If there is only one theme of blockchain in 2020, then I think it’s only DeFi.
What public chain, what storage and what cross chain are not worth mentioning comparing to DeFi. After all, defi has evolved from a so-called “Ethereum self rescue scheme” to a blockchain development direction that everyone can see and feel.
After exploring and developing blockchain for decades, we have finally found a real landing scene where the stories begin. Can you not be excited? The 2021 blockchain, no accident, the whole theme still has to revolve around DeFi.
The recent market also proves this point. In the two weeks when Bitcoin fell back to more than 40000 from the peak of more than 50000, defi blue chip and high-quality second tier currencies not only resisted the decline, but also rebounded rapidly after bitcoin stopped falling. He not only regained his lost land, but also set new records repeatedly. He didn’t look at the pie at all.
The Second month of 2021 is coming to an end. In the past month, there have been some new signs in the direction of DeFi. I will use two articles to give a brief introduction to these new signs and some unreliable predictions. I hope that in the next 10 months, I can add some ideas to the investment of readers.
1 What was DeFi like in 2020?
There are two kinds of aggregators: transaction aggregation, for example 1 inch while the other one is revenue aggregation, for example alpha.
Let’s start with transaction aggregation:
In short, DeFi is mainly in Dex, borrowing, liquidity mining and income aggregation, primary derivatives, primary insurance and initial generation algorithm stability currency.
The largest DeFi in 2021 must be based on 2020, which is upgrading the original major direction while maintaining the exploration of new direction among which the algorithm can stabilize the upgrade of currency.
Last week, the article “USD stable currency such as usdt has become the infrastructure of American financial settlement: a history of evolution of stable currency” has been introduced separately. This Blog aims to introduce several other major categories of upgrades and possible new directions.
2. Advanced Dex (Uniswap、Sushiswap、KNC、LRC、CRV)
Overall, the goal of advanced Dex in 2021 is better sliding point, lower free loss, faster transaction speed and lower gas cost.
I have going to discuss about the main example here.
Uniswap: undoubtedly it is the main protocol . the V3 version is something everyone is waiting for as the cost of gas is too expensive now.
More importantly, compared with the improvement of trading experience, Uniswap V3 contains a great significance to the choice of L2, which is related to the development direction of the industry.
there is a chaos on the Layer 2 stage and several leading Defi had a vital guiding significance for the choice of layer 2.
Uniswap may be the one with the heaviest voice among the leading companies. From the news released at present, the probability will be optimal rollup.
Sushiswap: the current daily trading volume is also rising it is also reported more and more integration with other projects and there is a tendency of all sort of activities pointing to the uni. From a fork imitation market, it has experienced various kinds of ups and downs and it is really difficult to go all the way to the present position.
The road map of 2021 is exciting. Readers who haven’t read it must remember to search it online. Sushi will do three things in 2021: release bentobox, cooperate with more heavyweight projects, and integrate L2 (at present, ZK rollup is more likely).
KNC: used to be DEX first child, now can only count as a second line player. KNC announced the 3.0 plan in recent days to introduce a new type of innovation called dynamic market maker (DMM) to eliminate the problems faced by the current popular DEX.
For example, low capital efficiency and high sliding point – however, the 3.0 roadmap has been stretched to the second half of the year. I don’t know if the day lily will be cold when it comes out.
CRV: it’s very trending recently. How strong is it? In addition to the growth of BTC’s own business volume, the release of selling pressure from mining and the gradual decline of its income ratio, the recent cooperation with SNx and synthetic assets is also a very bright growth point, which shows us many possibilities in the future. We will explain the specific reasons in detail in the next chapter of synthetic assets.
In addition, CRV also cooperates with AC corps to release CRV.finance It supports anyone to create an unauthorized curve pool for Dai, usdc or usdt exchange.
At the same time, curve metapool was launched, initially supporting FraX finance, basis cash and Mith cash. In a word and the action is ceaseless while the business is skyrocketing.
3. Synthetic assets ( SNX、CRV)
Synthetic assets, in fact, have always been available from 2019 to 2020, but they have not attracted much attention. The reason is very simple. We think that it is meaningless to use the synthetic assets of the blockchain industry to speculate in stocks and gold.
The blockchain industry itself is 7×24, and its volatility is more stimulated than that of stock gold. Why not invest directly and play with the stock gold of synthetic assets?
Howeve, you will find that it is not so simple by 2020 -2021. After SNx cooperates with CRV, there is such a scenario:
“Someone buy BTC (Wbtc on DEX) with 10 million Dai. With 1 inch polymerizer, 276 wbtc can be exchanged with 10 million Dai. The sliding point is 2%. With uniswap, the sliding point is 15.38%.
The cost of 34000 wbtc becomes 41500. With CRV and CRV, 286 wbtc can be purchased for 10 million Dai. Buy 10 more than the 1 inch platform and 46 more than uniswap!
How is CRV implemented? The user’s Dai will be converted to SNx’s SUSD on the curve first. In the first step and then the platform will use synthetix to convert sUSD to sBTC.
