DeFi cannot escape Ethereum
Editor's Note: This article comes fromDeep tide TechFlow (ID: Tech-Flow), Author: Bonnie, reproduced by Odaily with authorization.
Editor's Note: This article comes from
Deep tide TechFlow (ID: Tech-Flow)
Deep tide TechFlow (ID: Tech-Flow)
, Author: Bonnie, reproduced by Odaily with authorization.
High fees, congested network, conflicting developers... The popular DeFi on Ethereum seems to be dissuading developers and users from time to time.
Despite the complaints, DeFi is still inseparable from Ethereum.
Defiprime data shows that among the 242 DeFi projects, 197 DeFi projects are deployed on Ethereum, while EOS and Bitcoin only have 22 and 23 DeFi projects respectively.
Why haven't other public chains developed popular DeFi like Compound and Uniswap? Why is there no DeFi ecosystem formed on other public chains?
As the first public chain, Ethereum has a leading advantage in asset types and total assets.
Other public chains did not attach as much importance to DeFi as Ethereum, and now follow suit and lose the opportunity.
After the scale of DeFi, decentralized governance, the cost of migrating from Ethereum to other public chains is difficult to estimate.
After DeFi detonated the encryption market, major public chains have also entered a DeFi arms race. Funds, technology, talents... are continuously invested in it. And in the end, who can challenge Ethereum and sit on the Iron Throne of DeFi?
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Ethereum can hardly bear its weight
If the Ethereum network is compared to a road, then the Ethereum at this moment is probably like the Beijing Third Ring Road in the evening rush hour on weekdays, which is extremely congested.
"The congestion in Ethereum is even worse than the ICO bubble," said Ethereum researcher Haseeb Qureshi.
What he said is true. During the heyday of IC0 in 2018, the average daily transaction fee for a single transaction was as high as US$5.4, and at 5:00 pm on August 13, this value broke through the previous high and became US$7.4. Compared with 0.5 US dollars a month ago, it has increased by nearly 15 times.
In other words, if a user wants to initiate a transfer on the Ethereum network, he has to pay an average handling fee of more than 50 yuan per transaction. If a user wants to complete a transaction within one minute, the Gas handling fee may cost $20.
……
According to the logic of the Internet world, the prosperity of DeFi on Ethereum is almost an anti-human market behavior. High fees, anti-human user experience... Layer by layer, they are forcing back retail investors in the circle and traffic outside the circle.
However, even if the threshold is so, there are still a group of gold diggers pouring into DeFi, the reason is that DeFi can satisfy their hope of getting rich immediately. The reason is that DeFi's liquidity mining and automatic market maker system (AMM) have created one myth after another.
Since the start of liquidity mining on July 17, YFI has risen from US$34.53 to a maximum of US$12,821, surpassing BTC at one point, an increase of 371 times.
Yam Finance (YAM) launched a token distribution plan, depositing 200 million U.S. dollars in 6 hours.
As of August 18, the total market value of DeFi tokens has reached US$11.5 billion, the trading volume of DEX has exceeded US$404 million, and the total value of DeFi locked assets has exceeded US$6.2 billion.
On the other hand, the handling fee is also high. Uniswap, the hottest DEX (decentralized exchange) on Ethereum, has handled more than $7 million in fees in the past month.
The popularity of DeFi has aroused the vigilance of Ethereum developers.
Vitalik Buterin, the founder of Ethereum, also said that DeFi is not bad, but many people underestimate the risks of smart contracts. The interest rate of DeFi is much higher than that of traditional banks, which means that the risk of DeFi products is also much greater , the chances of "crashing" are also much higher.
However, high fees, congested network, and resistant developers... none of these can stop DeFi from prospering and growing on Ethereum.
According to DEFI PULSE data, 37 of the top 38 DeFi applications in locked value are on Ethereum. In the terms of the modern Internet, DeFi applications have been "slaughtered" by Ethereum.
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The DeFi dream of public chains
At 11:00 pm on August 18th, Beijing time, after a delay of one hour, the Tron version of Uniswap of "Baibi Coin Factory" was finally launched.
