Circuits of Value – COVAL

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Circuits of Value – COVAL

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In the midst of the NFT craze around especially art and collectibles, I recently discovered various projects that use NFTs for entirely different purposes. Recently, Circuits of Value was put on my radar by their community.

Circuits of Value built the Emblem Vault, which leverages custom non-fungible tokens (ERC-721) to enable multi-currency transfers on different networks. In this post, I’m diving into this usecase and its potential.

What is Circuits of Value – COVAL?

Emblem Vault

Circuits of Value announced the launch of the emblem valt (EV) in October 2020. It’s positioned as ‘an entire wallet inside a token’ as it basically enables users to create a custom NFT that contains various deposited cryptocurrencies (multi-chain support).

Important to note is that the vault currently supports BitcoinEtherERC-20 tokens, xDAI, BSC (BEP-20), Fantom, Polygon, and other ERC-20 tokens. The team aims to be supporting other chains in the future.

I initially wondered, what would be the main reason for someone to use this? And, what gas fees would be involved to create such a vault? An idea can be great, but there’s no product-market fit if no one uses it.

This review of Circuits of Value – COVAL was created for informational purposes. This article is not intended for promotion.

General info about Circuits of Value – COVAL

How does the vault work?

The Emblem Vault is powered by Circuits of Value. This means the COVAL token powers it, and currently, it costs 300 COVAL ($6) + gas fees to create an EV token. This is expected to reduce in the future, and leveraging Polygon will ultimately enable users to reduce TX costs and transaction speed for EVs.

Now, what would this look like if Bob created an EV to migrate his portfolio over (example)?

  1. Bob starts the process of creating an EV on the Ethereum Network for an ERC-721 NFT.
  2. The EV is protected through an encrypted mnemonic phrase, which gets sharded and sent to the EV NFT token and Google Cloud Hardware Security Module.
  3. Using MetaMask, the EV gets tied to an Ethereum wallet address.
  4. Now the EV is tied, Bob can fund it by sending the funds to the generated wallet address.

 

The EV is now generated and funded and can be transferred in multiple ways:

  1. The EV can be transferred manually by sending it to an address on any supported wallet.
  2. The EV also automatically shows up on NFT marketplaces such as Opensea. This means anyone can view the funds the EV contains, place a bid, and/or Bob could list it for sale on Opensea.

 

Once transferred, the EV would automatically sync to the holding wallet address. Meaning the previous owner can no longer decrypt the EV to access the funds.
The new owner could then either also send it to another address manually, list it for sale, or open it by signing a message on Metamask to decrypt the keys. This would result in the EV to break, unlocking the funds, and no longer holding the funds in a EV (NFT).

Use case of Circuits of Value – COVAL

Privacy

The Emblem Vault also supports privacy. Though not by default, and in a ‘tricky’ way.

Users can choose to create private vaults that only show up on the EmblemVault website itself when unlocked through a password. This means it would not show up on third-party websites.

However, the creation address and claiming address are publicly visible on third-party explorers. This means that it remains private as long as the vault is transferred and unclaimed.

This somewhat enables users to turn any token into a privacy token. However, if a user wishes to remain anonymous, it would be recommended to either transact it to a clean wallet address without any TX history, or sell it OTC to another party.

I do have to add that I’m not a big fan of EV using Google Cloud to store encrypted & shared mnemonic phrases. However, as stated, it’s planned to migrate this over to the Secret Network instead, which is excellent!

Benefits of using the Emblem Vault

Reading through the community channels, social channels, and available documentation. I see various (future) use cases for the EV:

  1. Trustless OTC transfers: Currently, OTC transfers have somewhat high entry barriers. One would need to use a middleman, which charges a fee. Or, the involved parties would need to trust each other to transfer (all) involved cryptocurrencies or NFTs. Using a (public) emblem vault makes it possible to verify all assets the EV holds. This could then be purchased through a supported NFT marketplace such as opensea.io (by setting up a private sale on Opensea, the OTC deal would remain trustless, and no fees would be charged).
  2. Private (OTC) transfers: when creating a private EV, only the creating and claiming address would be verifiable through third-party explorers. This means that those who know how to use the EVs would be able to transact their funds in a somewhat anonymous/private way. And, while holding the funds in the EV, it’s untraceable.
  3. Gift Cards. It’s possible to create EVs and sell them without knowing the receiving address. This is done by generating a ‘gift link’ which can be turned into a physical or digital gift card. The receiver can claim the EV using the link and generated ‘password.’ Note, after a link is created – this cannot be undone. Further removing the risk of people selling invalid gift cards.
  4. Easy transfers. This use case mainly counts for those who intend to create an EV one time and hold it for a more extended period. E.g., I like to switch ERC-20 addresses every now and then for multiple reasons. By holding my assets in an EV by default, it’d be easier to migrate them over, while also reducing transaction fees over the long haul. It’s also possible to just claim a single asset from the vault or deposit new assets into it without breaking the vault. Perfect for selling, e.g., a single position when your target is reached.
  5. Transact digital files. The EV also has the option to store text inputs rather than cryptocurrencies. Enabling you to, e.g., transfer/sell redeem codes, digital files, accounts, or other digital inputs you could think of.
  6. Store not just tokens from any blockchain / multiple blockchains within one NFT, but it’s also possible to add NFTs to this. This reduces the need to use multiple networks when transacting tokens. This could reduce time, costs, effort, and required knowledge as some L2 / Sidechain solutions require more knowledge and skills to be used than, say, the Ethereum Network.

The Tokens (COVAL & FUEL)

It’s important to mention COVAL initially was tied to a different product. The community states, “COVAL was rescued from an existing dead coin.” The adoption of COVAL for the new product (EV) fully benefited existing token holders, and no ICO was held to raise more funding.

This means that it’s more of a community-driven project at this point. This makes it more challenging to rate the team behind the project; however, what ultimately matters are the deliverables.

COVAL can be used to create vaults and will be the utility token within the ecosystem for other activities as well. FUEL tokens can be used to create emblem vaults as well and provide a discount to the creator.

To learn more about how this works, I’d recommend you to check out the tokenomics Medium post.

Developments

The team has various major developments planned, as illustrated above. Most of these have been highlighted throughout the post.
The implementation of the Binance Smart Chain has already been done; this means BEP-20 tokens and NFTs are supported in the EV, further improving the utility and relevance of using EVs.

Emblem vault staking and the Emblem fuel DeFi token are the next major upcoming developments.

What do we think about Circuits of Value – COVAL?

First of all, I love how involved their community is. As mentioned, Circuits of Value was put on my radar by their community, and their exposure on Twitter could come in handy once they’re ready to shift into mass marketing mode.

Before that, I believe it’s necessary for the project to move away from Google Cloud and support either a couple more chains or NFTs for the EV. This will provide more privacy, decentralization, and utility for the EV.

I love the idea of being able to transfer whole portfolios, sell pre-funded portfolios, and to be able to participate in private/trustless OTC deals.

However, I believe this will mainly be used by more experienced cryptocurrency users who understand smart contracts, sidechains, etc. – to be able to create, claim, and move EVs with much lower costs involved. Realistically, using an EV is still more expensive than using single transfers due to smart contract interactions and funding the vault.

This means that on the Ethereum Network, I would likely not be using it. But, for example, on the Polygon chain or Binance Smart Chain, I could see myself using this for convenience reasons.

Some education would be required regarding the use case of vaults, making users trust and be able to verify the vaults contents, the use of sidechains, etc.

COVAL-token

Circuits of Value – COVAL conclusion

I believe that as the Circuits of Value community focuses on the above mentioned points, and their roadmap, adoption and growth can surely happen.

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