2020 is an extraordinary year. In the context of the raging epidemic, we have witnessed the sharp turbulence of the stock market and the digital currency market, as well as the rapid update and iteration of the blockchain field. With turbulence, the entire blockchain world has undergone earth-shaking changes in one year. As an industry observer, IOSG Ventures has gained not only successful investment portfolios during the year, but also the growth and thinking of the entire industry, investment logic and post-investment value creation. Next, we will look back at 2020 in a slightly different way, and hope that in the third decade of the 21st century, we will continue to create long-term value to build an investment moat and do the hard and right things without Just follow.
Written by: IOSG Ventures
Unity of Knowledge and Action: Time Machine Theory takes you to the past and witness the future
The history of human currency is as long as the history of civilization. Compared with the progress of the Internet, the progress of the entire financial industry is still slow. The world financial crisis in 2008 deepened the potential risks of the world’s monetary and financial systems. It is in this context that Satoshi Nakamoto created Bitcoin. The Internet has swallowed the entire world rapidly in the past two decades, but in the last five years we have seen a trend that the blockchain is swallowing the financial world, and the open network running on the Ethereum world computer has begun to give birth to different subdivisions. Centralized financial applications (hereinafter referred to as DeFi).
In the past 20 years, the process of civilianization of financial innovation has been slow. In the past year, we have seen that DeFi has begun to emerge many innovative agreements with low threshold costs, no licenses, and regulatory advantages. Traditional financial development has evolved over a hundred years of industry theories. In the world of cryptocurrency, with infrastructure and The enrichment of the protocol layer began to be practiced. In the time machine investment law, the traditional financial infrastructure is complete and solid. We have seen the evolution of the DeFi protocol from the emergence of the base currency Dai to the value captured by the middleware protocol, and then to the user portal to output value; at the same time, it is developing in the DeFi industry. From the beginning of the loan agreement, to the synthetic asset agreement, to the derivatives leverage agreement, the forecast market agreement and the insurance agreement, a series of basic tools required for the construction of traditional financial systems such as leverage, margin, accounting unit, transaction infrastructure Infrastructure, loans, and issuance of infrastructure have emerged in the DeFi world one after another. This evolution is similar to the development of traditional finance.
DeFi has achieved amazing explosive growth in the past year. We believe that the middleware of the open financial stack in the encrypted network acts as a native token that maintains the security of the underlying network and the value of the top-level user application interface, and it is the entire ecological belt. The important role of value added. Wherein the stabilizing currency agreements and to the center of trading and aggregation protocol to play the role of value transfer center to go on this basis, have a variety of financial primitives (Primitive). At the same time, as the marginal cost of communication decreases, DeFi aggregation effects and network effects will also appear, which also helps us to deploy high-quality DeFi projects with more development prospects in advance. DeFi delivers value rapidly in the world of Web 3.0. How to maximize efficiency and capture value for fat protocol thin applications is the field and direction of our research.
IOSG Ventures 2020 portfolio
In the crypto world in 2020, we experienced the black swan event, felt the craze of the DeFi wave, and welcomed the rise of DAO. After the start and precipitation of the past three years, blockchain has become the most cutting-edge platform and opportunity for open finance. DeFi has found the easiest and most grounded application scenario for blockchain. DAO was born in the blockchain, but it is not limited to the blockchain. The explosive growth of new DAO and DeFi projects, and the decentralized governance of their organizations, has attracted more and more attention and participation. In addition to increasing investment in infrastructure projects outside the block chain, from 2018,2019 year 2020, IOSG DeFi layout on the whole follow from the underlying infrastructure (eg: issue of a stable currency DAI MakerDao) to the intermediate layer protocols (such as: Synthetic asset protocol UMA, Synthetix) then the topmost polymerization reactor, the inlet flow (eg: 1inch, Matcha, dhedge).
IOSG Ventures 20 20 Portfolio
❖1inch (DEX aggregator)
1inch is a DEX aggregator. It builds DEX liquidity and pricing by aggregating upstream users and lower-level flow agreements, and gathers users through network effects and price advantages. One of the reasons why IOSG invested in 1inch is that the liquidity transactions in the DeFi field are too fragmented and there are many agreements, and the market urgently needs the emergence of transaction aggregators; the second reason is that it provides a deeper liquidity pool for different DEXs, and Able to get the best price in various schemes.
Facts have proved that the DeFi dark horse 1inch has been recognized by the market: the current daily transaction volume of 1inch is 389 million U.S. dollars , the average daily active users in the past seven days has exceeded 3000, and the community is also extremely active. In 2021, we will see resource integration platforms such as 1inch take on an important part of the DeFi ecological infrastructure and assist the DeFi industry to reach more user groups through the “one-stop” service model. We believe that 1inch, as a DEX aggregator, is becoming the most important solution to problems such as DEX liquidity split.
❖UMA (middleware)
UMA provides Oracle and smart contract templates for DApps, allowing anyone to create synthetic assets that can track the price of any value subject. We started researching UMA in 2019 and started contacting the UMA team, and participated in investment in early 2020. We are convinced that UMA will become one of the most successful protocols in the Web 3.0 middleware stack, and their greatest value will burst in the future to provide the basic framework and basic business logic for many top-level applications.
At present, UMA has made progress in cooperation with a number of community projects in the near future, including Yam, BadgerDAO, etc., and the user community has increased by 9664. And this is just the beginning, and we look forward to seeing even greater success in UMA in the future.
