Foreword: 2020 is a boiling year. From the 312 plunge to a new high for Bitcoin, from the DeFi frenzy to the launch of Filecoin. “A bull market can make 10 years of money”, but there are also contract losses that lead to tragedies. 2021 is ushered in amidst the noise. Don’t forget that the freedom of choice is ultimately in our own hands.
At the beginning of August 2020, the DeFi oracle project represented by BAND and LINK broke out a big sun. At this time, a large number of domestic practitioners are still asking what is DeFi, and there are countless people who have stepped in the air. Overnight, the currency circle split into a “classic school” that stocked mainstream currencies such as BTC/ETH, and a “new school” that was hyping DeFi coins such as YFI/LINK/YAM.
This wave of DeFi spreading from abroad to domestic has actually already begun.
ETH lock-up volume is high, Coinbase detonates the secondary market
Since the beginning of 2020, the amount of ETH locked in DeFi smart contracts has stabilized at a high level of more than 2 million, and the locked position is worth about 1 billion US dollars, and the volume and price have been rising. The real turning point was on June 11, when Coinbase announced that it was considering listing some new crypto assets. Of the 18 announced, 1/3 belonged to the DeFi category. On July 31, Coinbase announced again 19 asset online evaluation plans, of which more than 40% of assets belong to the DeFi category.
WBTC now has more than 10 DeFi concepts in the top 50 listed on CoinmarketCap. These coins are all initiated by foreign teams.
At the beginning, in the entire DeFi ecological chain, the core demand of users for mortgage loans was detonated by the lending platform Aave/Compound/Maker, and the decentralized exchange Uniswap/Sushiswap provided a zero threshold for community token listings, and the funds were flooded. Driven by the new mining model, the aggregator yearn.finance, as a DeFi project that originated purely from the community, has provided tens of thousands of times astonishing returns to its early users.
So, under this DeFi market led by foreign communities and investment institutions, how do domestic DeFi projects perform? Will potential stocks be born from it in the future?
1. Republic Protocol (REN/renBTC)
As the current overseas Chinese DeFi project with the highest market value, Republic Protocol does not originate strictly in China. The two founders Taiyang Zhang and Loong Wang have been studying and starting businesses abroad.
Initially, the project owner was to provide a decentralized dark pool transaction service. Through the “Shamir Secret Sharing Scheme” algorithm, the transaction order will be broken down into order fragments, and the dark node will perform order matching. Compared with traditional trading platforms, it is more private. However, according to the latest roadmap, the development focus of Republic Protocol has been migrated to RenVM and renBTC, and in the future it will focus on the transfer of cross-chain assets.
Data from Defipulse shows that the amount of BTC locked in RenVM has reached 14,000, valued at more than US$300 million. RenBTC has become the second largest anchor asset after WBTC. Interestingly, BitGo, Kyber, and Republic Protocol are the main partners of the WBTC project, which means that the associated group controls more than 130,000 Bitcoin anchored assets on Ethereum. A previous investigation by Wanchain showed that the renBTC liquidity bridge stores user funds in a team-controlled wallet, which poses a centralization risk.
2.Nest Protocol (NEST)
Although the NEST oracle is regarded as an anonymous external project and the developers are relatively low-key, many people know that the project is supported by the domestic team and Huobi. NEST focuses on quotation mining, and has designed an arbitrage penalty mechanism for quotation deviation, and the team has no pre-mining. Before the DeFi boom, NEST has been tepid until Huobi announced the listing of NEST, and the price of the currency has increased by 300% within three days.
Since participating in NEST mining needs to mortgage the same amount of quoted assets, for ordinary people, there is a certain threshold for participation. Therefore, for a long time, the project is likely to be mainly the team mining, and the monthly gas fee will not be In the Philippines, sometimes the expenditure may even exceed the mining revenue, then the pressure on the funds of the miners will create a certain selling pressure on the tokens, causing the price of the currency to fall into a vicious circle. However, in the latest version to be released soon, NEST has added mining conditions, that is, NEST needs to be mortgaged at the time of quotation and when new quotations are taken after the order. The decrease in NEST circulation may be beneficial to the currency price.
Nest was born in the bear market of 18-19 years and has plenty of time to prepare. Therefore, we can find that this project is more self-consistent in algorithm mechanism and overall logic than some domestic DeFi projects that have been launched in a hurry this year. Nest has also incubated Cofix, nHBTC, NYFI, etc., and Cofix has received investment from coinbase, Huobi, dragonfly, etc., and the ecological layout is gradually expanding.
However, in the past month, NEST’s currency price has suddenly fallen for unknown reasons, and various speculations have been divided.
3.DODO (DODO)
DODO provides a very rigidly needed solution-using an oracle as a price-feeding solution to solve the problem of impermanence in DEX through the active market maker (PMM) algorithm. Once the problem is solved, a multi-market making strategy can be realized On-chain, reducing transaction slippage, greatly improving on-chain liquidity. From an application point of view, DODO can be regarded as a strong opponent of Uniswap. The automated market maker (AMM) scheme adopted by the latter has been criticized for its impermanence.
