I go to the bank to deposit money, but you tell me that there is a fee for depositing money? | Roast Star Selection

特邀专栏作者

2021-01-19 10:49

This article is about 1872 words, reading the full article takes about 3 minutes

In the popularity of DeFi for more than half a year, the currency circle has seen its magic power and potential, and it has also made people deeply understand the cost, congestion, and slowness of Ethereum. Not everyone has experienced the pomp of encryp

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The problem of gas fee and transaction rate has blocked many users. We have seen that both the Binance Smart Chain and the Huobi Ecological Chain are quite popular recently, while Ethereum has been obviously affected. After Bas was shut down, the gas fee has returned to Average.

The daily Gas price on Ethereum, the ETH price has risen recently, but the Gas fee has been reduced, indicating that the activity on the chain has decreased

While users vote with their feet, developers will also seek blockchain networks with larger user scale and room for growth to realize their encryption dreams.

Flux, a mortgage lending protocol based on the Conflux network, is a product that emerged under this trend. Flux's own exploration of decentralized mortgage lending, supplemented by the advantages of the Conflux network, can provide a different experience from the current mainstream DeFi lending protocols.

Similar to Compound and AAVE, Flux is also a mortgage loan product that supports users to deposit and lend related encrypted assets. Flux is like a bank, lending money from those with surplus assets to those who need assets, which is one of the most basic financial activities First, the product logic is simple and clear. At present, there are not many assets on the Conflux chain. The native assets include CFX and FC. However, with the help of Conflux's cross-chain solution, Flux can currently support mainstream assets such as BTC, ETH, DAI, USDT, and USDC.

An important advantage of decentralization is that it is open and transparent, and peer-to-peer transactions also eliminate the cost of intermediate links. However, the high Gas fee of Ethereum makes this advantage disappear and even become an obstacle. The common problem faced by Ethereum users is that every time they participate in a DeFi protocol to provide funds and liquidity, they are obviously making contributions to the protocol, but they are charged a high handling fee, even though the handling fee is not charged by the agreement . This is like in real life, when you go to the bank to deposit money, you are told to pay a handling fee first, which is unbearable.

However, there is no such cost problem when doing deposits and loans on Flux. The following is the handling fee for a deposit in Flux. The author deposited all the tokens into Flux. When confirming the transaction, I was worried that there would be no balance to pay the handling fee and the transaction would fail. However, a surprise appeared.

On the left is the deposit transaction on Flux, the handling fee is 0, and on the right is the handling fee for an Ethereum transaction when the Gas is at a low level of 47, reaching 12 US dollars

Due to the existence of Conflux's handling fee payment mechanism, the handling fee for my deposit is 0, which truly achieves the same experience as going to a bank to deposit. For a similar transaction, on Ethereum, we need to spend a handling fee close to 20 US dollars.

The impact of this is not a simple lowering of the user threshold, but an important issue related to the playability of the entire DeFi ecosystem. Based on such low-fee transactions as Flux, the composability and playability of DeFi can be brought into full play.

The first is that the utilization rate of one's own assets can be improved, and the arbitrage between various agreements is more convenient. Due to the existence of the fee payment mechanism, a lot of costs for users are covered, so the economic model has changed, and there are more arbitrage opportunities.

Users can lend certain assets in Flux and trade in the trading market. Since the borrowing cost is very low, the transaction profit can easily cover the cost without having to be very high, so as to obtain benefits. At the same time, you also get deposit interest, which is equivalent to using very low leverage to complete the hedging operation during the market downturn.

In specific operations, we can complete arbitrage and hedging through comprehensive ecological applications on the Conflux chain such as Flux, Moonswap, and Moondex. The whole process is very fast and low-cost. If we carry out such arbitrage and hedging operations on Ethereum, you may need to earn more than 5% of the profit from the arbitrage transaction to make a profit. In Flux, 2% of the transaction profit is enough to support your series of operating costs.

Flux also allows users to achieve cross-chain arbitrage. Currently, the borrowing rate of cDAI and cUSDT on Flux is 9%, while the deposit rates of DAI and USDT on AAVE have reached 11% and 23%. Deposit in AAVE and earn up to 10% interest rate difference, which can be said to be a white wolf with empty hands.

In addition, due to the existence of the service fee payment mechanism, it is possible to use the full amount for Flux deposits, and will not leave those small assets that are a pity to give up but cannot be used in the wallet.

It is also worth mentioning that the convenience and speed of Flux does not come at the expense of security. Perhaps many POS public chains can provide such an experience, but in terms of security and decentralization, POS public chains are difficult to compare with POW public chains, so the safety factor of DeFi lending on Flux is also higher.

The security of Flux is also reflected in the polishing of the product code by the Flux team and the innovation of the liquidation mechanism. The automatic liquidation mechanism developed by FLUX, when the liquidation is triggered, it will be liquidated directly, without the need for a bidding process, with high execution efficiency, able to resist the risk of price downside, achieve instant and fast liquidation, and effectively protect asset security.

At present, Flux is still in the early stage of development, has not yet issued project tokens, and various borrowing rates are also very low, which is very suitable for various arbitrage transactions. In the early days of DeFi, it was such arbitrageurs who gained high profits and got token airdrops from some projects. Flux currently provides such an opportunity.