Under the general trend of multi-chain and cross-chain DeFi, the cross-chain DeFi lending platform MyBank may become the most user-friendly, low-cost and high-yield Web3.0 DeFi representative.
Original title: “Kusama referendum 114 passed, what points can cross-chain DeFi ambush ahead of time? 》
Written by: WebX Lab
On June 3, Beijing time, the Polkadot pioneer network Kusama’s referendum 114 passed, which means that the Shell parachain, which originally only had block additions and final confirmation verification on Kusama, has become a Statemine parachain that can be used for token issuance and asset custody. The most important economic infrastructure of the Polkadot cross-chain network is officially reached. After Statemine runs smoothly, Kusama will officially open the card slot auction. After the official collection of all the parameters of this card slot auction, I believe we will soon There will be an auction of card slots for Polkadot’s main network.
In fact, there is a problem here. The market’s attention is over-focused on a single point of auction. The auction is not owned by Polkadot, nor can it represent the huge potential of the cross-chain ecology. That is to say, now that the auction is coming, we need to take a step forward and think about what kind of “new things” will be the first to grow in the ecology based on the cross-chain network after the auction is completed.
What are the next generations of DeFi? Cross-chain + DeFi + derivatives
Every explosive growth of the encrypted token market and blockchain-related applications is the result of the accumulation of underlying technology and infrastructure to a certain extent, whether it is the token issuance fever in 17 years or the DeFi liquidity mining wave last year and this year IDO was popular at the beginning of the year. The success of Ethereum in the DeFi ecosystem and the problems that it has exposed in the process have given many public chain teams see opportunities. Everyone is developing independent public chain infrastructure and ecology in their own direction, and continues to expand. The boundary of DeFi application ecology. But the problem is that the direction of this process is fragmented.
Public chains with different needs and characteristics are independent of each other, then there will be independent ledgers, wallets, applications, and assets. In independent scenarios, these public chains can meet the needs well, but once scenes or needs are crossed, users need Pay high time and capital costs, and even complete DeFi operations in a risky environment. This demand for cross-chain operations and cross-chain flow is an inevitable trend. With the continuous expansion of the ecology and asset scale of various public chains, capital overflow or demand for more open circulation space will become rigid needs. Cross-chain Bitcoin is just like this. This is a very natural product, so the problem that accompanies the need for cross-border circulation of funds is to solve the problems of high threshold, high cost, and high risk of cross-chain operations.
Nowadays, the cross-chain network headed by Polkadot and Kusama provides the necessary preconditions for this kind of cross-chain asset circulation and cross-chain DeFi operations. This means that users can complete cross-chain lending, transactions, liquidity mining, and various profitable operations on one platform based on a decentralized approach. The user’s encrypted assets can flow in a larger market through the cross-chain network, and obtain higher capital efficiency.
It can be said that the DeFi platform in this direction is the prototype of the next generation of DeFi.
Then return to the development of DeFi itself. Although DeFi has achieved multi-level breakthroughs after many major tests, the core points are still basic spot applications. Where will the next growth point be? Discussed for a long time. In this regard, we refer to the experience of traditional financial development. The volume of derivatives is 40 to 60 times that of the spot. In the encrypted market, the trading market value of derivatives accounts for less than half of the entire digital asset market. In contrast, there is still huge room for imagination in the development of derivatives. As crypto assets and DeFi become more popular, the demand for derivatives will be stronger, and the speed of market penetration and transmission will continue to accelerate, which will stimulate the emergence of new species in the market to make up for the gap and demand in the existing market. .
But it is very difficult to achieve this. Even in the same chain, many DeFi functions are scattered and independent. For example, if a user wants to increase leverage or a certain type of asset, it first needs to lend a certain amount of assets in the DeFi lending agreement, and then manually switch to the decentralized exchange to open a position. User products interact and control the mortgage rate through multiple protocols. In addition to the cumbersome operation of the position, it is also very difficult to manage. At the same time, in this over-collateralized lending model, whether it is long or short, the leverage multiple cannot exceed one time.
We can concatenate the above-mentioned various appearances to sort out a clearer route for next-generation DeFi applications.
MyBank: The first cross-chain DeFi lending platform in the Polkadot ecosystem to achieve high leverage
Then, as the cross-chain network infrastructure is gradually improved, DeFi is an important trigger for the ecological startup of each public chain. The ecology needs an application that integrates cross-chain, DeFi, and derivative functions. Therefore, in 2021, a new cross-chain DeFi species called MyBank from the United Kingdom was included in the Web3 Grants plan and became an officially supported project.
