#What Value could dYdX obtain?

[empresa-journal]

Can dYdX (DYDX) make money from Perpetual Contract Trading?

Can dYdX (DYDX) make money from Perpetual Contract Trading?

dYdX (DYDX) is a decentralized finance protocol and trading platform built to cash in on perpetual contracts. A Perpetual Contract is a cryptocurrency futures contract with no expiration date. Hence, a Perpetual Contract is a futures contract that can theoretically last forever. A Perpetual Contract’s value comes from the crypto asset they base it on. For example, a one Ethereum Perpetual…

[mexckk]

MEXC Global Research: Ethereum’s MEV and Countermeasures

What is MEV?

MEV (Miner Extractable Value) was first proposed by Philip Daian et al. in April 2019 in the paper “Flash Boys 2.0” and started to gain traction following the development of DeFi.

Miner Extractable Value refers to a measure of the profit a miner (or validator, sequencer, etc.) can make through their ability to arbitrarily include, exclude, or re-order transactions within the blocks they produce.

In other words, miners can pack transactions in Ethereum to generate blocks. In the resulting blocks, miners can also re-order, include, exclude transactions, and do other operations. In addition to transaction costs and block rewards, the value miners receive from these operations is MEV.

In DeFi, MEV mainly occurs in arbitrage transactions and liquidation. Arbitrage transactions, such as between different DEXs like Uniswap and Sushiswap, may contain arbitrage opportunities.

For example:

Suppose the appearance of a $10,000 USD arbitrage opportunity on Uniswap after a large trade led to a price slippage. At this time, the arbitrage bot notices this and submits the arbitrage transaction to the miners. Then, there are two possible outcomes:

1. The miner will duplicate and review the arbitrageur’s transaction. The miner will trade and pack the opportunity first. If the benefits are higher than the simple operating costs, there will be sufficient incentives for miners to participate;

2. Other bots will notice this arbitrage opportunity and bid a higher transaction fee to start a bidding war for the arbitrage. This kind of bidding is called a “Priority Gas Bid” (PGA);

The profit behind this $10,000 USD is MEV. If the miners do not participate in the trade and the bots compete in a PGA, then the difference between the auction’s settlement price and the total MEV is the winning trader’s profit (for example, if an arbitrage bot pays the miners $7,000 USD, the remaining $3,000 USD is reserved for the arbitrageur).

Most MEVs are PGA-type MEVs, just like Uniswap arbitrage. However, there are other types of MEVs, such as theft from vulnerable smart contracts. Dan et al. described an example in their “Dark Forest” article and found a smart contract with a vulnerability that allows anyone to steal money from it. Dan plans to recover money from the loophole before the thieves have time to steal the money. However, an arbitrage bot automatically recognized the opportunity and copied Dan’s transaction, giving higher transaction costs. The bot successfully executed the transaction before Dan and eventually took the money away.

As development progresses, MEVs will exist across all smart contract blockchains. One party will always be responsible for sequencing transactions, including non-miner participants, such as validators in ETH2.0 and aggregators on Optimistic Rollup. Therefore, Flashbots proposed that MEV should be referred to more broadly as Maximum Extractable Value, expanding its scope from Ethereum to cover other blockchain architectures while keeping the name of MEV. It is worth mentioning that MEV extraction in Ethereum today is mainly performed by non-mining DeFi traders and bots.

MEV’s definite negative externality to the blockchain ecosystem is the malignant effect on the gas bidding mechanism. As long as the MEV is large enough, the runners will be willing to pay gas fees hundreds of times higher than ordinary transactions through vicious competition. At the same time, block space will record a lot of failed high fee transactions, resulting in a waste of this scarce resource, block space, and a certain degree of network congestion.

This results in ordinary traders and searchers having certain negative experiences regarding MEV. In traditional finance, regulators impose legal constraints on the behaviors that disrupt the order of market transactions, such as rush trading; In the decentralized financial ecosystem, it mainly depends on the game between stakeholders and the technological upgrading of decentralized system to promote the reform or optimization of the market mechanism.

MEV’s Impact

1. Leads to the reflections and redesign of ecosystem roles

2. Importance of fostering greater attention to the value of transaction data and the sequencing of block space

3. Miners can benefit from this extra profit

4. Hurting users: MEV is essentially a rush transaction and can cause network congestion

5. Hurting the Blockchain network: MEV essentially encourages consensus instability

6. There are no constraints or direct solutions and only mitigation measures are currently available

MEV’s Typical Practices

Front-running refers to earning profits by placing a particular transaction in the same block before the target transaction (attacked transaction), mainly for liquidation and arbitrage transactions.

Back-running refers to earning profits by placing a particular transaction in the same block as a target transaction, typically an Oracle transaction or a single big transaction order.

Sandwich attacks are the combination of the two forms of attack above which allows the target transaction to be caught exactly in the middle of two specific structured transactions for profit. Sandwich attacks greatly broaden the scope of an attack, making it possible to target even a common AMM DEX transaction. An attacker’s first constructed transaction creates greater price fluctuations, and the second structured transaction is executed immediately following the execution of the target, thereby profiting after exchanging the attacked cryptocurrency.

Flashbots

Flashbots is a research and development organization that aims to reduce the negative externalities and risks posed by MEV to the public chain of smart contracts. It wants to create a “permissionless, transparent, and fair ecosystem” for the public chain of smart contracts.

Flashbots provides a solution for MEV — MEV-Geth. MEV-Geth eliminates information asymmetry, opens arbitrage opportunities to the public and shares them with stakeholders. Ultimately, the distribution order of benefits established by Flashbots may form a bidding market based on arbitrage and liquidation bots, thereby eliminating free-rider behavior.

Flashbots’ solutions to mitigating the MEV crisis are divided into three parts: illuminating the dark forest, democratizing value mining, and distributing profits.

Illuminating the Dark Forest: To quantify the impact of MEV, Flashbots created the scanning of Ethereum blocks, enabling MEV indicators to display visualized MEV-Inspects, thereby eliminating information asymmetry.

Democratization of Value Mining: Ensure that all participants can use the basic financial module equally so that the core features of Ethereum can be retained. The publishing of go-Ethereum client upgrade, MEV-Geth, enabling of the block space sealed-bid auction mechanism, and conduction of transaction order preference communication alleviate the situation of front-running and back-running transactions and reduce the congestion of Ethereum to a certain extent.

Distribution of Profits: Establish a coordinated and sustainable ecosystem with full consideration of the roles of users, miners, developers, node operators, and others.

Related Data (Reference data: June 30)

Due to the persistence of transactions in the blockchain, MEV will always exist, and realized MEV could be roughly calculated from the historical data. According to Flashbots’ data, the cumulative MEV exceeded $749 million in January 2020.

(Source：flashbots MEV-Explore)

Proportion Of Protocols Used by MEV for Interaction

Uniswap: 42%

Sushiswap: 23%

Balancer: 11%

Curve: 9.8%

dydx: 7.6%

Others: About 6.6%

(Source：flashbots MEV-Explore)

The main ways to obtain MEV are arbitrage and liquidation, in which the proportion of arbitrage transactions is more than 97%.

(Source：flashbots MEV-Explore)

Some Conceptual Projects Focused on Mitigating MEV’s Issues

At present, there are two solutions to the negative impact of MEV. One is to let arbitrageurs and miners work together to avoid malicious competition among arbitrageurs. The other is to hide arbitrage opportunities, place transactions in black boxes, and give tips (extra benefits) to allow miners to pack selectively.

ArcherDAO

Native Token: ARCH

Price: 0.72USDT

Market Value: 8 million USDT

ArcherDAO is a network protocol that allows arbitrageurs and miners to work together directly. It uses a different solution than PGA to optimize the benefits of arbitrageurs and miners and avoid wasting gas costs for arbitrage. At present, ArcherSwap is a different solution from other DEXs, and is more in line with the future development of Ethereum.

There are two main roles in ArcherDAO, one as a miner and the other as a supplier. Suppliers submit transactions with MEV opportunities, miners pack transactions into blocks, and the protocol links the two to route transactions submitted by suppliers to miners.

In a collaboration effort, suppliers act as diggers for arbitrage and liquidation opportunities, and they are responsible for discovering potential profit opportunities everywhere. Once possible opportunities are found, they are sent to ArcherDAO, which in turn sends them to the miners for priority packing. Once the arbitrage is successful, the protocol will distribute the benefits proportionally between the suppliers and the miners.

Currently, in this distribution of benefits, the current protocol does not charge fees. In the future, some fees may be charged according to the governance of DAO.

mistX

Related token: Alchemist Project（MIST）

mistX is a decentralized exchange introduced by Alchemist using Flashbots technology. mistX, also known as FlashDEX, binds transactions through Flashbots to achieve transaction confirmation.

Additional ETH fees are required for transactions in Ethereum, but through mistX, no additional ETH fees are required for any cryptocurrency to be exchanged with ETH, and there are zero Gas fees for all such transactions.

However, when users use one token to exchange for ETH or use ETH to exchange for other tokens, they have to pay a percentage of the miners’ fees in each transaction, which is called “Bribe”. If two cryptocurrencies are exchanged in the transaction and there is no ETH involved, the user’s wallet must contain some additional ETH to pay the Gas fee.

Bribes are similar to Gas fees, except that they are used to protect transactions and prevent front-running transactions through mistX. By using Flashbots to “bind” a transaction before it is released, it will not be sent to the mempool to wait for miners to pack the transaction.

