The dazzling variety of DeFi projects in the market has gradually evolved into a financial plus technology innovation field. It is difficult to outperform the entire market by relying on personal strength. Using a professional financial management platform may be a path with a higher success rate.
Author: Lou Yue
“Seizing the liquidity mining track” has become a hot topic in the crypto industry in the past two months. Although the DeFi field has achieved a spurt of development, it is still dominated by large-capital players and has not been able to truly benefit small and medium-sized users. I missed this wave of DeFi hotspots and want to “farming” through a certain degree of safety and convenience. What is a good way to enter?
DeFi market is booming
DeFi related concepts gradually entered the market’s vision in 2019, and typical public chain projects such as Polkadot and Cosmos began their early layout. Since the beginning of summer, various DeFi-related concepts and projects have quickly ignited the enthusiasm of the market, especially after the release of the DeFi lending star project Compound governance token COMP in June , the ” Yield Farming (liquid mining)” frenzy started encryption community members have become “farmer (farmers),” open the way farming income.
Liquid mining shows amazing magic
The Compound community created a new proposal to modify the market distribution mechanism of COMP. First, the concept of ” Farm ” was proposed. Through the governance token COMP, which grants holders voting rights in the agreement, it is issued to those who use the platform to borrow or lend crypto assets people.
Under the stimulation of this liquidity incentive mechanism , in order to obtain higher returns, participants will conduct transactions in the DeFi ecosystem more frequently, thereby injecting more liquidity into DeFi and obtaining higher token returns . After the token price rises, users are more motivated to provide liquidity, thus forming a virtuous circle , which promotes the explosive growth of the DeFi liquidity mining model.
In the first few weeks of income distribution, the price of COMP once soared from $60 to around $ 340 , an increase of nearly 466%. The annualized rate of return obtained by COMP Farmers exceeded 100% at that time .
Compound’s total lock-up volume once surpassed MakerDAO, which had long been on the top of the list, and became a decentralized financial agreement with the highest total locked value , and pushed the total value of DeFi locked assets to a record high. Based on the success of the COMP model and the wealth creation effect brought by high returns, the market has begun to rush.
The Pandora’s Box in the DeFi market opens
With Compound liquidity mining as a breakthrough point, liquidity mining projects with different gameplay methods have sprung up.
Among them, there are two typical liquid mining projects with relatively high community participation. One is on July 18, the on-chain revenue aggregator yearn.finance (formerly known as iearn.finance) launched the governance token YFI (community name “Uncle”) , Is distributed entirely through liquidity mining , without pre- mining , pre-sale, new governance mechanism, bringing a new set of yield tools.
Another typical project is on August 12 , the DeFi project Yam Finance (YAM, community name Sweet Potato ) launched the first round of token distribution. Within one hour after the launch , liquid miners deposited 76 million in the project pledge pool Dollar tokens.
The emergence of YFI and YAM has given new vitality to liquid mining and completely ignited the enthusiasm for market participation. In the past two months , several important projects have launched the ” liquid mining innovation wave “. This process of depositing or lending designated token assets and providing liquidity for the fund pool to obtain income has further become a general consensus model for liquidity mining.
In the past two weeks, the project SushiSwap (SUSHI, the community name Sushi) cloned from the decentralized trading protocol Uniswap has introduced a token incentive mechanism through the issuance of SUSHI tokens to bring more benefits to liquidity providers. After the project went live , its lock-up volume Soaring to 1 billion U.S. dollars, several major exchanges were quickly launched within a day.
Under the stimulus of SUSHI, various UniSwap imitation disk projects have launched another round of “liquidity battle”. SushiSwap imitation disk project KIMCHI (community name kimchi) has reached the total lock-up volume in less than 24 hours after its launch. 250 million US dollars.
DeFi market status
Various update iterations and dazzling projects continue to stimulate the nerves of the market driven by high returns.
