DeFi relies on innovation in economic models to stimulate the generation of liquidity, but at the same time accelerates the industry into unhealthy competition.
Original Title: “DeFi Dilemma: The Industry Needs a Reflection Campaign | Chain Catcher”
Written by: Wang Dashu
Since Compund launched liquidity mining, sweet potatoes, sushi, salmon, corn, pearls, kimchi, carrots and other DeFi “foods” obtained by contributing asset liquidity have come out on public chains such as Ethereum and TRON, satisfying The peasants who came forward and entered the market sought to get rich.
However, with the diving of projects such as YAM, Sunshi, and corn, the DeFi enthusiasm is getting weaker, and Uniswap, the leading Dex, issued the governance token UNI. Public opinion is immersed in the current whether the farmers’ carnival can continue, and scientists who have successfully landed and harvest The old peasants may be overlooking the end of DeFi, listening to the money-losing adventures of latecomers.
Cannon fodder situation
“I didn’t get on the bus when the pearl was $1,200. As soon as the corn went online, I used 10,000 TRX to exchange for three corns. The average cost was about 300 U.S. dollars. I hope that the corn will be as good as pearls at a good price of 1,200 U.S. dollars. But it fell to $30.” Retail investor Zhang Jiajia said upset.
Coincidentally, Zhang Jiajia is only a microcosm of the Fomo community. Lin Yi, who claims to be an old leek, once saw the link of the airdrop of YFI fork coins. Without thinking too much, he directly clicked to recharge 10 Ethereum to the stranger address. It was not long after YFI set the unit price to surpass the Bitcoin price by multiples, and it was not surprising that 10 Ethereum had gone.
This kind of operation is the first case mentioned in the DeFi Loss Guide summarized by the industry KOL Super Bitcoin: Excitingly hit the coin to the contract address, and there is almost no possible mining experience for the asset to be recovered.
At the same time, other money-losing cases are mentioned in the money-loss guide. For example, if you see that the pool has high returns, you can buy a hoe regardless of the cost. After less than half a day of digging, the gold hoe will turn into rotten iron; Run away (the most on Ethereum); see the high income and rush in, the half-hour income drops to 0, the income is 300, and the handling fee is 1500; dizzy, originally added liquidity, but repeated exchanges, wasting 5000 handling fees.
Just staring at the annualized income, repeatedly jumping into various pools, the operation is fierce, and the handling fee is 25 thousand; the wallet private key is copied and stolen; the wallet permission is authorized and phished; the money rushes in, the DeFi project is locked in a garbled code, and cannot be retrieved , I received a “I’m sorry”; I was fooled by promises such as “This time is different, the team is very reliable”, FOMO bought DeFi tokens in the secondary market in the mood, and finally the currency price fell by 10%, etc.
However, no matter which way to lose money, it is determined by the investor’s personality, judgment ability and trading habits.
Therefore, Cao Yin of the Digital Currency Renaissance Foundation has publicly subdivided the investors who lost money in DeFi into three categories: “The first one does not do research and is deceived by apy. At the slightest, they are locked in, and the worst is hacked. For example, Projects like bread and rose; the second type follows the trend, does not research projects, and does not participate in the community. The mood rides a roller coaster along with the currency price, chasing ups and downs. This kind of people is the most; the third is wishful thinking, with long-termism The correct attitude of the project, but the project research has not been thoroughly understood. As a result, pua, the founder of Slag Nan, was used as an ATM, such as Sushi. ”
Both Zhang Jiajia and Lin Yi have the above characteristics. Lin Yi had suffered a loss on YAM before, but he had not yet summed up any experience at the time and was blinded by the wealth effect. Now, after a wave of operations, he began to truly reflect on himself. “DeFi mining is a profitable game for smart people. It really doesn’t suit me. It is the right way to hold mainstream assets like Bitcoin honestly in the future.”
Similar to Lin Yi’s experience, Zhang Jiajia also participated in Yam mining before the corn loss. It was the first time he experienced DeFi mining in person. After that, he digs carrots and kimchi one after another, earning and losing money. After a wave of operations, He sighed: In this world where money is computing power, retail investors are just cannon fodder, and the high GAS fees have benefited from a mining experience.
Just as they lamented, DeFi liquid mining is on the surface an exciting agricultural society constructed by scientists. The contribution size determines the harvest, but it cannot be ignored. The essence of most projects is still between various DeFi agreements. Combine and nest each other to build a seemingly innovative and profitable doll game.
Under the bubble
Since June, Compound has started liquidity mining, Uniswap’s fund pool and AMM model, YFI has launched aggregate mining, and the price of YFI tokens has surpassed Bitcoin. These are the foundation and demonstrations of this game. It is a variety of high-yield imitations from Ethereum to TRON, EOS and Binance Smart Chain.
The Uniswap imitation Sushiswap on Ethereum, its token Sushi went from a unit price of less than $1 to $12 within 24 hours, and some exchanges skyrocketed to $15, and then the price was cut in half on the second day and the founding afterwards People dumped the tokens and hit the price to 1.5 US dollars. Although Sushi has been handed over to FXT at present, in the face of Uniswap’s money-spending spree, its unit price has been hovering around 2 US dollars and has not improved.
