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The digital asset industry is developing very rapidly, and its development in one quarter can be comparable to the development of the traditional technology industry in a whole year-the iteration and development speed of DeFi this summer, even the most low-key market participants are stunned.
Entering June, the total amount of funds “locked” in DeFi applications and agreements reached a historical high of US$1.2 billion, and the previous high was set before “312”. According to data from DeFi Pulse, in the following three months, this number has now increased by more than 8 times.
Similarly, we have also seen the explosion of various currency markets (borrowing) and DEX agreements. Now, there are more than 450,000 independent addresses on the DeFi protocol (Dune Analytics-Richard Chen). Although independent users may have multiple addresses to interact with these protocols, this number has more than doubled since June. At the same time, the volume of DEX transactions in August reached a new all-time high, exceeding $11 billion-a substantial increase from July’s $4.4 billion. Even more impressive is that the jump in DEX trading volume came at the cost of the loss of centralized exchanges, because in August the ratio of spot trading volume between decentralized exchanges and centralized exchanges hit a historical record of 6% New highs (3.95% in July and 2.1% in June). DEX Uniswap, the market leader based on average daily trading volume, had a total trading volume of nearly US$1 billion on September 1, exceeding the total trading volume of Coinbase Pro that day.
As Steven Zheng pointed out last month, there was a “Frakenstein code” trend in August, because in the DeFi field, code-copying projects have sprung up. The new yield farming protocol follows three different themes: 1) use yield farming to incentivize capital formation, 2) use the rebase feature of AMPL to create a gamified “Ponzi economy” product to incentivize transactions; 3) use emoticons And food emojis to attract more attention.
The extraordinary growth of the transaction volume and capital flow (usage) of these agreements has made DeFi’s “revenue” increase in a parabolic manner this summer, as governance tokens and liquidity mining are booming, drawing away agreements for the agreement liquidity providers Expenses to incentivize broader capital formation in order to seek high returns. As of the first two weeks of September, the total revenue of DeFi agreements has exceeded 80 million U.S. dollars (source: Token Terminal), exceeding all the cumulative transaction volume from January 2018 to July 2020!
So how did the DeFi field reach this step step by step? Let’s take a look at things about the DeFi market this summer.
This article will help organize some key and noteworthy events in DeFi this summer, while emphasizing the previous The Block research work on different protocols in DeFi.
The details of the agreement, important milestones, and additional research by The Block are listed in chronological order starting from the timeline.
The release of the COMP governance token is part of Compound’s efforts to gradually achieve decentralization by eliminating the risks posed by key players, allowing the Compound community to weigh protocol updates and monetize them after a fully decentralized buffer period. .
According to the distribution schedule at the time, about 2,880 COMP were distributed to the eight lending markets on Compound every day, including ETH, DAI, USDC, USDT, BAT, REP, WBTC and ZRX. The amount of COMP received in each market is proportional to the interest accumulated in the market, and users earn the corresponding COMP in real time based on their balance on the Compound. Although Compound was originally created by the now bankrupt crypto exchange Fcoin, it is now widely believed in the community that Compound has popularized the use of liquid mining to issue its native tokens.
It is worth noting that within one day of the Compound token transaction, the agreement won the first place in the total value of all assets locked in DeFi projects (June 20). According to data from DeFi Pulse, this represented 32% of the total assets managed by the DeFi department at the time. But this will not last long. As of September 14, according to DeFi Pulse data, Compound is currently the seventh largest DeFi protocol calculated by storage value.
Following the success of Compound and COMP, Balancer (n-dimensional automatic market maker) launched its own liquidity mining plan. On June 23, BAL token began trading on the Ethereum mainnet.
Balancer launched its liquidity mining plan on June 1, allowing liquidity providers on the platform to start earning BAL by providing tokens to the protocol. At that time, the team explained that it will take a few weeks for users to actually receive their BAL, because it is still solving the final details of the BAL smart contract deployment.
Before the token was launched, the total number of independent liquidity providers (LP) of BAL was less than 70. However, on the second day of token launch, this number jumped to more than 436. As of September 14, BAL currently has more than 1,400 LPs.
Nexus Mutual was launched in May 2019. It is a member-owned capital pool that provides insurance for smart contract bugs. The project token NXM uses a bond curve to incentivize the pool to provide effective capital repurchase based on the minimum capital requirements at any given time.