❖NEAR (Open Web)
Scalability is a problem that the blockchain needs to solve urgently, and NEAR is a highly scalable basic protocol that supports running DApps quickly enough on mobile devices. The use of sharding technology makes it more friendly to developers and users, allowing the number of nodes in the blockchain and the network to scale linearly, with the goal of reaching 100,000 TPS . NEAR leads technological innovation by building infrastructure. Among the projects that can compete with Ethereum, NEAR is the most powerful competitor. As the Ethereum 2.0 roadmap further delays sharding development, NEAR has become the current leader in sharding development. The core of IOSG Ventures’ investment is to help visionary teams like NEAR to develop and release their creativity, and work with them to build a more usable and good platform.
NEAR’s progress in the past year is obvious to all. The Ethereum cross-chain Rainbow Bridge, which was officially released in December last year, is currently running between NEAR and the Ethereum main network, and several DeFi projects are undergoing private testing. As of the writing, the market value of NEAR has reached 947.8 million U.S. dollars , and the daily transaction volume on the chain reaches between 10k~30k . Its community has also grown very rapidly, with up to 50k global community members for instant communication (Wechat, Discord & Telegram). NEAR’s capacity expansion and low fees have greatly reduced the threshold for use. Therefore, more and more Ethereum projects have begun to consider migrating to the NEAR platform. We will witness more projects migrate to the NEAR platform in the near future.
❖Polkadot (Web 3.0)
In the next few years, we believe that more and more developers will choose to build applications on the blockchain optimized for specific scenarios. Substrate greatly reduces the technical cost of the team that goes this route, and Polkadot makes these different chains interoperable and composable in the ecosystem. This will enable a new generation of applications, and these applications cannot exist on a single smart contract platform. Therefore, we invested heavily in Polkadot and Polkadot in the early stage. It is Polkadot’s ultimate mission to interconnect all chains and jointly build a fair and open cross-chain underlying system.
In addition to the amazing market performance after listing, Polkadot can be said to be the deepest community outside of Ethereum, and it also has the strongest attraction for developers. At the moment when Parachain has not been launched, we are pleased to see a large number of teams building core DeFi infrastructure based on Polkadot, including DEX, lending, synthetic assets, equity derivatives, privacy, etc. In addition, what impressed us was that some community-driven work created developer tools, educational materials, and hackathons. This means that the most valuable thing about Polkadot today is not the Polkadot blockchain itself, but the prosperous ecology it quietly gathered. Once the main network is opened, many entities in the ecology may be able to maximize the ecological synergy and complete a new leap forward at the fastest speed.
❖Synthetix (synthetic assets)
The reason we are optimistic about synthetic assets is that synthetic assets can promote DeFi lock-up volume and increase liquidity by absorbing traditional capital. Synthetix’s synthetic assets are composable in DeFi, and the user community in the Synthetix ecosystem is also composable, which will bring rapid user growth. We have seen the Synthetix ecosystem continue to expand, and more community projects and users on partner platforms have begun to use the Synthetix platform, which has increased the number of weekly active users of the Synthetix platform more than three times during the year.
At present, it can be seen that its highest single-day transaction volume has increased from 16.7M to 186M, a year-on-year increase of 1013% , and highly active users have increased from 3136 to 7777, a year-on-year increase of 148%. As more teams and developers enter the synthetic asset track, the types of assets that can be tokenized will continue to grow. Compared with borrowing, synthetic assets is still a small-scale track, and we expect this track to have even more amazing growth in the future.
Long-term value: create long-term value, never forget the original intention, research first
2020 investment main track & investment logic
Thinking and deciding investment, IOSG’s achievements in investment stem from continuous thinking and summarization of the industry. From our portfolio, we can see that the track we will focus on in 2020 not only covers DeFi, Web 3.0, Synthetix synthetic assets, but also includes the Layer 2 and Polkadot ecosystems that have been discussed in various communities recently. The following will explain in detail the tracks we are concerned about and the specific reasons, as well as our investment logic.
🔥 Web 3.0
Investment target: Polkadot, NEAR
As early as 2017, IOSG began laying out the Layer1 track, cross-chain protocol platforms Polkadot and Cosmos, sharding leader NEAR and many other Web 3.0 and Open Web projects. In 2019, based on past and latest research, we drew a map of the Web 3.0 technology stack and released a Web 3.0 research report, from its lowest-level infrastructure to Layer 1 to middleware, and middleware is divided into on-chain and off-chain. To the application layer, Open Finance is divided into the application layer. In the past two years, the industry is gradually evolving along our technology stack map. In the Web 3.0 era, users will have more control over their identity and data, and users will share data portrait rights with BAT. High replacement costs, strong network effects and user experience are the barriers of Internet giants, which will not be subverted in the short term, but the pursuit of the rights of users to control identity and data will eventually start a prairie fire.
The Ethereum ecosystem is the core infrastructure supporting the development prospects of Web 3.0, and IOSG also participates in the network operation as a verification node of Ethereum 2.0. At the same time, IOSG is one of the core strategic investors in public chain projects such as Polkadot and Near in Asia. It also actively invests in emerging underlying agreements such as Avalanche, Mina, and Oasis. On the other hand, through a safe and efficient Layer 2 solution, Web 3.0 applications in different scenarios will have more options for deployment of transactions, communications, and incentive mechanisms when Layer 1 resources are limited.
Starting from the fat protocol and thin application investment theory, we believe that with the rise of the entire DeFi open finance, middleware protocols and DeFi applications will emerge, and usher in a window of opportunity for the rapid development of the underlying infrastructure and upper-level innovative applications.
🔥 DeFi
Investment target: KAVA, MakerDAO, Kyber, 1inch, UMA, DDEX, dHedge, tBTC
2020 is more like a DeFi carnival, experiencing explosive growth and absorbing nearly $50 billion in new liquidity throughout the year. IOSG also took DeFi as its investment focus this year, and carried out multiple strategic layouts, and the final project performance in the market was very good. Regarding the overall picture of the DeFi project, we once made a “DeFi Project Panorama” on the IOSG public account, so I won’t repeat it. Here we focus on the two important tracks of synthetic assets and AMM.