In addition, mistX can be used to cancel a transaction with one click without paying Gas fees. Since Flashbots uses “binding” to process transactions, users can cancel transactions at any time without paying any fees as long as the transaction is not confirmed on the network.

CowSwap

Related token: Gnosis Project（GNO）

CowSwap was developed by the development team for the Gnosis protocol. Gnosis is a decentralized application infrastructure. Products include decentralized prediction market, multisig wallet Gnosis Safe, Gnosis DAO, auction market, and many other types of applications.

CowSwap matches transactions using a “Coincidence of Wants (CoW)” approach. Simply put, if two people on CowSwap hold the assets the other wants, they can match the transaction directly without the need to broker transactions with a market maker or liquidity provider. This provides the best price for individual traders and exempts handling fees incurred by market makers or liquidity providers.

Since CoW’s approach does not require external liquidity in the chain, it avoids the appearance of MEV because it uses batch orders to settle at a unified price where all orders have the same price with zero transaction sequencing problems.

Comparisons of Anti-MEV DEXs

Automata Network

Native token: ATA

Price: 0.753USDT

Market Value: 90 million USDT

Automata Network is a decentralized service protocol with the functionality to enhance DApps or build privacy-based applications on decentralized networks. It provides traceless privacy services similar to middleware for applications in Ethereum, Polkadot, and Binance Smart Chain. The first two products of the Automata Network are Conveyor and Witness, where the Conveyor addresses MEV-related issues.

When Conveyor is handling MEV transactions, it uses specific Automata Network tokens gtoken (gETH, gBTC, and others) to help users implement privacy-protected transactions. Before the transaction starts, the user’s tokens are wrapped into gtokens. This allows transactions to be made using the private compute node, Geode. Wrapped tokens are processed by the Conveyor, which will not change the transactions sequence or obtain information about the contents of transactions. Only after the transaction is executed will the token be unwrapped and restored as required by the user.

KeeperDAO

Native Token: ROOK

Price: 164.07USDT

Market Value: 950 million USDT

KeeperDAO aims to encourage token holders to participate in the liquidity pool through economic incentive strategies to coordinate liquidation and rebalancing in margin trading, lending, exchanges, and other applications.

KeeperDAO allows users to concentrate their funds on Ethereum smart contracts and gain common benefits through on-chain arbitrage and liquidation opportunities. To maximize the use of idle funds, all assets in the pool will continue to lend to Compound, dYdX, and others. In addition, KeeperDAO participants do not need to build their own infrastructure and bots, design payment-first strategies, and others. This lowers the entry thresholds.

KeeperDAO eliminates MEV by sealing transactions/debts through specialized smart contracts.

When a transaction happens and the trader submits it to KeeperDAO, the KeeperDAO analyzes whether there is an arbitrage opportunity (by front-running or back-running transactions). If there is an arbitrage opportunity, KeeperDAO takes priority in earning its profits. After the transaction is completed, KeeperDAO mints a new ROOK to reward the trader (keeper_Fee) for compensating for the loss caused by the slippage. After rewarding the trader with profits, the Guardian’s profit is reduced, but the loss is still less than that of the “Gas War” during the competition in PGAs.

The Guardian provides trading strategies for KeeperDAO and returns all profits to KeeperDAO. Then, according to the total profit in the pool, ROOK is rewarded according to the Guardian’s proportion of return.

BackRunMe

BackRunMe is supported by bloXroute, which allows users to safely submit private transactions (such as protecting users from front-running and sandwich attacks), while allowing searchers to roll back transactions via MEV (if an arbitrage profit is generated), while BackRunMe returns a portion of the extra profit to users. Simply put, if a transaction does not create a rollback opportunity, it will be treated as a normal, private transaction. If the transaction still generates an arbitrage profit, the user sending the transaction, the miner, the discoverer of the arbitrage opportunity (also known as a searcher, usually a bot), and BackRunMe will share the profit.

Generally speaking, a rush attack involves three parties — the victim of the rush attack, the trading bot, and the miner digging out the block containing the rush attack. BackRunMe uses these participants to provide services that benefit ordinary users.

Users submit private transactions to bloXroute; bloXroute sends metadata and the arbitrage finder proposes to roll back the transaction bloXroute checks if the arbitrage opportunity finder’s response is procedural; through private communication, bloXroute sends the most efficient and beneficial bundle of MEV transactions to the pool for execution.

[tipco613]

New Post has been published on http://cryptonewsuniverse.com/biggest-crypto-hedge-funds-and-what-they-tell-about-the-market/

Biggest Crypto Hedge Funds and What They Tell About the Market

Biggest Crypto Hedge Funds and What They Tell About the Market

Who are the biggest hedge funds operating in crypto today and how much do they have invested in crypto and blockchain firm

The total market cap for all cryptocurrencies stands at $293 billion, and while much of this value has been generated by individual traders buying and selling their own private stashes of crypto,

it's also largely the result of big investment funds. These are companies that have crypto assets under management worth as much as $1 billion or upward, with most of them qualifying as the whales the cryptocurrency community often talks about after every market movement. Yet, aside from simply trading Bitcoin, Ether or many other cryptocurrencies, funds also often invest venture capital (VC) in blockchain — and crypto-related startups. This makes them doubly important for the growth of the cryptocurrency industry, given that they support not only the currencies of the future, but also the platforms and companies that will harness these currencies to build entirely new financial ecosystems. That said, most of funds have been backed by traditional venture capital, such as Andreessen Horowitz and Sequoia Capital. So, even though they are supporting the emergence of the new crypto economy, it will be one that will have strong, foundational links with the financial system — something many in the community think crypto will replace.

The top five

Obtaining reliable, standardized data on the assets under management of each major crypto fund is very difficult, if not impossible. Accordingly, this top five doesn't claim to be completely authoritative, given that it gleans available data from a variety of sources published at a variety of times. Nonetheless, it provides a fairly robust account of the five firms that are most likely the biggest funds operating in crypto today, in terms of digital assets under management and investments in crypto-related startups.

Digital Currency Group/Grayscale Investments

Digital Currency Group was founded in 2015 by Barry Silbert, who had previously invested in such early cryptocurrency companies as Coinbase, Ripple and BitPay. It already has invested in nearly 130 crypto-related projects, with the average size of seed rounds it was involved in between 2016 and 2018 being $3.24 million. Given that it has more investments than pretty much every other fund in the industry, it will be no surprise to hear that it has backed some of the most well-known crypto projects and companies, including Circle, Chainalysis, Blockchain, Shapeshift, Parity, Ledger, Luno, Kraken, Korbit and eToro.

One of its investments is Grayscale, a subsidiary of Digital Currency Group that invests directly in cryptocurrencies and digital assets. Grayscale announced in its Q2 2019 financial report that it had assets under management (AUM) worth $2.7 billion. As an indication of just how volatile the AUM figure can be, it also revealed that this number had tripled since the first quarter of 2019, with its dedicated Bitcoin Trust having increased 300% compared to the same time last year. More revealingly, Grayscale's latest report also detailed how most demand for crypto investment comes from institutional investors — who have represented 84% of its client base since July 2018. As such, it's clear that, far from being a grassroots-based, decentralized ecosystem, crypto is already driven very much by big business and big money.

Polychain Capital

Founded in 2016 by cryptocurrency investor Olaf Carlson-Wee, Polychain Capital is another crypto-focused hedge fund that nonetheless has backing from noncrypto venture capitalists. Back at the end of 2014, it was reported that its AUM totalled $591.5 million, having plunged from a high at the end of 2017 of around $1 billion. However, data from Crypto Fund Research states that, as of June 2019, it has $967 million of cryptocurrency under management. As with most other major funds, it also invests in blockchain- and crypto-related startups, with its tally of investments coming to 37 (according to Crunchbase). These include Coinbase, Kik, Celo and dYdX, which Polychain has been able to invest in thanks largely to the raising of around $175 million for its venture capital fund at the end of 2018. One thing that's worth noting about Polychain Capital is that it has received significant backing for its venture capital and crypto funds from major VC firms. In 2017, it closed a $200 million funding round in which Sequoia Capital, Andreessen Horowitz and Union Square Ventures all participated. It is, therefore, as much a product of traditional finance as it is of the new cryptocurrency ecosystem.

Pantera Capital

Initially founded in 2003 and based in San Francisco, Pantera Capital was once a traditional investment fund, although it shifted its focus in 2013 to cryptocurrencies and blockchain projects. According to a range of estimates, it has assets under management worth anything from $335 million to $724 million, although this may have fluctuated in recent months. It has also invested a considerable sum in 72 crypto-related startups and projects, with it having raised at least $200 million in total from outside venture capital in order to fund such investments ($13 million in 2016, $25 million in 2017, and $175 million in 2018-2019).

Pantera Capital has backers from outside the cryptocurrency industry, which is significant insofar as it indicates not only mainstream interest in crypto but also the possibility that it may feel some kind of indirect pressure to invest in projects that would be more pleasing to its financial backers. As for Pantera Capital's general outlook, it may come as no surprise to hear that the fund is very bullish on the future of cryptocurrency and blockchain. In July, its CEO and founder, Dan Morehead, predicted that Bitcoin may hit $42,000 by the end of year and that it could climb as high as $356,000 in a couple of years. Despite this confidence, Pantera Capital is no stranger to setbacks. For instance, it admitted in December 2018 that it could be forced to pay refunds and fines for around 25% of its initial coin offering portfolio, given that roughly this proportion of the portfolio is likely in violating American securities laws. Similarly, during the 2018 bear market, its digital asset fund (i.e., its cryptocurrency fund) lost around 77% over the first 10 months of that year.

