In the first year of DeFi, who will compete with the public chain?

2020 is regarded as the "first year of DeFi". Thousands of DeFi (decentralized finance) projects have emerged in the market to compete. At the same time, the public chain that has been silent for a year has begun to compete again.

Relying on the outbreak of DeFi, Ethereum, which had been silent for a long time, returned strongly and became the most popular "king of public chains" in the new round of public chain competition.

According to statistics from OKLink, as of August 17, the total lock-up volume on Ethereum reached 7.75 billion US dollars, which has increased by nearly 6 times within two months. The boom in DeFi has driven Ethereum back to the second place in terms of market value.

At the beginning of August, Ethereum was still the leading public chain for building the DeFi ecosystem. In mid-August, this pattern began to appear turbulent. The sharding expansion is still stuck in the phase 0 test network, the Ethereum network continues to experience congestion, and the miner fee income exceeds the block reward for the first time. Some people point out that this may become a potential catalyst for the recurrence of the "black swan" event.

Tushar Jain, managing partner of Multicoin Capital, believes, "Due to the congestion of Ethereum, investors who hold leveraged positions on Ethereum-based DeFi platforms face the risk of being unable to reduce leverage during periods of volatility. When leverage needs to be closed but cannot be Liquidations will be triggered when positions are closed. This could lead to a repeat of '3.12'."

The front wave is questioned, and the back wave challenges. In response to Ethereum’s congestion, EOS founder BM tweeted: “EOS will be a better choice to build complex and high-performance DeFi. DeFi on Ethereum needs to use many difficult combinations to compensate for transaction delays, Gas attacks , reorganization, and lack of an organized database.”

EOS, which was launched only half a year ago in 2018, has greatly improved efficiency with the DPOS consensus mechanism. The average number of daily active users has exceeded 27 times that of Ethereum. He received fierce criticism from the outside world, believing that the mechanism design of sacrificing decentralization is doomed to the possibility of bribery and corruption. At the same time, its ecological design used too high a threshold to keep new users out of the door, so that this new star fell before it could subvert Ethereum.

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The peak of Qianlang Ethereum "lost the chain"

In June this year, Compound, a decentralized mortgage lending project based on Ethereum, launched "liquidity mining", attracting many "wool parties" and "arbitrageurs" to enter DeFi, and then the decentralized exchange Uniswap fueled the fire, abruptly turning 2018 The emerging DeFi concept ushered in value discovery two years later.

With the rapid growth of the total lock-up value in the short term and the release of good news on the Ethereum 2.0 test network, Ethereum has returned to the "King of the Public Chain". highlight again.

At present, Ethereum 2.0 is in phase 0, and it still uses the POW (proof of work) consensus mechanism. It will not be fully changed to the POS (proof of stake) consensus mechanism until Ethereum 2.0 phase 1.5, that is, it is still Only 30 to 40 transactions can be processed. The maximum number of transactions per second of the Visa credit card commonly used in global payments can reach 50,000, which is more than 1,000 times that of Ethereum. Therefore, when there are more pending transactions in Ethereum, it is very easy to cause network congestion.

In addition, transactions in Ethereum need to pay Gas as a transaction fee. When the Ethereum network is congested, the transfer speed will slow down, which means that the user needs more time to confirm the transaction, and the unconfirmed transaction (Pending) will wait for packaging in the transaction pool. If users want to package quickly, they need to increase the gas fee, so that the miners will prioritize the packaging of transactions with higher gas fees, and the transactions with lower fees will be ranked behind until the previous transactions with no more "commission" are processed. This also means that if the user's transaction fee is set too low, the transaction may have been pending, and sometimes there is no guarantee that it will be packaged after several weeks.

According to the statistics of OKLink, in the past two months, the recommended gas fee has repeatedly hit new highs, and reached a peak of 304Gwei on August 13, with nearly 150,000 unconfirmed transactions. Among them, the gas fees spent on transactions on the decentralized exchange Uniswap within 24 hours accounted for nearly 17%, totaling more than 1.2 million US dollars, about 80 times higher than CryptoKitties.

