DeFi+NFT is gradually gaining momentum, this article takes stock of 5 directions and 7 major projects

The answer in many people's minds is: NFT. However, a natural question ensues: If NFT meets DeFi, what sparks will come out of the collision?

At the crossroads of NFT and DeFi, more and more projects are gradually surfacing. Under the superimposed halo of the popular DeFi and the highly anticipated NFT in the future, what projects deserve our attention? This article takes you to understand.

first level title

DeFi heat wave 

With Uniswap, the number one DeFi project, announcing the issuance of UNI tokens and launching liquidity mining, it is foreseeable that the popularity of DeFi will continue for some time to come.

What does DeFi mean to finance? It can be said that DeFi is using a gamification method to stitch together the building blocks of the future open financial foundation.

secondary title

NFTs are still in their early stages

Some people say: NFT is the hidden line of investment in 2020.

Innovation since Satoshi Nakamoto has never stopped. The imitation and creativity of the financial field have gradually formed a subdivision of DeFi. And another new field is gradually emerging: NFT, non-homogeneous tokens, to represent any token assets that are different from each other.

NFT supporters can’t hide their ambitions and expectations: NFT will reshape the gaming field; NFT will transform the traditional collectibles market; NFT can even have an impact on the traditional real estate industry. Of course, there will be critics pouring cold water on this: NFT is still only a niche hobby in a small circle, lacking a unified standard, and without large funds entering the game, it will take a long time for NFT to develop and mature.

Of course, like the early stages of any field, DeFi and NFT are facing a high degree of uncertainty. Recently, it has only been three months since DeFi has gradually become popular. Under the influence of liquidity mining, everyone strives to be a "farmer"", pasta with sweet potatoes, potatoes and yams, pearls, emeralds, agates and diamonds, items appeared one after another. Behind the fact that several newly-promoted rich farmers are earning more than 10,000 yuan a day, they are also accompanied by the demise of projects one by one, running away and being stolen, and some are happy and some are sad.

image description

Source: NonFungible.com

But despite the overall situation, from several data, we can also see that NFT is gradually rising, although it is still a minority.

Data from nonfungible.com shows that in the past 7 days, the total number of NFT sales was 9353, and the total transaction value was 988,649 US dollars.

On DCLBlogger's Twitter, a series of areas where NFT has brought changes are listed, which mentions:

The connection between DeFi and NFT

Although DeFi and NFT have different focuses, looking at it from another angle, you may have a new understanding of the relationship between NFT and DeFi.

The full name of NFT is Non Fungible Token, a non-homogeneous token. In the final analysis, it is nothing more than a Token, which can be traded and transferred. What traditional Token can do, NFT also accepts all the same, but the value of the assets is different.

The current DeFi uses high-quality assets under the type of FT (homogeneous tokens, such as BTC, ETH, etc.) as the underlying assets, acting as collateral for leasing, and acting as market-making assets in AMM. Then extending DeFi to NFT tokens will also generate some new possibilities. Below, we'll look at a few examples of this.

first level title

WhaleShark, a British overseas Chinese and a well-known avid collector in the NFT field, initiated the project:https://whale.me。

According to his introduction:

WHALE is a social currency whose value is supported by the most valuable NFT collection in the world, promoted by the most dynamic community on NFTland, and achieved stability through DeFi mining and H2P (Hold-to-Play) proposals increase.

(In this program) there are no loans, no liabilities, and no statutory fees.

To put it simply, users can pledge valuable NFT as collateral to issue WHALE tokens. Today in the project's vaults, NFTs are worth more than a million dollars as collateral.According to Mason Nystrom's article, most of the NFT assets currently used as collateral in the project are provided by WhaleShark, one of the largest buyers in the NFT market.

According to data from Messari, more than half of the NFTs in the project’s treasury come from Sandbox. Among the four projects SuperRare, Gods Unchained, CryptoVoxels and The Sandbox, NFT assets accounted for 80% of the total value of the portfolio. (Data source: Messari)

One of the problems with mortgage NFT to create Whale is: the pricing of NFT itself is often not standardized. Unlike FT, how to ensure the issuance mechanism? Since its launch in May this year, WHALE tokens have gone from $0.2 to a maximum of $6.7. (The non-small number shows that the current price has dropped to $4.55)

image description

Source: OpenSea, WHALE's Vault

 Whale tokens serve several purposes:

• For general purposes, purchase NFT, such as purchasing from vaults, or WHALE's cooperative merchants and platforms;

• For leasing purposes, NFT blockchain real estate can be rented in the vault through WHALE tokens;

• For consulting services, you can pay WHALE in exchange for WhaleShark's business consulting services.