Galaxy Digital

Launched in New York City in 2018 by former Goldman Sachs partner Michael Novogratz, Galaxy Digital is another hundred-million-dollar crypto hedge fund. As of the end of June 2019, its total assets under management is $393.3 million, having dipped from May's total of $421.6 million. During 2018, the fund posted a net loss on its balance sheet of $272.7 million, largely because of the bear market and crumbling crypto prices. In addition to investments in cryptocurrency, Galaxy Digital has also invested in around 20 crypto-related projects, including Bakkt, BlockFi, Ripple, Block.one, BitFury, BitGo and Bitstamp. As with the other funds on this list, such ventures have been made possible by investments from noncrypto backers. That's because when Galaxy Digital launched in January 2018, it had not only $400 million of Novogratz's own capital but also raised a further $200 million by floating the company on Canada's TSX exchange.

Andreessen Horowitz

While it's focused mostly on companies operating outside of the cryptocurrency sector, Andreessen Horowitz established its own crypto investment fund, called a16z. As of writing, a16z claims that its fund is worth $350 million, while back in June 2018, when it was launched, the total came to $300 million. This is a big figure in the context of the crypto industry, but compared to the $7 billion in assets that Andreessen Horowitz manages in total, it seems a little more modest. However, it's likely that the value of a16z has increased since May. More importantly, however, is the fact that a massive investment fund with $7 billion in AUM is also interested in crypto, which is a significant vote of confidence for the industry.

This vote of confidence doesn't derive only from direct investment in cryptocurrencies, however. Andreesseen Horowitz and a16z have also thrown venture capital at a range of cryptocurrency startups, spanning Coinbase, Maker, Filecoin, dYdX and CryptoKitties. For example, in August 2018, the fund, together with Polychain Capital, invested $105 million in blockchain-based cloud startup Dfinity, having already contributed a combined $61 million in a previous round in February of that year. Even forgetting a16z, Andreesseen Horowitz is therefore heavily invested in the cryptocurrency industry and is one of the biggest funds operating in the space today. More encouragingly, recent events indicate that it wants to involve itself even more heavily in the sector — as in April of this year, it announced plans to restructure its entire business and register its employees as financial advisors. The reason? This would provide it with the legal basis to engage more in riskier ventures, such as cryptocurrencies.

The rest

Of course, these aren't the only big investment funds operating in crypto to the tune of hundreds of millions of dollars. Others include:

Union Square Ventures, which has around $256 million of cryptocurrency assets under management, according to Crypto Fund Research.

Blockchain Capital, which launched in 2018 and raised $150 million for its new fund in March 2018, bringing its total AUM to $250 million.

IDG Capital, which launched in China in 1992 and invests in noncrypto as well as crypto assets, and has $210 million digital assets under management.

BlockTower Capital, which launched in 2017 and has around $130 million in AUM (as of December 2018).

Boost VC, a California-based fund that launched in 2014, which has $95 million in AUM.

Fenbushi Capital, a China-based crypto fund that had $50 million in assets under management in early 2018.

These aren't the only significant funds working in the crypto industry. However, in a rigorous study published in May 2019, PwC and investment firm Elwood concluded that the vast majority of cryptocurrency investment funds are in fact pretty small.

For instance, the survey found that more than 60% of 150 active crypto hedge funds have less than $10 million in AUM, with only 10% of these funds managing more than $150 million. It also found that the average crypto fund’s AUM is only $21.9 million, indicating that, despite a few big fish, much of the sector is populated by smaller firms trying to capitalize on the cryptocurrency market. More disconcertingly is that the report also notes a lack of independent governance in the average fund, given that only 25% have boards with independent directors, something that may be risky in cases of emergency, when clear, cautious decisions are needed. Similarly, over 90% of crypto hedge funds don't use third-party research, suggesting that they suffer from a deficit of external, objective input.

Still, while this might indicate that the crypto hedge fund sector is immature and vulnerable, there was a pronounced increase in crypto hedge funds and the assets under their management in 2018, according to Morgan Stanley research. In 2014, for instance, there were only 31 such funds, while there were 220 by November 2018. More impressively, these funds had $7.1 billion in assets under management in July 2018, driven largely by demand and involvement from institutional investors. It is for this reason that it would be unwise to predict that the importance and presence of crypto funds won’t grow even further in 2019 and the years to come. As the foregoing overview has shown, they function as an indispensable medium between big institutional investors and the nascent cryptocurrency industry. This means that the more they grow,

Article Produced By Simon Chandler

Simon Chandler is a journalist based in Hove, UK. He writes mostly about technology, with his specialties including cryptocurrencies, AI, VR, and social media. He also occasionally writes about politics, culture and music, and has contributed to the likes of Wired, the Daily Dot, the Verge, Computer Weekly, Techcrunch, Bandcamp Daily, the New Internationalist, the Kenyon Review, and Tiny Mix Tapes

https://cointelegraph.com/news/biggest-crypto-hedge-funds-and-what-they-tell-about-the-market

[practicalryangosling]

The little circle of DeFi, the big world of the future

The entire world of blockchain can indeed be called turbulent. In the very first half the year, the thought of PoS staking was still mentioned. In the next half the year, the style of painting changed suddenly to DeFi, which seems to be a revolutionary application field.