Synthetic assets
“Synths” is an asset that simulates the mirror image of the target asset, and the price is anchored. Holding a synthetic asset does not mean holding the mirror asset but gaining its price risk exposure. The head of the track: Synthetix and UMA and their ecosystem, there are also some emerging projects, such as Synlev , Mirror and Deus .
As the main tone of blockchain financialization in 2020 is set, synthetic assets provide DeFi with a channel to use traditional financial assets and more diverse and complex trading strategies. As long as the system and oracle can support and integrate, synthetic assets can simulate and track gold, stocks, bonds, various traditional or encrypted indices, and theoretically can trade everything including pop culture market, meme market, and personal token market. and many more. Synthetic assets release greater liquidity than native cryptocurrency assets. We predict that 2021 will be a year for synthetic assets to shine.
AMM
Any market may not have enough organic liquidity to support active transactions. Market makers are essentially agents who alleviate this problem by facilitating transactions that do not occur in these markets. In traditional CEX, many market makers are professional teams or institutions. AMM (Automated Market Maker) is equivalent to truly decentralizing their role. AMM replaces order matching with a mathematical formula such as an algorithm and a bonding curve. AMM plays the role of the new token issuance market, and is also the most popular solution for listing new agreements and facilitating long-tail token transactions. Due to the permissionless feature of the AMM protocol and the simplicity of launching new tokens, this feature will exist as a long-term unique advantage of the AMM protocol, which is why we invest in 1inch , 0x and DoDo .
In 2021 we will see the emergence of new DeFi products, and the underlying protocol of these products is the financial infrastructure established on Ethereum in 2020. In 2019, the liquidity supply will mature, and in 2020, the liquidity incentive mechanism will produce liquidity mining and other innovative mechanisms. We have noticed that encrypted assets are beginning to be packaged into more complex forms, and new Dapp products have added more features. We have seen some Dapps that can provide contracts, futures, forwards and options. The high degree of composability of Ethereum itself will make Dapp easier to iterate. In addition, with the influx of new developers and the development of Layer 2, derivatives will continue to evolve and will bring DeFi closer to the performance of traditional finance. DeFi products can be programmed and will eventually surpass traditional finance. Therefore, the development of DeFi has a promising future and is expected.
🔥Layer 2
Ethereum expansion has always been a challenge. As early as three years ago, the Ethereum community realized the importance of scalability and introduced the first-generation expansion solution Plasma and state channels. However, after the rapid growth of DeFi applications and users, the community really realized and felt the throughput This bottleneck restricts the development of DeFi ecology. Layer 2 technology provides a secondary framework based on the existing underlying blockchain to solve its potential scalability problems. More and more DeFi projects have begun to consider which set of Ethereum expansion solutions to choose to reduce transaction costs on the chain for users, while also taking into account the composability and security of DeFi. The design of Rollups solves the data availability issues faced by other solutions such as side chains, state channels, and plasma.
The founder of Ethereum, Vitalik, began to call on the community to use the ” Rollup ” solution as the leading solution to promote the expansion of Ethereum Layer 2. At the same time, other expansion solutions will also be promoted simultaneously to enrich the ecological diversity. The initial Optimistic Rollup solution may be implemented faster. It improves the lack of data availability of Plasma, but its security is not entirely based on cryptography. From a long-term perspective, ZK Rollup is a more complete set of solutions, through zero-knowledge proof technology to ensure that expansion will not reduce security, but early engineering implementation requires larger resources. Therefore, we are firmly optimistic about the long-term value of ZK Rollup to the Ethereum ecosystem. Eventually, it may form a diversity expansion ecosystem based on ZK Rollup and supplemented by other solutions.
The future key directions of the Layer 2 field: Layer 2 security and composability; product interface and user experience; liquidity solutions across different Layer 2 (such as Hop Protocol and Connext, etc.); education to attract new users. We expect that by the second half of 2021, some large DeFi projects will gradually move to some Rollup expansion chains to take advantage of their high throughput and enjoy lower gas costs. It is foreseeable that in the future there will be indicators similar to TVL (total lock-up volume) to measure the value capture of Layer2.
🔥 Polkadot ecology
Polkadot and Kusama have achieved a very high degree of overall code progress this year. They are one of the few directions that can still become the focus of the market outside the Ethereum world after the DeFi fire. As a heterogeneous sharded multi-chain network, Substrate’s open source development framework is used to bridge homologous protocols, allowing end users to more easily access the entire heterogeneous blockchain ecosystem. In addition, Polkadot’s parachain auction this year is also a fairer governance activity. How Polkadot is compatible with the Ethereum world’s DeFi and transactions, we have also seen a lot of development teams working on this. We believe that only a sufficiently rich and powerful ecological project can interact well within Polkadot’s decentralized system, in order to realize the true potential of the system. Therefore, we look forward to discovering more ecologically original projects focusing on specific professional fields to help the long-term collaborative construction of the ecosystem.
Ethereum industry ecology VS Polkadot industry ecology
Similar to the development model of Ethereum in 2017/18, there are already a large number of projects built on Polkadot. The number of developers and projects based on Substrate has increased rapidly. The support of the Web3 Foundation has also established a solid foundation for developers to adopt the Polkadot ecosystem. Foundation.
In 2021, we will also see more projects dedicated to tools, services and integration. Their emergence will boost Polkadot’s growth and accelerate integration with other blockchain ecosystems. These infrastructure projects are essential to enhance the value of the Polkadot ecosystem and help Polkadot to value-link with other blockchains.
