Binance Block 101丨The Beauty of DeFi: A New Wave of Carnival in the Currency Circle

Zora (left) Dovey (top) Super King (middle) Laobai (bottom)

Super Jun: Hello friends of "Block 101", hello Zora, I am Super Jun,and my Weibo name is @超级bitcoin.

I founded Bixin with Xingkong in 2014 and am the co-founder of Bixin. In 2018, he left Bixin to go to Shenzhen, and now he is mainly a freelance investor.

Laobai: Hello friends, I am Laobai. I joined the blockchain industry in 2017, mainly in the field of blockchain advertising. I may be more interested in DeFi recently. This year, I think the YFI project is very interesting, and I think we should do something on it, so the whole community forked out to do the YFII project.

Dovey: Hello everyone, I am Dovey. Many people in China know me, and many people call me Miss Dovey. I entered the blockchain industry in 2014. At the beginning, I was mainly an investor in Danhua Capital. In 2019, I came out with my current partner Eric Meltzer to do Primitive Ventures. We have been laying out a lot of blockchain native or It is a lot of projects native to encrypted digital currency.

Since I started working in the industry, I have participated in many so-called DeFi. In fact, when we invested, it was not called DeFi in many cases. For example, in 2017, I voted for Kyber and 0X, which is now redefined as DeFi. We have been friends with Chaochao for many years. We met Lao Bai at a conference in early 2018, and then drifted around the rivers and lakes. Now we are together again, and I think this world is very interesting.

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Binance Zora: Mr. Super, let me ask you a question first. I saw on your Weibo that DeFi is similar to DAPP in 2018. At that time, those people who played in DAPP were particularly familiar with these operations, whether it was the calculation of wallet handling fees, mortgages, etc. Moreover, these veterans are very courageous, basically rushing in to liquidity mining in DeFi.

Super Jun himself started from YFI liquidity mining and has been playing until now. Why are the old leeks like you who deliberately pretend to be new leeks who make money? Can you tell me a particularly interesting story here?

Super Jun: I started talking about it in 2018. I was a Bittheist from 2013 to 2017, and I also wrote the Bitcoin Bible, which has been circulated. But since 2018, I have been looking for some opportunities in EOS. EOS was launched in June, and CryptoKitties started in July to August, September, and October. The popularity and explosion of DAPP are all on EOS, and all of them rushed to DAPP. the whole process.

For those who participate in the current wave of DeFi, I am actually a little later than Dovey and Lao Bai. I have only participated in it for more than a month. I used to think that putting money in DeFi is a high-risk and low-return thing, so I rolled Wool's strategy is not going to do this. Later, because COMP liquidity was mined, I just invested in it.

Through my observation, in fact, whether they are players or the core personnel of DeFi among this wave of people, they are basically the partners of DAPP back then. So I once said on Weibo that DeFi is a DAPP friend who came back to revenge.

The situation back then was very tragic, and many people lost a lot of money, including Lao Bai. The most important thing is that they have a good understanding. For example, if a person deposits coins into the project today, they will ask if my coins will not be returned if the project runs away, so they don't dare to charge. Back then, DAPP users, because their cognition was more in place, so they rushed to the front, relatively speaking, they would get early dividends.

Binance Zora: Brother Bai and Ms. Dovey, you met in 2018. How did you decide to participate in the second wife’s project and why did you participate in this project.

Lao Bai: That’s right, because we have a community, and everyone will be interested in some new projects. Starting around June, we began to pay attention to Compound, including several projects that started mining, until July 17, when Curve posted a tweet called Y pool to start mining, and we began to pay attention to this matter.

The first day didn't make it a big deal because there was no price on the first day. After logging in to the balancer the next day, the market price was generated. It was very interesting at three o’clock in the morning, and it was 300 US dollars. Everyone said that it would be very good to buy this coin quickly, and there were only 20,000 coins in total. Therefore, many people in the community participated in the launch of the YFI project throughout the process.

The first process of rising to 1,500 US dollars was in our community, from about 3 o’clock to the highest point at 4 o’clock, and then returned to the original price of more than 400 US dollars at 5 o’clock. One click OK and that would be $480. I remember very clearly that I was about to point to mine later and take out the money to mortgage mining.

Next, YFI released a very amazing currency price, from more than 300 to more than 4,000 yuan. Later, after being listed on Binance, it may rise even more, reaching 15,000 yuan. We felt that one YFI should be equal to one BTC, and many community members are loyal fans of YFI. But it only mines for one week, what will happen after one week? If there is no large exchange for trading, and the liquidity in the balancer is withdrawn, where to trade is a problem.

So we launched this YFI proposal. The main content of this proposal is to extend the mining time and extend the original 10,000 coins in each mining pool to halve the next week, 5,000 next week, 2,500 the next week, and the next week 1250, and gradually converge it to 20,000 coins in each mining pool, a total of 60,000 coins.

After this proposal was launched, I felt that the communication between Chinese and foreign communities was not particularly smooth. The final support rate was 80%, but the voting rate was less than the minimum requirement of 33%, so the entire proposal was not passed, and the YFII project came into existence later. If you disagree, everyone will fork, because governance coins have different governance schemes. Everyone thinks Andre is very talented, so everyone thinks that if the governance currency can be distributed more fairly, it will be more helpful to the long-term community development.