Is DeFi short-lived or does it really change profoundly? So how exactly does DeFi evolve? What is the relationship between DeFi and Ethereum? How did MakerDao emerge? Do you know the limitations of DeFi and what new explorations? With your questions, we particularly invited the teacher of the very first lecture on DeFi, the founder of Stafi & Wetez, the author of "Understanding the Blockchain PoS Consensus", and a solid supporter of the PoS consensus. 01 Background: People chain and Dapp are nowhere coming soon, and DeFi is just about the brightest one In 2019, following the 1CO, the exchange wave, the residual blockchain explorers are still innovating. The game between centralization and decentralization hasn't stopped, however the ideal decentralization spirit continues to be the target of (yi) and (yin) rule makers. We have witnessed the innovation of several blockchain projects, from public chains (Ethereum, Cardano) to Dapp (EOS, Tron), from Dapp to multi-chain (Lightning Network, Raiden Network), after which from multi-chain back to platform (Cosmos, Polkadot). In "The Myth of The Infrastructure Phase", Dani and Nick summarized the method of mutual achievement of infrastructure development and application development in the PC and Internet era. They said that in the blockchain, platforms and applications will observe the same rhythm, APP=>  Basic structure=> APP=>  Basic structure... Now, the proliferation of public chains has destroyed the imagination of investors, while Dapp has destroyed speculators' expectations for short-term landing. Practitioners all lament that being near money is just a double-edged sword, but in essence, this really is a different one. The performance of progress is very contradictory. Considering 2019, the bear market remains, but new concepts are still emerging. Staking and DeFi will be the two most beautiful boys on the street. Staking meets people's short-term profit expectations, and DeFi meets people's long-term profit expectations. Both are clearly divided in the cycle of time outbreak. The initial half 2019 could be the staking market, and the next half the year DeFi could be the protagonist. Both have a gestation period, which can be about 50 % a year. Starting in the middle of the year, DeFi Protocol has turned into a sweet potato in the professional circle. As the data of DeFi projects in the very first half the year has grown well, people's attention has begun to shift from the staking market (the staking trillion market that the media frequently claims) To DeFi in the more expensive market. One of the few DeFi projects, MakerDao carries a lot more than 80% of people's focus on DeFi projects. The surplus attention originates from people in the stock exchange, and the demand for stablecoin DAI covers the majority of the current DeFi scenario (that is, the preservation and lending of stablecoins). Based on data from DAppTotal, the total amount of loans for DeFi projects increased from USD 24 million in January to USD 173 million in June, and the total amount of loans also increased from USD 9. six million in January to USD 256 million in June. 02 What is DeFi? A simple definition of DeFi: the abbreviation of Decentralize Finance, literally translated as decentralized finance, following the community understands and diverges, it has a higher rate of meaning, called open finance, or distributed finance, distributed commerce, etc . Based on the above definition, Bitcoin ought to be the earliest blockchain DeFi project, a lot more than a decade from today, but in the new DeFi concept, MakerDao could be the big brother in the current layout, accounting for a lot more than 80% of the interest. Maker is just a project in October 2017. With this project as a starting place, the new DeFi project has been developed for nearly a couple of years. 03 DeFi classification In a lot more than a couple of years, many existing projects have already been refurbished, but you will find very few real newborns. They truly are divided in to three categories, stablecoins, lending applications and decentralized exchanges. All three categories are centralized. The approach of USDT is in accordance with DAI, the financing of centralized exchanges is in accordance with Compound, and Binance is in accordance with dydx. The big difference between your two types is simply the big difference between decentralized and centralized services, anti-censorship, openness and transparency, and irreversible transactions. ** **The biggest big difference is that decentralized projects give the trust of assets to the code. Therefore , an easy understanding of the DeFi project now's that as long as the ownership of the asset is fond of the dog owner by the code, it conforms to the thought of a fresh DeFi project. 04 DeFi features ** The existence of pledged assets**. Unlike traditional finance, many businesses are based on credit, such as for instance some small loans and credit loans. People decide whether to give you financing by evaluating your financial troubles status, work status, marital status, etc . The blockchain is essentially used to realize this group of credit system is extremely suitable, allowing individuals to own each of their own status data, but because the current development of the blockchain continues to be very early, many data structures are not perfect, making the credit-based endorsement The company is actually unable to develop. It can be seen that the decentralized projects surrounding both major kinds of DeFi (borrowing/stable currency) are fundamentally only endorsed by mortgage assets, usually through over-collateralization of assets to have stable currency, after which use stable currency to fulfill Your own personal needs are over-collateralized. Do more. Because of the not enough usage scenarios of Token, a lot of borrowed Tokens (such as DAI) have fundamentally came back to the transaction. First, in order to preserve the value/or even boost the value, the large currency holding institutions will mortgage their assets to have income through lending (year 10%+). These assets flow into the hands of the borrower, and the borrower obtains its own risk return by short or long. The rise in the very first half 2019 can see an important upsurge in mortgage lending. Based on related knowledge, the majority of the borrowed coins have already been employed for long. 05 Ethereum and DeFi ** Ethereum DeFi. ** DeFi projects which are broadly speaking concerned is going to be based on the quantity of collateral or the quantity of lock-up. Those projects with high lock-up amount we have been knowledgeable about, such as for instance Maker, Compound, Dydx, etc ., are typical projects on Ethereum. When it is determined from the quantity of lock-up, nobody Or doubt the truth that a lot more than 90% of DeFi projects are built on Ethereum. Actually , when lots of people look closely at DeFi, they also have to mention Ethereum. Ethereum could be the largest smart contract platform. It gets the second-largest ETH asset by market capitalization. It has a wealth of project parties and developers. Bitcoin cannot support contracts. Fang took this position well Questions about Ethereum DeFi. ** Is there every other project that can replace underneath layer of Ethereum (see a lot of Pandora, cross-chain interoperability, Polkadot, Cosmos and other new public chains), and certainly will DeFi declare that the chain fades through cross-chain? Of course, the premise is that the development of DeFi itself must continue to improve. Addititionally there is the impact of 1. 0 and 2. 0ETH on Ethereum. Sharding, PoS transfer, and EWASM will all have new requirements if not rewrites for new smart contracts. It's not clear whether large-scale dilemmas will occur at the same time. The conversion might not be completed until 2021. 06 DeFi token ** DeFi without Token? **** Many DeFi projects never have issued their very own tokens. Most of these projects are built on Ethereum. It really is indeed an intricate problem to style your own economic model along with Ethereum. You can have a look at the non-DeFi projects built on Ethereum, how to design your own Token model, and feel twisted no matter the way you look at it. ** Chainlink's oracle calls digest ETH, and the contract uses Connect to compensate the info provider; Loom's staking must enter Plasmachain from ERC20, after which locks in the contract on Plasmachain; IoTeX's staking supports the exchange of mainnet IOTX and ERC20, as well as supports Staking of both Token practices, the experience of both practices mixed to an individual is by no means straightforward. After 2018, DeFi projects have already been designed into a Token-free mode (except Maker). A trend I judged is that DeFi projects have also begun to go back to the profit model of "providing services". The "providing services" in DeFi could be based on their very own What generated by the agreement, including the generation of DAI, the matching in Dharma, the transaction in Dydx, etc ., are not much not the same as the centralized method, but they have absolute transparency. **Furthermore, the next upsurge in fee items could need to be decided by a decentralized community as opposed to led by the development team. Of course, ** doesn't rule out that the project uses the blockchain to create a semi-decentralized (Semifi) or centralized project, which aims to resolve the key dilemmas of centralized finance, however, not all, such as for instance asset ownership. It really is difficult to guage the continuity of this Token-free method. Built under a large structure, it is difficult to style an ideal economic model. Although a lot of practitioners have indeed appeared, it has nothing at all to do with the lack of good some ideas. Looking right back at some projects which have already issued tokens, 0x ZRX, it looks a bit tasteless at present. Additionally , pay special focus on projects such as for instance Cosmos and Polkadot offering underneath layer for development. CosmosSDK-based projects have a complete design model, and economic models are indispensable. For Substrate-based projects, if you want to use Polkadot's shared consensus, then these projects The problem is equivalent to that of the DeFi project on Ethereum. Of course, based on Substrate, you can design consensus, independent of Pokaldot, and come back to the specific situation faced by CosmosSDK. ** 07 MakerDao specific example In 2019, DAI and the MakerDAO that generated it became the most amazing in the DeFi landscape. But DAI is not a fresh thing, it is just a mortgage-generated asset. As early as 2014, BM realized the function of generating stable coins from mortgage assets on the Bitshares platform. **On the Bitshares platform, users can acquire a number of anchored assets by staking BTS, such as for instance Bitusd that is anchored to USD, Bitcny that is anchored to RMB, as well as Bitgold that is anchored to gold. This mortgage anchoring concept is in Bitshares The system is very mature and contains a complete group of supporting facilities. There is a integral decentralized exchange (commonly called the inner disk in the community) to support the exchange between multiple trading pairs; gleam centralized gateway that can directly accept Bitcny/Bitusd and other anchors The deposit and withdrawal of assets; there are numerous DACs, etc ., this complete group of packages is now in the circle, and you can see similar figures every where. Bitshares is indeed complete, can you envisage how people in the community think about MakerDAO? Actually , those individuals who have stayed longer in the circle understand that MakerDAO's origin is notorious. MakerDAO was born in December 2017. With the exception of the exchange of mortgage assets from BTS to ETH, the majority of the functions and Bitshares' stable currency function Very similar. People in the Bitshares community didn't show any good looks except to laugh at it. Additionally , MakerDAO was built on Ethereum and used ETH for mortgage assets. During those times, the BitShares community and the Ethereum community were incompatible with one another. Some people in the Bitshares community believed this operation of MakerDAO had not been considered a fork, also it was a naked plagiarism; Others genuinely believe that MakerDAO is too trivial, and only a small the main functions in Bitshares are realized, plus they do not go seriously; many people directly look down on this anchoring mechanism and genuinely believe that the Bit series assets have failed enough. DAI can not succeed at all, it will produce black swans. ** ** Black swan is just a sort of endgame occurring following the anchoring mechanism fails. This kind of endgame theoretically occurs in Bitshares and MakerDAO. It refers to the truth that once the mortgaged assets are in a specific period of time, the worth of the mortgaged assets shrinks dramatically, inducing the mortgager to keep Raise the position or repayment to ensure the career won't be liquidated. When a large numbers of mortgagers cannot perform, their collateral is going to be liquidated, and the liquidated assets is going to be sold at a discount. If you will find inadequate purchase orders in the market to receive the order, the mortgage The anchoring mechanism will fail. The truth is that in the bear markets of 2015 and 2018, Bitshares approached the black swan many times. During those times, the price of BTS fell all the way, and lots of mortgaged BTS assets were forced to be liquidated by the device, but there were not many people in the market who took over. I simply watched the disk and saw a lot of trying to sell orders, and the costs kept going down, but there is nothing I could do. No body could eat so many trying to sell orders. The problem was acutely critical at that time. Can you envisage the psychological shadow of the holding a lot of Bit series assets behind this anchoring mechanism? BTS was defeated such rounds of price erosion, which directly resulted in many people's suspicion about its anchoring mechanism. BTS is not worth anymore. Why can the Bit assets acquired by mortgage BTS have value? **Although the generation of stablecoins from mortgage assets is just a program execution, the worth of the mortgage assets is endorsed behind it. If you find an issue with the worth endorsement, the stablecoin even offers dilemmas. The later story could be clear to everybody. Ethereum could be the second largest in market value. Bitshares was already used in 30. With the black history of community crowdfunding, the departure of BM, the incorrect direction of Bit asset development and other dilemmas, the Bitshares community has long been out of harmony. The Ethereum community speaks the same day. MakerDAO has grown up beneath the strong protection of Ethereum. Although DAI has only experienced bull and bear once, ETH assets have seen bull and bear strong confidence assets many times. The DAI obtained by collateralizing ETH, from birth to Currently, it is fairly stable at around $1, and the over-collateralization rate of over 150% is sufficient to offset multiple rounds of price shocks. You realize, the BTS system has always required home financing rate in excess of 175%, and 150% of DAI hasn't collapsed, which can be enough to show people's confidence in the purchase price support behind ETH, which can be much stronger compared to the price endorsement of BTS. It really is with the shelter of the big tree that MakerDAO has begun to show stronger vitality, and DAI assets have begun to be exported. We are able to now see DAI trading pairs on many decentralized exchanges, even on centralized exchanges. It can be seen that many people mortgage ETH, obtain DAI, after which buy ETH. This is actually the just like people mortgage BTS to have Bitcny, after which buy BTS. Therefore , the trends of DAI and Bit assets are actually virtually identical. MakerDAO can also be walking through the path of Bitshares. One point that the former goes further than the latter is that new DeFi projects have begun to be developed along with MakerDAO. Applied, this really is certainly one of MakerDAO's luckier than Bitshares. Considering MakerDAO and returning to the DeFi layout, actually , many DeFi projects are not as divine while the media said. There are a lot of beautiful and incredible data reports. I've summarized the story of MakerDAO and Bitshares. Probably the most profound experience is, good A well-thought-out project requires a good carrier, and fertile ground can offer opportunities for continuous growth of the project. **For entrepreneurs, to seize one direction and find nutritious fertile soil, the following point to do would be to work hard. The idea of DeFi is too large. At this time, it is difficult to really have a DeFi project that may be large and comprehensive. Many of them are vertical applications. A brand new field must be developed from infrastructure to platform, and from platform to basic equipment. I believe that the development of DeFi has passed the fundamental stage of establishing infrastructure, and contains entered another application development node (to verify the integrity of the last infrastructure). Considering the DeFi projects available on the market now, MakerDAO's stablecoin and lending are one type, the prediction market Augur is one, and the decentralized exchange Dydx is one. You will find very few general categories, but due to the particularity of DeFi, There will surely be some emerging lending options developing. 08 DeFi's future direction Currently, you will find 3 target areas for DeFi projects, stablecoins, lending, and Dex. Some people say that there should be a prediction market. *From the definition of DeFi in the DeFi Overview, the prediction market must be viewed as one of the earliest DeFi applications. Like Augur, people use assets to bet on probabilistic events and get accurate returns.. This is actually the operating mechanism of Augur, but Augur is not developed because of the immaturity of the oracle. *In addition, people's understanding is too shallow in the first stage, and the traffic in the prediction market is actually low, therefore i temporarily put the prediction market Excluded from the present essential areas. ** The development of the three fields are relatively independent, plus they have achieved certain results in exploring stability. Before 2019, there were very few intersections between your three fields, but because they were all on the basis of the relationship on Ethereum, after 2019, you will have more and more cooperation between these three fields. Among them, stablecoins are actually The infrastructure of the latter two, stablecoin lending and trading pairs on Dex, can well bear the medium and certainly will also bring traffic. Dex itself will integrate lending functions to offer users with more trading options. Based on this development trend, you will have more and more cross-experiences among the three. But an awkward situation is that the integral coverage of the three fields of stablecoin, lending, and Dex is very small. An easy to use example is that centralized exchanges can offer a number of products to  generally meet the wants of transactions and peripherals, and multiple trading currency pairs. Leverage, futures, financing and debt financing, and OTC, etc ., while Dex can only do currency transactions, and it's also only ERC20 currency transactions. On such basis as transactions, dydx adds decentralized lending and leverage. Satisfying the whole trading needs continues to be much worse, and the final combination of the three fields could be the trading pair with DAI on Dex, while providing mortgage ERC20 assets to borrow DAI, after which there is absolutely no more. 09 DeFi projects need more asset classes Financial services are not that simple! Based on my understanding of financial services, general financial services revolve around assets themselves. Such assets could be physical assets, virtual assets, credit assets, or mortgage assets. The farther from the particular value of financial services, the more "endorsements" are expected for his or her products. The present development of social financial services can also be because of the comprehensive services surrounding assets, such as for instance guarantees, credit enhancement, insurance, and laws. They're all ways of endorsing assets to narrow the "distance" between them and actual value.. Nowadays, many DeFi projects are financial services themselves, however the corresponding products are really limited, and have less relationship with the available asset classes of the blockchain. Behind this limitation could be the contradiction between your current blockchain and real life. Although blockchain explorers are constantly seeking solutions, it has always been difficult to introduce real assets into the blockchain. In this technique, seeking new blockchain assets has turned into a temporary direction. Among them, the introduction of BTC assets into the contract is amongst the issues that are being solved intensively. BTC does not have a programmable contract, and the cross-chain of PoW has always had the issue of finality, resulting in cross-chain introduction that can't be implemented well. New cross-chain projects are pushing their very own homogeneous cross-chains. Heterogeneous cross-chains are fundamentally in a stagnant state. You can see that Cosmos cross-Ethermint has been developed for so long. Therefore , in the direction of introducing BTC assets, people started to tend to the solution of the DAO organization. Among them, WBTC is just a solution. WBTC is just a sort of ERC20 that members of the DAO organization store BTC at a ratio of 1: 1 and issued on Ethereum. Tokens, WBTC could be circulated on the Ethereum protocol. Many Dex have integral this WBTC trading pair to counteract the BTC trading pair in CEX. This solution is effective and fast, but it addittionally requires science and trust.. 10 Derivatives of Staking Assets-ABS