Today we have seen the application of EVM compatible smart contracts and asset bridges between Bitcoin, Ethereum and Polkadot. We can foresee that in the future, oracles, on-chain data query services, and API management tools will be the first to be built on Polkadot and promoted as user-oriented applications.
Because of the launch of cross-chain bridge facilities and card slot auctions, Polkadot’s DeFi ecosystem will flourish in the next few months. Based on the reality that the current market value of DOT+KSM is close to US$25 billion, we will inevitably see that 10%-20% of the market value of DOT+KSM will be used as locked position card slot funds to generate huge derivative value.
At present, in the DeFi innovation based on Substrate and cross-chain gateways, projects like Mangata have built Ethereum bridges to solve the problem of miners running away. Acala and Equilibrium are also providing stable currency and currency market protocol support for the Polkadot ecosystem. There is a privacy chain environment like Phala that provides the basis for confidentiality.
In the early days of DeFi in the Polkadot ecosystem, based on the card slot auction logic, we can predict that liquid bets will explode as core value. At present, several DeFi projects are studying to provide mobile security solutions similar to Stafi and Acala . In the coming months, we will see a large number of projects replicated on polkadot with the Lego nature of DeFi. Once the basic Lego system is established, developers will flock to develop innovative financial products.
Whether it is migration or direct development, I hope to see more synthetic token projects, business-oriented projects (similar to Centrifuge) and DEXes / AMM on Polkadot.
At present, DeFi assets locked in the Ethereum ecosystem will become the norm. Polkadot will attract many DeFi protocol migrations through card slot auctions, low-cost replication contracts and scalability in the short term, but in the longer term, we believe that Polkadot’s true value lies in With the ability to handle decentralized applications and data services, Polkadot’s system has threatened Ethereum 2.0 in terms of development progress and ecological richness. If DAPP breaks out again within 2-3 years, it will most likely be in Polkadot Support within the ecology. Therefore, projects related to games, application development, data services, and native smart contracts (!ink) are also worth preparing for long-term deployment.
As the parachain auction draws to a close, more and more projects seek support from DOT whales, funds and communities to raise funds, and obtain parachain slots by staking DOT. The price of each parachain is highly controversial, ranging from 200,000 DOT per year to 1.6 million DOT per year. Most mature projects are well prepared for the integration of parachains and the auction process. This will be an exciting time for the Polkadot ecosystem and promote developers’ development work on Polkadot.
TLDR: IOSG investment keywords
Investment is both a science and an art. In addition to testing people’s knowledge, professionalism and judgment, it also tests people’s disposition, aesthetics and values. IOSG’s investment logic and strategy are based on the long-term guiding ideology. Key words include:
Unity of knowledge and action: Under normal circumstances, based on in-depth research, it is not difficult to initially judge the intrinsic value of a project. The difficult thing is to dare to place a heavy bet on your own judgment and stick to your own in different market sentiments and environments. judgment. Therefore, investment needs to be faithful to oneself and achieve the unity of knowledge and action. IOSG has been focusing on betting DeFi since 2017 and has built a multiple portfolio. 1inch+Synthetix is from an obscure grassroots development team to entering the mainstream DeFi arena, Matcha (0X) + UMA (cooperating with the Yam/Badger community) They are all micro-innovations of well-known teams again. In this process, we have witnessed the growth of the team.
Long-termism: Long-termism requires us to stick to our original intentions, not to be troubled by current fluctuations and profit and loss, but to see opportunities and changes in the long-term future 10 or even decades; it requires us to become long-term thinking strategists and not to prove to the outside world What, but to work silently to do our best; it requires us to continue to create value as the foundation of our lives, and make choices that conform to our own values between short-term profit and long-term value. In the cryptocurrency industry, we adhere to the long-term principle, choose excellent projects to walk with the team, become friends of time, and accompany the team and projects to grow together. Regardless of whether it is Polkadot or Near, we support it at the earliest stage. At Polkadot, we pursued two consecutive rounds of investment and then strongly supported the developer hackathon. In terms of post-investment management, we helped them hold meetup founder communities in four cities across the country. Yes, these teams have one characteristic. They are all believers in long-termism.
Persist in doing the right thing, not afraid of loneliness and hardship: The future blockchain ecology requires serious and professional mature investors to build. They walked step by step to today, silently, but tirelessly preaching for the encryption field, allowing more users and funds to enter this field, for everyone involved, and for this era. In-depth industry research is essentially contributing to the industry and the times. The screening of massive data and information, the communication of many projects in the industry, and the exploration of industry maps are complicated and difficult, but they must be done by someone. In this noisy capital market, only a minority who maintains independent thinking and establishes a mature decision-making process and investment system can it be possible in the complex investment world without being disturbed by market fluctuations and emotions. Find the main contradiction and become the winner of long-term excess returns.
IOSG 2021 firmly optimistic about the direction
Integration of CeFi and DeFi
Financial development is gradual, and DeFi will eventually cover various financial tools and applications. However, due to regulatory restrictions, encrypted assets cannot be fully used as a means of payment. For users outside the circle who want to participate in digital asset transactions, the DeFi infrastructure is not yet complete. Therefore, we predict that the short-to-medium-term development rhythm is still the DeFi+CeFi hybrid collaboration model. In the traditional financial world, the first application case of DeFi will cooperate with the financial sector to provide services to developing regions where traditional businesses are insufficient. Because in these areas, DeFi can fill the gap created by the limitations of traditional financial services.
The unmet financial needs of the world mean a market opportunity of US$5.2 trillion. Centrifuge and Persistence invested by IOSG are leaders in targeting these profitable opportunities. The main goal of this type of DeFi is to allow global users to participate in the decentralized economy and be able to make instant profits. Centrifuge , Persistence, and Goldfinch connect financial technology companies. They gather capital from DeFi and issue loans to those in need. In the long run, this is one of the directions that excites us the most, because it demonstrates the power of technology and freely flowing capital that can create tangible value for ordinary people.
