Nine Highlights of the DeFi World in 2020

Winkrypto

特邀专栏作者

2020-01-07 06:34

This article is about 8351 words, reading the full article takes about 12 minutes

Get the pulse of the development of the DeFi world.

AI Summary

Expand

Get the pulse of the development of the DeFi world.

Editor's Note: This article comes fromChain news (ID: chainnewscom)Editor's Note: This article comes from

Chain news (ID: chainnewscom)

, Author: LeftOfCenter, reprinted with authorization by Odaily.

No matter what 2019 just passed has hurt you in the cryptocurrency world, we sincerely hope that 2020, which has already arrived, can rekindle your hope. Yes, for the blockchain industry, 2019 is a year of ups and downs, with far more falls than rises. In this year, the price of the currency is not beautiful, but it is undeniable that we perceive that "open financial DeFi "The undercurrent surging in the field.

We believe that DeFi has broken ground and will unleash great potential. In order to allow readers to better understand the development trend of the DeFi field, Lianwen will present you nine highlights in the field of "open finance", hoping to provide you with a window to gain insight into what is happening in the DeFi world .

secondary title

Aspect 1: Can the explosion of DeFi assets continue?

image description

defipulse.com statistics as of January 6, 2020

According to data from DeFiPulse (defipulse.com), since the beginning of 2019, the size of funds locked in the DeFi system has grown from around US$290 million to US$690 million. Among them, Maker locked up about 370 million US dollars, accounting for 53.64%, ranking first; the emerging Synthetix, locked about 150 million US dollars, ranked second; the lending platform Compound locked 92 million US dollars, ranking third.

defipulse.com statistics as of January 6, 2020

Of course, the most active cryptocurrency asset in the entire DeFi ecosystem is Ethereum. By the beginning of 2020, the number of ETH locked in the DeFi ecosystem has exceeded 3 million, a record high. The amount of ETH locked in the DeFi ecosystem is close to 3% of the total amount of ETH in circulation.

The amount and value of assets locked in the DeFi system is currently the simplest and most direct indicator to measure this type of application. This indicator has deficiencies, but the direction is very clear. As far as the development trend of the past year is concerned, everything is going well for this indicator. But whether this trend can continue in 2020 and achieve explosive growth deserves close attention.

secondary title

Aspect 2: The rise of the dark horse of DeFi, but the potential risks are worthy of attention

MakerDAO is currently occupying the "king" position in the DeFi world. As mentioned above, the value of assets locked in the Maker protocol is about 370 million US dollars, accounting for half of the entire DeFi ecosystem. Maker officially launched the multi-asset mortgage Dai function MCD at the end of 2019, adding more collateral types. Although its launch time is much delayed compared to the first quarter of 2019, it still cannot be denied that this is the DeFi world in 2019. The most anticipated important product upgrade of the year.

In addition to the dazzling MakerDAO, Synthetix, another synthetic asset issuance platform, is undoubtedly one of the fastest growing DeFi projects in 2019. The price of its issued token SNX has increased by more than 30 times in 2019, and its market value has rushed to the overall ranking About 30 people. The value of locked assets on the Synthetix platform even rushed to the second throne of DeFi, second only to MakerDao.

In this mechanism, the SNX staker is the counterparty of all synthetic asset exchanges, and the staker needs to bear all the debt risks in the system.

The rapid growth of Synthetix is impressive, and the potential risks it brings cannot be ignored. These potential risks include oracle machine risk, poor token liquidity, and the risk of unlocking and smashing due to the current excessive increase.

image description

The value of Synthetix's locked assets has grown rapidly in the past year and has entered a period of stagnation

At present, the Synthetix project has transitioned from a period of rapid growth to a period of stagnation, and the value of SNX's locked assets has also shown a downward trend.

secondary title

Aspect 3: Maker mode out of Ethereum

At present, Ethereum is still the home of DeFi. However, other public chain projects have also begun to cultivate their own DeFi ecology. The most prominent trend is that the Maker model has begun to go out of Ethereum.

The success of MakerDAO and its collateralized debt warehouse model has verified the feasibility of this new digital currency mortgage lending model in practice. The potential of this model in open finance has triggered other project parties to follow suit.