Binance Zora: Do you want to add, Miss Dove?

Dovey: Let me talk about my mental journey here. I started out because of Andre, the founder of YFI/Yearn. I met him in 2018, when he was still in a foreign blockchain analysis institution.

Andre has been working as a freelance developer since he resigned from there. During this period, many investors came to him, asking him if you want to issue coins, or if you want to come to work on the project. I think he is a very idealistic geek, very in line with the style of the traditional encrypted digital currency old gun that we often say. He is very independent and very his own way, but he has great love. I think he is very smart. Honest and kind person.

He originally made a series of DeFi formations, including Yearn and Ytrade. Ytrade is a decentralized stable coin trading platform. I don’t know if Lao Bai has any impression. Like Ytrade, its monthly trading volume should have reached about 30 million to 40 million US dollars at its peak last year, and he has been doing development alone all the time.

Up to this year, he has been very interested in decentralized community governance, and he doesn’t know how to do a relatively complete decentralized community management with the power of a single developer, so he said that in June this year, he was comparing In a small area, I told a few close friends that I want to do an experiment.

He did this purely as an experiment, and he did not take a single coin himself, quite returning to the spirit of Bitcoin. He said that I will not have any pre-mining, and I will not take any coins myself. Everyone will start at the same starting line. He also emphasized that this coin will not have any value, just because he is afraid of retail FOMO, so in Liquidity mining was officially launched in mid-July.

I want to say that in a big environment, any financial service platform needs a cold start. In fact, it needs capital itself. Whether you are a lending platform, an exchange or an asset issuer, you still have someone Put the money on your chain, and you will have opponents.

Liquidity mining itself is actually an incentive behavior on the traditional Internet. For example, whether you want to buy Pinduoduo or use Didi, you will be given red envelopes. In the blockchain world, what if there is no real money? Then print cash coupons out of thin air. As for the value of the cash coupon itself, it will be determined by market pricing.

The crazy thing this time was an experiment that Andre himself wanted to do, but the market gave him a very high price, which no one expected. I think Laobai or our friends around us may sell for 3 or 4 thousand dollars. My biggest YFI is probably sold for 4 thousand dollars, because I think it is already overvalue at that time. It turned out that 1YFI = 1BTC was joked in the group, but it turned out to be true.

In our very ineffective market, value and price will diverge for a long time, and may eventually be coupled. When hot money comes in, when the market needs new hot spots, it will naturally have an overvalued value. There will naturally be some bubbles.

I used to meet Laobai at the beginning of 2018, mainly because I was overseas and I didn’t have much contact with Laobai. When I first saw the second uncle came out, I thought it might be another scam. There will be many scams in the DeFi world, and you have nowhere to go to defend your rights. If you take the funds away, you will be gone.

When you use this kind of decentralized wallet or non-custodial wallet, as long as you send the money out, you actually authorize the ownership of the fund itself. At the beginning, I also felt that this matter was not so reliable, and I didn't know that Lao Bai and other small partners did it behind the scenes.

I forgot who brought me and Lao Bai back into the group, saying that behind the second uncle was Lao Bai and Master Gao and the others, and then we got together again.

Because every contract that manages funds has a private key, I think Lao Bai and the others made a very correct and decisive decision. They destroyed the private key of this fund pool. Many decentralized DeFi platforms in foreign countries use multi-signatures, which means that there are still multiple accounts to manage the private key itself. You may need more than half of such signatures before you can use the money in this contract.

But that is actually not a 100% safe storage method, because you don’t know whether the three accounts and five accounts behind it are really kept separately. No one can prove this. Now, no matter whether it is Compound or Dforce, although we believe that various DeFi platforms have done a good job in multi-signature management, there is really no way to verify this (and for security reasons, the platform also Impossible to tell you how they keep the multisig)

So the core developer of the second uncle made a very brave decision, directly burned the private key, sent it out and never got it back, and threw it into the black hole, so as to ensure the absolute safety of funds.

Since then, I have great confidence in the project itself, which is something that no other project has ever done. Because I mainly have relatively strong influence overseas, and I have a very good relationship with some core foreign DeFi practitioners. I am also in the second uncle community. I think I am the head of the overseas publicity department and participate in some strategies. There are also many diplomatic tasks, and this is probably the division of labor.

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Binance Zora: Ms. Dove just said that the second uncle directly destroyed the private key. This method is more radical than the multi-signature method of other projects. We saw that the second uncle’s slogan was very interesting. I directly Translate it into Chinese, "We don't have a founding team, we don't have investors, and we don't have pre-mining without any centralized things."

I also want to ask, for example, Brother Bai, you are the founding team, do you all use love to generate electricity? After all, you still have many developers and some teams are operating and maintaining this project. If you simply use love to generate electricity, is it impossible for it to continue? Is there any incentive mechanism to encourage the team?