Staking assets are another asset that everybody desires to solve. Based on statistics, the present value of staking-locked assets is about six. 4 billion U. S. dollars, which really is a large asset class, but there is absolutely no method to circulate due to the lock. When solving this dilemma, I found this form of asset has a typical feature, that is, it has a fixed income right. The corresponding product of this sort of income right in traditional financial services is named ABS (asset securitization). ABS is this sort of asset derivatives, with asset attributes, but a bit from real value assets. Turning staking assets into ABS blood circulation is definitely an innovation in the DeFi field. This innovation is logically and theoretically compatible with DAI. The logic is significantly similar, that is, the mortgage endorsement obtains equivalent value. Mortgage ETH to have DAI, and staking assets to have ABS. The big difference is that DAI and ABS perform different functions. As more and more PoS consensus projects landed in 2019, Staking assets is likewise enriched. XTZ, ATOM, DOT, etc ., corresponding to ABS assets will also increase. The generation of such assets brings DeFi Come more possibilities. Under normal circumstances, each time a new asset is generated, a number of services that run across the asset is going to be derived. If this service is decentralized, it'll be more complete, exactly like if you will find multi-asset trading pairs in DEX, additionally, there are Decentralized deposits and withdrawals, gleam reason for decentralized financing and debt financing. The ABS in traditional financial services requires multiple rounds of endorsement for assets. The cumbersome links are a lot of to assume. Guarantees, credit enhancement, insurance, and laws won't be pulled down. The ABS of staking assets, in my understanding That said, many links could be omitted, because the endorsement of the asset itself could be the public chain, and the thing of credit enhancement can also be the public chain. Here, some unqualified ABS products have already been screened out. The law and insurance are products that require to be increased and decentralized. Currently, you will find already many teams taking care of projects in various vertical fields. The Stafi_Protocol project is turning staking assets into ABS. There are also projects in neuro-scientific decentralized insurance which are exploring. Credit enhancement is not seen yet, however it must not far. It can be expected that with the development of DeFi, you will find positively a lot more than three essential areas, but will gradually increase. And ABS, I believe could be the fourth key area that is almost certainly to develop into DeFi in the future, namely stablecoins. Borrowing, Dex and ABS. *ABS assets, as a solid endorsement asset, are closely related to Dex and certainly will directly become an asset traded on exchanges. Moreover, *ABS assets have an average tendency to decentralize, that is, endorsement is created by public chains and The code guarantees that blood circulation in Dex is very good and "politically correct". Additionally , staking assets can also serve as collateral, generating stable coins or lending. Following the Ethereum transfers to the PoS consensus, the big difference between staking ETH to create DAI and staking ABS (ETH) to create DAI is only the big difference in value. The worthiness of the latter can be above the worth of the former, or that the former is wholly included. Of course, you can issue ABS in a centralized way, but this returns to the issuance of traditional ABS assets. The issuer of traditional ABS assets must seek the endorsement target of the original assets. As well as the public chain endorsement, in addition, it must carry out a number of work such as for instance credit enhancement, guarantee, insurance, and law. If such operations are not carried out, the mortgaged assets are completely centralized. In the hands of the issuer, comparing and trusting the Stafi code, you will need to pay more trust to trust such centralized ABS assets. 11 summary So in summary, assets from staking to ABS are becoming an interest-bearing blockchain asset. This asset supports the integration of various DeFi applications, as well as gets the potential to be the underlying asset of DeFi projects. It will be the ongoing future of DeFi. Field, a vital part, stablecoin, lending, Dex and ABS. ** ** Of course, explorers will continue to look for the entrance of physical assets to the blockchain. USDT is definitely an example. Later, to TUSD, PAX, after which to the recently controversial Libra. Although all of them are stable currencies, the look of them proves that individuals The determination for connecting physical assets to the chain. 12 question Time Question: Would it be denied that DeFi could be the most grounded form of implementation in the current blockchain? If so, what is the main reason? ** I believe it definitely is, because all DeFi now's for currency holders. The DeFI project provides many operation interfaces for currency holders, which users can use directly, but you can still find many concepts that require to be comprehended throughout the use process, and there could be some operational dilemmas, but this doesn't prevent it from being the closest to an individual The decentralized application used. Currently, I still have not seen that various other applications can offer some tools to users to directly interact with blockchain technology, aside from DeFi. Question: What challenges must be overcome when DeFi develops? Along with asset classes, let us speak about a challenge from a developer's perspective. The developer chooses whether to operate the project in an entirely decentralized manner. When we define some extent of decentralization and centralization, actually , we would not have a unified standard. When we define this standard, we shall have some tilt within our minds. The explanation for this tilt may come from technical difficulty., May be the technology, the difficulty could be insurmountable difficulty. It may be that the rapid launch of the project is some factors of the project development speed, plus some will be the needs of the business model. These factors will be the decentralized method that the project causes the project to choose to make use of. Currently, some typically common techniques, particularly some techniques in Silicon Valley, they will clearly explain many can and can't be done, and analyze many technical difficulties and key factors clearly, in order that everybody can see the project side. Is it reasonable to help make the current choice? Recently, I was inspired by watching DianDianCoin. Like the question of whether checkpoints must be centralized is stated in the white paper. It is extremely difficult for us to accomplish decentralization whenever you can, so we work with a centralized approach to achieve Raise the cost of double-spending attacks on the entire blockchain. Although it was very clear, it absolutely was criticized by lots of people, also it was also an issue that many project parties would encounter. Question: Incidentally, to add to this question, is it possible to shortly introduce the rumors that Compound has a backdoor? This dilemma seems to be well-known to everybody. Ordinary users don't appear to pay attention when using it. That is also an average contradiction, that is, would you trust the team? If you don't believe it, be careful if the project side will leave a right back door. You will find even rumors that MakerDao even offers backdoors, but these exact things won't be made public. Actually , any project must be upgraded, and the master of any project dare maybe not be 100% sure that his project doesn't have bugs. Without confirming whether there's a bug, that he can't be sure that he can solve these existing dilemmas. Actually , everybody needs to have a consensus that you need to consider a problem when using decentralized applications, that is, whether your assets are What could be lost, maybe you have expected anything? Question: Will DeFi derivatives have a big bubble risk, just like the subprime mortgage crisis? Once the available assets are relatively small, the derivatives is going to be farther and farther from the original assets, and its own endorsement could have a very long chain. If one link in the chain breaks the entire chain, you will have dilemmas, so In this case, long-term development is unhealthy, so we have been working very hard to bring new asset types into this DeFi field, that may prevent this risk well. And I believe the subprime mortgage crisis will always happen. In the end, human beings are greedy. Some people use this system, plus some people use it, that may cause certain contradictions, dilemmas as well as crises. Question: In the field of staking, we now have discussed the issue of uncomfortable staking gains along the way of price decline. Can you really achieve a breakthrough with DeFi? **For example, using stablecoins to earn interest? During staking, individuals were unable to provide timely feedback on the secondary market. Consequently, even though the interest was received, the entire principal was still not as compared to the staking income. Then DeFI hopes to make use of the contract method, such staking Assets may then flow, letting it answer market prices regularly to resolve some dilemmas during the period of inefficient token lock-up, after which after these coins flow out, you may also make many types of lending options, such as for instance stable coins or For PoS ETFs, these can be carried out, and they're an easy task to do. Question: DeFi is indeed reliant on Ethereum, which can be maybe not the very best news for the DeFI project itself, but can it be good news for the long-term support of ETH prices? I believe this really is an open question, and there's really not a way to provide an optimistic answer. Lots of people suggest that you want to create a DeFi project on Ethereum, because Ethereum already has a siphon effect, that is, lots of people need to use Ethereum in order to make better use of existing infrastructure when doing projects. Take action related, because DEX is on Ethereum, stablecoin is on Ethereum, and lots of applications may also be on Ethereum. So if you are performing a project on Ethereum, particularly a DeFi project with a currency model, if your currency is ERC20 compatible, or if a few of the derivatives you send are ERC20, you may easily circulate in this ecosystem. Find value swaps, which can be very beneficial to the development of your project. That DeFI is created on Ethereum is definitely beneficial to Ethereum itself. Pan Chao also asked a question on the last roundtable panel, can there be any public chain supporting the DeFi project? Actually , nobody immediately answered. I believe it just doesn't. In this case, does it support the price of Ethereum in the long run? I believe it is somewhat, but that he can not measure it quantitatively. At precisely the same time, it will encounter various market factors that make it very complicated. Therefore , it is hard to say that the benevolent see benevolence.