According to DeBank data, the total market value of the DeFi market, the total lock-up volume, the lock-up volume in the mortgage lending market, the DEX transaction volume, and the circulation of anchored assets continue to refresh historical highs. Among them, the Uniswap lock-up volume once exceeded 20 Billion U.S. dollars, becoming the first DeFi project with a locked position exceeding 2 billion U.S. dollars.
From the perspective of cryptocurrency exchange traffic, ICO Analytics compared the website traffic of the most popular crypto exchanges in July and August and found that the average website traffic of crypto exchanges in August increased by about 26% month-on-month. Among them, decentralized Exchange Uniswap’s website traffic surged 165% month-on-month and ranked 12th. This is the first time that a decentralized exchange has entered the top 20 .
From a financing perspective, according to The Block statistics , a total of 11 DeFi-related financing transactions were conducted in August, an increase of 83% from the previous month. The total financing scale reached 54 million U.S. dollars, and the average financing scale was about 5 million U.S. dollars, the median The funding scale is approximately US$3 million. Among them, from August 25 to August 28, there were 7 investment transactions that raised a total of 24.75 million US dollars, accounting for almost half of the total financing amount that month.
For users participating in DeFi liquidity mining, in the process of providing tokens to the fund pool, they need to pay the gas fee for deposits to the Ethereum network miners. With the help of the popular market, the Ethereum will be directly transferred to the Ethereum network on September 1. The median cost of Gas was pulled to 307 Gwei, a record high.
Ethereum miners took advantage of the trend and became the direct beneficiaries of this wave of DeFi dividends. According to The Block Research data , Ethereum miners’ income in August was 285.1 million U.S. dollars, an increase of 98.2% from the previous month and a 25-month high . In August, driven by the liquidity mining boom, Ethereum transaction fees increased significantly, and the ratio of transaction fees to the total income of miners reached the highest level in history , exceeding 40.5% of the total income. In May, the ratio was only 10%.
Various market data indicators have shown exponential growth. Liquid mining brings hundreds or thousands of times the return rate, which makes the market almost “mad”, but there are bound to be some when the market is chasing such high returns. Known or hidden high risk .
DeFi pain points that cannot be ignored
Early participants with a keen sense of smell tasted the benefits of top mines and missed several major early projects. FOMO sentiment is gradually heating up in the crypto community. Some activist investors “no-brained entry” only pursue speculative returns, and do not combine themselves with the market. Prepare to deal with market risks .
On the other hand, liquid mining is a new thing . In order to better adapt to the rapidly changing market conditions, the project is also being updated and iterated. Because it is still in the stage of market verification, there are some Obvious pain points , such as high user thresholds, high handling fees, and contract risks, may cause potential losses that cannot be ignored.
High barriers to user participation
For ordinary users who are exposed to various operations in the DeFi field for the first time, when opening some exchange and trading platforms, the first thing that will be printed may be a wallet authorization page and a simple display page for token exchange. There is no traditional market and transaction. Familiar K-line, depth map, data, currency details, and beautiful front-end display and interactive interface.
Taking the DeFi star project stable currency exchange platform Curve (CRV) as an example, users first need to go through some auxiliary graphic tutorials to prepare for various wallet creation, authorization, mnemonic input, and access to the platform.
After completing the above steps with great difficulty, after successfully establishing the wallet connection, the interface displayed by Curve brought everyone back to the computer interface of Window 98, and directly persuaded some users to leave .
If you want to participate in the DeFi ecosystem and don’t want to use Curve, you may not be able to bypass the decentralized exchange UniSwap. Compared with Curve, UniSwap may have a relatively friendly user interface.
However, since UniSwap is an Ethereum-based protocol that aims to facilitate automatic exchange transactions between Ethereum and ERC20 protocol tokens, UniSwap allows anyone to send a coin on the Ethereum blockchain and use it on Uniswap Create a corresponding fund pool, and directly list the currency by providing liquidity to the currency. This means that everyone can list on Uniswap in this way , without review.
The biggest problem with this decentralized currency listing model is that users who don’t pay attention to the exchange on Uniswap may only be worthless counterfeit coins, imitation coins , or the exchanged tokens have not waited until the rise is due to flow The exhaustion of the sex capital pool becomes a pile of air coins.
