On May 12, 2020, the “Bitcoin halving for the third time” took place as scheduled. This should have been the biggest attraction and hope of the blockchain industry in 2020, but the cruel reality has given all practitioners a note. With resounding slaps, the price of Bitcoin has not risen wildly as expected, but the computing power of the entire network is still high, and many miners are struggling to survive.
Just as people are about to feel confused about the blockchain industry in 2020, and are about to lose confidence and direction, the “borrowing mining” opened by Compound opens another door. Many users are surprised to find that they borrow money in Compound. Not only does it not cost money, but it may also make money. This has greatly increased the activity and trading volume of the cryptocurrency lending market. The COMP token issued by Compound skyrocketed tenfold in a day, and the market value once exceeded MakerDAO.
Soon, Balancer will incentivize users to provide liquidity funding support for the automatic market maker AMM on Balancer through the issuance of BAL tokens, and tilt towards the fund pool with lower transaction fees in the token distribution algorithm, so that the lower The transaction fee fund pool can get a higher BAL reward. Compared with the niche market of the loan agreement, Balancer has truly opened the national carnival of “liquid mining”. Whether it is a “geek programmer” or a “speculative enthusiast”, everyone is surprised to find that they only need to announce a sentence “you can do liquid mining”, or even sell them with “liquid mining”. The dog meat of “mortgage token mining”, tens of millions of dollars or even hundreds of millions of dollars of funds will swarm in an instant, and the price of tokens will explode dozens or even hundreds of times.
If Balancer’s “liquidity mining” opens up a new brain hole for blockchain entrepreneurs, then yearn.finance (YFI) is even more iconic in the history of DeFi development. The token price is 43 Within a day, it rose from US$3 to US$30,000, an increase of 10,000 times, becoming the undisputed pinnacle of the DeFi industry in 2020. And more important than the price increase, yearn.finance has brought extremely far-reaching effects to latecomers:
First, the ultimate token distribution model. Compared with blockchain projects, it is different from the practice of retaining a considerable proportion of tokens to give back to early investment institutions or as a reward for the founding team. Yearn.finance’s token distribution model adopts an extremely fair approach. , Set a hard cap of 30,000 tokens, all are produced through open mining, no pre-mining, no private placement, no ICO, no founding team retention, and the way and way for everyone to obtain tokens is completely To be fair, even the founder, Andre Cronje, does not have any privileges or first-minded advantages, which is quite fundamentalist in the Bitcoin era.
Second, to create the Lego building block-style DeFi financial era. Year’s own systems include year (aggregate revenue), ygov (governance), yinsure (insurance), yborrow (lending), and each system derives a bunch of certificates through smart contracts. Class tokens, and through this combination between Curve, Balancer and other protocols, thus creating endless innovative financial products. For example, people can mortgage usdt into iearn’s protocol fund pool in Curve to obtain yCrv, and then Store yCrv in yearn to earn interest or mortgage yCrv to other protocols for mining; for example, you can deposit ETH or DAI in yinsure to obtain insurance policy yNFT, and then mortgage yNFT to yieldfarming.insure for mining to obtain SAFE.
Third, completely community-based governance. In the past open source blockchain projects, the road to communityization was extremely long, and it took several years or even longer. Yearn had clear and achievable project goals and adopted YIP proposals and voting methods with relatively standardized content. , The community-based governance method was completed in a very short time, and major issues are currently voted on the chain through voting.
On September 17, Uniswap, a project that occupies an absolute dominant position in the DeFi ecosystem, announced the issuance of governance token UNI, and will send at least 400 UNI airdrop rewards to all old users, calculated as 5 US dollars per UNI, and sent to each old The user’s “red envelope” exceeded RMB 10,000, and DeFi once again entered a new climax. Uniswap once surpassed HT and OKB in market value and became the leading overlord of the DeFi industry, and UNI also set the record for the fastest listing on major exchanges in history. With the launch of Uniswap liquidity mining, the total amount of locked-up funds in the agreement exceeds 2 billion US dollars, while its imitation Sushiswap is only 500 million US dollars.
Although the DeFi industry has experienced explosive growth in recent months, it is still at a very early stage relative to the entire blockchain industry or the entire traditional business society. Whether it is Uniswap or Curve, Balancer, Compound, Aave, MakerDAO, its main function is to provide liquidity or capital demand services for mutual transactions between cryptocurrencies. We can collectively refer to it as a sub-category in DeFi—— “Transactional DeFi”, from the current point of view, the pattern has been preliminarily determined. The following new agreements need to be algorithmic improvement, performance optimization, and experience enhancement. However, in addition to the category of “Transactional DeFi”, there are other opportunities for DeFi. There are three interesting directions worth studying and exploring:
Data-based DeFi refers to a protocol that provides data and information outside the chain or in the chain as a DeFi mining incentive, or uses data and information as the main object of DeFi protocol transactions. At present, there are some Oralce oracle projects like Provable, ChainLink, NestProtocol and so on that are trying to introduce data into the chain, but most of them are still for fair transaction price information, and due to the high cost, it is far from enough to support DeFi’s broader and more popular For the application, the data-based DeFi protocol should assume such public responsibilities and support a wider range of data transmission and importing on the chain for use by various smart contracts.
Commodity-based DeFi refers to the introduction of off-chain commodities, artworks, or native encrypted assets on the chain into the DeFi protocol ecology in the form of NFT tokens, and promotes the increase of NFT transaction activity. There are currently tens of thousands of NFT categories, but the total monthly transaction volume is only more than 3 million US dollars, which is far lower than the transaction activity of other tokens. The new DeFi protocol should consider corresponding incentives for NFT mortgage, split, synthesis, and sale , In order to promote the rapid development of NFT ecology.
Game-based DeFi refers to embedding the DeFi protocol into online games, opening up gold coins, props, equipment, and even accounts in different online games through the DeFi protocol, so that these virtual items that originally have no asset attributes become visible on the chain , Transferable, tradable encrypted assets, and even we can go one step further and split the ownership, use rights, and profit rights of scarce items through DeFi smart contracts, thereby deriving more fresh gameplay, such as a senior player The krypton gold equipment is leased to a low-level player, and the player is charged rent or divided from the income from monsters, which can greatly enrich the fun of the game and increase the player’s viscosity.
2020 can be regarded as the first year of the real application of DeFi. As practitioners in the blockchain industry, when we show “what is a blockchain” to outsiders, it is finally not only boring token symbols and illusory coins. You can be proud to find a large number of DAPPs that can be connected and connected with each other from the mobile wallet, and smoothly do mortgages, transactions, loans, generate insurance policies, etc., tell him that this is the current blockchain application .
We believe that due to the “open source and open” spirit, the speed of the blockchain is much faster than the speed of the Internet. We look forward to seeing more and more colorful applications in the near future!