Large-scale application of lightning loans
Because on-chain applications are composable, Lightning Loan is probably a DeFi product. Flash loans are decentralized financial products that allow people with programming backgrounds the opportunity to become giant whales and can trade assets worth millions of dollars in a block.
We predict that more talents will enter this field due to the high remuneration of flash loans to further develop flash loans. In addition to motivating geek developers, lightning loans have also turned DeFi into an extremely efficient market, with various arbitrage opportunities constantly emerging.
Unsecured credit loan / insufficient mortgage loan start
In order to ensure the security of the decentralized system, the DeFi loan agreement requires over-collateralization. When over-collateralization can be performed anonymously in DeFi, the smooth operation of the system is guaranteed. This is the same as traditional finance, but it also has the disadvantage of low capital efficiency.
Now, there is an agreement to access intermediaries, let them endorse, and make insufficient loans to borrowers with insufficient credit (such as our investment in AAVE). In this way, the risk can be passed on to the middle party instead of the entire system. However, due to the lack of trust between borrowers and lenders, this model is difficult to expand.
No intermediate party endorsement is not full mortgage is a big step DeFi development, we believe one of development priorities in 2021 is not the mortgage in full, and we predict there will be more similar agreement hosting wallet to borrowers People manage assets.
LP liquid pledged tokens can be used as collateral for lending platforms
The AMM protocol provides users with a good opportunity to passively use assets and earn income. Liquidity providers are critical to the success of many AMM agreements. In these agreements, greater liquidity under certain conditions means greater transaction volume. The reason is composed of two parts. First, deeper liquidity means better pricing, so more orders are sent to a specific AMM. Secondly, more TVL means that the arbitrage robot responsible for the price efficiency of the AMM agreement can generate more transaction volume. Locking a large amount of liquidity in the AMM protocol provides an opportunity to build DeFi Lego on top of this layer.
We expect more LP token use cases in the next few months to unlock funds from the AMM pool (for example, allowing LP tokens to become collateral for currency markets or synthetic asset agreements)
Ecological opportunities under the combination of ETH2.0 and Rollup
In the first phase of the Ethereum 2.0 beacon chain launched at the end of 2020, the Proof of Stake (PoS) consensus mechanism was enabled and the PoW workload proof consensus mechanism used by the Ethereum 1.0 chain was upgraded. Judging from the fact that the number of active pledgers of ETH2.0 is far ahead, the initial launch of the beacon chain has successfully attracted the attention of the market. However, there has always been a dispute between ETH2.0 and ETH1.0. At present, the Ethereum network is very congested, and the average cost of each transaction is more than $10, which almost isolates retail and long-tail asset transactions. Therefore, the introduction of the Layer 2 solution can be said to be an arrow. But there is also such a saying: ETH 1.0 is the earth we live on now, ETH 2.0 is the Mars that many people hope to move to in the future, maybe ETH 2.0 is the ultimate solution for the long-term future, but we must survive before we have the future.
The ultimate goal of both ETH2.0 and other solutions of Layer1 is to get rid of the low TPS restriction. The initial launch of the beacon chain made a good start for ETH2.0; the PoS consensus continues to operate stably, and more potential pledgers and individual nodes will join Ethereum 2.0; the adjustment of the Ethereum 2.0 roadmap relieves the current potential Pledgers are prohibitive of liquidity risks. We believe that the launch of ETH2.0 is not only beneficial to the long-term development of ETH, but also beneficial to the development of its DeFi ecosystem, bringing certain expectations for the future scalability of Ethereum.
Rising NFT and game industry
In the past two years, we have witnessed the growth of the NFT field. From the underlying token protocol and public chain to development platforms, applications, and trading platforms, the layout of the NFT now covers multiple levels. We are optimistic about the breakthrough development of projects based on the combination of NFT and DeFi this year. There is nothing new under the sun. As early as a few years ago, there were many attempts in the industry to integrate NFT into blockchain games to provide permanent preservation and value support for virtual assets in the game. However, the timing was not fully ripe at that time, so NFT did not get explosive growth. We believe that the current time is relatively mature, which is mainly reflected in the following aspects:
The community’s enthusiastic participation in DeFi has formed a high tolerance for participation, and has great enthusiasm and ability to participate in emerging NFT-type projects, which has also greatly shortened the education cycle for new users ；
The industry gradually matures and forms more practical customer acquisition strategies. For example, the success or failure of NFT-based games depends more on the attractiveness of the game itself;
The infrastructure including the underlying protocol, the second-tier network, and the second-tier trading market has been gradually improved, removing technical and liquidity barriers for the large-scale use of NFT-based games, social and entertainment applications.
In our investment, we will also focus on the deployment of infrastructure supporting the liquidity of NFTs, applications such as high-quality games using NFTs, and applications based on NFTs in a wider range of finance, credit investigation and warrants. People combine NFT with games and collectibles because it can carry one of the unique values. But we believe that scarcity is only the surface layer of NFT. We dig deep into the deep attributes of NFTs, and pay particular attention to new NFTs such as DeFi and social tokens. Currently NFT deal size has exceeded $ 180 million can be expected, under DeFi attributes of blessing, NFT body will exceed one billion US dollars in the near future.
Broken financial derivatives
In 2020, the decentralized exchange (DEX) has basically completed the spot market layout. From the first quarter of 2021, we will see a deeper impact of DEX on derivatives trading. In recent years, several projects have begun to build infrastructure for the extension from spot products to derivatives, and it is expected that benefits will be realized in the near future. Derivatives are also a promising development direction for DeFi. One of the important differences between DeFi and traditional finance is capital efficiency. At present, capital efficiency is not high and requires so many additional collaterals to ensure good behavior rather than to promote more synthetic assets or derivatives. From the perspective of DeFi, no loan is unsecured. But it is possible to find a way to reasonably represent and tokenize cash flow outside of unproductive collateral. The key direction of community governance and derivatives: the role of delegation mechanism in community governance ; derivatives and synthetic assets ; lowering the threshold of collateral .
