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, Written by: dForce Team, Cryptocurrency Investors Published with Authorization.

• This live broadcast is the first detailed analysis of dForce founder Min Dao on the product line and strategic planning. The outline is as follows

• Reflection and DeFi risk control module design

• Agreement Dismantling

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Reflection and DeFi risk control module design

Looking back at the data of Lendf.Me before the hacking incident, dForce reached the fifth place in the global DeFi lockup ranking in just a few months.

Whether it's dForce's rapid growth, strategic perspective, or risk thinking about accidents, we hope to share these as a reference for the industry.

In the decentralized lending market, dForce has always maintained a flexible and fast strategy to access potential new assets, and has become the most complete and flexible stablecoin lending platform in a short period of time. The amount of fiat currency stablecoin borrowing is also the first among all lending platforms.However, the innovation and development speed of dForce also comes with risks. The hacking incident on April 19th brought us in-depth thinking. For a detailed review, please see。

dForce AMA restores the beginning and end of the Lendf.Me hacking incident

• The following is dForce summarizing our thinking on the risk control module

• Review Process for Acceptance of New Assets

• Fund pool model, single loan amount and debt limit (similar to Makerdao's debt ceiling)

• In the mixed mode, the collaterals in the single pool mode are not connected to each other, which solves the problem of unequal risk of the borrower.

• Assets and processes on the chain

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Agreement Matrix and Strategic Planning

Judging from this year, the boundary between DeFi and CeFi has gradually blurred. The three major exchanges have invested in their own public chains and stablecoins. How do we view DeFi? DeFi is actually a model of a store in front and a factory in the back (wallets or exchanges are stores, and DeFi is a factory). In the future, more value will begin to accumulate on DeFi.

If we classify the DeFi field, one is a functional protocol, and the other is an asset protocol.

dForce is targeting the lowest-level protocol, but because the market is very early, we will try our best to take a step forward to capture users at the application layer.

A question often asked by many people, how does DeFi capture value?

I personally think this way, see the picture below, the vertical is the asset class agreement, the horizontal is the functional agreement, value capture must be deeply cultivated in two dimensions, the most stable one among foreign DeFi players is Makerdao, the reason is Makerdao not only has the lending function, but also the asset DAI. When the asset DAI is integrated by other protocols, the network will have a huge effect. This network effect is far greater than the functional protocol. The functional protocol is relatively weak in the moat. Weak ones face competition for fees and liquidity.

Furthermore, the asset class is the most critical. Taking the following picture as an example, we can see that we put the asset class at the head of the carriage.

It can also be found from the reality that Makerdao has survived so many turbulences because of the DAI asset agreement.

The above three agreements are a gear relationship. The composable relationship between you and me is the mystery, but at the same time it also magnifies the risk. But you can’t give up because of choking. If there is no composability, the characteristics and advantages of DeFi itself will be difficult to play.

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Agreement Dismantling

Going back to dForce’s Protocol Matrix as an example, all of our strategic thinking is very much about capturing value.

(The following will follow the order of Mindao’s speeches, and add three major categories behind each agreement to help everyone establish a framework)

1. USDx (asset protocol)

To do USDx first is to hope that the value of functional agreements in the future can be deposited in asset classes, and asset class agreements can also provide functional agreements with very low capital.

Why not push the stablecoin USDx alone?

It is very difficult to push a stable currency hard. It can be seen that even the stablecoins with the background of the three major exchanges are difficult to break the monopoly of USDT in one fell swoop. From the verification of the access party and address data, it can be seen that even if it is stronger than the exchange, pushing its own stablecoin will not be effective. It is difficult to shake the position of USDT.

Many people don't understand how complicated it is to generate a currency.

It is very difficult to achieve the current status of USDT after its barbaric growth, or the network effect established by the first-mover advantage of DAI. Even if the daily liquidity of DAI is less than 500,000 US dollars, it still exists. For a new currency to have interest, it needs a lending market, and its application scenarios require a counterparty. These dependencies are very strong. The troika relies on each other for support.

2. Trading Strategy Market (Asset Protocol)

What is the trading strategy market?

We will make a permutation and combination of dForce's resources with income function in the future. From low risk to high risk, there will be USR, stable currency asset deposits, quantitative product tokens, etc.

3. dForce Swap (transaction protocol)https://trade.dforce.network/. The picture below shows the connection of the well-known aggregation transaction protocol 1inch to dForce Swap

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dForce Swap’s quotes on most stablecoin pairs are the best quotes

dForce Swap will be version 1.0 of dForce trading (we support most stablecoins), and ERC BTC trading will be added later, and dForce trading version 2.0 will be extended to multi-asset class trading in the future.

Supplement: The difference between dForce Swap and Curvefi is that Curvefi is an automatic market maker model and will adjust the price according to the algorithm, but in many cases it is not as good as dForce Swap. dForce Swap accesses external professional market makers, Connected to the liquidity of centralized or decentralized exchanges, dForce Swap’s conversion price is not only favorable but also makes the utilization rate of funds very high under the low capital precipitation.