DODO can be said to be a superstar in this year’s DeFi project. It was once popular with capital in the circle. In summary, it is “Veteran development team-a well-known project”, “Luxury investor-Binance led 500 Ten thousand U.S. dollars, other investment institutions and individuals are countless”, but “the fortune is not good-the matcha has been falling since it was launched in October, and so far there are only 4 exchanges that can trade DODO coins.” According to data from Defipulse, DODO’s current TVL is only about $13.8 million.
4.Wing Project(WING)
WING is the first DeFi cross-chain platform based on Ontology that integrates credit elements, with the help of Ontology’s decentralized identity and scoring system. Similar to the Flamingo project under NEO we previously reported, WING was incubated internally by the ONT team and went online in mid-September. Affected by Huobi’s WING mining rule adjustment event and ONG control rumors, most retail miners were just out of speculation Psychological participation, the project has generated a lot of controversy in the community, and it has rarely been seen in the media after September. However, the official website shows that the amount of assets locked on Wing has now exceeded 60 million US dollars.
5.dForce(DF)
dForce is a veteran DeFi project. The bear market has begun to lay out. Therefore, the ecological scope is wider, covering stable assets, liquidity agreements, lending markets and derivatives markets. It has launched a basket of stable currencies USDx and decentralized lending agreement Lendf. Products such as .Me and Shengcaibao, among which the Lendf.Me hacking incident that occurred in 19 years, once cast a shadow over dForce. As the governance currency of the dForce platform, the price of DF largely depends on the development of application scenarios and user growth. dForce’s TVL now exceeds US$39 million. Like DODO, dForce has also been sought after by institutions, and well-known institutions including Multicoin Capital, Huobi Capital and CMB Capital are its investors.
6.ForTube(FOR/KUN)
Fortube (The Force Agreement) is also an earlier DeFi project in China. In the early launch of ForTube1.0, it was positioned as an open financial platform, mainly providing decentralized encrypted digital bond issuance and clearing services, in order to open up bond financing channels for blockchain projects. However, in ForTube 2.0, which was launched in September, the project gradually transformed into a lending platform, and at the same time introduced the decentralized stable currency protocol QIAN (Governance Coin KUN). Now, ForTube’s lock-up value is more than 17 million U.S. dollars, QIAN’s lock-up value is more than 5 million U.S. dollars, and similar foreign lending platforms Maker, Compound and Aave have locked positions that have exceeded 1 billion U.S. dollars.
7.Moonswap(MOON)
Moonswap is a controversial DEX, which is benchmarked against Uniswap and SushiSwap. The project team hopes to establish a liquidity pool in MoonSwap and migrate mortgage assets across the chain to Conflux. At the beginning of the launch in September, many big Vs questioned the problem of “pre-mining” and “no timelock” in the project. At the same time, although Conflux once clarified that Moon is an independent Defi project, from the perspective of Conflux’s support, the two are highly related.
As the community reputation is hard to recover, MOON has also fallen into a long downturn after it went online. The team seems to have given up on market making and continues to go on the exchange. One detail is that Moon has also given airdrop rewards to community users of the above two projects DF and FOR. There is a clear trend for domestic projects to group together.
In addition to the above-mentioned projects, YFII, HBTC, etc. are barely considered good local projects. The price of Flamingo, the most powerful and incubating NEO coin, is close to zero. In addition, it is expected that a large number of DeFi imitations will appear on the public chains of the three major exchanges in the future.
Project quality determines currency price
We can see that most of the domestic DeFi is now controversial, the model follows the trend of foreign countries, lack of original ecological innovation, light word of mouth and heavy routines, so it is difficult to become a top project. The market voted with its feet, and the market value has repeatedly fallen. In addition, with the exception of individual teams that had an early layout in 18-19, most of the other projects were launched in batches during the DeFi boom in August and September this year. At this time, the DeFi market has come to the end, and retail investors do not pay, which leads to subsequent coins. The price trend is quite ugly.
As shown in the figure, apart from the pseudo-domestic project of Republic Protocol, other local DeFis have not really opened up the situation.
2020 can be said to be the first year of the DeFi project. From our inventory, we can see that there are very few local projects that have really run out. Although the market value of cryptocurrencies is often in vain, their high and low rankings can still be To a certain extent express the market attitude. Regardless of whether these domestic DeFis are short-lived or long-lived, the DeFi field is currently the largest application scenario of the blockchain. This marathon is still just the beginning, and it is difficult for the old leeks in the currency circle to pay for the routine. The quality of the project has become the decision. The only standard for future currency prices.
Unlike 17 years, China’s cryptocurrency environment has undergone tremendous changes. On the one hand, it is the severe crackdown on supervision; on the other hand, DeFi’s innovation-driven, geek spirit, community-based, small and flexible characteristics are incompatible with Chinese cryptocurrency entrepreneurs. The public chains of TRON and the three major exchanges controlled by the Chinese attract Chinese developers to make imitations for their own traffic, but to some extent they have also lost room for competition with mainstream projects. Nevertheless, in 2021 we still look forward to the emergence of certain competitive projects on the world stage.