In 2021 we will see the emergence of new DeFi products, and the underlying protocol of these products is the financial infrastructure established on Ethereum in 2020. In 2019, the liquidity supply will mature, and in 2020, the liquidity incentive mechanism will produce liquidity mining and other innovative mechanisms. We have noticed that encrypted assets are beginning to be packaged into more complex forms, and new Dapp products have added more features.根据这个发展逻辑，我们可以预测复杂的衍生品产品会在接下来大放异彩。
我们已经看到了一些Dapp 可以提供合约、期货、远期和期权。以太坊本身具备的高度可组合性会让Dapp 更容易迭代。此外，新的开发者涌入以及Layer2 的发展，衍生品会不断发展，并且会让DeFi 更加接近传统金融的性能。DeFi 产品可被编程，最终会超越传统金融。所以，以太坊的超可组合性如何加速新的 衍生品平台 推出, 未来随着DeFi「乐高积木」的丰富，我们可以去创建新的资产类型，并通过创建新衍生平台以从基础资产中发现更多的价值。
分级贷款协议和固定利率产品
目前，DeFi 领域最大的问题之一是利率非常不稳定。贷款人的APY （Annual Percentage Yield 年化收益率） 在一定时期内可以在1% 到20% 之间变化，这对于寻求稳定可预测回报的大型机构和个人投资者来说是一个大问题。基于收益率敏感性和市场价格波动性的需求，分级债券是市场上的主要解决方案。分级贷款是2020 年末开始受到重视的DeFi 新领域之一，Saffron 和Barnbridge 是在该领域深耕的头部项目。通过引入固定收益衍生品，这些项目使保守的投资者能够对冲收益率的波动，让投资者对相同的资产实现不同的风险和收益水平。
上述结构化产品在传统金融中占有重要地位，是使用最多的金融产品之一。随着DeFi 系统的日益成熟，我们预计结构化产品和分级借贷平台将在投资者中得到广泛应用。由于DeFi 项目的可组合性， Saffron和Barnbridge很可能将被整合到现有的DeFi 蓝筹项目中，如Aave 、 Uniswap和Compound ，并为投资者提供额外的对冲选择。
以人为本的去中心化治理
2020 年，流动性挖矿成为了协议向核心用户分发代币的创新激励机制，类似Aave 的「闪电贷」和「信用贷」等产品创新正在涌现。随着DeFi 协议的发展，产生了越来越多具备治理价值的内核。以Maker 和Compound 为早期代表，2020 年下半年至今，我们看到越来越多的DeFi 项目开始了去中心化治理。项目使用开源代码程序进行决策，组织的财务记录会保存在区块链上。去中心化自治组织及治理方式对当今世界许多传统的等级制度和排他性组织结构来说无疑是一个巨大的挑战。它通过” 群体智慧” 进行更好的集体决策，这在治理民主化方面相较于传统治理模式更为优越。DAO 可以最大限度地使利益相关者参与到决策流程（权利下放） ，并实现治理透明化。在没有权利下放的情况下，DeFi 工具可能不会具有革命性。只有权利下放，DeFi 平台和项目才能实现革命性结果。
截至撰文，全球DeFi 市场锁定的价值约543.1 亿美元（DeFipulse.com） ，而通过DAO 管理的总资产AUM （Asset under management） 也高达9.918亿美元(deepdao.io) 。去中心化治理创造了一个无需信任、没有边界、透明、可访问、可互操作并且可组合的组织。随着DAO 管理着越来越多的DeFi 资产，以及越来越多的社区成员参与DeFi 项目的治理，可以预见，未来将有更多的DeFi 产品与DAO 进行交互，更多的管理规则将被写入智能合约公共代码中。我们相信，去中心化治理将成为DeFi 追求的基本要素，未来也将有更多的DeFi 协议通过DAO 进行管理。
处于上升阶段的保险市场
自2020 年中起，DeFi 保险市场热度逐渐升高，出现大量创新项目。跟随Nexus Mutual的脚步，其他保险项目，比如Nsure 、 Haka 、 Union 、 InsurAce在开发上取得快速进步。我们预计今后两年内更多项目会上线，并出现规模足够大的行业领军项目。保险项目承保的风险类别不断扩大，从智能合约保险扩展到包含市场风险，事件风险，现实世界风险等风险类别的产品。比如说，投资者购买从基于衍生品的市场风险保险，从而降低价格波动的影响。另外，现实世界风险保险上链也发生了长足进步，我们看到关于航空和农业风险的保险项目准备上线。预计未来两年内，随着更多项目的开发和上线，更多风险类别可以被保险，满足用户的各类不同需求。
随着DeFi 生态的扩大，用户的增多以及生态系统内资金量的暴涨，对于保险的需求在2020 呈爆炸性增长，保险的用户量在不断攀升（如Nexus Mutual 年内保险量增长破千倍） 。我们预计未来两年– 随着DeFi 生态的逐步成长和成熟– 保险用户将会持续攀升，购买保险的DeFi 用户比例也会上升。
