blockchainblockchainindustry, everyoneDeFipublic chainpublic chainwait. Some people also say that DeFi ushered in the second spring of the public chain. Some projects even see the popularity of the DeFi concept, and bluntly associate their projects with DeFi.

In addition, DeFi has also spawned countless wealth effects. This year, most of the "wealth passwords" mainly come from DeFi. At the same time, many people have suffered heavy losses due to DeFi.

On October 25th, at the 2020 Blockchain Annual Ceremony and the 2nd Bochain Finance "Star Power" Awards Ceremony, Bochain Finance invited Chain Hill Capital Co-Founder Steven and Conflux Business & Technology Director Shang Shu, Reed Hong, Cocos-BCX technical contributor, Tang Shi, co-founder of BP Accelerator, Liesa, partner of Jubi Labs, and Guo Tao, head of Zenlink China, are concerned about capital parties, public chains, project parties, investment institutions, and incubation institutions in the DeFi field. , Let’s talk about the DeFi market of ice and fire in 2020.

The following is the sharing record of this DeFi roundtable (Bochain has slightly deleted):

bitcoinbitcoinProduction reduction, the second half of the year will be DeFi. Today's roundtable discussion is very good in terms of breadth and depth of content. I remember that the concept of DeFi came out in 2019, and it will be particularly popular in 2020, especially when the peak of locked-up funds reached more than 7 billion US dollars. What is the inevitable factor for DeFi to become popular this time, ladies and gentlemen? What are some special random coincidences?

Chain Hill Capital Co-Founder Steven: Although this topic is a cliché today, it can still be talked about often new. Chain Hill Capital has been researching the DeFi sector for a long time. Most people see that DeFi is hot in 2020 the second half of the year. But in a real sense, DeFi has matured in the second half of 2019, and in the first half of this year, the data has begun to show clearly. To give a few examples: the transaction volume of Kyber Network increased week by week at the beginning of the year, and the transaction volume broke through several orders of magnitude in March; the other is Compound, which issued coins in the second half of the year, but its deposit and loan balance began to increase in April. Significantly increased sharply, and the main growth has been completed in the first half of the year. So we saw these signs in the first half of the year, predicting that DeFi may have such an explosion in the second half of the year. In fact, there is indeed an unexpected growth.

Ethereum

First,Ethereumthis soil. You can see that basically all of the DeFi this year or the ones that have really exploded are based onETH, why is this happening? It is because of the accumulation of Ethereum in the past two years that you can see that ETH is still the ecological chain with the most developers, and Solidity is still one of the most used blockchain languages. The complete ecological closed loop gives DeFi the soil to grow. I think this is a very important point, that is, your developers should have a better ecological atmosphere to build these products. I think this is a prerequisite for DeFi to come out, and the corresponding choice of track is also very important. The premise is that it is a very wise choice for Bancor to switch from EOS to ETH this year.

Second, in 2019, it will be difficult for everyone to use DEX, or they may not be willing to try it. Everyone has been in the blockchain industry for so long, and it has been developed in recent years before they are willing to spend time and energy to learn some introductory knowledge of so-called decentralized finance, or the threshold is not so high now, and users have gradually matured , so people will really use these DEXs. One is soil and the other is users. These two points must determine that DeFi can have a relatively large development.

If we talk about chance, the first one is the "312" extreme market. In fact, "312" is not just our currency circle or the blockchain industry, but a major cleanup of the entire financial market. Everyone knows that whether it is the entire A-share market or the U.S. stock market, during the 312 period, there will be a very large decline of more than 30%, so the subsequent incremental funds do not know where to go, so they are panicked.

So there will be gold suddenly soaring from $1,600 to $2,000, and it is the same in the currency circle. After 312, many people are panicking about whether the DeFi industry is going to hang up, and whether the largest decentralized stable currency DAI is going to hang up. In the end, it didn’t. Not only did it not hang up, but it also repaid all the debts caused by the price drop, and it was in the form of collateral auction, which is a particularly responsible behavior.

In this way, these funds can only go to DeFi. In other words, it does not mean that DeFi can fight well, but that the opponents are too weak. If you have used DApps on EOS, you will know that the user experience is relatively bad. So at the right time, after 312, the funds were reshuffled, and I met the right people. This wave of DeFi people on ETH just created such a thing.