Lao Bai: The entire YFI project relies on liquidity mining to obtain the distribution of coins. Everyone is treated equally, including our early members and outside miners, all mining at the same level. The token distribution of YFII is very even. It can be seen that there are about 3,700 addresses in the token distribution, and there is no particularly large and large household that occupies a dominant position. This is more suitable for organizing such a project in the form of a community.

As for this kind of incentive, everyone is actually the coin owner of their own YFII. I have my own currency, and I am responsible for the price of the token, so everyone performs their duties. Everyone is effectively responsible for their own coin, which is a natural incentive.

Next, there are about 5% of the developer fund in the owner's profit. The developer fund is responsible for operations including some development work, and also reserves insurance funds for strategies, and a part of the funds are still responsible for the entire community. operation. It is not to say that there is no income at all, and electricity is generated entirely by love. Enthusiasm will account for the main part, and money will be a small part.

Dovey: I would like to add that we have recently passed a governance proposal. I have also said in many places before that the second uncle itself is not an air coin, but it can be valued. We talk about smart pools. In the traditional sense, smart pools for digging bitcoins or real computing power smart pools may have a lot of computing power behind them. On our side, computing power is the capital itself. I often say that if Bitcoin is a proof of work, we are actually a proof of funds. DeFi mining is a proof of funds.

We now have tens of millions of dollars in the smart gun pool. Behind us is a strategy team that specializes in various high-yield strategy analysis. Where the yield is high, we will dig that thing or do such a contract interaction.

So Uncle Er, you can think of it as a passive investment income aggregator. After the user puts the money in the smart gun pool, because the money is put in a contract that we have burned the private key, it is 100% safe. In addition, we have different revenue optimization operations behind it, in fact, it can continue to generate interest.

Second uncle is profitable, you can think of second uncle as an asset management platform. We proposed through the community some time ago that part of the 5% profit will be put into a developer fund, and all our freelance developers and independent developers can get a certain amount of compensation from here in the form of a subsidy .

I think that a good open source software community operation cannot be completely powered by love, it must have the ability to generate blood. It is precisely because the second uncle itself is not an air currency, it is an asset management platform that can be valued, and part of the proceeds can be given back to the development community, so that the project can continue to develop. This comparison can only be made by marketing and stories. Leek's air coins are not a way of playing at all.

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Binance Zora: OK. Let's go back to the relationship between the great uncle himself and the second uncle. At the beginning, it was true that YFI only had a one-week mining period. After the community voted, the two opinions in the community were divided, and then the second uncle was forked.

At that time, Ms. Dove also said that she believed that the development of Uncle and Uncle can be completely independent, because it is a code system, regardless of whether there is a dialogue or any cooperative relationship at the development level, Uncle can do it. things, and the second uncle does not need the approval of the eldest uncle to do anything.

Ms. Dove has repeatedly mentioned the forks in the DeFi world, that is, the fork is completely different from the fork of PoW Bitcoin mining. From a certain point of view, I feel that the second uncle is not a fork, and I want to hear a few opinions.

Super Jun: First of all, let me talk about my views. I have YFI first, and I will also be deeply involved in its proposals, and I will take a serious look at its proposals, and I will vote, and the voting will cost a handling fee. I especially like the vibe of the YFI community discussions.

I didn’t know about my second uncle until later. I was a little worried about my second uncle, because governance is very important for this kind of community project. I didn't have much confidence in domestic governance before, because everyone in the country thought it was just a talk, and there was no in-depth discussion, so I didn't have confidence at first.

I started to ask Dove what do you think, and she was also deeply involved in it. After she finished talking to me, I became more confident. In fact, I think it is a very interesting project, because I am a Bitcoin miner and a DAPP player, and I recognize its token method model, and even its token decentralization is better than YFI at present a lot of.

Everyone at YFI is very enthusiastic. Like my buddy who just met abroad, there are only a few YFIs, and he wrote three proposals in a row. Like me, there are only a dozen or so, but I am also very keen to participate. In the case of YFI, some people may not participate in a thousand, and he may vote against any proposal. He is also based on his interests, which is understandable. After learning about this community in depth, I think it is a very independent community.

Dovey: May I add. In fact, everyone is mainly controversial about fork. Fork at the code level is very simple. Let’s say that the code is now open source. I have a piece of code in github. Whether it is from the parameter level or the code logic, this piece of code is equivalent to a branch of the code. We often say that it is a branch rather than a fork. In fact, different programmers may have different understandings of the same piece of code.

We have explained many times before why it is completely different from other traditional PoW forks. In the traditional sense, the same hush algorithm used in computing power forks needs to compete for limited ASIC computing power in the same period of time. The production capacity of the mining machine itself is limited, and its computing power is also limited during that period of time. It is impossible to suddenly and elastically extend the computing power.

For a DeFi fork, we started to compete for liquidity, but to compete for liquidity itself, we need to know where the liquidity ultimately comes from, and finally from the fiat currency world. But in the legal currency world, we all know that central banks all over the world are desperately releasing water. Now there is a huge interest rate difference between the legal currency world and the encrypted digital currency world. Even if there is no liquidity mining, like last year on many decentralized lending platforms , The interest rate of the US dollar stable currency can be as high as 15% to 20%.