The fee friction cost is too high
Participating in liquidity mining is another major headache for participants is that the frictional cost of the transaction fee is too high. As mentioned above, the median Ethereum Gas fee soared to a historical high in early September.
During the entire process of participating in mining, ordinary users may need to perform four or five exchanges and transactions. In these processes, they basically need to use Ethereum’s on-chain transfer every time, which consumes network resources . At the same time, it means paying a gas fee.
A more vivid analogy is that if you want a car to run, you need enough fuel, and if you want transactions on the blockchain to run fast, you also need a gas fee, and when the gas fee has been raised, you need to pay Higher gas cost.
If you feel that the cost of gas fees is too high, some people may want to set relatively low gas transfer costs. But generally speaking, miners will sort the received transactions according to the gas unit price from high to low . If the gas fee is lower, it will be ranked behind, and the speed of packaged transactions will be very slow. If the fee is as low as a certain threshold There will also be situations where no miners are willing to pack .
In this case, it is very likely that the on-chain transaction and exchange rate will be too slow and a good opportunity to enter the market will be missed. It will also cause the exchange rate originally set on the DEX to fail to complete the transaction. If after a long queue on the chain, you may eventually find that no miner is willing to accept a low-priced packaged transaction fee, then the transaction will eventually fail, and the gas fee for the failed transaction will not be refunded.
Therefore, to participate in liquidity mining, you need to accept the gas fee transfer model, and in these at least four or five times, as many as seven or eight times, exchanges and fund pool switching processes, the high gas transaction costs may exceed the principal. And revenue .
Giant whale game
Take the loan agreement Compound as an example. Generally speaking, institutional investors will have a huge demand for DeFi loans, and it is the capital whale game that participates in the COMP ecosystem.
According to TokenTerminal data, approximately US$340 million of funds were traded in the fund pool in about two weeks after the launch of COMP. Most demanders (borrowers) seem to be institutional participants . After the launch of COMP, it only attracted about 800 borrowers and more than 5,000 new depositors.
Other DeFi projects also have the problem that giant whales control most token rewards by providing more funds and liquidity, and the holders of a large number of governance tokens also have an absolute advantage in voting governance and other processes. It means that the interests of giant whale users will be further enhanced, which may further dilute the interests of ordinary traders in DeFi projects.
Industry chaos
The explosive growth of the DeFi industry has not received corresponding supervision, which has led to extremely low costs for some projects. The wealth-making effect of liquid mining attracts not only ordinary investors but also the development of many scam projects. Hotbeds, various counterfeit currencies and phishing projects emerge in endlessly, making it difficult for ordinary investors to distinguish.
For example, on September 9th, the EOS DeFi mining project EMD (Emerald) was exposed by the slow fog area intelligence as suspected of running away . The project contract emeraldmine1 has transferred 780,000 USDT, 490,000 EOS and 56,000 DFS to the account sji111111111, and there are 121,000 EOS has been transferred to the changenow coin laundering platform. According to the mainnet deployment record, the project has upgraded the contract after its release.
Subsequently, the news of the runaway was confirmed, which triggered many deceived users and even seized the “transfer message area” on the EOS chain, calling on the project party to negotiate.
For another example, justfolio (JFT), a DeFi project that has run off the track, claims that its smart contract has passed the audit of Chengdu Lianan, but Chengdu Lianan responded that “this project has never been audited”; SushiSwap imitation disk project KIMCHI ( Kimchi) The project party has the authority to mint any coins; typical incidents such as the YFI imitation project YFIII running off the road make investors hard to guard against.
Many security companies such as SlowMist and PeckShield have issued security warnings to remind users to ensure the security of the project before participating in the DeFi liquid mining project.
Contract risk
DeFi is essentially built on smart contracts, so the risks associated with the underlying contracts such as hacker attacks and program errors are also fatal risks that have always existed.