[szunwaves]

CeFi and DeFi are inevitable, and the encrypted economy and the traditional economy will ultimately compete

Not merely is CeFi and DeFi inevitable, but the encryption economy and the traditional economy will ultimately compete. Original title: "CeFi and DeFi Love and Kill" (Crypto banks versus money protocols) Author: Ryan Sean Adams Translator: Url to Allen DeFi (Decentralized Finance), a decentralized financial system. The idea of DeFi has been hot before two years, particularly in the very first half in 2010. Its main features are license-free, anti-censorship, and trust minimization. Nevertheless , it still has a single application scenario, mostly flowing to exchanges. For that reason it's in urgent need of high-quality scenarios and assets. expand. The integration of CeFi and DeFi will soon be the opportunity for a new form of digital bank in the foreseeable future. It should be noted that CeFi mentioned in this article is just a centralized financial system beneath the encrypted economy system. Can you remember the battle of the Five Armies in The Hobbit? The army of dwarves from the Lone Mountain fights the armies of humans and elves, and the three armies are ready to fight on the battlefield-for wealth and honor. Simply because they participate in different tribes and have different values, they never die. Nevertheless , new challengers appeared... Two armies of orcs rushed down from the mountain. Claws, teeth, blades, wolves-orcs want to kill everyone. Because of this, the dwarves, humans, and elves suddenly found common ground and united against the common enemy, and the battle of the Five Armies began. Orc army fights against elves, humans and dwarves-perhaps this is a description of cryptocurrency and conventional finance This reminds me of cryptocurrency. DeFi and CeFi compete for the exact same treasure. They will have similar services—credit, interest, stablecoins, exchanges, assets—but use different methods. One does not require permission and another requires permission. This is an irreconcilable huge difference. They're ready to fight. Nevertheless , new challengers have emerged... the army of conventional finance and the central bank. Could it be very similar to the battle of the five armies mentioned previously? CeFi vs DeFi I do believe there has to be a battle between CeFi and DeFi. Actually , the two are actually in competition, and the competition will continue steadily to intensify. What do CeFi and DeFi refer to? CeFi refers to centralized trading platforms such as Binance, BitMex, Coinbase, and lending platforms such as BlockFi and crypto. com. DeFi includes Maker, Uniswap, Set Protocol, Compound, Synthetix, etc . They supply services similar to CeFi, but they are made through Ethereum with a permissionless programmable protocol. Both CeFi and DeFi are part of the encrypted financial system, and both use encrypted currencies since the currency layer. But for users, CeFi is closed, and users need to obtain their permission to use it; DeFi is open and open source and will be utilized without permission. CeFi has existed because the birth of cryptocurrency. But DeFi came to be after the emergence of Ethereum, plus it must count on programmability to flourish. CeFi and DeFi capital competition

* (Exchange) Coinbase vs Uniswap competes for liquidity and trading volume * (Lending) BlockFi vs Compound Competitive Lending Capital * (Stablecoin) USDT vs DAI compete for stablecoin funds * (Derivatives) BitMex vs DyDx compete for derivatives * (Investment) Bitwise vs Set competes for index fund capital. Your competition between CeFi and DeFi is who is able to get the maximum amount of value as you possibly can. The currency of the Web2. 0 era is data, and giants such as Google and Facebook are data integrators. The cryptocurrency is capital, and its particular essence is money. For that reason to become successful CeFi or DeFi project, you must become a fund integrator. There's absolutely no doubt about the respective advantages of CeFi and DeFi. At this time, CeFi occupies an absolute dominance in the quantity of users and the amount of funds. There's still a big gap between DeFi and CeFi. But we should remember that DeFi is still very young. Not long after Maker was founded, Compound only has a history of significantly less than per year, but the combined capital pool of the two has now reached 500 million US dollars. This growth rate is incredible. CeFi advantages:

* User experience (but the gap is narrowing, such as Argent wallet) * Liquidity (but DeFi is global and certainly will perhaps not divide liquidity by geofencing) * Fiat currency channel (but Wyre as well as other organizations are providing fiat currency entry for DeFi) * Speed ​​(but some technologies are advancing and the gap may be narrowed) DeFi advantages:

* World wide (anyone on the planet who comes with an Ethereum address can access immediately) * noncustodial (the custody of assets often belongs to the user) * Programmable (can be combined at will and create new products) * Permission-free (no permission is required to build, fork, and use) Some DeFi projects have even reached a high amount of decentralization. Uniswap is just a purely trust-free exchange-only users, codes and public ledger, which can withstand censorship and regulatory pressure. After all, to obtain a steady flow of funds takes a steady flow of banking. Remember the 20 billion dollar ICO frenzy? Scam, stupid. Yes, however it is undeniable that the stupid, blind, and neutral DeFi can perform some items that CeFi can't. Through the use of ERC20, anyone can issue tokens. Just like anyone can develop a web site, the net tells us that permission-free is powerful. For that reason despite the current gap between DeFi and CeFi, in the fast-developing world of encryption, today's stars can become tomorrow's yellow flowers anytime. Looking forward to the future, the bottom layer is cryptocurrency, and the very best layer is CeFi and DeFi. This is actually the cryptocurrency system and nothing more. For that reason it is critical to ask ourselves, how will the very best level develop? Below are a few possibilities: Blurred boundaries-With the improvement of CeFi and DeFi, the boundaries between your two can be blurred. CeFi can become a lot more like DeFi. DeFi can be a lot more like CeFi, the majority of which may become fusion products and services. Binance launched Binance Chain and DEX in an attempt to become DeFi. Maker's launch of multi-collateral DAI may also make them a lot more like CeFi. CeFi replicates DeFi—binance is one of my favorite examples of this plan being put into practice. They directly copied projects which were clearly feasible in DeFi. Launchpad or IEO is just a replica of ICO, Binance Chain corresponds to Ethereum, and BNB may be the reserve asset of Binance Economy. Maybe it's not going to be a long time before we could begin to see the Binance version of Compound. CeFi integrates DeFi-this is really my long-term judgment. I do believe CeFi and DeFi will ultimately interact. CeFi uses agreements such as Maker to provide lending services or launch Set tokens. Users can borrow Compound directly from Coinbase. CeFi will soon be built on DeFi, exactly like BTC, ETH and ERC20. With this transition, I really hope that non-custodial currency agreement aggregators like InstaDapp and Zerion can open a place. Pay close attention to CeFi and DeFi, this is extremely important, as it will determine how our funds will exist in the foreseeable future. According to what's happening now, the development path of BTC and ETH will soon be deeply affected. The encrypted world and real life If you zoom out, the battle is not only between CeFi and DeFi. Both will grow together plus they can help one another even in competition. This is actually the war between your crypto economy and the traditional economy: cryptocurrency versus legal tender, something that relies entirely on banks vs something that relies more on protocols. Just as the Battle of the Five Armies, at some time, orcs will be. This will be a contest between your crypto economy and the traditional economy.

