The value of revenue aggregator capture is becoming more and more obvious, and it is expected to become the unicorn sector in DeFi

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Is the bull market coming? Is this flourishing age as you wish?

The price of Bitcoin rushed all the way from 3,800 US dollars to 19,000 US dollars, which is close to the highest level in history. The bull market is still the familiar taste, but the way insiders collect coins has quietly changed dramatically.

Entering into the second half of 2020, DeFi has achieved unprecedented development, and the total value of locked positions (TVL) has continued to soar. It has now exceeded 12 billion US dollars. At the same time, DeFi TVL is also rolling forward with a continuous breakthrough. It has become a unicorn in the field of cryptocurrency. The Ethereum bull market is coming. How to keep and increase the value of the digital currency held is something that every holder needs to think and understand in advance. In the past six years of the Mt.Gox (Mentougou) incident, investors have not yet received compensation. The first two There are still lingering fears about the withdrawal of the coin on the trading platform…

In the blockchain industry with relatively lack of supervision, there are frequent problems with centralized applications, as in “Forrest Gump”: Life is like a box of chocolates, you never konw what you’re going to get. (Life is like a Box of chocolates, you never know what flavor you will get next), which one will be the next centralized giant?

The amount of funds locked in DeFi has been increasing, and the Bitcoin balance of the centralized cryptocurrency trading platform has dropped to a new low of approximately 2.3 million since August 2018.

Insiders were surprised to find that the DeFi aggregator is simply an artifact of the bull market. Decentralization + asset appreciation perfectly solves the old problem of the currency. In 2013, the bull market was in CEX, in 2017, in Wallet, and in 2020. The correct way to open is of course DeFi aggregator+Vault+Farm+…

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What is an aggregator? The simple explanation of the Ethereum aggregator is a service integration platform. The platform can provide integrated services such as data aggregation, transaction aggregation, revenue aggregation, financial aggregation, and so on.

To give a simple example, in fact, the 21st century is dominated by “aggregators”:

If you want to buy consumer goods, you may choose to shop on an aggregation platform like Jingdong;

If you need to go to the airport to take a plane, then you may choose to take a taxi from aggregation platforms like AutoNavi and Didi;

If you want to watch the most popular video programs, you will almost certainly use a video aggregation service provider like Tencent Video.

The above is what has happened in the Internet world. These aggregation platforms have become industry giants on the track, but this is all in a centralized world. In the blockchain world, decentralized aggregation platforms are gradually growing.

There are many types of DeFi aggregators: income-type aggregators, such as YFI/Golff, etc., transaction aggregators: 1inch, etc., borrowed aggregators: Aave/Compound, etc.

The revenue-based aggregator is the hub of DeFi products. Next, I will test the mainstream DeFi revenue-based aggregators on the market. I chose three products: YFI (big uncle), Golff (golf), YFII (YFI bifurcation coin two) Uncle), directly above the picture.

For users, how to participate in different DeFi protocols at different times to maximize revenue has become a problem. For profit-seeking users, the best practice is to invest stablecoins in the loan agreement with the highest interest rate. Then the most primitive way is to get up every day to manually check which agreement has the highest annualized reward and evaluate where to move the money. In a protocol, we do it manually and do it in borrowing protocols such as Compound, Aave, Fulcrum, and dydx.

The core function of the revenue aggregator is Vault. On the one hand, it is a fund provider, and on the other hand, it is a strategy developer. The two-way market is opened up. The strategy builder allocates users’ capital, and the capital provider chooses the strategy they want to use. These strategies have achieved automated yield farming for users. With the launch of Vault, potential farmers now only need to deposit funds in Vault, and their capital will be automatically allocated to the best strategy.

“Vaults” not only reduce the risks faced by users trying to understand the different possibilities of yield farming, but also alleviate their concerns about gas fees by sharing them with other fund providers in the fund pool.

Over time, we can select optimization strategies through programming or arranging certain protocols to automate the process. This is actually what we call the Golf GOF (Golff Finance) protocol.

The model is roughly: Taking Dai as an example, a user deposits DAI in Golff Finance, Golff Finance will feedback a voucher GV2-DAI, and the deposited DAI will be transferred between different agreements in order to pursue the highest annualized income. If the DAI interest rate in Aave is higher than Compound, the Golff protocol can decide to transfer all or part of DAI to Aave, thereby helping users to maximize the benefits of Dai.

The agreement will also check for better interest rates when users deposit or withdraw funds from the pool, so that the fund pool can be rebalanced when necessary. The aggregator is to help users automatically select the safe and highest-yield DeFi products for investment in the entire network, and make dynamic capital and strategic adjustments. Another cleverness of the aggregator is that this economic model allows it to be transfused to other projects on the market.

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Automatic quantitative agreement in the DeFi field, income aggregator YFI&GOF

From the perspective of the most fundamental needs of investors, the future development trend of revenue aggregators is also in four directions: further reducing user operation thresholds, further reducing user gas fees and handling fees, further enhancing user revenue, and further improving investment security.

Let’s compare two popular products on the market in these four aspects. The originator of YFI’s income aggregator, and the representative of the second-generation Golff aggregator:

1. Lower the threshold for user operation: DeFi has a high threshold for operation, and it basically stays in the circle at present. According to the current operation, it is basically difficult to get out of the circle. In particular, the application of DeFi to Western products accounts for the vast majority, and The operating habits of users in Asian countries are quite different. I have seen a well-known western product before. The interface is only a few computer codes and the language version is English, which is very unfriendly to Asian users.

YFI is relatively friendly to similar Western products. Since Golff went online, it has taken into account the operating habits of Asian users and provides “dumb” one-key operation.