Conflux Business & Technology Director Shang Shu: Inevitability, I feel that DeFi has found its own essential logic. DeFi connects financial markets all over the world that cannot be connected to each other due to policies or national licenses through the form of smart contracts. Financial markets are connected. After that, the cost of global access to capital will become equalized. For example, there have been negative interest rates in Europe and the United States, but China's GDP is still growing at an annual growth rate of 5% or 6%. The cost of funds here is actually higher, but the cost in Europe and the United States is relatively low. A person may lose money by depositing money in the bank, but if he finds a way to invest the money in a third world country, He can make money.

However, due to various reasons, these people have no way to invest their money in these places. A basic logic at the bottom of DeFi is that it can allow these money to circulate freely around the world, and the cost of capital acquisition in all parts of the world can be averaged This is a great ideal.

The outbreak of DeFi in 2020 feels a bit early. Even today, the essential logic of DeFi has not been solved, and there is still no realistic scenario for over-borrowing. Therefore, DeFi has been going through this for 2-3 years. Bo Qian also hopes that these projects can continue to do this in the next 2-3 years.

Cocos-BCX technical contributor Reed Hong: I have been involved in DeFi since the end of July, and I feel that there are several points in the popularity of DeFi:

First, the entire encryption market has not existed for two or three years, so everyone has the value-added demand for basic funds.

Second, market expectations, whether it is Bitcoin halving or Ethereum 2.0, everyone has high expectations for the market.

Third, after so many years of development on Ethereum, there are many high-quality assets on it, and DeFi based on Ethereum has the most basic soil.

miningminingThe model made the industry detonate an inevitable point, and the huge wealth effect made many people follow suit. This is the fundamental reason why DeFi is discussed by everyone.

digital currencydigital currencyOriginal value derives greater value. It is undeniable that there are more and more cases and channels for blockchain to link with entities. Whenever the market is bad, everyone will talk about chain reform. Chain reform is moving forward, but financial decentralization and centralization will be The first step reached first.

Then there is chance. In 2019, people can hype more projects that are relatively sinking, but at the beginning of 2020, one is the concept of Bitcoin halving. In May, Compand came with super high mining income. In the mainstream currency circle, there is a need for a point that can make users feel more involved. The biggest starting point for this wave of DeFi popularity is profit.

Liesa, partner of Jubi Labs: I have always believed that the encryption economy itself belongs to the financial industry. The application of decentralized finance (DeFi) has existed before, and it is normal logic until the recent popularity. Whether the encryption industry is a centralized exchange or a decentralized application, its essence is still around transactions. It is normal to make a series of innovations around finance, even if it is very simple and rude at the beginning, and even be regarded as "rebellious" by the traditional financial industry. This is also the value of the encryption industry. In addition, after many investors in this industry have made money, it is normal investment logic to use a small part of the funds to test the waters of DeFi.

Guo Tao, head of Zenlink China: DeFi’s popularity this year was born from both inside and outside, and the inside is its own development in the DeFi track. Let me talk about what Zenlink is doing first. We hope to build a very basic protocol. The good thing about the guests in this roundtable is that there are many project parties in it. Talking about DeFi in these environments will be different.

Why does Zenlink do this? We have seen that in the wave of DeFi brought up by Ethereum this year, the previous public chains began to do cross-chain things. Polkadot is very good in terms of underlying architecture, and even has an absolute monopoly position. We have our own Thinking about it, the future blockchain is the era of Wanchain interconnection, and various application layer protocols will emerge based on the rhythm of Wanchain interconnection, so Zenlink hopes to create a simple and extreme infrastructure.

Let me talk about the reasons why DeFi became popular. The inherent value of the industry itself was discovered. This also took two or three years to settle, which is reflected in several aspects.

First, the underlying assets have been well settled.

Second, from the perspective of the external environment, whether it is the industry cycle or the heat of the market, the characteristic of this industry is that various concepts will come out very quickly, and will be verified very quickly, and bubbles will start to form. DeFi is a Very typical example.

In 2017, we talked about the concept of the public chain. Recently, the smart contracts on Ethereum have been continuously improved, and some products have been launched, which has led to the popularity of DeFi. It is mainly caused by these two reasons.

encrypted assetsencrypted assets, It is also a financial-oriented industry. Of course, there are many people who need to find a hot spot. I think I agree with all viewpoints. I personally think that existence is reasonable.

Moderator | Du Chao, Founder of ByteLink: We define the whole wave of DeFi as the emergence of new gameplay. Everyone thinks that the centralized exchange (DEX)UniswapWhat can we do? One dimension is to learn and learn from, and the second dimension may encounter difficulties. Can you discuss it together?