In the legal currency world, the United States, Europe, and Japan have had negative interest rates for many years, and I personally feel that there is no competition for the funds themselves. So it can be said that different income aggregators can reach a huge amount of funds in a short period of time, which is different from Bitcoin mining. Because we are still very small, it is not a hostile fork, I think it is just a code branch, and the code branch is said to be oriented to different funding groups.

Lao Bai: I think the difference between the uncle and the uncle is the different understanding of the same project in terms of governance.

Then most of the people in the community behind it are not repeated. There are some people in the entire YFI community in China, but very few. I know that a few groups are more sensitive to overseas Twitter. These groups, but most of them Members are communities that have not participated in YFI. Looking at the members of the YFII community at present, there are about ten groups in China with about 4,000 members, and there are about 2,000 members overseas. Some of the overseas communities come from YFI, but these domestic communities are basically new members.

I think it is more like a join than a fork. A fork splits the original members, half of them go to new projects, and half go to old projects. But actually we are providing new members and liquidity for the entire Yearn system, so I don't think it is a fork.

Dovey: I also want to add that after the hard fork of Bitmain, the overseas community actually has a natural prejudice against all projects with Chinese background. There is a certain degree of hostility, and there may be some populist things coming out in a tense geopolitical environment. These are very meaningless.

The reason why we are in this industry is because we like this industry itself, which has no national boundaries, no prejudices, and no core philosophy such as geopolitics, so I think there may be some unpleasant things on both sides at the beginning, just like the second uncle. Some of the wallets or DeFi components may have been blocked by them. Later, we did some coordination work, and they were quickly resolved. For example, we have also been whitelisted by balancer recently. We have fully coordinated with many foreign lists. I think it is more necessary for communication.

I have always advised everyone to go to Twitter as much as possible, go to overseas communities as much as possible, talk to friends in overseas communities to see what they are saying, and share your views with them. It should all be under an equal dialogue system. In fact, don't have too many preconceived prejudices.

Binance Zora: Let’s talk about Sweet Potato. CZ also mentioned earlier that he thinks there will be many projects like Sweet Potato. He appeals to the community not to follow suit blindly. Take responsibility for your investment behavior. We can also see that the price of sweet potatoes has risen and then plummeted, because it was found that the code in this project has bugs.

I would like to ask a few of you in particular, what do you think of a project like Sweet Potato and the views of CZ?

Super Jun: Let me talk about it first. I am a participant. Many people in the circle may start with DeFi from sweet potatoes. I wrote an article - "30 Hours of Digging Sweet Potatoes".

I think that many DeFi projects are for DeFi and DeFi, and they are reinventing the wheel. I personally prefer projects that sell water for DeFi, such as YFI and YFII, or projects that are already leaders in DeFi, such as decentralized lending. I personally like these projects.

After sweet potatoes, there will be many more sweet potatoes. I think they repeat the feeling of making cages, and they will only keep falling and then fall into the soil. "Turning into spring mud and protecting flowers" is originally a project to increase nourishment for YFI and YFII. There are many That's right.

I told everyone at the time that the logic of blockchain investment has changed now. It may have been driven by faith before, but now it may be driven by business. It depends on how much money you can make, how big your market value is, how much space you have, and what the future looks like. , which is equivalent to mapping traditional finance to this, there are decentralized banks and decentralized insurance.

There will also be some new things, the things on the blockchain, the assets are highly liquid and can be customized freely, such as YFI, YFII, aggregators, etc. There was no such thing before. For digging, I still recommend everyone to dig. The agreement is beautiful, but the bubble is also very big. If you don’t have the ability to dig, whether it’s sweet potatoes or grapes.

If you don’t have the energy to follow these projects, these projects are often at 3 or 4 in the morning, you don’t have the ability and energy, you should put the funds in the fund pool of the aggregator, such as the YFII fund pool, and let them dig it themselves , that's how I feel about sweet potatoes and various projects.

Lao Bai: I remember Andre first said that Uncle and Uncle Second, he supports every fork, but you’d better make some changes instead of copying the original code to do it, like Uncle Second has The mechanism of halving is an innovative way of playing.

On YAM we saw a combination of AMPL plus YFI. We discussed this mechanism in the early community. YAM was the first to be made, and YAM is also very interesting. It is the aggregator of our YFII smart pool mining, the first target project, and each of these projects gives Bring a lot of benefits to users. Their annual rate is very high, 1000% to 5000%, and it is non-destructive mining, that is, there is no risk in terms of principal, and all contracts are checked by contract audits, so there is no problem.

Then there were many imitation disks. If there is no innovation, the price may have collapsed within a day or two. We also found that some contracts with backdoors were caught by our contract audit in order to deceive others, and then they did not participate in these projects to ensure the safety of users’ funds. This is a better security measure than retail investors. , allowing them to participate in DeFi financial management business at a lower cost.

Dovey: Let me talk about sweet potatoes. We look at the problem very simply. Basically, all financial products are divided into two categories. One is a zero-sum game, where someone wins and someone loses. Another kind of positive sum game is that everyone can make money together. Sweet Potato is more inclined to the zero-sum game of financial games, because at least according to its original design, it does not have the possibility of long-term cash flow, and of course it can change some designs later.

