CONVERGENCE Showcase

6 min readMar 21, 2021

As DeFi holds on tight to its throne, the trendsetter Convergence is here to unite the traditional and modern finance worlds igniting innovation for decades to come.

If 2020 was the year of DeFi, 2021 is almost certainly the year DeFi goes mainstream. What can we expect in this transition period? A convergence, if you will, of decentralized tokens — both the utility and security kind — with the high liquidity of conventional finance. Bundled in this package will be revolutionary innovation and ingenious composability.

It’d be fair to say that Convergence Protocol will be leading the charge, unifying real-world assets with DeFi liquidity. What does that entail? Let’s find out.

About Convergence

Today, all you technically need to engage in decentralized Ethereum trading, lending and yield earning is the internet. The last decade saw blockchain and cryptography nurturing the decentralized ecosystem with assets incorporating STs (Security Tokens), UTs (Utility Tokens) and not to be forgotten — NFTs (Non-fungible Tokens).

UTs operate in the decentralized crypto-native monetary protocols, while STs function as tools for private equity market innovation, equity crowdfunding, and ownership.

With digital asset exchanges experiencing never-before-seen institutional investment exposure and treacherous mechanized protocols, we’ve seen a redrawing of the geography of the decentralized financial economy with cryptic governance, wise agreements, new token economics, and DAOs. With it, there have been some challenges. Precisely what Convergence aims to solve.

What Problems is Convergence Solving?

1)Traditional and Finance Security Tokens

Everything at the moment in the world of tokenization sounds like a bed of roses. What could go wrong in this rapidly changing market expected to rise by a CAGR of 22.1% as 2023 knocks at the door?

Asset holders by way of STOs (Security Token Offerings) are relishing crowdfunding from accomplished and recognized investors. But there are problems on both ends of the deals.

A) Issuers’ Perspective

Non-scalable Distribution
Investor demand, while growing, remains insufficient. As a result, it has resulted in low fund procurement for ST issuers.

Unrealized Access and Liquidity Premium
Investment democratization also seems to be a far-fetched dream as STO issuances are limited to accredited investors increasing asset prices driven by liquidity and access premium remain just theoretical.

(b) Investors’ Perspective

Lack of Liquidity
In comparison to UTs, ST liquidity is lower since it is limited in secondary markets. Not just that, ST liquidity is behind the runner in the race with UT liquidity as we measure the DeFi DEXes by trading volume.

Ownership is not Needed.
The broader investor clan still lacks confidence in STs and isn’t yet ready to give up liquidity completely. STs with legal, enforceable rights and transparent, automated ownership, hence take a backseat in the economic exposure battle.

Lack of Composability
UTs allow both centralized and decentralized digital asset exchanges and protocols, thereby letting the users swap tokens without a counterparty.

Even when the ERC-20 standards authorize interoperable protocols and high liquidity levels, the stock behaviour of STs and centralized trading exchanges make them less coveted protocols.

2) DeFi and Utility Tokens

DeFi platforms with DAO governance, enticing contracts and crypto-economic incentive designs furnish unreliable, disintermediated financial services.

With a 24/7 market presence, they enable users to play mix and match with them and other DeFi protocols, giving birth to exciting combos and services.

Lack of Real World Exposure
If you’re a crypto-user desiring pre-IPO,round-A startup, private equity funds, etc., you’re in for a disappointment as these are non-existent. However, almost the whole of DeFi TVL is native crypto-driven.

Missing Of -chain Connection with Asset Issuers
Talking big about including real-world liquid assets as collateral is not a Biggie for DeFi protocols. But in a real sense, off-chain interactions with asset-issuers can’t be completely let go of when executing the transfer of interests, liquidations etc.

(3) Synergistic Opportunity

Both the warriors, traditional and decentralized finances, have their strengths and weaknesses. However, to win this battle, they need to combine their powers.

The next decade will witness an increased demand for UTs and STs as crypto-native companies enter the market.

UT holders will hence have to be capable enough to benefit from capital gains and physical asset exposure.

Features

The Convergence Protocol, the first of its kind, will amalgamate Wrapped Security Tokens (WSTs) with UTs on a single interface that is user friendly, adaptive, and composable with other DeFi protocols achieving its goal of interchangeable asset exposure

1)Wrapped Security Tokens

Unforeseen Liquidity
WSTs can be traded across the Convergence ecosystem, the Convergence AMM and other liquidity venues.

Tied-in Economic Exposure
The proprietary token wrapping module we designed ensures that economic benefits will be transferred to WST both from an on-chain and off-chain perspective, holders subject to token holders’ views via DAO. For instance, the assurance for WST holders can monetize from the proceeds of a company’s (e.g.SpaceX) IPO.

Composability
WSTs have a scope beyond trading and liquidity purposes. Working with different types of DeFi protocols will make WSTs flow around the DeFi supply chain with increased utility types. We foresee stablecoins supported by WSTs and lending & borrowing protocols with WSTs as collaterals.

2)Convergence Protocol

The Convergence Protocol is formed of token wrapping module, Convergence AMM infrastructure, Convergence Pools and ConvergenceDAO.

Token Wrapping Module
This is Convergence Protocol’s undisclosed topping and proprietary asset. BTC <> WBTC is the token wrapping layer for creating WSTs with features, as mentioned earlier. WSM will be injected into Convergence AMM.

Convergence AMM Infrastructure

Convergence AMM enables trading WSTs 24/7 and real asset price discovery. Built on Ethereum and being EVM-compatible with other chains (i.e. Finance Smart Chain, Moonbeam and more), it intelligently finds the best order routing from aggregated liquidity sources to give traders the best prices. It eliminates complexities and allows ease of access for retail investors, fund managers, and digital-native investors worldwide to freely provide liquidity and trade amongst the pools.

Convergence Pools
They give the asset owners the flexibility to develop and manage their own market management strategies. Asset owners the flexibility to perform initial WST offerings alongside providing liquidity for further trading for DeFi users. This eradicates the complexities and allows ease of access for retail investors, fund managers, and digital-native investors worldwide to freely provide liquidity and trade amongst the pools.

ConvergenceDAO
This is to provide improved transparency and decentralization to the Convergence Protocol. The token holders can exercise their governance rights to vote on various proposals like WSTs to be included in Convergence AMM and utility tokens that can be used to swap certain WSTs. Users are the decision-makers on whether DOGE <> SpaceX can happen.

3) Native Token (CONV)

Functions of the native token:

Governance Rights
The CONV token holders have an independent community reflecting their needs. They get to vote on administrative matters such as new assets, listing on exchanges etc.

The split Transaction Fee
CONV tokens are provided as a split of the transaction fee to the liquidity providers.

Privileged Access
Token holders might get special access to the upcoming WST offerings with pre-sale events.

Investors/Backers

Convergence declared its affiliation with DuckDao, the decentralized seedbed for dawning crypto companies, in its endeavor to democratize investing for everyone, anchoring the strength of DuckDao.

Convergence has secured Strategic investment from large VCs like Block Dream Fund (OKEX investment arm), Hashed Capital, NGC Ventures, Genesis Block, Alameda Research, CMS holdings, Morningstar Ventures, Black Edge Capital, Block Dream Fund, LongHash, AU21 Capital, Kenetic Capital, Paul veradittakit, dao_duck, divdotvc and Mr. Liang Xin Jun (Fosun Group Co-Founder)!

Convergence Finance is here to be a trailblazer capitalizing huger liquidity, transparency with all investors’ inclusion. It was high time someone bridged the gap between DeFi and age-old Finance.