Opinion: DeFi is a one-way street worth looking forward to

This article attempts to understand the market changes in 2020-2021 from the perspective of DeFi, providing a new perspective.

From the beginning of 2020 to the present, many major events have occurred in the world we live in, and the epidemic has caused the global economy to slump. In order to stimulate the economy, the central banks of various countries have launched monetary easing policies. Among them, the Federal Reserve is the most impressive. Since the beginning of the epidemic, it has released a total of about 6 trillion US dollars, far exceeding the scale of rescue funds from the financial crisis in 2008, which is equivalent to the US dollar in 2020. 28.6% of GDP. And these banknotes issued out of thin air have triggered a widespread sentiment to sell the dollar, and almost all assets other than the dollar have appreciated in value.

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Bitcoins decentralized gene

This starts with the birth of Bitcoin. Satoshi Nakamoto released the Bitcoin white paper in November 2008, and wrote down on the genesis block of the Bitcoin network in January of the following year:

Bitcoins genes naturally carry dissatisfaction with the unlimited printing of money by currency issuers to rob the poor and help the rich.

12 years later, in the face of the Feds more crazy release, it shocked the DNA of Bitcoin! As a brand-new safe-haven banner digital gold, Bitcoin has outperformed traditional assets in 2020, and it is generally believed that it will continue to maintain its momentum in 2021.

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DeFi cold start, smooth and difficult

In mid-2020, DeFi began to exert its strength, initially starting with Compounds liquidity mining. At that time, I didn’t expect that the DeFi craze was already surging under the sea at this moment, and then waves of DeFi liquidity mining projects emerged on the sea.

Although people almost come here for high returns, more importantly, DeFi has been widely spread during this period. In just three months, the seeds of DeFi have been sown among the blockchain crowd, and a large number of users have completed in practice A first lesson in decentralized finance.

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Mapping of traditional finance and decentralized financial products

DeFi tries to move traditional financial products to the decentralized network, but the environment has changed and problems have followed. The original intention of DeFi is to smooth the threshold of financial services and realize inclusive finance. But what is sad is that the Ethereum network at that time could not meet the performance requirements of financial services. Inclusive finance has become a large-scale finance. The congested network keeps miners fees high, and ordinary users often cannot make ends meet.

Even so, DeFi has already started. Although the road is bumpy, the direction is firm.

In one year, the locked-up size of DeFi has increased by 30 times, reaching 30 billion US dollars

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Level the road, repair the road and refuel

On the one hand, it is the huge demand of users on the Ethereum network, and on the other hand, it is the performance bottleneck of Ethereum. At this stage, Layer2 and Eth2 as a solution to performance problems became the most frequently reported topics in the blockchain media in late 2020.

Eth2 is a major upgrade of the Ethereum network. The first step has successfully started the beacon chain, and everything is proceeding step by step.

The Layer 2 network expansion solution is also becoming more and more clear in practice and iteration, oprollupAnd zk rollup is basically settled. Taking the zk rollup solution as an example, it is estimated that the performance of the Ethereum network can be increased by 100 times to 1500+TPS. Correspondingly, the value that the Ethereum network can carry and its own value will also be significantly improved. However, compared with traditional financial networks, 1500+TPS is still lagging behind, but for the current Ethereum network and DeFi users, a hundred-fold performance improvement is worth looking forward to.

At present, the top DeFi projects have basically selected their respective Layer 2 solutions. Among them, Synthetix has adopted op rollup, and the Uniswap V3 upgrade will also introduce the Layer 2 solution.

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DeFi is about to leave the circle?

In stark contrast to the booming DeFi, it is theU.S. Retail Investors Are Teaming Up Against Hedge Funds。

After retail investors on the Reddit WSB forum jointly repelled short-selling hedge funds on GME stock, they are planning to target the long-short silver futures market next. During the period, Robinhood (foreign brokerage platform) restricted retail trading, and the WSB forum was temporarily blocked. This movement even began to spread, and the Korean version of WSB and the Indian version of WSB appeared one after another.

The Feds release of water and retail investors grouping together to fight against institutional funds are like the scene of the birth of Bitcoin in 2008, but the protagonist has changed. Satoshi Nakamoto was dissatisfied with the central bank robbing the poor to help the rich in a crisis; Reddit WSB forum users were dissatisfied with financial injustice, companies that were too big to fail, and institutions that did whatever they wanted. As a forum users confession letter said, the financial crisis in 2008 was silently borne by countless ordinary people like him, and this time, he can finally speak out to the institution with a sickle in his hand.

The blockchain makes financial decentralization no longer a castle in the air, and more and more people need decentralized finance. DeFi is inclusive finance. It can not only provide financial services for people in underdeveloped regions, but also allow people in developed regions to experience more transparent and fair finance.

This is the fourth stage I want to talk about. In the confrontation between retail investors and traditional financial institutions, the concept of DeFi may be forced out of the circle and into everyones field of vision.

How do you see the future of DeFi? DeFi is a one-way street, and peoples demands for transparency and fairness will not budge.