This article is from:Hashpie (ID: hashpie), Author: LucyCheng, forwarded with authorization.
Hashpie (ID: hashpie)
Hashpie (ID: hashpie)
, Author: LucyCheng, forwarded with authorization.image description。
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Like many emerging projects and concepts in the currency circle, DeFi cannot escape the development track of driving high and going low, and quickly getting cold; butEven if the superficial data is bad and the project development is hindered, we still have reasons to believe that DeFi is the best place for Ethereum and even the blockchain field。
It is a fact that it is cold, and it is also a fact that the potential influence expands
Not to mention that stablecoins and decentralized exchanges in the three major fields targeted by DeFi are the long-term focus of the market and top participants; it can be seen from the speed of its integration with the market alone,
The rapid development of DeFi is not simply driven by market hype and frequent media exposure
According to DappTotal's data, DeFi can be described as blooming everywhere in the first half of 2019; both the market size and the number of users have shown an exponential growth trend. Among them, the lock-up scale of DeFi projects reached an all-time high of US$1.72 billion on June 25, a surge of more than 500 percent compared to US$287 million at the beginning of the year. At the same time, the entire DeFi ecosystem is also rapidly taking shape. So far, thousands of projects have been launched in the field, covering more than ten development directions such as payment, KYC authentication, stable currency, prediction market, and exchange. In April, the blockchain software company ConsenSys also predicted in an interview that Ethereum-based decentralized financial projects will achieve tenfold user growth in 2019.
Changes in DeFi locked-up volume in 2019 (data source: dapptotal.com/defi)。
However, as mentioned at the beginning of the article, DeFi can’t escape the general fate of opening high and low in the hotspots of the currency circle; the lock-up scale of related projects reached the highest point and then declined rapidly. The total lock-up value of the market last month was only 1.08 billion US dollars. The chain fell by nearly 40%. Similar to the trend of lock-up scale, the monthly active users and monthly transaction volume of DeFi DApps have also declined successively after explosive growth, showing a negative growth of more than 10% in the past two months.
These data and the status quo to be described next tell us that DeFi is capturing the DApp market at a subtle speed
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Taking Ethereum as an example, the current game is no longer the home of the ecology on the chain; among the top 100 DApps, exchanges and financial DApps, which are important components of DeFi, have taken the dominant position. Starting from June, the main source of new users for the Ethereum ecosystem is no longer games, but DeFi DApps with an average monthly increase of 32,600 users during the year. As for EOS, which currently has the largest total number of DApp users and transactions, although gaming projects still occupy half of the market, its DeFi project EOS REX, which was launched in May, has surpassed MarkerDAO in terms of lockup scale in nearly a month since its launch. The current daily transaction volume Ranked among the top three EOS DApps.
Distribution of Ethereum Dapp types (data source: DappTotal; collection time: 20190905; sampling is the top 100 DApps ranked by users that day)
What is even more impossible to ignore is that the DeFi star project MakerDAO has far surpassed many popular DApp projects such as CryptoKitties and Fomo3D. Its token DAI has occupied a certain market share in the stable currency at this stage, and its influence is second only to CK USD, which ranks fifth in trading volume. According to data from Coinmarketcap, there are currently over 77.259 million DAI circulating in 27 exchanges, including large platforms such as Coinbase, HitBTC, Korbit, and various decentralized exchanges.
image descriptionThe proportion of each stable currency in the market (data source: Coinmarketcap)。
Idealism aside, realism is the way to survive in the current currency circle
Of course, you can also refute me that DeFi, like other DApp projects, is suspected of false prosperity; at this stage, decentralized finance is still an application in a small circle, and users are either programmers or senior retail investors.
It is undeniable that the distance between DeFi and the masses is still far away, and it is getting bigger and bigger under the current situation of frequent problems and successive shutdowns of projects; but it must also be admitted that the current cryptocurrency ecology is moving closer to the financial field
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It is not to say that the currency circle has no dreams and only pursues profits, but that the infrastructure in the field is still being established or even unable to support normal use, and only the wealth effect can provide a steady stream of power for the market. As stated in the previous article published by HashPai ("Even a bull market, the altcoin market cannot be revived"), it is more speculators than users that support the DApp ecological operation at this stage; it is enough to arouse market interest What matters is no longer technological progress, but more profitable projects and investment models. As a new trend in 2019, DeFi is no exception.