As long as there is no cash flow and no own income, it is equivalent to sending a coin, and it depends on whether the coin itself has liquidity in the liquid market. In this case, it is purely a zero-sum game. People who dig sweet potatoes are basically Make a profit without losing money. Because of our Uniswap liquidity pool, it will have something called free loss.

As a market maker, because it is a sliding curve, if the price of the local currency plummets, and you are trading the local currency and ether, the ether you make the market yourself will be less and less, and the local currency in your hand will be more and more. On the day when sweet potatoes plummeted, you were still a market maker in its liquidity pool, and you would have a pile of sweet potatoes in your hands. At that time, you would have lost a lot, and the fair price of sweet potatoes in the market was very low. You only do farming from a pool, and there will be no loss of principal.

This is a matter of the decentralized world itself. If you want to take orders from a centralized exchange, it is a completely different matter. It seems that many people ask me about CRV. CRV has a very heavy mining pressure. I think a lot of transactions So maybe I didn't expect it to become like this before going to CRV. In addition to the sweet potato itself, it is an elastic currency tool. It will deflate or inflate the currency itself according to the contract design. In fact, it is a very troublesome thing for centralized exchanges.

I think that in the future, I don't know how the DeFi and CeFi worlds will be connected. The centralized exchange itself has a layer of protection for its users, because since users entrust their money here, they must be responsible for them, but all decentralized financial services emphasize that you should be responsible for yourself, which is Two different trading philosophies will also cause many technical frictions. I also suggest that as long as you feel that this is a zero-sum game and DeFi tokens that do not generate any cash flow, you should be very careful when buying on centralized exchanges.

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Binance Zora: You must be careful, but I believe that there are really many people who come in because they think they can get wool or make money in it. Back to the price of YFI, many people said that one YFI is equal to one BTC, and later the price of YFI completely surpassed BTC. There is an interesting concept in an article called IYO.

IYO means to do a cold start through liquid mining projects such as YFI or Second Uncle, which has also brought a wave of users. I would like to ask the three bigwigs present, do you think IYO will become a future trend? , or what kind of projects do you think will become winners through IYO?

Lao Bai: In essence, IYO is the logic of an aggregator, which aggregates these funds, distributes them to some new projects that need funds, conducts transmission, and generates our own value, profits, etc. in the process.

IYO, two projects like YFI and YFII distribute tokens through liquidity mining, which itself is a kind of marketing behavior, and I think it is a growth hacking technology in DeFi. Any new project can establish its own original community in this way, but it also needs a form of advertising, how to let more people know that their project is released, and distribute the token more evenly in their hands , this aspect may be their shortcoming, and this second uncle can help them do something.

Super Jun: I use a metaphor, YFI is regarded as Google, and YFII is regarded as Baidu. In the Internet age, Google and Baidu are both information aggregators, bringing traffic to various websites. In the era of blockchain, YFI or YFII, as assets An aggregator that brings assets to various websites that need this asset for a second distribution, or have other financial needs.

Correspondingly, these websites want to complete this cold start. YFI and YFII bring funds and reward tokens. Due to the existence of a secondary market in the market, there is a valuation for tokens. These tokens are equivalent to This value is passed on to YFI and YFII. Which projects need YFI and YFII, but for any project that you really want to do, if you want to complete this cold start, no matter it is a zero-sum project or it can generate benefits, you have to communicate with the outside world. a linkage.

For example, borrowing is linked to the outside world, not idling internally. This kind of aggregator is needed to solve certain external needs. This is the role of one enemy against one hundred. The role of Baidu’s advertising or SEO before, the future is DeFi It is a common practice for a project to complete a cold start, and there are also some DeFi in the market who do not like these aggregators, prohibit contracts, and let themselves do it.

Dovey: IYO is like this. When we have a large enough capital pool, our capital pool can continuously generate income and benefits. It will naturally become a channel, because behind our capital pool are real people, many addresses, so many addresses themselves, it seems that our current machine gun pool itself is going to find new high-yield projects by itself.

But I think that in the future, if there is a project that needs to be cold-started and needs to reach such a huge community, they will automatically come to cooperate with us. We already have many such inbound requests, and foreign projects will come and say , I heard that there is a very good community here, and the smart pool has already supported many assets. I hope that our smart pool can also support them in the future. We only support 5 or 6 assets now.

In the future, it may be possible to support more assets and become a distribution channel. Using an easy-to-understand method, it is conceivable that we, in a sense, act as both a brokerage and asset management, and do a good job as a brokerage , the more diversity of assets above, the better. We are now seeing such a trend that there are already certain community sizes or emerging assets, and they want to link up with us to achieve such a network effect.

Binance Zora: Just now Miss Dove mentioned that you have some inbox pocket lists and hope to start some cooperation with Second Uncle Machine Gun Pool. I have heard that the second uncle may cooperate with Binance’s BUSD and USD stablecoins, so I really want to gossip, can you tell us what kind of cooperation will be carried out in the end, myself look forward to?