What is more worrying is that contract-related risk issues will appear in the market after a period of time. The YAM rebase vulnerability incident on August 13 made the community experience a roller coaster market, which caused the 750,000 yCRV in the governance contract to be permanently locked.
In addition, this year’s DeFi market has also seen many smart contract vulnerabilities that have attracted much attention. For example, the bZx flash loan vulnerability in February caused a loss of tokens worth nearly $1 million, the 3120 Dai liquidation event, and the June Bancor smart contract vulnerabilities, etc.
In order to reduce the risk of contract vulnerabilities, it is generally necessary to rely on third-party audit institutions, but audits usually require a certain amount of time. The audit results are limited by the capabilities of the institution. Even audited projects will have excessive authority of the project party The risk of the contract cannot be fully guaranteed, and it is difficult for ordinary users to find and distinguish .
In addition to the above-mentioned typical DeFi risks, there are some uncontrollable factors such as impermanent loss, bifurcation risk, market volatility risk, and oracle risk.
So ordinary users do not want to miss this wave of DeFi hotspots, but also want to participate in a certain degree of security and convenience. What good ways are there?
How do ordinary users enter the circle?
External aids
Looking back at the development of the financial industry, whether in the traditional financial field or in the cryptocurrency field, due to some internal and external risks are too high, most ordinary investors are in a state of earning less and losing more, and it is difficult to outperform the whole by relying on personal strength. The market, for ordinary investors, learning to use professional external auxiliary tools to deal with the market may be a way with a higher success rate.
Especially for some inexperienced new investors, they tend to be eager for success. Such a mentality of pursuing wealth creation can easily lead to wrong decisions. Ordinary investors do not have much financial expertise. Knowledge reserves , and in the case of asymmetric information , it is easy to make wrong investment decisions.
Participating in DeFi liquidity mining seems simple, but there are also some professional barriers. Users can use financial derivative tools to simplify complex information and reduce access by handing funds to trusted professional institutions such as BigONE . Threshold , quickly enter the DeFi field to maximize revenue.
Users participate in the DeFi ecosystem by entrusting token funds to a professional centralized platform (CeFi) such as BigONE. Although they reduce a certain degree of their own risks, they may also be concerned about the core of token security, capital gains, operational convenience, costs, etc. Question , how does BigONE perform?
In-depth disassembly of BigONE
Established in June 2017, BigONE has established a complete digital asset trading ecosystem, covering one-stop digital assets from spot, contract, leverage, OTC, wealth management, lending, PoS mining pools to decentralized trading services, etc. Asset integrated services.
Transaction service
From the market point of view, according to data encrypted website CoinMarket data show, BigONE provide active trading market for already over 100, while trading opened DeFi spot trading market, helping users to participate in the aid DeFi token exchange platform.
Digital asset custody service
BigONE also has digital asset custody services, and currently supports a variety of blockchain assets, including BTC, ETH, ERC20, ETC, ZEC, etc., which meets most of the needs in the market.
From the perspective of custodial service security , according to the introduction of the cryptocurrency market information tool MyToken, BigONE implements 100% reserves , uses top wallet technology and risk control procedures to ensure the security of user digital assets, and provides bank-level security, reliability, Easy-to-use blockchain asset custody and transaction services.
According to the official introduction , all users’ recharged assets will be retained and will not be used elsewhere. BigONE provides a mechanism that allows each user to check the status of the asset margin.
BigONE also combines other security assistance mechanisms, such as the use of two-step verification and notification, separate storage of hot and cold wallets, the use of multiple signatures, real-time monitoring of the status of wallets and assets, and a special private key management method to ensure that no one can control the private key. Relying on technology and strict operating procedures, we prevent risks from multiple aspects and protect asset safety.
The core members of the BigONE team have 5 years of experience in digital asset trading service platform management, as well as rich experience in digital asset mining.
In order to promote the security and joint defense of the encrypted digital currency trading platform, BigONE and SlowMist Technology have reached a strategic cooperation . The two parties will fully address data monitoring, analysis and tracking, code vulnerabilities, hacking attacks, OTC anti-money laundering and other aspects in the digital currency industry. Linkage to further protect platform user funds and transaction security.
