DeFi "out" of Ethereum?
On December 15th, SushiSwap co-founder 0xMaki mentioned that SushiSwap plans to launch on Polkadot, and mentioned that users will receive moonSushi.
As soon as the news came out, there was an enthusiastic response in the comment area. Before that, no decentralized exchange on Ethereum was launched on the Polkadot chain, and SushiSwap is likely to become a DEX pioneer compatible with Ethereum and Polkadot.
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The form of cross-chain DeFi is constantly evolving
Cross-chain forms of DeFi projects emerge in endlessly. This article will introduce the following five forms of expression.
1. Synthetic assets
On May 27 this year, Ren officially released its mainnet RenVM SubZero. After the mainnet launch, users can use Bitcoin, Bitcoin Cash or Zcash in any DeFi application, and these tokens are displayed on Ethereum as renBTC, renBCH and renZEC respectively. Before Ren this was only possible using escrow.
The emergence of synthetic assets is convenient for users to directly hold external chain cryptocurrencies such as Bitcoin and BCH in the Ethereum network, and also provides the value of external chains for the Ethereum network.
In addition to renBTC, WBTC, oBTC and other ERC20 tokens anchored to Bitcoin continue to emerge on Ethereum. Among them, WBTC has the highest locked position, reaching 2.66 billion US dollars, second only to Maker in the TVL ranking of DeFi projects.
2. Provide Staking asset liquidity
The cross-chain projects Bifrost and StaFi in the Polkadot ecosystem can also generate synthetic assets to provide liquidity for Staking.
The logic of Bifrost is: Assets staking through Bifrost will generate corresponding vTokens. vTokens have interest-bearing properties, can capture Staking income, and can be traded and circulated at the same time.
Bifrost has a built-in AMM-type decentralized exchange vTokenSwap, which provides convenient exchange services for vToken, and can also directly capture the fee income brought by the transaction.
It is worth mentioning that before the launch of the ETH2.0 mainnet, Bifrost launched the vETH Mint Drop, and more than 10,000 ETHs participated in vETH minting in less than 18 hours.
In addition to Bifrost, StaFi also proposed the ETH2.0 Staking liquidity solution rETH. Users can participate in ETH 2.0 Staking through the pledge contract deployed by StaFi on ETH, and the pledged amount will not be bound by 32ETH.
Similar to Bifrost's vToken, StaFi uses rToken to connect the values of multiple public chains.
On December 16, StaFi officially released the rToken white paper. It is mentioned in the white paper that StaFi will develop a cross-chain bridge service to realize rToken-related transfers in the Ethereum, Polkadot and Cosmos ecosystems. For example, rTokens in the Ethereum ecosystem can participate in Polkadot DEX transactions or loans.
And just before the release of the white paper, StaFi announced the launch of rBridge, users can complete the conversion of FIS and ERC20 tokens, and rToken transfers are realized simultaneously. rETH and rFIS can enter DeFi on the Ethereum chain through rBridge, and rETH and rFIS will be available soon.
The white paper also mentioned that according to the priority, StaFi will give priority to the implementation of three rTokens including rETH, rFIS, and rDOT, and gradually establish the protocol standards corresponding to rToken.
3. Launch the Ethereum DeFi project on Polkadot
Acala recently announced plans to launch Ampleforth in the project in the first half of next year.
Acala COO Bette Chen pointed out in the article: Ampleforth will bring the Rebase and elastic token mechanism to Acala and Polkadot. AMPL will also become the first multi-chain independent token, serving the broader cross-chain encryption and DeFi communities.
After Acala starts Ampleforth, AMPL will be circulated on the Polkadot chain through Acala, and users can directly pay AMPL as a transaction fee when transferring AMPL, and the Ampleforth smart contract will be deployed on Acala's Ethereum virtual machine.
4. Producers of Bitcoin products on the Ethereum chain
Among all cross-chain DeFi projects, Badger DAO is special. Strictly speaking, it is a decentralized autonomous community and cannot be regarded as a cross-chain project. But the main purpose of this project is to produce Bitcoin products in the Ethereum network, and indirectly introduce the value of Bitcoin into the Ethereum chain.
Badger DAO recently announced that it will launch DIGG, a Bitcoin product with Rebase attributes, which can be regarded as a combination of Bitcoin and Ampleforth.
The Badger DAO development team pointed out that the protocol construction has been completed and the audit of the project has begun. The launch of the project will help maintain the upward momentum of Badger DAO and further increase the project's lock-up volume.
5. Decentralized exchange cross-chain
Decentralized exchanges are also trying to cross-chain transactions. In addition to the SushiSwap mentioned at the beginning, Sifchain, a full-chain decentralized exchange project, recently announced the completion of a $3.5 million seed round of financing.
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DeFi cross-chain is imperative
It is not difficult to find from the above cross-chain projects that Polkadot ecological projects account for a large proportion, and the interoperability between Polkadot and Ethereum will bring huge development space for DeFi. Polkadot is likely to become the next explosive point of DeFi.
First of all, Polkadot will speed up the development of DeFi projects. Developers can easily create DeFi applications based on the Substrate framework, and through the cross-chain bridge on Polkadot, the value on the Ethereum chain can be introduced into the Polkadot project, and the value of the Polkadot project can also be introduced into Ethereum.
In addition, based on the design of Polkadot's heterogeneous parallel chains, Polkadot's processing speed will far exceed that of Ethereum, and the cost of users using DeFi applications will be greatly reduced. However, there are too many DeFi applications on the Ethereum chain, and the problems of low TPS and high Gas fees have been exposed. The DeFi application on Ethereum has seen the "ceiling" of development, and the value of a single chain restricts the growth of the DeFi market value.
When Cao Yin participated in the event in September, he said: "In the future, more and more Ethereum DeFi projects will be migrated to the Polkadot network. The migration of large-scale Ethereum DeFi protocols to Polkadot is a certainty." Some people worry that Ethereum's DeFi traffic advantage will be lost.
From the perspective of the long-term development of DeFi, Ethereum and Polkadot cannot be opposed. The relationship between the two is not a competition, but a relationship of mutual reference and mutual promotion. The cross-chain migration of DeFi protocols is to find a good platform for the healthy development of DeFi projects, so that DeFi can continue to expand the market size and increase the "ceiling" of DeFi development.
However, there are still interoperability problems in cross-chain DeFi. Nervos architect Xie Hanjian proposed the concept of interoperability 2.0 at the Shanghai Wanxiang Blockchain Summit.
Interoperability 2.0 is to allow users to enter the blockchain world from any entrance and operate any asset in the digital world, rather than inventing a new standard. With Interoperability 2.0, the connection between all chains will be opened up, and Ethereum users can use their own wallets and accounts to use applications in public chain ecosystems such as Bitcoin, Polkadot, and EOS.
MakerDAO founder Rune Christensen once said: "What the DeFi protocol ultimately wants to achieve is to connect real-world assets through the blockchain and DeFi to continuously expand the market."
But from the current point of view, there is still a long way to go to get DeFi out of the cryptocurrency circle and embrace the larger traditional financial market. The focus of the DeFi cross-chain project is mainly on the cross-chain aspects of public chain assets, building bridges between various public chains, making them the Internet, and promoting the circulation of funds in the cryptocurrency circle.