Dovey: We started talking about this matter with Helen, the person in charge of the stable currency two days ago. In fact, this is a very natural cooperation. You can think about it. Our own user group, we are another aggregator of compound interest and income that can help stablecoins generate interest and various encrypted digital assets generate interest

Lao Bai: For example, now BUSD will have a capital flow pool on Curve, a swap pool created by BUSD and other three mainstream stablecoins.

The stakeholders of this pool can mine through the machine gun pool, and the annual rate can reach more than 60%. Of course, our main strategy is to mine CRV, convert CRV into YFII through Uniswap and Balancer, and distribute it to users. The entire profit It is still very high, and the capital space is still relatively large. 1 billion US dollars is locked in Curve's liquidity pool. Binance also has a part of BUSD, and there will be a lot of room for cooperation here.

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Binance Zora: The most popular thing in the DeFi field is liquidity mining. In addition to liquidity mining, DeFi, whether it is a decentralized exchange or a stable currency, is one of the subfields of DeFi. I would like to ask three other than For such liquidity mining projects, do you think there are other categories in DeFi that you are particularly optimistic about?

Super Jun: I think this is the case. All financial institutions seen in the financial world in the real world will move to DeFi in the future, whether it is commercial banks, insurance companies, or even the central bank. Stablecoins are similar. Institutions of the central bank, or various lending, small lending and lending, these areas are expected to move up.

To be honest about the valuation of these projects, I am quite ambivalent, especially when I saw AAVE with a locked pool of 1.5 billion US dollars yesterday. The market value of this token is close to the market value of a certain exchange in our country. I felt that the bubble was too big, and another scene appeared in another part of my heart. The scene where Tesla picked out Volkswagen, Ford and Toyota one by one was the electric car, and its bubble was also very big.

But I'm still leaning towards the bubble, because I'm not too sure that history will allow me to see two Tesla-style revolutions in such a short period of time.

However, this is a very big trend, and this trend should also be seen in the bubble. In the future, DeFi will gradually dilute the market share of CeFi, because it does not require permission, giving you more freedom to customize your financial needs. First, for ordinary people, borrowing is a very big demand. If you borrow money yourself, in the real world, you can borrow it on AAVE. The second part is insurance, because it can only do insurance for the smart contract part, and the one in YFI will also do insurance, which is more interesting.

The third part, which makes me feel that it has gone far is synthetic assets, which is similar to the chaining of everything. If it is to combine Tesla's synthetic assets on the chain, the imagination is very big, and it will broaden the exploration of the blockchain in the financial field, and it will be more attractive than traditional finance. What I am currently interested in is the content of the synthetic assets.

Lao Bai: Because the entire DeFi can automatically adjust from the underlying assets, from stablecoins to Ytoken, store your stablecoins in Compound or Lend or other platforms, and automatically find the best profit strategy. This is Ytoken, yes Packed in one layer.

The second layer passes the loan currency through Curve, and uses the automatic market maker to package it into a swap between four Ytokens. In addition to earning the interest of its own stable currency, it can also earn Curve’s transaction fees.

YFI and YFII are relatively high-level agreements. They started to use YCRV and Curve liquidity to provide equity tokens for mining or higher-level packaging. The third layer, I think it will be a higher-level level. Every Each layer has its own value. In terms of lending, it may be relatively large, it is lower, and the amount of funds that can be accepted is also the largest. Looking at the volume of AMM automatic market makers, Uniswap, Balancer or Curve, the daily trading volume will be relatively large, but the number of locked TVL may not be so high.

Further up is the aggregator of the uncle and uncle, a higher source of income. Next, this kind of mining strategy requires insurance. If there are problems in various aspects of smart contracts, insurance coverage is required. Insurance is also a very good business.

Except for these few, the loan business currently feels like a pawnshop business, mortgaged 200 dollars of Ethereum, but I can only lend 100 dollars of DAI or other assets, can there be a better form, like traditional financial use? In the way of credit, I can issue loans based on a person's credit, so that the entire DeFi market can rise. This is the difference from traditional CeFi, and it may be an opportunity in the future.

Dovey: Let me tell you, I am optimistic about other so-called DeFi projects. I actually dislike the word DeFi. In fact, the cornerstone of an industry is itself a philosophy of DeFi. Bitcoin itself is the largest product of DeFi, whether it is As a point-to-point transaction cash or as an anti-sovereignty or super-sovereignty asset storage, we often say Not your key, Not your coin, if you do not have a private key, the property itself is not yours.

I have also defined what is DeFi before. DeFi itself corresponds to CeFi and to centralized finance. It has two core features. The first feature is permission-free, whether it is Binance or Huobi That’s okay, I want to do transactions, I want to do market, and my assets need to be approved. The first and most obvious feature of DeFi is license-free. License-free has a deep meaning. We can enjoy the same service for every money and every address.

In the traditional financial world, we all have credit. What is credit? It is a price to some extent, because I am Dove, I can borrow more money, and everyone thinks that my credit will be higher and better. This is very unfair, because the money is the same. If you have one dollar and I have one dollar, we should be able to borrow the same proportion of assets with one dollar of collateral.