[bdcost]

The DeFi market is developing rapidly, will it be a bubble like ICO?

DeFi liquidity mining tripped a wave, but what goes on following the wave? Original title: "Viewpoint丨 Has liquidity mining turn into a new trend in DeFi? 》 Published by: Citadel. One Compiler: Liam Decentralized finance (DeFi) has changed into a hot topic before couple weeks, and you will find speculations that people will see a growth similar to the 2017 ICO. The consumer and transaction level of the DeFi market keeps growing rapidly, particularly in the lending sector. There is a new trend-"liquid mining (yiedl farming)"-lending tokens on the DeFi protocol, or being a part of the market-making pool to earn higher returns, which are generally a lot more than ordinary commercial bank savings The interest rate on the account is many times higher. This trend has attracted the eye of many people. You can find already some instructions on how to "rent" different assets on different platforms, such as Maker, Compound, Curve, Ren Protocol, Curve, Synthetix, Balancer, and so on DeFi liquidity mining uses the leverage of multiple protocols to have rewards through the borrowing of the platform's native tokens, thereby performing compound interest. With the rapid growth of tokens for several projects, interest rates in the DeFi field seem very attractive. In some cases, users can participate in multiple DeFi platforms to help expand increase their APY (annual interest rate). Needless to say, the interest rates we see now are the result of the immaturity of the market. With the growth of market size and volume, interest rates will fall over time. The rapid growth of the DeFi market we're seeing could be related to the following facets:

* Since mid-March, the DeFi market has seen steady growth. * Coinbase announced that it will support many DeFi projects later on. * Compound (COMP) token issuance. Market growth Previously several years, Decentralized Finance (DeFi) has become an essential and highly valued direction in the blockchain community. In line with the DeFi pulse, the total locked-in value (TVL) of DeFi projects in February exceeded US$1 billion for the first time, but after Bitcoin's plunge, the worth fell right back the following month. Nevertheless , before month, DeFi TVL broke the previous record and today reaches $1. 67 billion. Although this can be a relatively bit by the standards of the traditional financial industry and the crypto market, it obviously shows that the market sees the potential of the DeFi industry.

Ethereum continues to take over the DeFi field. Most major DeFi protocols are made on Ethereum, and new projects are always being launched. In addition , complex transactions related to DeFi have increased five times before 2 yrs. Ethereum analytics company Covalent predicts a "flippening" event, that's, DeFi transactions exceed ordinary ETH transfers. Market performance source: coinmarketcap. com As is seen from the above dining table, DeFi projects such as Kyber Network, 0x, Synthetix, Aave, Loopring, Bancor, and so on performed significantly a lot better than Ethereum and Bitcoin in the weekly, monthly, and 3-month periods. DeFi has always been a rapidly developing field in the crypto world. Although the market share of the DeFi ecosystem is far less than that of the overall crypto market, new borrowing and profit methods have attracted attention. People's interest is reflected in the explosive growth of a few new and old projects in this field. Coinbase Announcement On June 10, Coinbase revealed that they're exploring the chance of adding 18 new cryptocurrencies. Aave (LEND), Bancor (BNT), Compound (COMP), Numeraire (NMR), Keep Network (KEEP), Ren (REN) and Synthetix (SNX), they're all part of the decentralized financial sector. Although the exchange's announcement stated that they were only evaluating whether to list those tokens, following the announcement, the above-mentioned assets all experienced an increase. On the afternoon of the announcement alone, some tokens rose by 10%, and transaction volume grew rapidly. These tokens enjoy the well-known "Coinbase effect"-currencies mentioned or listed on exchanges, temporarily rising (because listing on Coinbase frequently contributes to an increase in trading volume), which also reflects investors in the market Emotions". Although the trading level of Coinbase listed or mentioned currencies is going to be consistent with other currencies on the market following the hype ceases, and there will be a callback, this really is still among the market's stimulating facets. Several days following the Compound (COMP) token was issued, after Coinbase provided a small boost to DeFi, Ethereum-based Compound and Balancer publicly released their native tokens. The launch event generated a great deal of transactions and further publicity surrounding the DeFi project. Investors earnestly got on the claimed "train" and started initially to participate in the agreement, hoping to get as much profit as you can using this booming market.

Compound is just about the hottest DeFi lending agreement and surpassed MakerDAO in total lock-up value, with an overall total lock-up value of more than 100 million US dollars (July 3, 20, Compound's TVL was 624. five million US dollars, Maker was 510. 4 million US dollars ). By the launch of the protocol's governance and reward token COMP on June 16, Compound's TVL has risen sharply. On June 23, the price tag on the token exploded rapidly from $90 to a lot more than $400 on Coinbase Pro, however it has came ultimately back to about $180. Compound's circulating supply is the reason about 25% of its total supply, as well as therefore it's enough to surpass MakerDAO in market value ($464 million and $450 million, respectively). The huge difference with 2017 Now a lot of industry insiders are worried that the hype of DeFi this time is the same as the “ICO bubble” in 2017. We think that it's important to outline some obvious differences.

* Most DeFi projects are decentralized benchmarking projects of conventional enterprises. Industry they focus on has existed for a long time, and their proportion to the encryption field is huge. We have reason to think that DeFi projects can seize a percentage with this existing market since they provide similar services (but they work differently). However, many ICOs are trying to create new markets, and their use cases are not that easy. * Real assets take part in the DeFi agreement. Although they've been digital assets, they've been still locked in a smart contract, which represents the collateral for loans, exactly like locked assets provide liquidity. They do not rely purely on speculative incentives to build revenue, however they are essential "gears" for project operations. * DeFi products will not attract unqualified investors, because most of them have utility tokens and are generally perhaps not thought to be speculative asset types. Exactly what do we study on the existing situation in Ethereum? The more DeFi projects launched on Ethereum, the more we recognize that PoW can become an obstacle to such projects. Previously month, we've seen a sharp increase in transaction costs, which is the original condition of the blockchain industry. As users and their transaction volume grow, so do transaction costs, which might significantly decrease adoption. Low-value transactions have become too expensive. As is seen from the figure below, June 10 and 11 are incredibly expensive days.

And again, Ethereum's ~13 second block time frame causes it to be impossible for blockchain developers to build DApps that need high tps. This is a potential bottleneck for DApps. Ethereum 2. 0 should be able to solve these issues, make financial-oriented DApps more capable, and eliminate the limitations of block time and high Gas Price.

Starting in 2020, the gas level of the complete network has steadily increased, and in June there's been an amazing increase.

Although the majority of the DeFi hype involves ETH projects, the transaction volume can be increasing steadily, however it still has really not reached 1, 349, 890 ATH. The substantial increase in transaction volume in June was due mainly to the increase in how many DeFi users. There are some unusual use cases in the crypto magic market: one asset can be utilized as collateral, yet another asset could be borrowed, and the asset could be borrowed again following the exchange. The actual rate of get back is negative, but at precisely the same time it's obtained as a result of rapid growth of COMP Positive yield price. It is a very strange situation. Users can make complex solutions with certain risks to create money, because the worldwide mentality of "high risk and high return" is permanently linked to the crypto industry. This may perhaps not work in any conventional banking context. It only works because COMP is too speculative. Financial attractiveness If the trend of encryption technology application continues and the gateway from currency to encryption technology will build up further, then DeFi projects is going to be extremely attractive weighed against conventional financial markets. Lending platforms like Compound provide the same services while at precisely the same time, their interest rates are much higher than most first-tier banks (or better still to some degree, due to the fact the borrower is over-collateralized). Balancer Vulnerability According to Coindesk, DeFi liquidity provider Balancer Pool admitted in early morning of June 29 that it had turn into a victim of a bad hacker attack. The hacker used a vulnerability to deceive the release of tokens worth $500, 000. In a post, Balancer CTO Mike McDonald stated that the attacker borrowed $23 million worth of WETH tokens from dYdX, which is an Ethereum-backed token ideal for DeFi transactions. Then, they trade with Statera (STA), an investment token that uses a toll model, and each transaction consumes 1% of its value. The attacker made 24 transactions between WETH and STA, exhausting the STA's liquidity pool before balance was very nearly zero. Because Balancer believes that it has the same amount of STAs, it releases WETH comparable to the original balance, allowing the attacker to acquire a larger deposit each time a transaction is completed. As well as WETH, the attackers also used WBTC, LINK, and SNX to conduct the same attack, all targeting Statera tokens. The identity of the hacker remains a mystery, but analysts at 1inch exchange, a decentralized exchange aggregator, said that the hackers have covered their tracks well. The Ether used to cover transaction fees and deploy smart contracts is laundered through Tornado Cash, an Ethereum-based mixer service. 1inch stated in its post about the breach, “The man behind this attack is really a very experienced smart contract engineer who has extensive knowledge and understanding of leading DeFi protocols. ” What's next? The way the DeFi hype will build up and how much the DeFi market will pull right back following the end of the hype cycle is going to be a fascinating question. It is difficult to express what impact this period will have on the worldwide crypto market. Might it be just like the "ICO bubble" that leads developers to create DeFi projects? Will we see some negative consequences brought by DeFi "liquid mining"? The systemic threat of hackers is greater than ever, and we possibly may view a situation similar to the destructive consequences of DAO. If the smart contract of a lending platform is attacked or exploited by way of a major hacker, it might trigger a chain reaction, causing a number of position liquidation of different DeFi agreements, leading to a top degree of hatred and cautious market sentiment towards DeFi. Another interesting topic is how a DeFi department will contend with the Stake department. Because part of DeFi is dedicated to passive yield, it mainly involves the Ethereum 2. 0 plan, because most projects are based on ETH. All this is determined by the incentives given by the project, because most investors will follow an increased APY, which makes me doubt whether DeFi's "liquidity mining" will affect the economic model of ETH 2. 0. In addition , it is also curious whether there will be major DeFi projects built on networks other than Ethereum.