Financial services
One of encryption currency-related financial services also BigONE mainstream business, covering popular DeFi mining, prudent financial management, financial derivatives, PoS mineral pool, node ecology, lucky treasure, such as different business modules, differentiated to meet different users demand.
In the traditional financial market, products issued by some large banks, trusts, fund companies, etc. are generally favored by the market, not only because large institutions have outstanding investment and research capabilities, they can ensure relatively stable income and sound The risk control system also reduces risks.
In the field of cryptocurrency, large platforms also have advantages. BigONE COO Cheng Jun said in an interview with the media before that, taking BigONE as an example, its wealth management products often need to go through rigorous market research before the project is established. After the needs are clarified, the R&D team will establish the project. During the development process, the platform It will also solicit user opinions from time to time, and conduct extensive testing before completing the research and development. Only after ensuring the smooth operation of all aspects of the product will it be officially launched.
If after a comprehensive comparison, users who are pursuing stability feel that the entry threshold of DeFi is too high and the risks are uncontrollable, they can also participate in spot, asset custody or some robust financial products by participating in BigONE, and all assets can be opened on one platform to avoid cumbersome The process is convenient for different asset allocation.
For users who are pursuing certain gains and willing to bear certain controllable risks, they can choose BigONE DeFi wealth management products if they want to further participate in the DeFi wave .
Analysis of BigOE DeFi wealth management products
In order to meet DeFi users’ demand for diversified income and better fit market hotspots, BigONE launched related financial products as early as June and July during the early rise of liquid mining.
As of September 11, “BTC Curve Liquidity Mining”, “ETH DeFi Universe Strongest Machine Gun Pool”, “USDT Universe Strongest Machine Gun Pool”, “ONE Harmony-Old Rail Train”, and “GXC Mobile” have been officially launched as of September 11 A series of DeFi-related products such as “Sexual Mining”, “ONT Liquidity Mining”, “TRX DeFi Machine Gun Pool”, “Poca Eco Plasm Mining Pool”.
basic product info
Due to the rapid conversion of DeFi market quotations and hot spots, it can be seen from BigONE’s recent financial management announcements that the change of its liquidity mining pool will also make corresponding adjustments to keep up with market conditions.
For example, on September 9th, BigONE just opened two new mining pools, “ONE Harmony Number-Old Rail Train” and “GXC Liquid Mining”. Among them, the “ONE Harmony Number” liquid mining pool is an exclusive welfare mining pool for ONE holding users, and the platform allocates USDT for users participating in the mining pool for liquid mining operations. All proceeds will be repurchased on the secondary market , 50% of which will be distributed to participating users, and the remaining 50% will be destroyed .
At present, “ONE Harmony” has reached about 96% of the original 250 million ONE fundraising quota in just two days after its launch. According to the BigONE market , the price of ONE tokens has also risen slightly to a one-week high near 0.002248 USDT.
In addition to supporting several popular liquidity mining pools, “Sell as you mine”, BigONE also provides a regular wealth management mining pool “Polasm Ecological Plasm Pool”. Different periods can get different weights and benefits . Products The period is 30 days and 100 days. Different lock-up time corresponds to different weights. The 30-day weight is 24 and the 100-day weight is 100.
Polkadot can be described as a star public chain project that has been high hopes for the past two years. Before it went online, basically all mainstream exchanges listed options. After going online, the three major exchanges included free listings. Since the Polkadot ecological network contains some extremely complex functions and technologies, it also contains many high-quality projects. Users who want to “participate” in the Polkadot ecology can also use the BigONE “Polasm mining pool” to carry out the layout .
Regarding the fees that users care about, BigONE eliminates the cumbersome and costly problem of gas transfers with zero headaches for ordinary users. Users can mine with one click , while BigONE only charges a service fee of 10% of the mining revenue, and the remaining part will be distributed to participating users , Which greatly reduces the participation threshold of ordinary users .