After going online, many investors said that they bought fake coins on JustSwap, and some people laughed at themselves: "If you buy a dirt dog, you can buy a fake dirt dog."
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On JustSwap, 1 TRX can even be exchanged for 1 million fake ETH
Ten hours after its launch, JustSwap’s turnover exceeded $5 million, many of which were contributed by counterfeit coins.
JustSwap on TRON is still hard to compare with real Uniwap. According to Debank data, as of 7 pm on the 19th, the 24-hour trading volume of Uniswap was 200 million US dollars, nearly 40 times that of JustSwap.
As early as a month ago, TRON founder Justin Sun announced three decisions to enter the DeF Future i: launch the TRON version of Uniswap JustSwap, launch USDJJST pledge mining, and enter the blockchain oracle market.
On Tron, there are many public chain microcosms that want to enter the DeFi market.
"The new currency on DeFi has a tendency to replace the current mainstream currency." Some investors said. This statement is true. LINK, known as the DeFi oracle machine, quadrupled in 2 months, squeezing out old coins such as LTC and BCH, and ranked fifth in market value.
Compared with the DeFi market where hundreds of times and thousands of coins are constantly emerging, mainstream currencies are stagnant, and the related communities are lifeless. Many investors propose to use DeFi to activate currency prices.
On August 15th, EOS founder BM (Daniel Larimer) tweeted: "I created the first DeFi platform in 2014. DeFi is a necessary condition to stimulate DPOS, TAPOS and high-performance database and ledger structure. EOS Designed for DeFi."
BM also replied to netizens that EOS would be a better choice for building complex and high-performance DeFi. Ethereum's DeFI needs to use many difficult combinations to compensate for transaction delays, gas attacks, reorganization, and lack of orderly databases.
Perhaps stimulated by BM's words, the price of EOS rose sharply, rising by 25% in two days.
Block.one CEO Brendan Blumer tweeted that EOS will unlock "DeFi skills". In the face of other people's jokes, he replied: Public opinion hype is usually cyclical, and there are more innovative applications on the EOS mainnet than other ecology, and this is the beginning.
Meanwhile, even Bitcoin is getting in the DeFi race. DG Lab is known as the most powerful company in the Bitcoin world, raising $93 million last year. Recently, DG Lab announced its entry into DeFi, intending to run smart contracts on the Lightning Network.
According to incomplete statistics, half of the top 20 cryptocurrencies by market capitalization want or are entering the DeFi market.
But basically, the large-scale DeFi is on Ethereum, and the DeFi on other public chains together may not be able to match the DeFi ecology of Ethereum.
Why didn't DeFi grow on other public chains besides Ethereum? South orange and north trifoliate, once DeFi leaves the soil of Ethereum, will it be difficult to grow?
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Why is DeFi favoring Ethereum?
Almost every public chain wants to embrace DeFi, but DeFi has become a behemoth that cannot embrace it. The total market value of DeFi tokens reached $11.5 billion, surpassing the market value of all public chains except Ethereum.
The vast majority of DeFi projects are built on ERC-20, such as Compound, Uniswap, Balancer, etc.
According to data from defiprime, among the 242 DeFi projects, 197 DeFi projects are deployed on Ethereum, while EOS and Bitcoin only have 22 and 23 DeFi projects respectively.
Why does this lead to this situation?
“Network effect is the main reason.” Pan Chao, head of MakerDAO China, told Shenchao TechFlow that the development resources and partners are all in Ethereum, and the most important thing is that the US dollar stablecoin is issued on Ethereum.
In the craziest stage of IC0 in 2017, most of the fundraising tokens were generated using the ERC-20 protocol, and massive assets were deposited on the Ethereum network. There is no need to cross-chain, and the swap between tokens only needs to pay ETH as the transfer gas fee. DeFi star projects such as AaVE were also born at that time. It can be said that the prosperity of IC0 on Ethereum has created an opportunity for the explosion of the DeFi ecosystem. Broad mass base, and attracted many developers.
The safety and convenience of asset swaps in a single chain offset the problem of transaction speed, so a series of DEXs came into being.
