Listen to Arthur0x and Su Zhu comment on top DEX projects and future trends

DeFi projects that focus on creative governance solutions and long-term development positioning have the opportunity to become the ultimate winner.

Finishing: @Akshay BD
Compilation: Lu Jiangfei’s Chinese version was first published on ChainNews.com

This article is a summary of the content of a recent podcast by Arthur Cheong, head of DeFiance Capital, and Su Zhu, CEO of Three Arrows Capital, who explained their views and opinions on the development of DeFi projects.

First, let’s take a quick look at a few key points of this podcast:

1. Building UI/UX is very important. Doing a good DeFi project can’t just consider technology and token economy. In fact, building a good user interface and user experience is more important than you think. For specific negative textbooks, you can look at Balancer (the user experience and interface are not very good, resulting in mediocre performance);
2. Community participation is very important. The community can do many things, more important than you think. For specific positive cases, please refer to Sushiswap;
3. DeFi projects that focus on creative governance solutions and long-term development positioning have the opportunity to become the ultimate winner. Specific positive cases can refer to SNX.

Let’s take a look at what they think about some specific DeFi projects.

In the first part, let’s start with a decentralized exchange.

Decentralized exchange Uniswap (UNI)

• Arthur believes that Uniswap is the best decentralized exchange with the highest usage rate;
• But compared with professional market makers, Uniswap has higher slippage. Of course, it is already very successful;
• Uniswap investor Paradigm has top researchers who can provide more support and help for Uniswap v3;
• Uniswap has some governance issues, such as the proposal will be deadlocked-probably for legal reasons, the team has been letting go;
• Su Zhu believes that the key issue that Uniswap needs to pay attention to is how to play a governance role without the leadership of the team. The community needs to promote and determine the priority, but also balance the liquidity providers, token holders and other stakeholders. Interest in time.

Sushiswap

• Sushiswap’s release intention has been criticized. They chose to issue tokens before Uniswap, which may be to maximize profits;
• However, Arthur later changed his views on Sushiswap. When Sushiswap adjusted at the bottom, he realized that Sushiswap’s transaction volume was actually quite good (ranked in the top 5 by transaction volume), especially after the market hype had disappeared, and this performance was good enough;
• Sushiswap’s distribution of tokens is declining, but the liquidity value locked on the platform is about 1.2 billion U.S. dollars (chain news note: currently locked liquidity is about 3.5 billion U.S. dollars), indicating that the project is growing organically. In the past two months, the annualized rate of return of SUSHI tokens has exceeded 10-20% (this figure is true because they purchase SUSHI tokens from the open market to distribute rewards). The corresponding background is that of Sushiswap. Liquidity mining rewards have been greatly reduced, and token rewards will be locked in a certain percentage;
• It is a grassroots democracy, but it is a bit chaotic;
• Sushiswap actually originated from Uniswap, but it has some technological breakthroughs. Although SushiSwap is more like a grassroots version, it can also meet the needs of the community (such as margin trading) and achieve rapid iteration. The release of BentoBox is also optimistic.
• Su Zhu believes that Sushiswap is promoted by the bottom of the community, so it can lead the trend of cross-chain (such as Solana, Serum, Polkadot, Moonbeam, etc.), and does not need to consider too many principles, just about creating the best interests for the community.

0x

• Arthu: What exactly is 0x? It is not a decentralized exchange, but a DeFi protocol on which different DEXs can create and share liquidity. It is also a request for quotation (RFQ) platform. DEX based on the 0x protocol can initiate an inquiry.
• Although there is an off-chain order book (to get the best quotation through the repeater), the transaction is executed on the chain;
• The adoption of 0x protocol is relatively slow. Its competitor Paradex has been acquired by Coinbase, and this former rival has faded away. The problem with 0x may lie in incentives, and the transaction volume of the repeater on the 0x protocol is not very good. Judging from the current market environment, the life of repeaters is not easy.
• Recently, 0x has begun to experience some recovery. They optimized economic measures to incentivize repeaters (by allocating fees) and also provide users with practical token rewards, but overall the transaction volume is still small.
• imToken wallet is one of the largest Ethereum wallets in China. They used the 0x protocol to build a decentralized trading platform Tokenlon. Now Tokenlon drives more than 90% of the 0x repeater transaction volume.
• AMM-based decentralized exchange vs. order book-based decentralized exchange? AMM-based decentralized exchange is more like an investment strategy. At this time, the decentralized exchange is more like a by-product-for investors, they can use market volatility to trade, and then through fixed Weight rebalances assets, which is actually somewhat similar to an exchange-traded fund (ETF).