Simply put, MyBank is a cross-chain DeFi platform based on Polkadot deployment. It uses Substrate’s Runtime and Bridge to achieve interoperability between different public chains through the XCMP protocol. On the one hand, based on the advantages of the cross-chain network, MyBank brings together diversified encrypted assets to support users to freely circulate assets on multiple chains in a more secure and decentralized manner, without the need for complex and high-cost operation processes. On the other hand, MyBank has filled many gaps in the cross-chain DeFi business. For example, high-leverage loans, high-leverage transaction exchanges, unsecured loans, credit loans, etc. on a cross-chain basis.
MyBank’s core business is mainly divided into three major parts, namely lending BWS, trading MySwap, and value securitization agreement CLF. The three major parts basically cover the most basic needs of DeFi. MyBank provides a place for encrypted assets and users, that is, a platform where assets and user operations seamlessly connect and circulate. All actions can be completed in one-stop manner on MyBank through smart contracts, even across liquidity mining and lending. This is also an unprecedented innovation in cross-chain DeFi.
High leverage operation, DeFi closed loop system
Then, when the basic environment of the cross-chain network is mature, a new financial system is needed for more efficient capital allocation. In the past, our focus on DeFi may have been on a single product, but the current trend is that the intersection of DeFi products and businesses is more and more frequent, and the trend of systemization is gradually becoming clear.
Then this closed-loop system can be seen on MyBank. First of all, the bottom-level advantage of MyBank is the rich and diversified encrypted assets brought about by the cross-chain network, and then the three core businesses are important user portals and form an asset liquidity cycle. On the basis of mortgage lending, BWS will release the asset liquidity of depositors to give play to its social guarantee value, and support friends on social networks to make zero mortgage loans. When the governance organization of the community is improved, it will support users to make credit loans. MySwap will support users to conduct high-leverage transactions of more than 1 times, and support users to short and go long conveniently and quickly. This will not only increase the efficiency of asset utilization in the financial market, but also further increase the utilization of funds in the BWS fund pool. rate. Creators can issue their own exclusive Token/NFT in CLF to strengthen contact with fans and obtain start-up funds. Fans can subscribe to the Token/NFT issued by the creator, and the Token/NFT can be traded and auctioned in MySwap. So what is the basic logic and positioning of each product business in MyBank’s closed loop?
Lending BWS: a package lending business centered on high leverage
Leveraged lending
MyBank is the first cross-chain DeFi platform in the Polkadot ecosystem that supports high-leverage lending operations. The user initiates a leveraged loan through the transaction fund pool. At this time, the loaned funds will be locked, and the smart contract will automatically complete the operation of liquidity provision and even leveraged transactions. Therefore, the pledge rate and settlement ratio can be greater than 1, the funds that the trader can lend out are allowed to exceed the value of the collateral, and the margin transaction as an entrance will make the transaction a better user experience, and the efficiency of the use of funds in the loan pool will also be improved. , Liquidity providers can get better returns.
Social Guaranteed Loan
On the basis of mortgage lending, MyBank will release the liquidity of depositors’ assets to give play to its social value, and provide zero-collateral secured lending services. Depositors can use their deposit certificates to provide loan guarantees for friends in social networks, and friends can make zero-collateral loans on the platform based on the guarantee certificates. Each user can choose to maintain his own social network circle, and the friendship needs to be confirmed by both parties. When a user needs a loan and wants to choose a zero-collateral guarantee loan, he can send the loan event to his friend’s inbox. The friend can choose to respond to the event as the guarantor of the user. After the guarantee is successful, the system will issue the loan to his friend. Loans and deposit certificates will be locked by the system but will not affect the guarantor’s income as a liquidity provider. The introduction of a guarantee mechanism will use idle deposits to increase the pledge rate and at the same time alleviate the system’s liquidation problems under high volatility market conditions. The guarantee mechanism is established on the basis of social networks, through which the risk-free restriction is realized, and the lender and the guarantor have real social connections under the chain.
Unsecured credit loan
The user’s deposit records, loan records, guarantee records, transaction records, and social networks will all be stored on the chain. The anonymous credit data accumulated by users combined with off-chain governance makes it possible to develop credit loan business. Credit Loan relies on a powerful governance organization and needs to integrate related institutions in different fields. MyBank reserves 5% of tokens to encourage users to participate in the collective governance of the community and the docking of off-chain resources. When the ecology develops to a certain scale, the governance organization will be gradually opened up. In the first stage, the community will open to institutions and enterprises that have been reviewed and approved.
Over-collateralized borrowing
Depositors can inject liquidity into the corresponding MyBank fund pool to obtain deterministic interest income. MyBank’s bilateral asset liquidity pool will greatly promote the improvement of asset utilization. For over-collateralized loans, the borrower needs to over-mortgage a certain amount of assets as collateral, and choose a suitable pledge rate to lend the required assets. When the pledge rate is less than a certain threshold, the system will trigger liquidation to auction the collateral. There is no need for peer-to-peer interaction between users, and every loan will interact with the fund pool. Compared with the single-chain lending market, borrowers can provide a variety of encrypted assets as collateral, and the system will automatically perform cross-chain conversion.