The deep meaning of license-free, every digital asset and every address is equal, and you are guaranteed to be equal technically, and your personal privacy and personal information will not be involved. Traditional centralized services rely on your personal privacy Whether it is your transaction records or your KYC information, it is through this that it does such price discrimination and service discrimination. As the core philosophy of the industry itself, DeFi is very recognized by me. This is the first major feature of DeFi.

The second major feature is whether your assets are hosted by a trusted third party. We all know that all exchanges, banks or various wealth management products are a big black box for us. This is why the financial crisis occurred in 2008. I also knew that there were many P2P explosions in China before. Its biggest problem is that after I put the money in, I don’t know whether the other party will use my money to buy a house, do high-leverage transactions or speculate in stocks. I only know that I may have a good profit.

But this directly led to the 2008 financial crisis. The core reason is that when layers of stimulus credit assets were packaged, the product had become too complex to be effectively rated. In the world of decentralized finance or open finance, we know for the first time that, for example, if you put money in the second uncle's machine gun pool, you can clearly see what the machine gun pool sees at every step, and you can clearly know whether he is mining or Doing arbitrage, fully knowing what you have done, is equivalent to having the effect of public supervision.

I have been saying on Twitter that we often discuss in many discussions that we need equal opportunities in the Internet world. In fact, it means data freedom and data transparency. Only data freedom and data transparency can bring about equal opportunities.

So I think the second biggest feature of decentralized finance is that there is no trusted third party to host your assets. With its derivative meaning, you can have complete information visibility, which guarantees us from the data level for the first time. The so-called public ledger or your private property is sacrosanct, you will never throw money into a black box anymore.

7

Binance Zora: You can see that DeFi is mentioned. I feel that every project basically chooses the Ethereum chain, which makes other public chains particularly jealous. A brief analysis, we all know that everyone uses Ethereum to develop DeFi , First, the number of these deposited assets on Ethereum is large enough and the value is high enough. The second point is that Ethereum is basically more decentralized than other chains, while EOS and TRON are less decentralized.

In the second half of DeFi, I am particularly optimistic about Binance Smart Chain. First, Binance Smart is linked to Ethereum, and developers can seamlessly transfer to Binance Smart Chain. Next, Binance Smart Chain is the second chain made by Binance. The first chain is Binance Chain. There are more than 200 asset stablecoins issued on Binance Chain. There are 9 kinds of stable coins. interact with each other.

I would like to ask the three of you, the DeFi story must have not burst yet, and it has not yet been finished. What do you think in the second half, which chain may start to flourish and the DeFi-related ecology and the like.

Super Jun: In addition to participating in DeFi on Ethereum, I also participated in DeFi on EOS. The DeFi on EOS is called DeFibox, and now the accumulated funds are almost 100 million RMB. It is true that it has very few assets, and now it can only do simple mortgage lending transactions, and can only do these three parts, and I generate stable coins. But the advantage is that there is no handling fee.

I think the big opportunity is still in Ethereum, and part of the opportunity should be the exchange's own chain, Binance Chain or others. It is indeed a big entrance. In terms of ease of use, it will do some better optimizations in line with the habits of its own users, which may lower the threshold for many people to enter the DeFi world. I think so.

Lao Bai: Let me add here. When it comes to which chain smart contracts may have a relatively large development, DeFi on Ethereum has been around for many years, starting from Maker in 2017 to Loopring including Kyber and 0X.

Dovey: You remember Augur in 2015, Augur is a DeFi, the earliest DeFi on ETH.

Lao Bai: Yes, Augur is also very early, including theDAO. It has been established in Ethereum for many years, and a lot of preparations have been made for the current outbreak time. In 2019, the bubble of Ethereum IC0 has just ended. Many new DeFi projects, including Uniswap and Bancor, are continuing to build credit. The projects in 2019 have been running for a year. It is more natural to release your own governance currency after no obvious bugs have been found in years. A new project may have problems when it is first launched, and it will take time to settle. This is one of the reasons why Ethereum can explode. I have not seen other chains. to an obvious accumulation.

Dovey: Let me also add that I am only optimistic about two types of public chains for the development of DeFi.

The first type of public chain has a very organic and rich developer community, Ethereum is a good representative, EOS and Tron, I have not had much confidence in them, mainly because their quality is too poor Yes, their developer code ability is very average, if compared with Ethereum. I think Polkadot has long-term potential, but looking at them now, their assets are still too small. When a large number of US dollar stablecoins will be sold on Polkadot, that may be a good turning point.

To do DeFi, it's less about De, more about Fi. First of all, decentralization is not a premise, it will be a feature. Its premise is that there must be capital accumulation, and you must have asset diversity. I think that if the asset diversity on Polkadot can increase in the future, the US dollar stablecoin can It can be scaled up, and it is a public chain that is a good match for DeFi applications.

Another type of blockchain platform, I think it is like Binance Smart Chain, its biggest advantage is liquidity and asset diversity. You can think of Binance as a liquidity pool, which is centralized, and it can To divert the flow to the outside world, it depends on whether Binance wants to open this valve. I think the future exchange chain will be a very big competitor of the Ethereum ecosystem because it has good liquidity. Of course, it may be relatively weak because it is a developer ecosystem. After all, it is a relatively closed developer community, and its liquidity and asset diversity are actually very good.