Bancor

• Bancor may be one of the oldest decentralized cryptocurrency exchanges in the DeFi industry. It is also one of the projects with the most ICO financing in the history of Ethereum (a total of $100 million in financing). They did launch a product, it seems Also received recognition;
• Bancor’s liquidity is mainly concentrated on BNT tokens. They cannot directly trade ETH to USD. This means that users have to convert ETH to BNT first, and then use BNT to exchange USD, which obviously caused a lot of inconvenience. Because people don’t want to hold tokens they don’t trust (most users trust ETH or stablecoins more);
• Temporary losses can be compensated by BNT tokens;
• Bancor V3 has been officially released recently, with 7 million transactions in the past 24 hours;
• Bancor’s automated market maker model is similar to Uniswap, but unlike Uniswap, Bancor adds compensation for permanent losses;
  -So far, we still don’t know why Bancor has not achieved great success. The problem may be related to the user experience or the Ethereum community is very dissatisfied with Bancor’s ICO.

Kyber Network

• Su Zhu believes that Kyber Network is extremely innovative in its pledge model and can obtain real cash flow instead of simply repurchasing and burning tokens. This is a more advanced business model-but it may be taxable. The people are not very friendly. Generally speaking, we know that those who engage in DeFi transactions should not pay taxes (God, is there a king?). This can attract users to better participate in transactions and understand the returns.
• The Kyber Network model can be said to be ahead of this era. Everything on Kyber is carried out on the chain. For example, if you are a market maker on Kyber, then every quote is completed on-chain.
• Kyber Network has a passive market model and an active market model. For example, you can achieve passive liquidity through Synthetix. Of course, Kyber Network also provides customized solutions for professional market makers;
• Capital efficiency is the core of Kyber Network’s operations. During the end of 2019, their transaction volume was almost the same as Uniswap, but in terms of lock-up volume, Kyber was only one-tenth of Uniswap. Although Kyber Network has many advantages, they may not foresee two market directions:
  1. How to solve the problem of insufficient service to retail investors
  2. How to make the community willing to provide more liquidity to support their favorite projects.
• Although the scale of Khyber Network has increased tenfold and its performance seems to be good, there is at least an order of magnitude difference compared with Uniswap, so they should really do something in the next iteration!

Which direction of the DEX circuit should be paid attention to in 2021?

• Arthur believes that the market share of DEX will continue to grow, and the daily trading volume of decentralized cryptocurrency exchanges can reach 500 million to 1 billion U.S. dollars, especially when L2 is successful
• Su Zhu believes that both centralized exchanges and decentralized exchanges will grow in transaction volume, especially cryptocurrency exchanges like Binance (and other cryptocurrency exchanges that do not operate in the United States), they may play a cross-chain second The role of the layer network (basically, users deposit tokens directly in Binance, and Binance can provide users with other token withdrawal services);
• These cryptocurrency exchanges can not only provide centralized financial services, but also provide decentralized financial services, so they can draw a certain percentage of liquidity rewards from them. This hybrid model helps users get a more familiar experience. At the same time, it perfectly integrates the high efficiency of DeFi;
• However, centralized exchanges may continue to face pressure because they now have to list DeFi tokens faster. Nowadays, when a certain DeFi token is launched, they can immediately go online on Uniswap and Sushiswap, which obviously brings some competitive pressure to centralized exchanges, so centralized cryptocurrency exchanges may also need to provide similar services. So that users can also quickly access DeFi tokens and prevent funds from flowing out of their platforms.
• Some core experience: the community is still the most important thing, you need to carefully serve the community, not just focus on technology or economic models. The community is more important than you think. To get community users involved, they will do many things beyond your expectations.

Source link: twitter.com

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