Chain Hill Capital Co-Founder Steven: Uniswap is a phenomenal existence, but with so many people at the event site, there may not be many people who can actually receive 400 UNI. The people who really participated in it are 1% 1%, let’s look back and review why Uniswap can achieve explosive growth. Even after everyone thinks that the DeFi boom has passed, it still has a transaction volume of 100-300 million US dollars.

Therefore, the entire DeFi market can currently account for 5%-10% of the total transaction volume including centralized exchanges. This is a particularly scary figure. Because last year or the year before, this data could only account for one-thousandth or even none.

I think there are three points in UNI that are particularly worth learning.

First, from the perspective of product thinking, a DEX or other APP must fundamentally change the user experience in order to capture users. Uniswap’s transition from OrderBook to AMM is very open and epoch-making of a thing.

Because the original DEX is very difficult to use, you don’t know which one to click when you go in, and you can’t trust the UI interface. But Uniswap fundamentally changes this thing. I think this is the first and most important thing it does, whether it is switching to AMM or doing a particularly simple interaction. It is from the perspective of user experience. The product is really usable.

Second, Uniswap tried liquidity incentives earlier, and its liquidity incentives are not like the later YFI (yearn.finance) or creating a token by itself. A lot of DeFi coins in the back are to give you a so-called thousand times thing, which is actually a non-existent thing. From the beginning of UNI, the return on mortgage liquidity and mortgage transaction pairs is ETH, and there is no UIN token at the beginning. This is a particularly acceptable thing for mortgaged miners or for those who participate.

Third, I think UNI has done another thing. It did not issue tokens too early. Everyone knows that including Sushi, many of them issued their DeFi tokens before or not long after they went online. Out. UNI’s coin issuance is more or less threatened by Sushi, because if he does not issue it, it is true that Sushi has stolen a lot of its pledge.

So, looking back, if you really have the strength to do this, you don’t need tokens to intervene in this process prematurely. In many cases, tokens will distract the attention of the entire project or the value of the project itself. In this regard, UNI does well done.

Shang Shu, Director of Conflux Business & Technology: I said something good before, so let me say something bad. I think UNI has existed for a long time before this wave of DeFi, and before this wave of DeFi, UNI's main customers are CX projects, because only users of CX projects can control currency price fluctuations, yields, and such difficulties. Use it with such a high fee.

The same is true for this wave of DeFi. If those DeFi projects cannot support such a high rate of return, I believe that the vast majority of users will not have the motivation to use UNI, because the handling fee is so high that it is outrageous. first question.

For the second question, I haven’t calculated it specifically, but at least from the current point of view, it should be cheaper on UNI than on centralized exchanges. However, if the centralized exchanges lower their own yields and reduce the cost of listing, they will soon recover the lost ground. The cost for the project party to make a market on UNI is not low, and a large amount of tokens and equivalentUSDTOr Ethereum is injected into the liquidity pool, and a large amount of unpaid losses will be borne in it, which will cause a large amount of losses for the project party, and the user's slippage is also very large.

But for DEXs like UNI, there is now a good time. At this time, major centralized exchanges are still willing to change their direction and charge high listing fees. If this trend continues to go down, The competition between the two will be more intense. The benefit of UNI to the industry may be that it can reduce the listing fees of the three major exchanges, which is also very powerful.

Cocos-BCX technical contributor Reed Hong: I have personally read the UNI contract very carefully, mainly from a technical point of view. Looking back at DeFi now, the Ethereum community is really a large developer community. The entire UNI code is amazingly written. The core exchange logic can be made out of less than 200 lines of contract code. Every line on UNI None of the code is redundant.

In particular, the handling fee is very cleverly implemented. UNI charges Qiansan’s handling fee. How is the handling fee collected? Implementing the logic is very delicate. Qiansan’s handling fee is so much for each transaction pair, there are probably thousands of transaction pairs. When trading, for example, if I want to exchange 100 million Ethereum into USDT, I will deduct three thousandths of an Ethereum Put it down into the liquidity pool, and the LP in the pool will share the income at this moment, and the handling fee will only be received when the LP leaves. This is a very intuitive feeling. But I didn't see Qiansan's performance, it was distributed to everyone.

He himself said to charge a handling fee of 10,000, but so far he has not charged a handling fee of 10,000, and the whole implementation is also very delicate, as long as one address is designed to collect at the bottom layer, the algorithm is very delicate.