In addition, Ethereum-based stablecoins occupy most of the market share, such as USDT, PAX, BUSD and other stablecoins are all generated based on the ERC-20 protocol. According to data from the Ethereum browser, the total market value of stablecoins in circulation on Ethereum has already exceeded 10 billion US dollars.
"The single asset on EOS is also one of the key factors hindering the construction of its DeFi ecology. The core asset of Ethereum is ETH, but there are a large number of other ERC-20 assets on its blockchain. They constitute the DeFi ecology of Ethereum. Important elements." The relevant person in charge of OKLink said.
Currently, 284,494 types of tokens have been issued under the Ethereum ERC-20 standard, 6,303 types of tokens have been issued under the ERC-721 standard, 5,497 types of tokens have been issued by EOS, and 7,746 types of tokens have been issued on TRON.
In addition, other public chains did not pay much attention to DeFi before.
William, the chief researcher of OKEx Research, told Shenchao TechFlow, “It’s not that DeFi on other public chains hasn’t developed, but that before DeFi became popular this year, other public chains didn’t pay attention to DeFi at all, and now they’re starting to follow suit. Since last year, Ethereum has been Focusing on the development of DeFi, the current DeFi ecology on Ethereum has reached a large scale, while other public chains have only just begun.”
This may be the main reason why other public chains lost the opportunity of DeFi, and EOS, which previously focused on the development of DeFi, developed many DeFi applications in 2019, such as Newdex, which once ranked first among all Dex, but as the middle of this year " The wealth effect caused by "liquidity mining", a huge amount of funds poured into Dex on Ethereum, and Newdex was quickly surpassed.
After Compound launched the "liquidity mining" model, EOS also launched its own liquidity mining project DeFis Network (DFS), claiming to integrate Uniswap, Synthetix, Compound and MakerDAO.
However, due to the problem of the rule mechanism, DFS became a wool machine for scientists and speculators, and had to revise the rules three times a day.
At present, DeFi applications on EOS include PIZZA-USDE, EOSDT, Vigor, Chintai, Defibox, Defix Network, etc., all of which are difficult to scale.
EOS may not be "born for DeFi" as BM said. In fact, in addition to losing the opportunity to deploy DeFi, EOS newcomers are not friendly: new users need to spend money to create wallets in EOS accounts, and Ethereum Wallets are free to create.
And Justin Sun only announced the three major decisions of TRON in DeFi last month, launching the TRON version of Uniswap JustSwap, launching USDJJST pledge mining, and entering the blockchain oracle market. Whether the "late but arrived" grandson can catch up with the wave of DeFi, time will tell the answer sheet.
Also worthy of attention is the DEX MOV on the Bytom chain. Chang Jia, the founder of Bytom, said that MOV is the DeFi protocol suite of Bytom, and currently ranks fifth in the number of active users among all DEXs.
Finally, after DeFi grows, it becomes a decentralized community, and the cost of migration is incalculable.
Other public chains can spend a lot of money to invite developers, such as the previous Dapp war, TRON and EOS paid a lot of money to grab ETH developers, but they can't win the community and people's hearts.
With the growing scale of the Ethereum DeFi ecosystem, governance rights are handed over to the community, and migration may no longer be something that only one team can decide.
For investors, after the collapse of ICO and the contract "312" event, it may be difficult to build trust in centralized encryption projects for a while. However, most public chains outside of Ethereum have been developed in a centralized manner, such as Tron and Justswap for Justin Sun.
In any case, the DeFi battle of major public chains has already started, and Ethereum is still the king in the DeFi world.
At this moment, the major public chains are gearing up to enter the DeFi arms race. In addition to the above-mentioned EOS, TRON and Bytom’s deployment of DeFi, Quantum Chain has also announced its participation. On August 17, Qtum announced the establishment of a DeFi developer support plan with a total of 1 million US dollars to support developers to use Qtum to develop DeFi applications.
In the past two years, these public chains have not been able to deliver the killer applications that everyone expects. The popularity of DeFi has forced these public chains to enter the currency circle, which is one of the few landing applications.
Which public chain can run out in the DeFi battlefield? To review, if the public chain wants to build a DeFi ecosystem, it must at least meet the following 4 points:
Precipitation of Asset Types
Stable performance and low transfer fees (at least better than Ethereum)