In addition, the WHALE community has set up mining incentives:

• Mining pool participants on Uniswap can share 5,000 WHALE rewards per month

• Encrypted art creators can mortgage their NFT works or contracts to get more WHALE tokens.

In terms of liquidity mining, as long as the user provides liquidity of more than US$500 in the Uniswap mining pool of the project party, 5,000 WHALE tokens will be distributed in proportion to the share of the mining pool every month. In addition, the threshold capital for participating in the mining pool will increase by $50 every month, and it will be $550 in September.

In terms of encouraging NFT artists to participate in creation, the project has established a monthly NFT mining reward pool of 2,000 WHALE tokens, which will be distributed to 10 NFT creators. The NFTs they create are specially sold and priced at WHALE. The project party will screen the candidate artists according to their qualifications, and enjoy the benefits for three consecutive months after selection.

first level title

Liquidity mining mining NFT

CryptoWine targets DeFi miners.

GRAP, a mining coin of a DeFi liquidity mining project, can be obtained by providing liquidity, and there is also a direct purchase method on Uniswap. How to combine DeFi mining with NFT? CryptoWine works like this:

• In the GRAP staking pool, every player can randomly get a CryptoWine NFT airdrop. CryptoWIne is an encrypted painting, the theme of which is a wine bottle;

• After the player obtains CryptoWine, they need to go through the step of extraction, which consumes winemaking points as a handling fee, and the GRAP pledge pool will provide players with winemaking points;

• The handling fee of brewing scores will be injected into the prize pool, and will also be used to provide incentives for artists;

• In addition, the CryptoWine collected by the player will have a corresponding score, which will be combined with the score of CryptoWine and the brewing score obtained by the player to rank the player. The top 3 can share the prize pool, and the remaining 1/8 will be allocated to the artists who provided the works.

The gameplay of CryptoWine is more like a creative experiment, to see what new ideas can be found in the gameplay of DeFi + NFT. The feature that NFT is suitable for encrypted paintings can be well combined with the rewards brought to the crowd by DeFi liquidity incentives, and further form its own community culture in different DeFi communities. I believe this kind of gameplay of CryptoWine will be seen in more DeFi projects.

So, what will be the gameplay of air coin mining + NFT? Some people in the community really do this: MEME, a NFT + DeFi liquidity mining project derived from a joke.

This project originated from a tweet: On August 15th, Jordan Lyall, the head of DeFi products at ConsenSys, satirized DeFi as "degenerate finance". He used a random Emoji as a Logo, and then copied it with a verified contract to create it. In fact, this is true of many DeFi projects on the market.

image description

Use the pineapple points obtained from mining to exchange for NFT collectibles

This project also has a series of interesting MEME pictures, you can search for them if you are interested.

Interest-bearing Token generates NFT

Aavegotchi is a project we will focus on today, and the token name is GHST. 

Aavegotchi is an NFT project supported by DeFi. Let's talk about it separately, and first introduce one aspect of DeFi.

Aave is a DeFi platform focusing on asset lending. Users mortgage assets on the Aave platform to obtain the interest-bearing token aToken. With aToken, users can get interest sharing. For example, users who deposit DAI in Aave will get aDAI as a deposit certificate and interest-bearing token, and share the interest of DAI deposits.

Aavegotchi is the first NFT platform based on aToken in the Aave ecosystem. Aavegotchi can be regarded as a kind of NFT digital collection, which is realized through the ERC721 standard. Each Aavegotchi has its own characteristics, and its value and scarcity are also different. To create Aavegotchi, you need to pledge the aforementioned aToken, which is a typical project that combines DeFi + NFT.

In Aavegotchi, the value and scarcity of Aavegotchi are determined according to the number of mortgage assets, characteristics and corresponding game equipment.Usually the characteristics of NFT collectibles are determined, but Aavegotchi has growth potential, and the scarcity will change with different levels and different game equipment. 

secondary title

Aavegotchi as a side of the game 

The Aavegotchi project has several main factors: Portal, GHST tokens, and AavegotchiDAO.

Users purchase Portal (portal gate) through GHST tokens. The Portal in the game is set as the portal between the void world of Aavegotchi and the human ether world.