Tang Shi, co-founder of BP Accelerator: I have talked with many teams, and I agree that the front end of UNI is very good. Everyone has talked about the AMM mechanism. For large investors, the slippage is really low. When talking about the optimization space of the AMM mechanism with technology, I found such a problem: the disadvantage of the new arbitrage method is also the slippage. The method is to see a big payout before Insert an order with a higher handling fee, and the slippage of the buy order is relatively high. After buying the price and then issuing another order to adjust it back, basically the rate of return for each hacker can be 15-20%. This is also a disadvantage, and it can be used in new products. After making adjustments, I feel that there are no particularly good products now, and I look forward to it.

Liesa, partner of Jubi Labs: I am from a public chain background. When talking about the essence of the industry, I still think it is the financial industry. Why is the U.S. stock market still the craziest financial market in the world no matter how crazy the president is? To a certain extent, I will definitely do US stocks, because only that market can afford your funds, and UNI's technical team is very reliable.

The so-called science and technology finance must be finance first, technology to assist, and complete through certain means. Unable to be bound by some traditional financial thinking, how should market maker pricing and costs be calculated? Will they suffer badly? I said that some people should lose a lot, but some people should make a lot of money. I think this is unacceptable to people in the traditional financial industry.

Traditional financial thinking is really not suitable in the currency circle. UNI can stand on the track, which means that its community and investors have basic recognition for it. We definitely want to go down this road of DeFi, and the thinking it brings is still to do it.

I myself am an experienced option seller, is there any way to increase everyone's yield? I think these are the thoughts brought to me by UNI. There are many ideas that need to be supported by technical means. Many technical partners should increase their awareness of the financial industry and think about how to use technical means to support ground-breaking ideas. I think this is the right path that the industry should take. Don't get into a dead end and be unwilling to come out and ignore the nature of this industry. The US stock market can come out because it can afford the largest amount of investment and financing in the world. What is the greatest value our industry can afford? This should be thought about.

Guo Tao, head of Zenlink China: I want to jump out and talk about what UNI means to the industry. This industry has never lacked points of controversy. Now we talk about DeFi, and sometimes we talk about the future of decentralized and centralized exchanges. .

What the blockchain does is to decentralize things. No matter what financial or other attributes this thing has, it has an essence at its core. This is the biggest difference between those of us and those of traditional Internet companies, including Ant Jinfu and Tencent are also deploying blockchain now, but their genes are definitely not the same as ours.

The biggest thing about UNI is that it makes the industry think about decentralization, but we have done a lot of centralized things, and the whole industry thinks about decentralization. In the future, this industry will belong to a more radical road of decentralization. Polkadot has two main networks. The positioning of the chain circle and the currency circle is to do some exploration on the road of decentralization. At present, it seems that we have found a better one. The direction is DeFi.

It is obvious at the moment that DeFi or DEX has encountered a bubble, which means that products, innovation, and the bottom layer have all encountered technical or product bottlenecks. Next, I will definitely think about how DeFi should go? DeFi or DEX itself is the most important thing for our industry. The essence of blockchain is still a matter of transactions. The core of which is DEX. Let us think about what direction DEX will go next? From my personal point of view, although Ethereum is the most successful public chain with the most successful products and contracts on it, it must have limitations in terms of technical architecture. Cross-chain is not a false proposition or concept. When it comes down to cross-chain, it will definitely enter the bottom layer of all public chains and blockchains.

Based on the cross-chain DEX, the underlying architecture has been established, and more and more will go to the application layer. The competition of the public chain has died at the moment or for a long time, and the next is the competition of the application layer. The first thing to compete It is technology, which means that various general-purpose protocols will emerge. Some of these protocols may be born specifically for DEX, and some may come in for traditional Internet or finance.

Centralized exchanges may be spot at the beginning, and later turned into futures and various derivatives. DEX will follow the same path in terms of business form, so it is necessary to pave all these from the technical level. It is the traditional Internet, industry and capital that go here. Whether it is technology or underlying high-quality assets, it will definitely carry the entire building. We will see more and more "Lego building blocks" to improve the entire industry.

Du Chao, founder of ByteLink: I also have deep thoughts and touches on DeFi, and the guests have said very well. I have two thoughts myself:

First, what happened with OKU proves that it is very likely that the future of this industry will be DEX, and there is no other possibility.

Second, I mentioned a small point. This is a point of view raised by Xiao Feng of Wanxiang Blockchain before. This point of view is also very touching to me personally. That is to say, will there be a blockchain-based technology in the future? Trends of thought and fashion may bring about drastic changes and influences in the first stage, but it is a technological revolution, that is, the 200 lines of code mentioned by the guest just now can change an industrial structure. This is also a big point of stimulation for me. UNI brings us inspiration.