For example, Kava, the first DeFi project on the cross-chain project Cosmos, has just released its mainnet recently. Similar to Maker, Kava is also an automated mortgage lending platform that also issues two tokens: the stablecoin USDX (similar to Dai) and the equity governance token KAVA (similar to MKR). Users can mortgage BTC, XRP, ATOM and BNB tokens in the multi-collateralized debt warehouse CDP to generate stable currency USDX, which is pegged to the US dollar at 1:1; in addition to USDX, another equity and management token is issued in the system Token KAVA. The fledgling Kava has done a great job. Less than a week after the mainnet was launched, the scale of assets pledged by validator nodes reached 80 million US dollars.

Another similar project is Checker, a collateralized stablecoin secretly developed by public chain project Tezos co-founder and CTO Arthur Breitman. At present, the specific details of the project are unknown, but the published information shows that the project is similar to the MakerDAO model, and the stable currency Checker is also generated by locking XTZ tokens as collateral. The difference is that there is an additional Tezos baking reward for locking XTZ tokens. In other words, locking XTZ tokens will yield higher returns than simply baking.
In the Bitcoin ecosystem, the Maker mode has also appeared recently. Money on Chain, a startup in the process of transforming into a non-profit trust, has launched a DeFi platform based on the Bitcoin sidechain Rootstock (RSK). In most Bitcoin DeFi use case scenarios, either Bitcoin is wrapped into a token in Ethereum format, or a centralized service is provided to mortgage Bitcoin to obtain a DAI loan. Money on Chain uses a An open-source protocol inspired by Bitcoin to build solutions.
Money on Chain claims to be an evolving ecosystem on which lending products can be built. Like MakerDAO, there is not only one token in the Money on Chain ecosystem, but three tokens, namely:

BitPRO (BPRO) collected from users of the system representing Bitcoin fees, which is called "passive income";

Money on Chain token (MoC), an equity token that can be used for community voting governance, corresponds to Maker Foundation's MKR.

In the future, Money on Chain will issue a variety of stablecoins linked to legal currencies in many Latin American countries, aiming to reduce volatility risks and be more easily accepted by enterprises. However, the problem facing the project is compliance issues, so it is currently mainly targeting the Latin American market.

secondary titleAspect 4: How to introduce real assets and off-chain assets into the DeFi system?In 2019, more asset classes, including physical assets or off-chain assets, began to enter the DeFi system. This not only includes the newly launched Maker Multi-Asset Collateralized Dai (MCD) system, but also the Maker Foundation and the German Supply Chain Financial District Centrifuge, a block chain platform, has launched a series of projects in areas such as logistics, real estate, and streaming music supply chain industries (such as Spotify) where "the payment cycle is long and there is a large funding gap in each stage of operation".「How to get DeFi out of the small circle game? Let’s take a look at its application in real industries.”pilot test

How to get DeFi out of the small circle game? Let’s take a look at its application in real industries.”

The interoperability and composability of DeFi make it possible for cToken in RC20 format to be integrated by other protocols. For example, Uniswap provides Dai and cDai trading pools, which means that injecting cDai into the Uniswap liquidity pool allows users to earn compound interest while obtaining handling fees in Uniswap's related trading pools.

Based on this, another DeFi project, Decentral, issued rDAI to further generate another token from the profits generated by staking cDAI. It hopes to realize the tokenization of the ownership of the interest generated by staking cDAI, which is essentially a token ownership of principal and interest. The practice of separation.

secondary title

Aspect 6: DeFi Insurance ServicesInsurance services and products in the DeFi field are emerging and becoming an important subfield.Different from insurance businesses such as accident insurance and life insurance in our traditional cognition, the DeFi insurance agreement is essentially an insurance based on smart contracts, which mainly provides risk protection for several types of accidents that often occur in the currency circle. Including private key stolen, exchange attacked, wallet stolen, smart contract loopholes and manipulation, etc., aiming to provide investors with hedging risk insurance services, related products include Etherisc, CDx, Nexus Mutual, Opyn (oTokens) , VouchForMe, and KeeperDAO.The Orange Book of blockchain media was once in "