After the user obtains the Portal, he can open the Portal and choose from 10 different Aavegotchi. Not only that, you also need to mortgage aToken before you can get Aavegotchi, which is equivalent to connecting to the void world through a portal to get Aavegotchi elves.After the collateral is retrieved, Aavegotchi will be destroyed. Aavegotchi is an NFT obtained by using DeFi assets as collateral. In this way, the project party endows Aavegotchi with intrinsic value.

secondary title

More details on the GHST token 

GHST can be used to buy game gear and consumables, increasing the scarcity of Aavegotchi. GHST is also a governance token, because the threshold for community governance voting requires participants to have 1 Aavegotchi and GHST tokens. In addition, in AavegotchiDAO 2.0, users who participate in voting can get GHST rewards.

In addition to the platform mechanism design itself, some special factors have also been introduced in the issuance process of GHST tokens: Bond Curve issuance and DAICO mechanism.

The so-called DAICO was first proposed by Vitalik, which can be understood as fundraising in stages. In the case of Aavegotchi specifically, the first phase raised $250,000 from community members. Most of the GHST tokens are sold in the second and third phases, accepting DAI as a payment token.

• The private placement round is aimed at specific groups of people (with KYC requirements), 5,000,000 GHST tokens, and the price is 0.05 DAI / GHST. The participation threshold is 20,000 DAI, and the lock-up period is 1 year;

• Pre-sale round, 500,000 GHST tokens, the price is 0.1 DAI / GHST, there are KYC requirements, and the lock-up period is one year;

• Token Bonding Curve (TBC) Token Bonding Curve (TBC) Token Bonding Curve sale, with KYC requirements, in progress, no lock-up period, issuance upon purchase, destruction upon sale, no issuance cap.

first level title

NFT mining

yinsure.finance is a decentralized insurance platform created by yearn (YFI, commonly known as big uncle) founder Andre Cronje. Currently provides insurance services for DeFi platforms including Balancer Labs, Compound, Curve Finance, Synthetix and iearn finance. The underlying support for this is Nexus Mutual.

secondary title

Policy NFT market transactions 

       NFT trading platform Rarible announced support for NFT policies in September. Available now.

secondary title

Policy re-mining: SAFE       

On the Yieldfarming.insure platform, two types of NFT assets are supported: yNFT (ETH) and yNFT (DAI), which are insurance policies for ETH and DAI assets respectively.

In a nutshell, yInsurance is underwritten by Nexus Mutual, and the policy is NFTized in ERC721 format, and the generated assets are called yNFT. In addition to buying and selling in NFT trading markets such as OpenSea and Rarible, yNFT can also be mortgaged to third-party platforms for mining to obtain SAFE token rewards.However, what needs to be reminded here is that, like traditional insurance policies, if the insurance expires and no insurance needs to be reported for reimbursement, then the corresponding yNFT asset value is 0, which becomes an invalid policy.

first level title

secondary title

NFT + Leasing Transactions: Examples from Chintai and Yiedl 

Chintai is one of the earliest DeFi projects on the EOS blockchain. Before the EOS REX system was launched, Chintai provided a resource leasing method for resources (CPU/NET) on the EOS public chain by creating a P2P leasing platform, allowing EOS holders to rent their own CPU resources through the Chintai platform.

Programmers or DApp players can rent resources such as CPU/NET without additional purchases. Especially when the price of CPU/NET resources on the EOS blockchain was high at the end of 2018, Chintai played the role of a buffer.

The reason why Chintai is mentioned here is that in the first half of 2019, Chintai proposed an NFT design idea: to separate the ownership and use rights of NFT, and add the leasing function of NFT to the NFT standard protocol, so that NFT can be realized using these standards. Token projects natively support NFT leasing.

For example, if the assets in an RPG game use the NFT standard to realize its heroes or props, then gamers can rent out the NFTs to others. Since the NFT standard natively supports the leasing function, the owner of the NFT asset can still maintain the ownership and only lease the right to use it to others to obtain benefits. In the battles of breaking through levels, team battles or opening dungeons in the game, players can temporarily rent heroes to enhance their combat capabilities and win in-game victories.

secondary title

NFT as collateral for lending 

Different from the P2P lending of NFT itself, one possible idea is to use NFT as collateral to borrow assets from the DeFi platform. WHALE's approach is somewhat similar, except that after WHALE mortgages NFT, it is used to issue social tokens. The same idea can also be expanded: mortgage NFT to issue stable coins, or vice versa, mortgage stable coins for liquidity mining, and obtain the qualifications for NFT collections or collections.

summary

Disclaimer: This article is the author's independent opinion, and does not represent the position of the Blockchain Institute (public account), nor does it constitute any investment opinion or suggestion.

 -END- 

Disclaimer: This article is the author's independent opinion, and does not represent the position of the Blockchain Institute (public account), nor does it constitute any investment opinion or suggestion.