I think today's round table is really beyond my expectation. I think it has covered all dimensions, and it is really perfect.

Moderator | Du Chao, founder of ByteLink: In the last session, I would like to invite each guest to share in 1-3 sentences. Are there possible opportunities in the field of innovation?

Chain Hill Capital Co-Founder Steven: First, UNI is now a monster in DeFi, and everyone thinks it is very difficult to surpass or subvert. But on the other hand, it does have many problems, such as unpaid losses, such as the OrderBook innovation problem faced by the current iteration to V3. DEX will still be a big direction. Whoever innovates on the next generation of OrderBook is good enough, can be practical and easy to use and can solve free losses, will have the possibility of surpassing UNI. The other is the track of Derivative DEX. If we say At present, spot DEX has come to a bottleneck period, and derivatives will be another tipping point.

Second, it is still over-collateralized, and credit is not really being created. What DeFi needs to think about in the future is how to create credit. One possible direction is the current decentralized identity (Decentralized ID, DID). Positive credit, add this to DeFi, in the case of proving credit, there may be things that do not require excessive borrowing, which can truly benchmark against the credit-creating lending market, and there will be greater imagination force.

Shang Shu, Director of Conflux Business & Technology: Regarding the subsequent development of DeFi, I have two thoughts:

First, what will come out when the market continues to develop. Second, what I expect from myself.

Everyone has very high expectations for the DeFi market. They can see tens of thousands of annualized returns. What they are looking for is stimulation. If the stimulation cannot keep up, the boom may end. Now many people are discussing NFT, but the transaction volume of NFT is too small. If a painting is completed in a traditional trading house, the handling fee is about 20%. What kind of project will give the intermediary a 20% kickback? It shows that this thing is very difficult to trade. The handling fee in the NFT exchange is at least 10%, which proves that the liquidity is very bad. With such bad liquidity, it is difficult to support what is currently being played in the DeFi circle. The only possible direction is derivatives. Everyone can refill their expectations and may drive the next wave climax.

When doing everything, it is separated from the fiat currency world, and the assets of the traditional fiat currency world are not reflected in the DeFi boom. For anyone, assets are not just coins. In reality, there are many assets that may bring benefits to me in the future. Can these things be mortgaged to the chain and combined with digital currency? This is the direction I would rather see. There are also some products to be produced on this track, but the scale is very small at present, and I hope to be able to do so.

Cocos-BCX technology contributor Reed Hong: The combination of NFT and DeFi will bring great imagination. NFT is not rare, and it is more descriptive. It is worth looking forward to what new things it will bring. The biggest innovation in the DeFi field is the introduction of new Tokens. I think many gameplays will change.

Tang Shi, co-founder of BP Accelerator: The direction of derivatives is indeed very optimistic. I will add a little bit to the options, which is about index funds. I always think that this is quite a chance. Then, among the existing DeFi products, we feel that there is a track that is not done enough. It may be because everyone is impatient. It is a low-frequency product, but in fact it is very urgent, that is, insurance.

On the one hand, it is done on the original assets of the mainstream currency circle, and the other is to do it on-chain and off-chain. This is more difficult, and it will definitely be related to NFT. Another separate point is about NFT.

Let's imagine it boldly, because I know that there are teams doing such things. If we boldly imagine non-homogeneous tokens, they may become important asset targets in DeFi products, or even the underlying asset targets.

Liesa, partner of Jubi Labs: I think it is still a derivative product. Even if you speculate on DeFi, there are already some things in the center, and it can find its own way on DeFi.

If you want to invest or start a business, go to the road of derivatives, especially options. I think options are very complicated and have more dimensions than futures. Since it is complicated, it can be simplified. There may be more.

Guo Tao, head of ZenLink China: In the short term, there are only a few hot tracks. I think Polkadot is a very likely opportunity.

Du Chao, founder of ByteLink: The last link is already the most essential part of this round table. The guest mentioned that these are expectations and cognition of the industry on the one hand, because they are engaged in different vertical fields and have investment funds. , Public chain projects, some specialize in technology, investment research and incubation, and some do the Polkadot ecological protocol layer.

I think it's very good. If you talk about this matter more transparently and the three-dimensional effect will be better. Finally, I am very grateful to Broadchain Finance for organizing this roundtable, and thank you all the guests.