In my personal opinion, if Binance Smart Chain can do a good job of bridging assets such as Ethereum and Polkadot in the future, I think it can quickly attract both ecology. In fact, the importance of cross-chain does not mean that cross-chain itself will become a chain. It is a cross-chain, a middleware, and a bridging function.

The middleware itself is made by any public chain. You just need to write the adapter. The chain can seamlessly connect to ERC20 assets and Polkadot assets. In the end, what everyone competes for is liquidity itself. I think Binance has the best liquidity in the world. As long as the gate is opened a little, there will be a very large liquidity flood effect. I especially hope that Binance will play a good leading role in the entire DeFi community in these aspects.

8

Binance Zora: One more question at the end. Many small partners are novices and novices who have not participated in any liquidity mining. They have no time to participate in liquidity mining in the primary market. What kind of coins should they buy or what kind of coins should they participate in? How should they participate in liquidity mining?

Super Jun: Let’s talk about the threshold first. The transaction fee of Ethereum is very high. I suggest that it should be at least more than 30,000 US dollars before participating. This is a threshold. The second part, in terms of security, it’s best to put it in the fund pool of the aggregator and let them help you. If you don’t put it in, it’s best to follow them. They can dig whatever they dig, and be relatively conservative. Mainly in the security part, pay more attention.

Lao Bai: We often switch which currency we use for mining. Sometimes it may be better to use YCRV, sometimes it is better to use DAI, and sometimes it is better to use USDT. It depends on which project has a higher rate of return. Stablecoins are often switch. For a novice DeFi mining player, the capital fee is required, otherwise your transaction fee and cost will not be covered.

For example, YCurve needs about 0.15 to 0.3 ETH to exchange a token. This is a transaction, and withdrawing cash requires so much money, which is particularly unfriendly to novices. If you don’t have much funds, it is recommended to use YFII’s smart pool Deposit, recharge fees, and cash withdrawal fees get the highest rate of return in the market for the two fees.

And we have the support of various tokens, you can join different pools according to your own currency, we will automatically switch strategies, and will find the project with the highest income in the current market. In this way, you can save your cost. To understand a new project, it is still time-consuming to study its various economic models, including the rate of return. For novices, it is recommended to use YFII's smart pool directly.

Dovey: I saw a message saying to do some risk warnings. If you are not a full-time coin speculator and do not have much technical or computer background, you have to figure out every step by yourself. The steps are really very complicated. The threshold for using DeFi is still very high. The most convenient way is to deposit money. Go to the second uncle's machine gun pool, and it will automatically generate interest and compound interest for you, so I always say that this is a passive investment behavior, lying down to make money.

If you really want to operate by yourself, you have to face a lot of risks, for example, you may face the risk of wallet being phished, because for us, we have a contract security audit team of more than 20 people behind us, if you You have to dig it yourself. If you don’t know how to read their contract itself, you don’t know what kind of pit it is.

Some time ago, we saw a contract that looked fine at first glance, but it changed one of the Ls to 1, which made no difference at first glance. It is actually a maliciously defined function that can directly transfer your money away, so It is said that you will face the risk of wallet phishing, the risk of contract running away, the risk of exchange in the process of stable currency exchange, and the risk of transaction friction.

If you go to mine on CRV or Curve, the transaction fee is one Ethereum. I really think that if you have too little funds, you can mine by yourself. Of course, you can experience it, but it is thankless, and there is a high probability of losing money. That's basically the risk. Some of them said that the threshold of digging by themselves was too high, and they handed it over to the machine gun pool. The private key of the machine gun pool contract itself has been destroyed, and it is impossible for it to run away with money, which is technically impossible.

Another one, because we have many security experts behind us, it is a pity that the current contract audit cannot be audited on the chain, and the reason is relatively simple. There are many logical loopholes that cannot be seen by computers now, but need to be read by human brains. There will be some semantic loopholes, and there will be definitional issues, which may be semantic or relatively mechanical loopholes, and many logical loopholes need to be seen by human eyes.

Now the contract security is the most critical, because our Smart Pool is an asset management platform, and the most important asset management platform in a decentralized world is to ensure the safety of everyone's principal. What we have to do now is to increase the diversity of such assets after ensuring 100% security of the principal.

For example, adding Bitcoin and USDT in the future are all in our development path, and it may take some more time. All our developers are working day and night to catch up with this progress.

Binance Zora: Three big guys have brought wonderful sharing today. Please pay more attention to Second Uncle’s community. Blockchain 101 will be broadcast live on Tokenclub’s live broadcast platform every Monday to Friday. I will share with you at 8 o’clock in the evening See you, thank the three big guys again today, thank you.

Dovey: Thanks, bye.

Lao Bai: Goodbye.

"Disclaimer: The opinions of the guests in this article do not represent Binance's "Block 101" position, and do not constitute investment advice, please treat with caution."

"Disclaimer: The opinions of the guests in this article do not represent Binance's "Block 101" position, and do not constitute investment advice, please treat with caution."

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