The patron saint of DeFi:
Talk about the new track of insurance
"The article has made a good introduction and summary of these core projects:
Nexus Mutual: It adopts a risk-sharing model. It has a risk-sharing pool governed by NXM token holders, and the community votes to determine which claim is valid. Nexus Mutual is essentially smart contract-driven insurance, which means that DeFi users can use this solution to purchase insurance for funds lent on Compound or Dharma, and digital currencies stored in Uniswap to hedge risks.
Etherisc: is a general-purpose decentralized insurance application platform that allows anyone to create their own by providing developers with a common insurance infrastructure, product templates, and insurance license-as-a-service. Insurance products, ranging from flight delay insurance and hurricane insurance to crypto wallet and loan mortgage insurance.
Opyn (oTokens): oTokens is currently only a proposal. The team behind it hopes to propose a more complete protocol, Convexity Protocol, to replace dYdX. Essentially, users can protect their assets by purchasing put options on the Convexity Protocol , the user mortgages Ethereum ETH to mint an ETH oToken, which represents a put option on Ethereum, and others can buy this option to obtain insurance against the collapse of ETH. Users who mint oToken are equivalent to mortgaging ETH to sell options to obtain additional income, and holding ETH can also make money.

CDx: It is a credit default swap agreement. A credit default swap (CDS) is a financial product designed to insulate users from the default risk of another party. The buyer pays the fee continuously during the insurance period, and can receive compensation if he encounters a breach of contract.

SWAP RATE: It is a DeFi-based interest rate swap transaction (Interest Rate Swap, IRS), which means that when you are on various decentralized platforms, you will face the problem of uncertain interest rates. Now, as long as you use the SWAP RATE Smart contract, you can obtain a fixed interest rate for borrowing. When the expected interest rate does not reach, the platform will make up the difference for you through the contract. Of course, if the income has exceeded the agreed interest rate, then the natural contract will also make you redundant. The proceeds are handed over to the platform.

In addition to the above projects, Talo, a distributed system development company, and Amber Group, a digital asset management platform, have recently jointly launched a project called "KeeperDAO". KeeperDAO, which is positioned as a "liquidity underwriter on the DeFi chain", is essentially a trust-minimized cross-protocol insurance fund that encourages token holders to participate in liquidity provision and liquidation through economic incentive strategies. KeeperDAO encourages token holders to participate in liquidity pools through economic incentive strategies to coordinate liquidation and rebalancing in applications such as margin trading, loans, and exchanges, allowing users to pool funds into Ethereum smart contracts, and Obtain common interests through on-chain arbitrage and liquidation opportunities, which not only allow all participants to obtain passive income through gaming, but also ensure the liquidity and orderliness of decentralized financial applications.

secondary title

Point 7: How to solve the liquidity problem?

Compared with the traditional market, the overall market value of the encryption market is not large, and it also faces the problem of insufficient liquidity, especially in the DeFi field, which has a small market. In 2019, various project parties used all their strength to release liquidity.

In order to release liquidity, a common trend is that DeFi and the centralized world cooperate for a win-win situation, embrace each other, and explore a new hybrid model that combines the strengths of DeFi and CeFi.

Among them, the new version of the margin business of the decentralized exchange DDEX began to support the centralized stable currency USDT in addition to DAI. USDT is the stable currency with the largest market value at present, and it is also one of the most liquid cryptocurrency assets. DDEX margin business increases support for USDT, which will undoubtedly improve the liquidity of the lending pool on the platform.

In addition, MakerDAO has recently launched the Multi-Asset Collateralized Dai (MCD) system, adding assets other than ETH, and currently supports BAT, the most liquid attention token. Whether or not centralized mortgage assets (such as tokenized bonds) and stablecoins (such as USDC or USDT) should be introduced has been the focus of debate in the MakerDAO community, but MakerDAO CEO Rune Christensen has a very clear view. He believes that the introduction of centralized assets can Increase the liquidity of Dai and the decentralized financial ecosystem, expand cryptocurrency to as many people as possible, and expand the overall market value of encrypted DeFi.

Not only are decentralized exchanges embracing centralized assets, but centralized exchanges are also moving closer to decentralized stablecoins. The centralized exchange OKEx has launched multiple decentralized stablecoin Dai trading pairs, and will integrate the Dai deposit rate (DSR), as the world's first integrated DSR (Dai deposit rate) trading platform, users can enjoy DSR on OKEx profit). MakerDAO CEO Rune Christensen believes that this can provide new users with an easy access to DeFi.

In terms of providing liquidity, the opportunity of DEX is also worthy of attention. A major obstacle to the development of the DeFi platform is the lack of liquidity, so it is very important to bridge the liquidity from outside the platform for the DeFi platform.