After taking over from Sushi, another mining project, Sashimi, the price of its token Sashimi has risen and dropped by more than 60% after its launch. Compared with the high point, it has fallen by more than 90%. Kimchi is even worse, with the price falling below 95%. .
In fact, the DeFi bubble on Ethereum can basically be counted from the YAM crash due to code vulnerabilities. Even if the official announced the restart after the crash and commissioned the domestic security audit company Paidun Technology to do security audits, it seems difficult to achieve good results. According to Weibo KOL Super Bitcoin broke the news, investors who participated in YAM since its restart on September 20 may have ushered in a new wave of losses.
Of course, as Lin Yi experienced, compared to the DeFi bubble on Ethereum, Justin Sun’s TRON DeFi ecology is even more tasteless. Most projects are temporarily packaged for the purpose of collecting money, and there is almost no technical atmosphere. , A large number of users suffered serious losses due to counterfeit currency, smashing and other incidents. In addition, compared with Ethereum, TRON lacks the support of underlying borrowing assets, and the risk of systemic collapse is greater.
Compared with the DeFi products in the public chain ecology, which can at least maintain the situation for more than one day’s high-light moment, the DeFi product BakerySwap developed based on the Binance Smart Chain can be called the “short-lived ghost” in a group of DeFi projects that go high and low. According to users who participated in the mining, its token BAKE fell rapidly after the rapid rise. After only one hour of going online, the annualized return of the BAKE pool dropped from 1,473,439.58% to about 40,000 times. BAKE: BNB also increased from 1:1 It has developed to 100:1, and some investors even said that Binance is using DeFi to absorb BNB in circulation.
However, if analyzed from the perspective of supply and demand, the emergence of imitation projects such as sweet potatoes, sushi, salmon, corn, pearls, kimchi, carrots, and bread did not meet investors’ expectations of getting rich, but it made up for those who missed early mining to get rich The investor psychology of Inspur, on the other hand, can also be regarded as the market’s Fomo sentiment towards DeFi liquidity mining that gave birth to the bubble.
However, the premise of the bubble is that a large number of imitation projects without underlying assets and technological innovation have flooded the market. Whether it is the economic model, governance mechanism, or security issues that it promotes, it will be a potential risk for DeFi and even the cryptocurrency market. .
Earlier, the cryptocurrency exchange Coinbase summarized the potential risks. In terms of expansion, it includes four aspects.
One is the risk of smart contracts: DeFi smart contracts are easy to be used by hackers, such as the earlier theft crisis of bZx, Curve and Lendf.me;
The second is the system design risk: many DeFi protocols do not operate for a long time, but they provide a large number of incentives, such as Balancer. At present, with a simple loophole, FTX can obtain more than 50% of the benefits;
The third is liquidation risk: The encrypted collateral in the DeFi protocol is easily affected by market fluctuations, and there is a risk of insufficient collateral for debt positions in market fluctuations, which in turn induces a liquidation mechanism, causing users to suffer further losses;
The fourth is bubble risk: the price dynamics of some underlying network tokens (such as COMP) will be relexive, because the expected future price is usually related to the degree of network popularity and application, and the network usage is in turn inspired by the network in the future. Price impact
However, despite the huge hidden worries under the bubble, there are still speculators coming in after Uniswap issued the governance token UNI and started the money-spending mode.
“After receiving the airdrop of 400 UNI, I quickly mentioned that Huobi was sold at a unit price of 2USDT. I really realized what a handful of money is because of a strong wind. However, what is annoying is that the unit price of UNI has soared to over 8USDT , I took the order on impulse, and now I am stuck again.” An investor who used to provide liquidity on UniSwap told the chain catcher.
The investor’s reaction in a sense represents the general sentiment of the market. Before UniSwap was issued, the industry generally believed that DeFi had come to an end. However, the rising price of its governance token, UNI, seemed to ignite the market’s confidence in DeFi.
But such confidence may only last for a while. After all, the recovery of the cryptocurrency market and the arrival of the bull market require the entry of incremental funds. Obviously, DeFi is still far from achieving this.
However, everything has two sides. DeFi does stimulate the generation of liquidity by means of innovation in economic models, but at the same time it accelerates the industry’s entry into undesirable competition, such as the counterattack made by centralized exchanges regardless of industry development, or TRON. The bubble crisis caused by other public chains such as EOS and EOS.
“The DeFi project that we participated in ran away, and now we have found the project through hashtags on Tron to put all the stolen money into 10 different Binance wallets without KYC certification. Binance needs us to report the case to freeze the account, but the group The police station where the insider ran all over the place did not deal with it. Can you give some advice?” This is an investor’s request for rights protection on Weibo.
Under the bubble, some people rekindled their hopes in the rise of the UNI currency price, while others were struggling to defend their rights. Some people ridiculed LV and other local dog projects that only circled 20 Ethereum and ran away, and some entered the market with 500,000 cash. , A wave of mining and only 5,000 yuan of principal left to seek wealth codes that can turn around.
All this seems to be a warning, urging the industry to carry out a formal and serious reflection campaign, urging investors to recognize risk and rational investment, and advocating entrepreneurs to establish a sense of responsibility to themselves, users and the industry, in order to explore the benign The development path empowers the entire industry.
Source link: mp.weixin.qq.com