虽然DeFi 保险行业仍旧有很多风险和挑战，例如有效杠杆/ 资金利用率低，造成保险供不应求。独立承保人生态缺失，保险用户购买入场门槛高。保险项目自身受到攻击，再保险业务生态缺失等等。但我们认为，保险是区块链不可或缺的环节，大额资产需要多一层外在保障。我们预计在未来两年内，在开发者团队，社区和投资人的共同努力下，这些问题都会得到解决。
算法稳定币及算法类合成资产
传统金融与区块链金融的融合与冲击，主权监管势必让中心化稳定币受到更多限制，从而将加密经济推向去中心化稳定币。同时稳定币跨境支付业务继续增长，使用稳定币或任何加密资产进行跨境支付比传统方法更简便有效。算法稳定币具有的去中心化与抗审查性，使得其长期来看几乎必定进入主流的选择。过去的一年，由AMPL 带领的ESD、BASIS、FRAX 等算法稳定币暴涨行情重新洗牌交易榜单，令行业对算法稳定币刮目相看。因为早期无须抵押品，没有底层价值支撑，导致参与交易的资金博弈投机成分较浓。泡沫消退后，算法稳定币会逐步走向稳定，保持均衡状态，而以FRAX为代表的部分 抵押算法稳定币，更像是一个有趣的社会实验，以期在价格稳定、资本利用率和抗审查之间，找到本该属于它的谢林点。
巨大的SaaS 数据服务商市场
从2019 年到2020 年以太坊地址从8400 万增长至1.31 亿，增长56%，那对于数据的要求，其实有不少公司已经开始了试水，Nansen 将超5000 万个以太坊链上地址和活动进行标记，并进行数据分析，且数据分析仅有4 分钟的延迟。此外我们于今年布局的DeBank 为整个DeFi 生态整理出最新的项目并统计所有的链上数据后，社区开始使用DeBank 定义的锁仓量（TVL） 、用户规模、交易量数据，作为DeFi 生态的重要趋势指标。另外一个重要的team，Scout 选择了另一种产品形态，为用户提供一种可以深入挖掘以太坊数据的工具。而且Scout 为了进一步降低该工具的门槛，提供了图形化的界面。DeFi 的前景仍然无限广阔，而专注于链上分析的Nansen 也将继续为深度用户提供专业与牢靠的数据支持。
DeFi 市场已经有543.1 亿美元锁仓TVL，超过700 亿美金市值，以太坊市值2011 亿美元（截止发稿） ，随着Aave 与Synthetix ，Uniswap 跻身总市值排名前二十，我们有理由相信，DeFi 的前景仍然无限广阔，而专注与链上分析的数据平台也将继续为深度用户提供专业与牢靠的数据支持，将更加凸显价值。
社交协议代币的创新
社交代币的出现和兴起为社交媒体的价值输入带来了万花筒般的曙光。多样的代币分发模式帮助发行者和持有者获得一定的短期和长远价值捕获。我们认为，社交协议的未来可以在于创造完整的社会资本市场，任何人都可以在任何时间出于任何原因交换发行代币，但一旦发行代币足够分散和流通，领域将有可能出现正式的交易所。这将使我们的社区、第三方和几乎任何网络参与者能够轻松地在彼此之间交换社交货币。这一点已经可以从Roll 和Uniswap V2 的分叉交易所中体现出来。
Roll社交基础层就扮演了社区聚合器的角色，将个人和社区代币揽入怀中。Cherry 就是一个经典的例子，是Roll 平台中仓位较大且网红社交代币。通过发行Cherry，创始人可以有效地创作属于自己的经济市场，通过激励用户参与互动和分享赢得$Cherry。拥有$Cherry 的用户则可以换取CherryBlossom，并用其换取一系列的Perks，比如观看Cherry 独家内容，与Cherry 进行互动，以及对Cherry 接下来的活动投票规划。然而，Cherry 的核心点不止步于表面上的获得优势，更在于从根本性上维护了消费者和艺人们双方的权益，帮助其他艺人通过Cherry 赚取费用并为消费者直接提供有价值的内容。令人欣慰的是，这件案例只是个人代币能力的冰山一角：不同的艺人可以开展不同的模式，创造不同的机制和机会，而多样性的发展方向正是应该令我们兴奋的地方
IOSG 对社交协议代币的出现充满了期待。在过去的一年中，我们的Portfolio 里加入了Roll 社交代币，让我们对这个行业踏出了第一步。Roll 在短暂创立的两年时间内已经成为行业里最受欢迎的代币发行工具，演变成社会协议发行代币的焦点。在新的一年里，我们将更多的关注并发掘行业内的充满前景的模式、协议与工具，发掘社交代币市场中宝贵的机会。
对长尾用户友好的协议
虽然DeFi 的资产规模增速迅猛，我们同时需要冷静的看到，各个DeFi 协议的实际用户人数却增长放缓，对于一些基础设施protocol 来说，用户人数可以说是停滞不前。我们认为这是因为参与DeFi 变得越来越像一个资本密集型产业，交易手续费只对于巨鲸友好，但对于新接触DeFi 抱着尝试心态的早期使用者，以及未来巨大的长尾用户蓝海来说门槛极高。
我们虽然也期待Layer2 Rollup，侧链和其他公链去尝试迁移已有的Layer1 DeFi 生态，但我们同时认识到这样的生态系统迁移将会是缓慢和具有挑战性的。我们将在未来十分关注能够盘活已有Layer1 DeFi 生态，并且可以让长尾用户更容易和低成本接触和使用DeFi 的应用层和基础设施项目。
投资价值传递：IOSG 投后赋能
IOSG Ventures 是一家研究及社区驱动的投资机构，团队通过对区块链各个领域的思考与大量的调研制定投资决策。通过输出研究报告，帮助整个团队认识到当前市场缺失的部分，也获得了时常反思的机会。作为一家负责任的投资机构，IOSG 不仅为投资项目提供资金支持，也为其提供社区建设、资源对接、品牌推广、生态扩展等帮助，这是对双方都有意义的事情。因为在这个循环中，资方能更加了解了项目在做的事情，看到行业的市场趋势，也能发现可以再为行业及社会进步作出更多贡献。真正参与到项目的生态中去，见证项目从0 到1 的开发，为其产品提供建设性改良建议，深入参与到行业变革的浪潮中，是一件极其幸福的事情。
