Compound lending, that is, mining, has become popular, and the amount of locked positions has surged by 40%, which is giving birth to a new "ICO" method?
Editor's Note: This article comes fromChatting with Xiaozha (ID: xiaonazha88), reprinted by Odaily with authorization.
Editor's Note: This article comes from
Chatting with Xiaozha (ID: xiaonazha88)
Chatting with Xiaozha (ID: xiaonazha88)
, reprinted by Odaily with authorization.
At the right time, DeFi is also bumpy this year. After experiencing the theft crisis before March and the liquidity crisis caused by network congestion on March 12, it moved forward quickly amid doubts, and recovered in just 3 months. The glory of the past, that is, the lock-up volume of DeFi exceeded 1 billion US dollars, and the overall market value of DeFi exceeded 2 billion US dollars, and DeFi has become a hot product.
The "appropriate way" is to issue COMP tokens through borrowing and mining. Everyone is familiar with what mining is, but why is it so hot all of a sudden? With a little innovation + money-making effect, it will become popular.
Before and after the popularity of DeFi, and then there was the money-making model of borrowing and mining. Compound has been reported by various media. It is difficult to think whether it is hot or not.
Can Compound’s lending-to-mining model last long? Will it return to the tragedy of Fcoin? After careful consideration, I feel that there is a high probability that it will not, but there is little room for huge profits, and Compound’s lending-mining model can bring liquidity to DeFi projects, and a successor imitator may be in preparation.
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1. Compound's "borrowing is mining" effect is shocking
On June 16, Compound announced that it had begun distributing the governance token COMP to users.
According to DeFi Pulse data, the total USD value of tokens locked on the Compound platform has risen to 139.8 million USD, a 24-hour increase of 40.4%.
The total market value of COMP tokens issued by Compound surpassed Maker to become the No. 1 DeFi market value.
However, I personally feel that the market value of the COMP token is meaningless. Why do you say that? Although the circulation of COMP is 10 million, the maximum circulation of COMP on the market today will not exceed 25,000+2880=27,880.
Because, Compound Team placed 2000ETH / 25000 COMP trading pair on Uniswap, providing 25000 COMP to the market, and the total amount released by mining every day is 2880.
Therefore, COMP can be raised as high as it is, and it can be done with a small amount of money. On the contrary, the higher it is pulled, the better the publicity effect. Seeing that the total market value of COMP tokens surpasses Maker and becomes the No. 1 in DeFi market value, this sounds good and what a good publicity .
Look at this from two perspectives:
1. Judging from the amount of locked positions on the platform, it has increased by 40.4% within 24 hours. This has truly brought benefits to Compound, bringing users, brands, and liquidity to Compound.
Looking at it from another perspective, this is the power of innovation and the motivation for users to pay for innovation. In the final analysis, it is the effect of making money, or the expected effect of making money.
Although COMP has skyrocketed, how many people can eat meat? After all, only 2880 COMP coins are released in one day.
But COMP drew a good pie for everyone, looking "sweet" and eating "sweet".
Users come naturally.
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2. Will "borrowing is mining" follow in the footsteps of "transaction is mining"?
Compound’s loan-to-mining model makes everyone unnaturally think that the transaction-to-mining model initiated by Fcoin will also start with a lively start and end in a dismal way.
I would like to say that Compound’s borrowing and mining model will most likely not. Going back to the transaction-as-mining model, this is not the first proposal of Fcoin. Before Fcoin, Dragonnet was already carrying out the transaction-as-mining model. The difference is that Dragon Net’s transaction or mining is not popular, while Fcoin’s transaction or mining is extremely hot.
So what is the difference between Fcoin and Dragonnet's transaction-mining mode? In terms of supply, Fcoin does not limit the amount of mining per day, while Dragonnet has an upper limit on the amount of mining per day.
What is the result of this? Fcoin’s crazy swiping volume, all kinds of trading robots are frantically activated; Dragon Net’s is not crazy swiping volume, because it will stop swiping when it reaches a cost price on the same day, and it’s not worthwhile to swiping again.
It can be said that Fcoin's trading-mining mode is very aggressive, while Dragonnet's trading-mining mode is relatively stable, and Dragonnet's trading-mining mode is more sustainable.
Looking back at Compound’s lending, that is, mining, the daily supply is 2880 COMP, and there will be no more. If the volume is crazy, it is estimated that the price of COMP will soon reach a cost price.
How does Compound’s lending, that is, mining, scale up? as follows:
The basic version of loan-to-pound mining:
0. Prepare USDC
1. Account A, mortgage USDC, lend DAI, and transfer to B
2. B account, mortgage DAI, lend USDT, transfer to A
3. Account A, deposit USDT
Account A’s COMP comes from: lending DAI + depositing USDT
Account B’s COMP comes from: lending USDT
To understand it simply, if you use 40,000 U to borrow, through repeated borrowing, and finally come up with a loan amount of 70,000 U to use COMP, with the current output and price, the annual rate of return is about 140%.
Although the annualized rate of return is 140%, it is exaggerated, but this is only the calculation of static income. If you calculate dynamic income, it is difficult to be so high.
Therefore, Compound's loan-to-mining model can last for a relatively long time.
Assuming that mining takes 3 months, then the total number of COMP produced is 259,200. Based on the current COMP price of 96 US dollars, the current market value of COMP is 27.28 million US dollars, which is not large compared to MKR's current market value of 560 million US dollars. (This is not to say that the price of COMP is not high)
From the perspective of lending, the interest rate of lending is the driving force behind whether people will continue to borrow on Compound, and the reward of COMP tokens is more like Xiaoquexi.
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3. Borrowing means mining. Will imitators go crazy?
Compound’s lending-to-mining model is bound to attract new users to provide liquidity for DeFi, and at the same time absorb the liquidity of other DeFi projects.
In this way, existing DeFi projects are caused to compete with each other for liquidity, and secondly, other institutions and organizations are attracted to come in for a share.
Latecomers do not rule out adopting a more radical method of lending or mining to attract users and funds. It's like Fcoin made trading and mining popular.