Next, after dForce's lending agreement is reopened, our dForce Swap will have a synergistic relationship with the lending agreement to further improve capital efficiency.

Our own professional market maker resources and traditional financial market background are a great advantage for dForce to enter the trading field.

4. USR (Asset Protocol)USR is a mechanism similar to Makerdao DSR, and the relevant copy can be found in this articledForce Improvement Proposal (DIP001): Governance Vote Results

, USR is to enter a part of the USDx stablecoin Supply into the lending market, and the interest generated by these stablecoins will be distributed back to USDx holders or used to repurchase dForce Token.

The contribution of USR to the dForce ecology is to endow USDx with systematic interest. USDx interest comes from its stablecoin component currency, and does not need to be generated by borrowing demand.

The interest of the scalable USR system also includes transaction fees. The transaction fee model is similar to the transaction fee model on imBTC Tokenlon. In the future, USR will also share the transaction fee of USDx in the dForce ecosystem. PS: USR system interest = deposit interest of USDx component currency + transaction fee of dForce related agreements

5. Yield Protocol (interest-bearing and lending agreements)

After the launch of the Yield Protocol, any asset you hold can be deposited into the dForce contract and turned into an interest-earning Token. This is the Yield Protocol. Many people may immediately think of Compound’s cToken. From the perspective of interest-earning, the two are similar , the difference between the two is:

cToken only exists in Compound's own protocol, while Yield Protocol is a more open and abstract architecture. Yield Protocol will deposit part of the tokens in the DeFi protocol, including Compound, dydx, dForce Lending, etc., and the other part will enter dForce PPP ( Public Private Pool). The launch of PPP is dForce's thinking after experiencing the hacking incident. All borrowing and liquidation actions are on the chain, and each borrower can have its own lending pool, but the borrower needs a whitelist.

For example, I am a borrower, and I deposit ETH into Lendf.Me as collateral for borrowing. I do not want my collateral to be exposed to smart contract risks. In the past DeFi agreements, all collateral and Deposits are stored together, but in PPP, borrowers can have an independent loan pool. PPP gives borrowers more choices, which can be understood as private or customized, and collateral will be safely stored in an independent loan pool. You don’t have to worry about being borrowed by others. This is actually a risk control on the loanable amount of the loanable assets. This is the key to the design of Yield Protocol. PPP pools will not infinitely magnify risks while obtaining competitive funds.

Regarding the future scalability of the PPP model, PPP can open a loan pool for CeFi, open a loan pool for Staking assets, or continue to mortgage the loan pool of the stable currency Yield Protocol (which will be a derivative commodity). In addition, PPP can more flexibly customize different borrower groups and different borrowing conditions.

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summary:

summary:

dForce's huge protocol matrix layout, we are making a cutting-edge attempt, no one can guarantee absolute security, this is an innovative dilemma, and we will do everything we can to make the protocol more secure with various risk control methods, finance is a marathon.About the DF token distribution plan, you can read this articleDF Airdrop Program - DeFi Community Co-construction Award

, the next distribution and circulation plan will be announced later. Friends in the community are very concerned about this, and the next circulation plan will be announced in the next two weeks

The following are media and community questions and answers

Question one:

Question one:

In addition to disclosing the product roadmap, are there any details worth disclosing about the marketing plan at present? Will the previous attacks affect the reputation of dForce in overseas communities? Will it advance in the future? What's the plan? (chain news)

In the future, dForce will focus more on the Chinese market, and we will not make too much effort in terms of products and agreements. We just want to do big things with a down-to-earth attitude. Why China? Yesterday in the Binance 101 live broadcast, Buffett mentioned that he was born in the United States and won a womb lottery (2% probability). Entrepreneurs doing DeFi in China is like Buffett winning the lottery. China has a bigger market potential, if you are number one in China, you must be among the best in the world.

Question two:

Question two:

Many foreign DeFi project innovations are mostly elaborate. In traditional finance, every business line needs to go through a lot of verification, and every attempt has an opportunity cost. For dForce, strategically we are a breakthrough innovation (interlinkage as a protocol matrix), and tactically we are a pragmatic and gradual innovation. We will see which protocols have been verified. Does it take a lot? innovation? unnecessary. Now I choose to do dForce Swap because there is indeed a demand for stablecoin transactions in the market.

Question three:

Question three:

The protocol matrix of the dForce troika is aggregation, which was mentioned a lot in the live broadcast above. Western entrepreneurs have never seen how Chinese entrepreneurs compete, and Chinese teams must give full play to their advantages.

Question four:

Question four:

With regard to security, we will make different arrangements for different protocols to cut the risks that can be isolated. This can be seen in the initial risk reflection of the live broadcast.