Liquidity aggregators like DEX.AG meet such a demand well. DEX.AG provides trader users with the best prices from 11 different decentralized exchanges. A typical use case of DEX.AG is that after the recent integration of Synthetix's native exchange, users of both platforms will start from additional At the same time, SNX holders can also charge more transaction fees.

In 2019, there is another trend in creating liquidity, which is to create debt for locked assets in the staking business to maximize liquidity.

For example, in the Stake DAO service launched by Staking service provider Stake Capital, in order to release the liquidity of mortgage assets, a derivative Liquid Token (LToken) based on mortgage assets was invented. This token is generated at a ratio of 1:1 Can be traded on the secondary market.

Acala Network also adopts a similar model. This is a DeFi project initiated by a Chinese team. Its solution will support the generation of stablecoins by staking Staking assets in the Polkadot network, so as to maintain the holders' continuous access to staking income while releasing the liquidity of staking assets and participating in the DeFi project. In financial services such as centralized lending, leveraged transactions, and crowdfunding of high-quality projects. This means that DeFi can be applied to staking that lacks liquidity, which can create debt for locked assets and maximize liquidity.

secondary title

Point 8: Decentralized lending has structural limitations

In the field of decentralized lending, MakerDAO continued to occupy an absolute leadership position in 2019. In 2019, MakerDAO upgraded from single collateral (Sai) to multi-asset collateral (MCD). With a current deposit account, users can deposit and withdraw at any time without any counterparty risk. DSR is essentially a smart contract that can be integrated into any exchange. Its introduction is of great significance, and it will become the benchmark interest of the DeFi ecosystem.

In the long run, if the development goes well, DSR may become an unsecured savings rate, which is equivalent to the impact of the central bank's reserve interest on commercial bank interest.

In addition, both Compound and Fulcrum have created fund pools that allow users to borrow and lend encrypted assets, including Dai, USDC (Coinbase’s stable currency), and ETH.

Dharma, which started as a Compound competitor, underwent a major revamp in 2019. The new version of Dharma is developed based on the Compound protocol, and the compound liquidity pool realizes "instant matching" to provide lenders with the best interest rate immediately, thus solving the delay problem that users complained about before, which means that the two parties have changed from a competitive relationship to a symbiotic relationship. It is also determined by the genes of openness and composability of DeFi open finance.

The advantage of decentralized lending over traditional lending markets is that it requires no permission to enter. Capital from massive sources can directly compete for capital allocation. Not only that, but the compatibility and composability of DeFi also means that it must face competition for funds from other lending agreements. DeFi's permissionless lending model will attract more market participants, and this trend has already emerged.

However, decentralized finance also comes with structural limitations. A big advantage of traditional lending companies is that they can borrow without collateral or partial collateral because they have a firm grasp of the lender's information and can rely on the legal system to enforce the borrower's repayment obligations.

Decentralized finance needs to be over-collateralized, which means that the utilization rate of funds is low. To solve this structural inefficiency in the DeFi field, it is necessary to solve the decentralized identity problem, that is, how to ensure that the decentralized identity is effective without violating user privacy. There are still contradictions in solving this problem.

secondary title

Aspect 9: How to reduce the decentralized mortgage rate?

"Low mortgage rate" will be the future of DeFi, so how to reduce the loan mortgage rate in the DeFi ecosystem and improve the utilization rate of funds?

One solution is to build a credit market DAO, share loan risks by forming an alliance, and share profits from interest rates. Maple, a new player in DeFi lending, is making such an attempt: Since staking generates fixed interest and can guarantee a part of the income, the mortgage rate can be reduced by mortgaging fixed future known returns.

Another credit union called "Union" adopts the design of "credit union". In this mechanism, members who join the DAO organization can get the corresponding interest based on the calculation of the bonding curve through Staking DAI or similar interest-generating encrypted assets. Shares, Staking assets will be sent to other currency markets to earn interest, and these interests will be pooled into a lending pool, where the funds can be lent to DAO members without collateral or with partial collateral.

Another solution is to utilize zero-knowledge proofs (ZKPs), which can solve the Sybil attack generated by partial staking without revealing the public ID data. You can get a credit score without revealing any privacy. There are currently two solutions. One is to integrate the data of various platforms in Web2.0, such as crediting social platform logins such as Airbnb or Uber, and integrating income-related data at the same time, but this method is "semi-centralized". Another way is to extract data from traditional finance, however this way greatly slows down the process and imposes censorship.

DeFi

Welcome to Join Odaily Official Community