Because of SNx’s synthetic asset model, there is no sliding point in the process of converting sUSD into sBTC. Second, the platform transforms sBTC into wBTC. In this process, curve uses the unique constant function market maker (CFMM) to control the sliding point at a very low level
This may not be a features for end users. After all, the call cost of gas may cost hundreds of dollars. However, this is the first scenario for large amount of exchange for large households.
And we found that last year’s US stocks, such as Tesla and NIO which is even beating BTC, ETH. People that are not convenient to buy US stocks. It is conseriderable a better participating way to the US market by using SNX.
Furthermore, with the setting of the main tone of block chain assets in 2020, synthetic assets provide a channel for defi to use traditional financial assets and more complex transaction strategies. This importance will be recognized more and more clearly in the circle.
What’s more, we need to realize that in theory that synthetic assets can not only simulate and track gold, stocks, bonds, various traditional or encrypted indexes, but also theoretically trade everything, including pop culture market, meme market, personal token market, etc.
At the end of the 19th century, a developer had an idea and released a prototype – what if we had a synthetic asset to track the frequency of feces in San Francisco?
When more faeces are seen, the token holder will make a profit. If the faeces are reduced, the token issuer will make a profit, as long as there is one (or several) reliable “faeces quantity report prediction machine”.
You can continue to let your imagination fly, such as creating token, a synthetic asset that tracks US military spending, and the twitter frequency one year after Biden came to power As long as the system and Oracle support.
SNx’s road map in 2021 is also worth looking forward to, including migrating to optimal Ethereum, developing the V3 version of synthetix, improving the election process of the Spartan Council, continuously decentralizing synthetix Dao, expected to provide synthetic futures with at least 10 times leverage, upgrading binary options, expanding support for encrypted assets and commodities and stocks, DAPP Upgrading, acquisition and expansion (similar to year), etc.
In short, no surprise, 2021 will be a brilliant year for synthetic assets. In addition to SNx, UMA, mirror protocol, coinversation on Boca and so on are all noteworthy projects. Even recently, Oracle projects such as nest have begun to set foot in the field of synthetic assets.
4 . Advanced Metonymy Fixed interest rate and capital efficiency
I guess you’ll have to choose the defi that you missed the most and let you clap your thighs. Maybe AAVE will be the first one.
After all, in the past two years, with a thousand times increase, we can say that in recent years, we have been proud of the invincible players in the circle (yfi, a hundred times a day fair launch type, is not included), so that the thighs of countless small partners (including me) can no longer be swollen.
After all, the essence of finance is built on the base of metonymy.
So which direction will the advanced Defi metonymy go in 2021 ? At present, fixed interest rate and capital efficiency are two major directions.
As we all know, whether it’s compound or AAVE, the interest rates in it are floating at any time. Interest rate fluctuation will make it difficult for both sides to plan the future, and it is not conducive to investment decision-making and appropriate risk hedging.
This is why most of the borrowing market share in the traditional financial field is dominated by fixed rate products. It is not difficult to imagine that the development of the loan generation of defi will certainly be developing in this direction. At present, there are several projects mainly focusing on fixed interest rate borrowing.
As you can see, there are MFT, mph, yield, swift, notional and other projects in the process of doing it, and AAVE, the leader of the loan generation, has recently begun to step into this field. In 2021, the rate of this field will gradually change from the blue sea where you are my good to you and become a red sea of your own.
As for how to achieve a fixed interest rate in the volatile blockchain industry, each company has its own way, which is not the same. The space problem can not be explained here.
Another direction of borrowing is the improvement of capital efficiency. As we all know, if you want to borrow money, you must lock in more funds than you can borrow (for example, ETH 1500 dollars, you can only borrow 1000 dollars for each ETH), which will inevitably lead to low asset utilization.
Imagine if there are flowers on the defi, what would it be like? The bottomless loan based on credit will certainly release the capital efficiency of an order of magnitude higher than that of others.
At present, several projects in this field have begun to explore, including the leading AAVE, which adopts the method of credit delegation. Truefi, based on Dao mode and teller, introduces out of chain credit data (such as bank transaction data)
The metonymy between agreements will promote the improvement of capital efficiency between defi, and make the capital flow quickly between different agreements, thus opening up a new field of defi.
Iron Bank’s 0-loan-to-duck-loan.at present, all the defi loan-to-duck-loan agreements, from maker, compound and AAVE, are over loan-to-duck.iron Bank of cream tries to adopt the credit system to realize the loan-to-duck-to-duck-loan. If it can be successfully implemented, it will unlock the liquidity of capital in the field of defi.
Iron Bank will set up a white list. If an agreement is listed in the white list, it can obtain a certain amount of credit, which can be directly obtained from cream v2.
According to cream, it is similar to its users who have enough credit to allow a certain amount. The main difference here is that they do not have to sacrifice their liquidity.
As a whole, this field has just started and everyone is exploring. I believe that with the gradual popularization of did (decentralized identity) and the gradual acceptance of credit on the chain, there will be a broader space for development.
Well, this is the first chapter of 2021 defi for you. In the second part of next week, we will introduce the latest context of the following three directions: Advanced income aggregator, advanced insurance and advanced derivatives.