Convergence Pools
Convergence has a liquidity pool to help the platform’s real-time trading even more.
Users stake their assets in liquidity pools to potentially gain rewards.
This can be achieved by temporarily locking a portion of your token in a liquidity pool.
Users can also design their pools if they so choose.
The earliest WST offerings that customers can purchase on the market can be launched using these similar pools.
Asset owners also gain because the protocol makes it simple to launch their crowdfunding plans.
The protocol’s major advantage is that Convergence pools enable 24/7 trades on the exchange without taking up a lot of traders’ or asset owners’ time.
ConvergenceDAO
The platform’s utility token holders are in charge of governing the protocol because it is decentralized.
Owners of the native tokens for the platform are eligible to vote for various system enhancements, upgrades, or revisions.
Additionally, several other features are up for voting by owners of the native tokens.
TOKEN CONV
The platform’s native utility token is called CONV. It can be used as a form of payment for transaction fees, as a medium of exchange, and to obtain voting privileges in the protocol’s governance system.
The coin used to compensate the network’s liquidity providers is called CONV.
The CONV token powers ConvergenceDAO. CONV holders have the right to vote on protocol decisions involving, among other things, the addition of new assets, listing on exchanges, and maintaining liquidity thresholds.
With these use cases, CONV holders are granted special access to freshly introduced WST items and pre-sale events, if any are scheduled.
Conclusion
Convergence is a project that is still in its infancy in the cryptocurrency world.
Despite its promise to be the market’s first interchangeable assets protocol, much work must be done before its proof of concept can be successful.
Fortunately, the protocol has already established the foundation for a very liquid security token market. The foundations look to be sound.
We may anticipate that investors will be persuaded to join the network thanks to its established AMM architecture and access to liquidity pools.
These remedies go above and beyond addressing the issue with centralized exchanges that tokenize real estate assets.
Beyond these fixes, however, using a DAO will likely motivate community members to continue participating in updating the protocol.
The project’s prospects appear promising, as seen by the level of interest it attracted when it announced the first of its successful strategic investment rounds.