After the Ethereum 2.0 test network Medalla was announced on August 4th, some people believed that the 2.0 era was coming, and the problems of high gas fees and long waiting times would be solved, but the realization of this blueprint is still quite far away.

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Houlang EOS is gaining popularity, but the DeFi ecosystem has not yet developed

When Ethereum temporarily hit a wall, EOS founder Daniel Larimer (BM) tweeted to catch up on the popularity of DeFi. He said: "I created the first DeFi platform in 2014. DeFi inspired DPOS, TAPOS and high-performance databases and A must for account structure. EOS was designed for DeFi.”

In fact, in May 2019, BM declared war on Ethereum, saying that DeFi is doomed to fail on Ethereum, and EOS is the best destination for DeFi.

Take the decentralized exchange (Uniswap) as an example. All assets and transaction operations of users on Uniswap are driven by the public chain. To conduct a transaction on Ethereum, you have to wait for 15 seconds for confirmation, which is very difficult for people accustomed to the Internet. Bad is extremely user unfriendly.

The high cost of each transfer is also the core shortcoming of Ethereum. According to OKLink statistics, as of August 13, the average daily transaction fee of Ethereum has reached 7.4 US dollars, that is, the suggested fee for initiating a transfer has reached 1 USDT, which is higher than the 0.5 US dollars on July 12. nearly 15 times. If you spend 2 yuan on Ethereum to make a transaction, maybe 40% of the fee will be spent on Gas. This makes small transactions impractical on Ethereum.

Compared with Ethereum, EOS can achieve transactions within 1 second. Previously, EOS claimed that its TPS was as high as one million, but after the mainnet was launched, the actual measurement was only close to 4000TPS. Nevertheless, this speed is enough to support various transactions on the current platform. After all, the average daily peak value of Visa credit cards is only 4000TPS, which is enough to handle the transfer transactions of 3.2 billion cardholders around the world. Moreover, transactions on EOS do not cost transaction fees.

On the one hand, BM shouted that the future of DeFi lies in EOS. On the other hand, EOS’s DeFi got off to a bad start.

Following Compound’s launch of the “liquidity mining” model, which set off the DeFi “sweeping wool” craze, EOS followed suit and launched the liquidity mining project DeFis Network (DFS). DeFis claims to be the best among the protocols on Ethereum ( The advantages of the liquidity protocol Uniswap and Synthetix, and the lending protocol Compound and MakerDAO) are integrated. However, after only three days of going online, DeFis had to revise the rules three times in one day because it became a "scientist" and speculator's hair-raising machine. (Note: "Scientist" refers to the person who uses the rules or loopholes to use the program to mine infinitely.)

Some users pointed out that EOS has taken too hasty steps in the design of the DeFi mechanism. It seems very naive to want to achieve a "qualitative leap" by including the functions of several DeFi star projects on Ethereum. "If it copied Ethereum's DeFi, it might be more robust." He added.

"The single asset on EOS is also one of the key factors hindering the construction of its DeFi ecology. The core asset of Ethereum is ETH, but there are a large number of other ERC-20 assets on its blockchain. They constitute the DeFi ecology of Ethereum. Important elements." The relevant person in charge of OKLink said.

"The single asset on EOS is also one of the key factors hindering the construction of its DeFi ecology. The core asset of Ethereum is ETH, but there are a large number of other ERC-20 assets on its blockchain. They constitute the DeFi ecology of Ethereum. Important elements." The relevant person in charge of OKLink said.

Although in the new round of the DeFi track, the public chains are actively building the DeFi ecology, and attracting wool parties through "liquidity mining" has achieved immediate results, but without strong technical support, this approach is easy to lose everything . Even with the attraction of arbitrage, users will still vote with their feet.

Behind the public chains betting on DeFi, the competition will still be very fierce. As more and more public chains join the DeFi track, the head effect will become more obvious. We will wait and see who can escape from the "window period" of DeFi.