研究报告输出
从2020 年初到年末，共输出WeeklyBrief 共80 余篇，内容覆盖行业洞察、新闻动态、基金情况等等。同时以Medium 为英文内容主要发布平台，以Newsletter 的形式输出了许多文章，从讨论技术底层逻辑AMM 到探索市场热捧的产品SushiSwap 等等。研究报告是IOSG 的立身之本，我们对行业和市场一直保持着严谨的态度和敬畏之心。
中文报告一览，可关注公众号「IOSG」阅读详细内容
英文内容一览，可关注@IOSG VC 阅读详细内容
社区项目合作
IOSG Ventures 的团队遍布中国、美国、欧洲及新加坡，为帮助项目成长，团队成员积极参与到相关社区及组织中，通过高效的沟通与协作为项目提供支持，建立庞大的社交网络，帮助投资的portfolio 成长并完成品牌建立，也为其产品增加影响力和社区规模。
IOSG Ventures 加入行业内相关知名组织，比如以太坊企业联盟（Enterprise Ethereum Alliance，EEA ）、芝加哥DeFi 联盟（Chicago DeFi Alliance，CDA）等，为portfolio 制定创企业成长计划，帮助他们走的更远。同时IOSG 也是DeFi 知名活动DeFi Summit 的主要参与者和推动者，也同时是Metacartel DAO 的正式成员。我们坚信社区的力量，坚持作为投资机构帮助初创企业成长的责任，我们希望给予的不仅是金钱上的帮助，还有社区及资源支持。我们时常与各项目创始人、团队、开发者、交易所、学术研究机构、其他风投基金、媒体和网络意见领袖等保持紧密联系，帮助如Near 和Oasis 等项目建立合作，提升其产品的易用性和开发效率，并协助建立社区；同时我们也在鼓励更多开发者参与到整个行业中，为赞助Cosmos 联合顶级大学和开发者社区共同举办的研讨会和一些黑客松活动提供赞助。
未来我们能继续为Portfolio 做的事情，包括但不限于：为项目注入资金，支持其建立社区和商业采买；联系行业内专家进行辅导，从而进行项目孵化；介绍更多的战略伙伴和行业专家；联系Portfolio 中的其他公司进行商业合作和技术开发来做到战术协同；参与质押保证token 经济顺利进行；参与社区治理并提出高质量的治理提案；作为节点验证人发挥作用等等。
活动会议
活动是帮助项目曝光以及获取资源的绝佳方式，在过去一年中，IOSG 最为亮眼的活动当属我们的第七届Old Friends Reunion IOSG DeFi Summit。10 月26 日，Old Friends Reunion 在上海1933 老场坊圆满落下帷幕。IOSG 携手imToken、DeBank 以及Aave 共同打造了一场空前的视听盛宴。
超过1000 人参与了历时一整天的分享，活动现场汇聚海内外的知名区块链开发者、投资者、开发者及社区爱好者，邀请重量级嘉宾超过60 余位，其中包括以太坊的联合创始人Vitalik Buterin，NEAR 联合创始人Illia Polosukhin，Aave 的创始人兼CEO Stani Kulechov、tBTC/Keep 的联合创始人Matt、Avalanche 的创始人Emin Gün Sirer 和Oasis Labs 的创始人Dawn Song。
我们的老友会已经成为了行业内知名的平台和集会，聚集了众多创始人、开发者、投资人。他们可以在这里互相交流想法、洞见，探讨市场行情，甚至孵化项目、促成合作。我们也希望，IOSG 能够将老友会打造成国内乃至国外顶尖的行业盛事。不仅能够促进项目孵化、社区成长，也能为行业带来无穷的动能。在新的一年，IOSG 会继往开来，继续做好我们的研究内容输出、扶植项目社区经营、办好活动、加强Portfolio 品牌建设，为接下来的已投和将投项目的赋能做好万全的准备。
写在最后
区块链和加密货币的未来从不缺乏星星之火，发现它、陪伴它、帮助它，在合适的时候，它便会点亮整个天空。
— IOSG Ventures team
目前，区块链与加密货币行业还处于野蛮生长的早期阶段，因此并不缺乏短期的造富机会与神话。信息不对称产生的套利机会、追逐热点的投机机会在行业俯拾即是。但我们认为，这种短期的快钱机会可能会导致投资人怠于发现真正有长期价值的机会，从而失去不断正向进化的可能。正如高瓴资本张磊所说的「有些事情不能做，那就从一开始就不做」。
过去一年，我们说的最多的一个词就是拒绝，因为我们不希望自己做某个选择与决定，仅仅是因为别人也这么做。我们会问自己，这到底是一个让我们内心平安的选择，还是说喧嚣之下被迫做的很着急的选择？当然，我们也相信，短期的非共识一定会变成共识，在构建长期共识的旅途上我们遇到的哪些寻找真正热爱社区与创造产品的创始人，与他们共同创业与成长，坚守加密朋克Web 3.0 世界的初心。
对于许多基金来说，在熊市开始的时候构建投资组合和深度研究是个挑战，我们很幸运地建立了一个核心投研团队。通过我们每一个项目讨论会议，每一个细分赛道的行业研究洞见，从创始人出发与开发者共同构建产品与社区，继续探索一个特立独行的加密投资范式。我们也期待未来的东方市场，出现越来越多专业而受人尊敬的加密基金，我们也将为这份期许不断努力。
本文感谢在背后默默提供支持的Dong Mo、Deniz Omer、Marvin、潘致雄。