With the total value locked in DeFi now exceeding US$8 billion, Nexus Mutual’s insurance coverage has exceeded US$120 million (Nexus Tracker). It is worth noting that the coverage value of Nexus Mutual two months ago was less than US$10 million.
At the beginning of 2020, yearn.finance is a simple agreement that aggregates different lending agreements (ie Compound, Aave and dYdX) to optimize user returns.
The initial version of the protocol does not have a token or even many functions. The user deposits funds in a smart contract that analyzes the returns of various lending markets and then automatically rebalances the funds to keep up with the best strategy.
In the past month, the assets managed by this platform have grown from less than US$10 million to more than US$607.5 million. Launched on July 18, 2020, from July to August, YFI’s market value increased from $0 to $295.5 million. Currently, its market value is below 800 million US dollars.
Curve is an automated market maker platform for trading stable assets. The key feature behind Curve is that by changing the pricing formula of assets in its liquidity pool, Curve can provide a smaller slippage for transactions between assets with relatively stable prices (such as stable coins).
Curve, together with Synthetix and Ren Protocol, launched a pilot liquidity mining project to obtain tokens from a liquidity pool that synthesizes BTC on Ethereum. By providing wBTC, renBTC (Ren Protocol’s BTC) or sBTC (Synthetix’s BTC) to the Curve pool, users can obtain REN, SNX and CRV rewards. These rewards will start on June 19 and last for ten weeks.
On August 14, the launch of the Curve (CRV) token seemed to be forced by the community. It was when an anonymous developer ran and deployed its smart contract in front of the Curve team without the knowledge of the Curve team.
Due to its large stablecoin pool, Curve has become the platform of choice for many people who do stablecoin and Bitcoin transactions. This creates compound interest opportunities for Curve’s few pools.
Two days after its token was launched, Curve became the third DeFi agreement to lock in a total value of $1 billion. As of September 14, it is just at the level of 1 billion US dollars.
Yam is Frankenstein’s project, which is inspired by a series of DeFi projects such as Ampleforth, Compound, Synthetix and yEarn. The Yam project exceeded the total value lock-in of approximately $600 million (in an unaudited contract) one day after the project was announced.
Yam looks similar to Ampleforth (a price-elastic currency that adjusts supply according to demand), but has a premise that after the agreement performs an active rebase (see: expanding its supply), it will use part of the supply to Buy yCRV, which is a stable currency generated by a basket of yields on the Curve protocol.
Two days later, the project will fail due to a repurchase bug that the team cannot fix, causing the market value of each yam to drop to zero, and the yCRV token with a net loss of about $750,000 will be locked forever.
But then, Yam Finance set up a Gitcoin donation to coordinate community funding to audit the Yam contract to support the launch of Yam 2.0.
Aave, the decentralized currency market protocol, surpassed MakerDAO on August 25 and became the first in total value lock (TVL). Currently, it still has the largest dollar asset value today (September 14).
Based on the Ethereum-based currency market agreement, after becoming the leader in the peer-to-peer lending model, its market share continues to grow at an alarming rate.
September-Uniswap to SushiSwap
SushiSwap is a fork of Uniswap v2. It was initiated by an anonymous developer. He introduced a governance token named SUSHI. If the liquidity provider (LP) stakes Uniswap LPtoken, they can earn these tokens, and then Finally provide liquidity on SushiSwap.
In Uniswap, LP earns 0.3% of transaction fees in any pool, and these fees are distributed proportionally to all LPs in each pool. Since SushiSwap went online on August 28, it has gained a lot of liquidity. Within 3 days, its total value locked up to more than 700 million US dollars.
Since then, in the first week, Uniswap LPtoken worth more than $1 billion was staked to continue to harvest SUSHI tokens. Although the expected result of SushiSwap is to absorb Uniswap’s liquidity for a long time, within the first week of SUSHI’s liquidity mining plan, Uniswap’s liquidity rose from 300 million US dollars to nearly 2 billion US dollars.
On September 9, Sushiwap successfully migrated Uniswap’s more than $800 million in liquidity to its contract. Although this initially caused Uniswap’s liquidity to drop by nearly 60%, since SushiSwap cancelled higher liquidity incentives, Uniswap’s liquidity has expanded to more than $1 billion, while the liquidity of Sushi has returned to 10. Below 100 million U.S. dollars. Judging from the transaction usage of the two platforms, Sushi’s average transaction volume in the past 5 days is close to 200 million US dollars, and Uniswap’s average daily transaction volume is approximately 372 million US dollars.