2. Reduce user fees: DeFi fees are basically concentrated in these areas:

a. Aggregator management fee; b. Basic protocol gas fee; c. Harvest gas fee; d. Aggregator withdrawal fee.

Both YFI and Golff are based on the native Ethereum bottom layer. Transaction fluency and transaction costs are largely dependent on the performance and gas of the Ethereum chain. YFI is currently 5% management fee + 0.5% withdrawal fee, Golff is currently 0 management fee + 0 withdrawal fee;

In terms of the high gas fee, the gas fee can range from a few dollars to more than a dozen dollars. The high gas fee generated by the frequent invocation of the contract of the revenue aggregator machine gun pool can be imagined. YFI has not done any optimization at present, and Golff has done it. Quite innovative, the Golff aggregator uses priority optimization adjustments and optimization adjustments of resource usage time in contract calls.

Golff aggregator Vault 2.0 does not immediately transfer to the third target pool for users with small amounts of money after transferring to the Vault pool, but temporarily stores them in the Vault contract, and will only start after the accumulation reaches a certain threshold. In the past, small user participation in renewal fees during the transfer process effectively reduced by 60%.

3. Increase user benefits: The comparison between DeFi aggregators and CeFi aggregators is very transparent. For aggregators such as YFI and Golff, in addition to strategy optimization and adjustment, the user’s revenue comes from revenue on third-party platforms. In principle, YFI Platforms that can obtain revenue can be obtained by aggregators such as Golff. In theory, under the same platform charging and strategy, the revenue that users can obtain on all revenue-type aggregators is the same.

There is another difference, the aggregator ecological model. YFI released all Tokens from the beginning. YFI users can only get income through Vault+ other products. There is a big problem. YFI user income depends entirely on market income. Products.

And Golff provides users with excess income through Golff Farm+Vault+ other products, so under the same conditions, Golff users have a portion of the effective TVL farm income than YFI users, especially when the secondary market performs well. Part of the revenue even far exceeds the revenue of Vault+ other products. Effective TVL’s Farm can guide and increase the amount of funds for users to participate in the Vault machine gun pool, so that the platform can obtain more benefits from outside the ecosystem and give back to users.

4. Improve security: The security of the aggregator is an issue that cannot be ignored, such as the stability of the Token pool price and the security of the contract. At present, the new products of DeFi aggregator projects will include third-party smart contract code auditing company audits before they are launched. /Internal sandbox testing/Community volunteer team code review/third-party mining pool review and other security precautions.

With the increase of third-party interactions for DeFi products, for example, Harvest/Pickle has problems quoting Curve third-party oracles, and Conpoumd has problems with Uniswap third-party quotations. Therefore, it is more important to add insurance services to product functions similar to Golff.

From the perspective of Golff’s income distribution, 90% is allocated to fund investors, 1% is for insurance, 1% is harvested, 4% is used for repurchase of GOF destruction in the secondary market, and 4% is for the fund pool. So in this, 1% is used as the compensation when the contract security problem occurs, which means that once the contract has a problem, the risk reserve will be used to compensate the user.

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YFI and other products by Golff

Insurance is a very important track, because DeFi is currently in the early stage of rapid development. Providing insurance services to individuals and institutions is undoubtedly a safety lock for the rapidly developing DeFi ecosystem. Golff’s insurance does not require KYC, and the scope of underwriting includes on-chain contracts and on-chain assets, that is, it can underwrite contract security accident risks and asset credit risks.

The insurer only needs to deposit assets of stable value into the “underwriting pool” to become an insurer. The insured only needs to deposit risk assets into the “insured pool” to buy insurance. Once an asset safety incident occurs, the insured can apply for a claim to the Claims Committee. After the claim is approved, the corresponding assets in the underwriting pool will be paid to the insured pool.

At present, YFI has added the aggregated Vault of the insurance pool. On the basis of insurance, the insurance pool of Golff has added the aggregated farm and Vault of the underwriting pool and the insured pool, which allows the insurer to obtain basic premium income. The additional benefits also allow the insured to obtain certain benefits based on the transfer of risks.

At the same time, when users generate income through the aggregator, they will be released in a linear manner, which will be fully released within 24 hours. The user re-deposits the asset, and the linear release income will be timed again. The purpose of this is to prevent large funds from diluting the income of other owners of the Vault pool by quick entry and withdrawal, and to ensure the fairness of user income.

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YFI and Golff Ecological Economy

Currently, Golff’s machine gun pool converts user revenue into GOF in DEX for settlement. GOF currently has only 4.5 million in circulation, with a market value of approximately US$2.93 million. The overall lock-up value of TVL is approximately US$15 million, while the current market value of YFI Token For 706 million US dollars, according to defipulse data, the current YFI locked position value is 427 million US dollars.

So from this perspective, the development of Golff ecology has great potential, and the aggregator is also expected to produce a siphon effect.

And from the perspective of TVL, Golff’s value is largely underestimated. YFI’s market value is 165% of TVL, while Golf’s market value is only 19.53% of TVL.

For Golff’s revenue aggregator, by improving the ease of use, safety and revenue of the aggregator, the threshold for small capital users is lowered. Golff will also make the usage rate of revenue aggregator more common. With the continuous increase of the total value of the aggregator sector, it is also expected to become a unicorn sector in the DeFi field.

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DeFi’s future outlook

Mankind has experienced the Stone Age, the Copper Age, the Bronze Age, the Iron Age, the Steam Age, the Electrical Age, the Atomic Age, and the Information Age. After entering the digital age, will Bitcoin become the digital gold of the future? Will DeFi become the entrance to production factors and achieve great integration across national borders? This is a question we need to think about, and it is also a golden opportunity to seize.

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