DeFi financial products have a certain initial investment amount and purchase limit. Some products were sold out due to the high enthusiasm of users for participation. The official will also increase the amount of some products according to market conditions to benefit users.
The settlement method of current DeFi wealth management products is “sell as you mine”. The withdrawal cycle is 1 day. Coins withdrawn before 8:00 (UTC+8) are expected to arrive at around 9:00 on the next day, and coins withdrawn after 8:00 , It is expected to arrive at around 9:00 am on the third day.
Safety
As a wealth management product, the safety of its products cannot be ignored. BigONE DeFi wealth management products choose projects that have undergone security audits, are well-known, popular, and relatively reliable.
From the initial project selection, BigONE professionals will conduct research and configure appropriate strategies in the early stage. There is also a strict risk control system for projects. BigONE will make different strategies for safe migration, suspension of mining pools, and machine gun pool mergers for each project according to market timing .
As for the latest income of liquid mining, in addition to users being able to query relevant information in their own accounts, BigONE will also promptly publicize the income of the mining pool on the official website to ensure transparency and openness.
For specific project security, for example, when there is a bug in the YAM smart contract, BigONE immediately redeemed the ETH involved in YAM mining and closed the mining pool to ensure that users receive the investment ETH and avoid user losses.
Another example is that the liquidity migration of the “Sushi” project will occur within 48 hours. After the BigONE DeFi project team discovered possible risks in Sushi, in order to ensure the safety of the user’s principal, the relevant mining operations were suspended and all in the machine gun pool were withdrawn. During the mining of Sushi’s funds, the user’s fund income will be distributed at an annualized rate of return of 1% during the migration period, and then the related mining will be resumed as soon as the risk is reduced.
BigONE further added that due to the short suspension time and the huge amount of funds, it did not choose other types of higher risk for mining. During the mining suspension, the redeemed assets did not perform any operations in the wallet. In the future, BigONE will still conduct DeFi liquidity mining under the premise of ensuring safety first.
income
The ultimate income of BigONE DeFi wealth management products depends on the performance of the project, similar to the “net value of wealth management” of traditional funds. This type of “fixed income +” product based on public funds has also been a hot spot for investment in the traditional financial industry. BigONE further uses intelligent scheduling to select farming pools with high revenue to help users maximize their revenue.
The BigONE “ETH DeFi Machine Gun Pool” once set the highest yield in the industry, reaching 981.2% , and helped users earn more than 1 million USDT in profits.
As of September 14, BigONE DeFi liquid mining product users have participated in the fundraising quota of over 46.7 million USDT.
Other layouts in the DeFi field
In addition to getting involved in the recent hot liquid mining field, BigONE has also made early plans in other areas of DeFi .
One year ago , BigONE launched the cross-chain decentralized exchange BigDEX . Based on the Mixin Network public chain, BigDEX technically adopts a cross-chain communication protocol that connects all blockchain networks and combines multiple lightning networks. Users can pay digital currency faster to confirm and accept digital currency faster.
In March of this year, BigONE launched BigProxy , a decentralized mining pool . Compared with traditional mining pools, BigProxy has zero risk. Assets are in the hands of users. It supports entry and exit at any time, and benefits are settled daily. Users can get EOS income by staking EOS in their wallet to BigONE’s proxy account.
In July of this year, BigONE began to launch 4 DeFi projects, and then successively launched multiple DeFi assets. In August , BigONE launched the DeFi zone page.
Recently, BigONE has participated in the multi-signature voting for the popular project SushiSwap and was shortlisted for the second round of candidates.
summary
The DeFi field is a place where risks and opportunities coexist. There are different ways and means for project parties, institutions, and individual investors to participate.
For ordinary investors, many DeFi projects are more like a financial plus technology product. It is difficult to understand and obtain information. At the same time, there are high thresholds for ordinary users, relatively complicated operations, high handling fees, and contract risks. Therefore, investors can use DeFi financial products to simplify the process, formulate strategies that are more in line with their actual conditions, and use professional platforms to better participate in the DeFi wave.