[practicalryangosling]

Comprehend in one article, the "past and present" of Decentralized Finance (DeFi)

What the translator wrote in the front: MYKEY has just launched two activities recently: redeem DAI inside a limited time, and OASIS deposits a network fee. Put simply, are you a new comer to DAI and DeFi? Do not worry, today's translation will require you to know them.

The promise of cryptocurrency is to generate income payments universally available to everyone else, regardless of where they truly are on earth. Decentralized finance (DeFi) or open finance takes this promise a step further. Suppose the global open alternatives to financial services which are being used today, such as savings, loans, transactions, insurance, and so forth, could be accessed by anyone on earth through smart phones and the Internet, and implemented on smart contract blockchains such as Ethereum. Smart contracts are programs that run on the blockchain and may be automatically executed when certain conditions are met. These smart contracts enable developers to create more technical functions than just sending and receiving cryptocurrency. These programs are what we now call decentralized applications or dapps. You can think about a dapp being an application built on decentralized technology, as opposed to an application built and controlled by a single centralized entity or company. Although some of those concepts may possibly appear to be future ideas-automatic loans are negotiated directly between two strangers around the world, without bank intervention, many dapps are actually implemented. You will find DeFi dapps that allow the creation of stablecoins (cryptocurrencies whose value is pegged to the U. S. dollar), lending funds and earning interest on cryptocurrencies, loans, exchange of just one asset for yet another, long or short assets, and Implement automated higher level investment strategies. What exactly is the big difference between these DeFi dapps and conventional banks or Wall Street counterparts? The core of those organizations just isn't managed by institutions and their workers, but by code or smart contracts to write rules. After the smart contract is deployed to the blockchain, the DeFi dapp can run on a unique with little or no human intervention. Even though in practice, developers usually maintain dapps through upgrades or bug fixes. The code is transparent on the blockchain and anyone can review it. Still another trust relationship is established with the user, because anyone gets the chance to find out about the event of the contract or find errors. All trading activities will also be public, anyone can view. Even though this might cause privacy issues, transactions are anonymous automagically, that's, they truly are circuitously associated with your real identity. From the first day, Dapp started to develop for the global market-whether you might be in Texas or Tanzania, you should use the exact same DeFi service and network. Of course, local regulations may possibly apply, but technically speaking, many people connected to the Internet may use most DeFi applications. You can create it “without permission” and participate “without permission”—anyone can cause DeFi applications, and anyone may use them. Unlike finance today, you can find no gatekeepers or lengthy accounts. Users interact directly with smart contracts through their cryptocurrency wallets. Flexible user experience-don't just like the interface of a particular dapp? No problem-you may use a third-party interface, or you can build your own personal. Smart contract is similar to an open API, anyone can build applications for it. Interoperability-New DeFi applications could be built or combined by combining other DeFi services and products (such as Lego blocks), such as stable coins, decentralized exchanges and prediction markets could be combined to create brand-new services and products. DeFi is now one of the fastest growing areas in the encryption field. Industry observers make use of a unique new indicator-"ETH locked in DeFi" to measure traction. During writing, users have stored significantly more than $600 million worth of cryptocurrency in these smart contracts. Are you interested? Let us have a closer look at a few popular DeFi dapps available. You will need a cryptocurrency wallet with an integrated dapp browser (such as Coinbase Wallet) to connect to these dapps. You can even use most dapps on the desktop by selecting the Coinbase Wallet option and scanning the QR code.

It's still in its infancy for dapps, so DeFi users should conduct research on new products and services. Like any computer code, smart contracts could be susceptible to accidental programming errors and malicious hackers. Stable currency and decentralized reserve bank: MakerDAO Maker is really a stablecoin project in which each stablecoin (called DAI) is pegged to the U. S. dollar and backed by collateral in the form of cryptocurrency. Stablecoins provide cryptographic programmability with no adverse effects of volatility caused by "traditional" cryptocurrencies like Bitcoin or Ethereum. You can try to produce your own personal DAI stablecoin on Maker Oasis dapp. Maker isn't only a stablecoin project, additionally, it hopes to become a decentralized reserve bank. Holders of a different but related token MKR can vote on important decisions, such as stability fees (similar to how a Federal Open Market Committee of the Federal Reserve votes on the federal funds rate). Still another stablecoin with a different architecture could be the U. S. Dollar Coin (USDC), where each USDC token is backed by a U. S. dollar held within an audited bank account. Borrowing: Compound Compound is really a blockchain-based lending dapp that may lend cryptocurrency and earn interest in it. Or possibly some funds is necessary to pay rent or buy groceries, nevertheless the funds are tied up in cryptocurrency investments. Then you can certainly deposit cryptocurrency as collateral into the Compound smart contract and put it to use as collateral. The composite contract automatically matches borrowers and lenders, and dynamically adjusts rates of interest predicated on supply and demand. Other popular borrowing/lending dapps are Dharma and dYdX. Aggregators such as LoanScan track the borrowing and lending rates of each and every dapp, in order to check around to obtain the very best rate. Automatic token exchange: Uniswap Uniswap is really a cryptocurrency exchange that operates entirely predicated on smart contracts, enabling you to trade popular tokens directly from your wallet. That is different from exchanges like Coinbase, which store your cryptocurrency and keep your private key for safekeeping. Uniswap uses an innovative mechanism called automatic market making to automatically settle transactions near market prices. Along with transactions, any user can become a liquidity provider by providing cryptocurrency to the Uniswap contract and finding a part of the exchange fee. That is called a "pool". Other popular decentralized exchange platforms (DEXes) include 0x, AirSwap, Bancor, Kyber, IDEX, Paradex and Radar Relay. All architectures are slightly different. Prediction Market: Augur Augur is really a decentralized prediction market protocol. Using Augur, you can vote on caused by the function, unless you add value to the vote to help make the "skin in the game". Prediction market platforms such as Augur and Guesser are nascent, but give a vision into the future, and users may use the wisdom of the crowd to create better predictions. Synthetic Asset: Synthetix Synthetix is ​​a platform that enables users to produce and exchange synthetic versions of assets, gold, silver, cryptocurrencies, and conventional currencies (such while the euro). Synthetic assets are backed by excess collateral locked in Synthetix contracts. Lossless savings game: PoolTogether The composability of DeFi gives it unlimited new possibilities. PoolTogether is really a lossless game in which participants deposit DAI stablecoins into the ordinary lottery pool. At the end of each and every month, a lucky participant will win all of the interest earned and everyone else will withdraw their initial deposit. Therefore , what's the next phase for DeFi? Since the birth of human civilization, money and finance have appeared in one form or yet another. Encryption is just the most recent digital incarnation. In the next couple of years, we may see all of the financial services used in today's legal system being rebuilt for the crypto ecosystem. We now have seen asset issuance and exchange, lending, lending, custody, and derivative services and products built for cryptocurrencies. What's next? The very first generation of DeFi dapps relied heavily on collateral as protection. Put simply, you need to already own cryptocurrency and provide it as collateral in order to borrow more cryptocurrency. More conventional unsecured lending will need to rely on an identity system to ensure that borrowers can establish credit and boost their borrowing capacity, exactly like today's SSN and FICO scores. However , unlike today's identity and credit systems, decentralized identities must be both universal and privacy-protective. We now have also seen innovation in the insurance field. In these days, many DeFi loans are over-collateralized (which ensures that these loans are inherently safe since there is an adequate buffer of reserve assets). However , the black swan of DeFi is really a smart contract vulnerability. If your hacker discovers and exploits a bug in the great outdoors source code of the dapp, millions of dollars may be used up straight away. Teams like Nexus Mutual are building decentralized insurance, when the smart contract is hacked, this can benefit users as a whole. Still another trend we see is really a better user experience. The very first generation of dapps was built for blockchain enthusiasts. These dapps do a good job of demonstrating the exciting new DeFi possibilities, nevertheless the usability remains notably insufficient. The latest version of the DeFi application prioritizes design and ease of use in order to bring open finance to a wider audience. As time goes on, we hope that the encrypted wallet can be the portal for the digital asset activities, exactly like today's Browser could be the portal for accessing global news and information. Imagine a dashboard that not just shows what assets you have, but additionally exactly how many assets are locked in different open financial agreements (loans, asset pools, and insurance contracts). In the complete DeFi ecosystem, we now have also seen the trend of decentralizing management and decision-making power. Although the term "decentralization" is employed in DeFi, many projects today have a primary key for developers to close or disable dapps. That is done to facilitate upgrades also to provide emergency shut-off valves in the event of error codes. However , while the code becomes more tested, we are expectant of developers to abandon these backdoor switches. The DeFi community is tinkering with various techniques to allow stakeholders to vote on decisions, including through the use of blockchain-based decentralized autonomous organizations (DAOs). Some magical things are happening in the great outdoors financial system-cryptocurrency is making money online, and we are seeing a massive leap in the number of choices of currency functions. This is a rare chance to see brand-new industries bloom from scratch. The DeFi field will first catch up with today's financial services industry. But with time, even when the energy to build financial services is democratized to anyone who are able to write code, it'll be difficult to know what innovation will be produced.