The DeFi narrative has fallen out of favor, how can outdated blue chips regain market attention?
Original title: "The DeFi track is rigid, can outdated blue chips come up with new tricks?" "
Original source: vernacular blockchain
The most indispensable thing in the encryption world is narrative, especially the recent Shanghai upgrade, BRC 20, meme and even the old-fashioned halving narrative. Every hype will arouse new market attention.
first level title
The DeFi Narrative Out of Favor
Since the "DeFi Summer" in 2020, the entire DeFi track has made great progress, and the market has spawned many subdivisions such as decentralized transactions, lending, derivatives, fixed income, algorithmic stablecoins, asset synthesis, and aggregators.
However, since reaching its historical peak on May 19, 2021, traditional DeFi blue chips such as UNI, LINK, SUSHI, and SNX are gradually showing signs of decline. Whether it is an established DeFi leader such as Uniswap and Synthetix, or a "DeFi 2.0" rookie such as OHM, they all seem to have escaped. The embarrassing situation of being gradually forgotten by market hotspots.
Especially in the development of the encrypted world in the past 2022, after experiencing the successive prosperity of NFT, DAO, Metaverse, Web3 and other narratives, DeFi has been forgotten by most market participants and has become a market narrative that has fallen out of favor.
The root cause is that, except for the brand and stickiness of individual leading products, the services provided by most products are similar, and most of them are barely maintained by the Token incentive plan launched by themselves:
When there are rich liquidity incentives, the asset size (TVL) of the new DeFi platform will indeed expand rapidly, but this is unsustainable, because the funds themselves are not truly "locked", once new high-yield opportunities appear , or the incentives of the original agreement cannot be maintained after a certain TVL scale, then the funds will be transferred quickly and flexibly.
first level title
Old DeFi Blooms New Flowers
secondary title
MakerDAO Enters the Alternative Spark Protocol
First of all, MakerDAO, which started as a stablecoin, began to lay out the lending track. It launched the Spark Protocol, a lending protocol based on the Aave V3 smart contract, at the beginning of this month, which is open to all DeFi users. The product is centered on DAI and has ETH, stETH, DAI and The borrowing function of sDAI.
Spark Lend supports MakerDAO's PSM and DSR. USDC holders can also directly convert USDC to DAI through PSM through Spark Protocol's official website homepage, and obtain deposit interest through DSR.
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Aave deploys GHO stablecoin
Interestingly, Aave, which uses borrowing as its base, coincides with MakerDAO, and plans to launch a decentralized, collateral-backed, and dollar-pegged Aave DAO native stablecoin GHO.
It has similar logic to DAI—it is an over-collateralized stablecoin minted using aTokens as collateral. The only difference is that since all collateral is productive capital, certain interest (aTokens) will be generated. Depends on borrowing needs.
Last month, Aave founder and CEO Stani Kulechov released an update on the progress of the stablecoin GHO, saying that the GHO code has been made public and the audit has been completed. At present, GHO has been released on the Goerli test network and is in the process of bug bounty program.
In fact, this might not be an excellent controlled test group: As the two major DeFi blue chips with mutual penetration of business, the current stablecoins of MakerDAO and Aave are similar in mechanism design, and the borrowing mechanism is also based on Aave V3 smart contracts. The difference is that one is based on the stablecoin's own Token casting rights to enter the lending market, and the other is based on the borrowing scenario to build an extended basis for the use of stablecoins.
Who can escape in the end can prove to a certain extent whether it is easier to penetrate the lending field based on native stablecoins, or it is more advantageous to expand the usage scenarios of stablecoins based on lending protocols.
secondary title
Curve launches crvUSD
In addition, Curve, which focuses on large-scale asset exchange as its main battlefield, has also recently launched its own stablecoin crvUSD. The UI has been deployed and officially launched not long ago. It currently supports sfrxETH, a liquidity pledge product of Frax Finance’s Ethereum, for mortgage casting. Support stETH.
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frxETH is advancing by leaps and bounds
In fact, MakerDAO, Aave, and Curve in front of them are also laying out the big cake of liquid staking in addition to their respective new tracks-the borrowing of MakerDAO and Aave can directly expand the LSDfi business.
But among all the current DeFi blue chips, Frax Finance has the deepest layout in the LSD field, as can be seen from the growth data of frxETH:
On October 21, 2022, frxETH, an Ethereum liquidity staking product launched by Frax Finance, was launched. As of today, in about 200 days, frxETH has grown from 0 to nearly 220,000 pieces, worth about 400 million US dollars.
According to DefiLlama data, the number of frxETH pledges is currently second only to Lido, Coinbase and Rocket Pool, and has grown by more than 40% in the past 30 days, and the growth rate after the upgrade in Shanghai is even more impressive.
In a sense, Frax Finance’s pursuit of change over the past year is a typical example of our observation of the breakthrough of DeFi blue chips:
The change of the algorithmic stablecoin in 2022 once put Frax Finance in a crisis. At a critical juncture, on the one hand, for the original stablecoin layout, Frax chose to increase reserves to completely remove its own calculation stability attribute (become a fully collateralized stablecoin).
At the same time, further expand the new narrative, especially the precise step on the LSD - the Convex Governance Token CVX accumulated and held in order to form a 4 pool with UST has also come in handy, giving Frax a reward for using a huge exchange rate to influence Curve emission, and thus create the possibility of higher income (about 6%).
summary
summary
In fact, the prosperity of most DeFi projects in 2020 and the difficulties they encountered in 2021 were doomed from the beginning-the generous liquidity incentives are unsustainable.
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