MyBank focuses on high leverage and unsecured lending business to provide users with different levels of solutions to meet diversified DeFi lending needs.
Trading MySwap: a decentralized high-leverage cross-chain trading center
Unbalanced trading
Decentralized high-leverage trading is currently the most promising direction of DeFi. The problem is that most of the current lending agreements are independent of DeX. If leveraged transactions are required, users must first pledge a portion of the funds from the lending platform before they can obtain loans to trade in DeX. The deposit certificates obtained by users on the lending platform itself have actual value, but this part of the liquidity has not been released, resulting in a lower asset utilization rate of the lending project, and ultimately resulting in lower deposit interest rates on the lending platform. After manually collateralizing the loan on the lending platform, and then returning to DeX to execute the transaction, the entire experience is very cumbersome, and the user cannot conveniently control the trading position, which indirectly increases the transaction risk and operating cost. Moreover, the current loan agreement is limited by the over-collateralization mechanism, and the user’s capital utilization rate cannot be more than doubled.
MyBank integrates the loan fund pool with the transaction fund pool. The assets exchanged for leveraged transactions will be locked in the network. Therefore, the assets that can be lent from the loan fund pool are allowed to exceed the value of the mortgaged assets, and the leverage multiple can exceed double. The liquidation will be independent of the liquidation of over-collateralized loans, so theoretically the leverage can be unlimited, but considering that the liquidation has a certain delay, different funds will have different maximum leverage according to their risk systems. For leveraged transactions, users only need to do it once on the front end, and the above multiple steps will be automatically completed in a Bloc. As Polkadot’s Parachain, MySwap will not have the gas fee rush problem faced by the existing DEX on Ethereum. At the same time, users do not need to pay expensive fees, but transactions will be executed at a faster speed.
If a user is not optimistic that XToken will continue to rise in the future, he can choose to lend XToken in BWS, then sell XToken in MySwap to obtain stablecoins, and then use stablecoins to redeem XTokens to return the loan when the price drops. If a user is optimistic that XToken will continue to rise in the future and wants to increase leverage to do more XToken, he can lend stablecoins in BWS, then use stablecoins to obtain XTokens in MySwap, and sell XTokens when the price rises to redeem the stablecoins to return the loan .
Value Securitization Agreement CLF: Individual Social Value Tokenization and NFT Issuance
Securitization
MyBank’s CLF is a value securitization agreement, similar to asset securitization. Creators can use their potential and future revenue as value support to issue social tokens and NFTs. Fans can buy to invest in creators to share the creator’s future income . Token can be traded based on MySwap, and NFT can be auctioned through MySwap. In addition to providing asset issuance functions, MyBank will also provide creators with dApps such as IPFS and Vote to help creators build bridges with fans.
When MyBank develops to a certain scale and the collective governance organization gradually improves access to off-chain resources and on-chain governance, outstanding creators can initiate a certain amount of credit loan from the loan fund pool and meet certain conditions at the same time. High-quality social tokens and NFTs will also be allowed as collateral for lending.
Liquidation
MyBank proposed a more advanced liquidation plan to circumvent the loopholes in the design of the liquidation mechanism that were exposed in the previous market turbulence. First of all, over-collateralized loans, secured loans, leveraged loans, etc. all require the system to monitor the pledge rate of Position in real time. Unlike the current DeFi protocol on Ethereum, which completely relies on third-party liquidators, the liquidation monitoring of MyBank mainly relies on collector miners on ParaChain. , Its Rumtime has a built-in distributed scheduling system and a priority queue. Different miners are responsible for processing different positions to achieve parallel monitoring, and clearing tasks will be submitted at a higher speed.
In the specific liquidation, MyBank has three levels of bottom line. First, the margin/collateralized assets will be auctioned through the built-in trading pool with a default slippage. If the execution fails in the built-in trading pool, it will try to auction other DeX in the ecology. On the basis of these two, MyBank will expose third-party APIs and provide front-end pages to allow third-party liquidators to participate in asset auctions. When the auction is successful, the liquidators will receive a certain percentage of liquidation penalty incentives.
The tenacious vitality of DeFi exceeds all imagination, and at the same time, DeFi is constantly mutating and growing forward. At present, the environment constructed by Polkadot and other cross-chain technologies provides a new catalyst for this kind of innovation and mutation. Then MyBank is an attempt to integrate those underlying technologies that are not perceived by users at the value level into an application platform that can bring actual value to users. Under the general trend of multi-chain and cross-chain DeFi, MyBank may become the most powerful User-friendly, low-cost and high-yield Web3.0 DeFi representative.