Question five:

Question five:

In Defi, how is the boundary between centralization and decentralization defined? For example, there is a point of view this time that the dForce team does not need to use a centralized method to recover funds, which is inconsistent with the idea of ​​decentralization. But in fact, centralization and decentralization should be combined with each other. How to determine this degree is more appropriate? (block rhythm)

Personally, I prefer to use the term Open Finance. Everyone takes D’s decentralization too seriously and D’s ideology too much. For example, USDT is very grassroots and has grown through decentralization, but the USDT minting process has the characteristics of centralization. Do you think it belongs to DeFi? For a project, don’t engage in decentralized governance prematurely. Emphasizing decentralized governance before finding a market position will consume too many unnecessary resources. For example, every time Makerdao meets and coordinates, it needs 1-2 people to do it full-time. , it may be feasible for a mature project like Makerdao, but for most teams that have no verifiable products in the early stage, it is a huge burden.

Holding the pot thinking is not a kind of user thinking. Many ideologies will be gradually eliminated by the market. In the future, it must be a hybrid model. The dForce PPP model is a combination of exploration.

Question six:

Question six:

In fact, after dForce returned the user's assets, the cryptocurrency experienced a small climax, and the Ethereum and Bitcoin all rose by 10-20%. If everything is normal, this period should have been a period of rising Defi lockups. This is also the opportunity cost of dForce. So in fact, even if all the assets are recovered, dForce still has a lot of losses. What plans does the team have to cover the losses during this period? Now it has temporarily dropped out of the sixth place in the ranking of defi locked positions. Is there any plan for re-entering the top ten in the future? (block rhythm)

Defipulse’s lock-up volume is not a good criterion for judging DeFi projects. For example, DEX focuses on transaction volume and does not pay attention to lock-up volume at all. For dForce, we not only want to rank, but we make agreements to build network effects.

Question seven:

In dForce’s asset class protocol, there is an interest-generating protocol (Yield Protocol). Can you explain how this protocol helps users “hold currency and earn interest”? What is the principle and logic behind it? (Odaily)

Idle finance's practice is where to allocate tokens where the interest is high? Yield Protocol, dForce’s interest-generating protocol, is more concerned with security issues. It will be allocated to mature protocols such as Compound first, and then a part will be allocated to PPP Pool, so that the interest of Yield Protocol will not be worse than other aggregation protocols.

Question eight:

How does the hybrid lending market in dForce lending-like protocols work? Does it mean that dForce will support multiple mixed tokens and other assets like Synthetix in the future? (Odaily)

The biggest difference between dForce and Synthetix is ​​that Synthetix belongs to the category of derivative assets. There is a big difference between real assets and derivative assets. Derivative assets have a lot of friction, and there will never be a deterministic price anchoring mechanism. It is difficult to get out of one's own system due to the type of derivative asset system from the system.

Question nine:

What if the funds stolen by the hacker are not recovered?

After the accident, dForce prepared a wartime office to deal with it. Within 2 hours, we contacted most of the centralized asset parties to solve the problem, and then reported the case to the Singapore police. The entire handling process team was relatively calm. A little confused, the whole process was like a thrilling roller coaster.

What if the funds are not recovered? We now regard DF circulation as a priority, why? At that time, Makerdao lost several million dollars on 3/12. Fortunately, Makerdao had a circulating market value, and made up for the deficit by issuing additional MKR. Makerdao could fully capitalize and start again, but for many teams, it might die.

Therefore, circulating tokens are of strategic significance to the DeFi team.

Question ten:

DeFi protocol matrix, what is the similarity between this concept and the product matrix of the Chinese Internet giant Ali Tencent Toutiao, and what is the difference?

There are similarities in the mutual diversion part, but Internet giants are a closed matrix, you can’t use WeChat to guide Douyin, DeFi is different, each protocol is interoperable. It seems that they compete with each other in the early stage, but they are open to each other in essence. For example, when USDx is aggregated by the trading aggregator, the liquidity of USDx is opened. There were no trading pairs with other currencies, but now there are trading pairs.

Why can Bitcoin and Ethereum rise so high in a short period of time? And Facebook is not so fast, this is because the network effect in the blockchain is different from the traditional network effect, and the digital currency has a stronger network effect.

Question Eleven:

Why choose dForce Swap as the first product? Does dForce have a background in trading in the past?

The dForce team has a relatively deep trading background. Before dForce, I also founded Blockpower (asset management) and Hashingbot (encrypted asset quantification). The partner I traded was also from Goldman Sachs. It is difficult for domestic DeFi teams to find a team with first-hand experience in the financial field.

Question twelve:

What is the plan for the loan V2 version mentioned by dForce? What are the improvements over existing lending protocols?

dForce Lenging v2 will have a debt asset limit, different mortgage rates for each asset, and a review process for each asset access. In addition, we will also add centralized services to monitor related risk signals.

Question Thirteen:

Describe the future ecology of dForce to retail investors in the simplest terms? How to understand the closed loop of the protocol matrix?