Anti-censorship, openness and transparency, and low or even no threshold are the advantages of DeFi that are widely praised in the market, but the usage threshold of related projects is enough to deter most ordinary users. To put it bluntly, the reason why DeFi, which still has problems such as unfriendly user experience and unclear core needs, can still maintain its vitality is nothing more than being attracted by the risk-free arbitrage characteristics of the DeFi market. Taking MarkerDAO as an example, users tend to use DAI plus leverage to buy ETH in order to obtain double happiness when the Ethereum market rises. The surge in traffic of the decentralized exchange Uniswap after the fork of Bancor is related to the transfer of handling fees to liquidity providers; because this operation invisibly increases the incentive for arbitrageurs, for users, earning When you get the money, you can also get the handling fee, so why not do it.
image descriptionThe ranking of intraday trading volume of decentralized exchanges (picture taken from: DAppTotal)。
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Talking about change is too long-term, but a new market has quietly opened up in the near futureParticipants are still willing to make profits through DeFi, which is more or less related to the former’s distrust of centralized stablecoins and centralized exchanges
Decentralization, openness and transparency are the plus points of DeFi, but it is still too early to discuss whether it can rebuild the financial building and subvert the traditional financial process at this stage. After all, the best place for smart contract application scenarios is Not Decentralized Finance is still to be studied.
. The risk-free arbitrage mentioned above is a kind, and the no-counterparty short selling proposed by Band Protocol earlier is also a kind. The developer of the blockchain protocol once explained a method of optimizing the bonding curve on Medium, and said that using this model can use services such as decentralized margin loans to conduct trustless and fully collateralized short selling in DeFi projects.
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Graphical illustration of direct shorting using the bonding curve model (picture from Medium, Orange Book)
What's more interesting is that with the launch of the ERC-20 token USStocks, which anchors the S&P500 stock index of the top 500 listed companies in the United States, digital currency users can also short traditional assets through Oracle (oracle machine). According to Hydro engineer Radar Xiong’s interview with Babbitt, this investment method avoids the complicated account opening, troublesome deposits, and high commission rates that domestic investors will encounter when trading US stocks, allowing participants to Asset investment with extremely low cost; "To make a product that shorts US real estate, traditional finance may require three lawyers and 150 pages of legal documents, while DeFi only needs one Oracle."
Threshold is not the cause of hindering development, demand is
Judging from the changes in operating procedures and investment objects, the investment threshold for various assets in the DeFi ecosystem has indeed decreased, which allows investors in this field to participate in the financial market in a way that was previously unimaginable. However, the most indispensable thing in the field of blockchain and cryptocurrency is possibility and innovation; in my opinion, DeFi can be considered by V God and other people as the best place for smart contracts and even the entire blockchain field. The fundamental reason is that decentralized finance simply and crudely meets the needs of most market participants.
Different from daily application DApps such as games, social networking, and tools that require a certain threshold of awareness, market behaviors such as investment, trading, and lending directly linked to DeFi are the initial motivation for most people to enter the currency circle. Since entering the circle is for investment, why not choose a market that has more investment opportunities and is more credible to a certain extent. And this may be the reason why EOS REX quickly seized a certain value scale of the EOS ecosystem within three months after its launch.
References
[1]Alex Wearn，《Measuring DApp Usage》，Medium
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EOS DApp seven-day transaction volume ranking (data source: DAppTotal)
The proportion of the public chain ecology has increased, the potential influence of leading projects has expanded, and market demand has gradually become clear... The current market performance and development trends all tell us that the blockchain starting from Bitcoin, which breaks the trading rules of the traditional financial market It is very likely to find the best or the first foothold in DeFi. However, to become a pioneer in landing, only these prerequisites and the ideal of changing the traditional system are far from enough; if you want to seize the opportunity, the most important thing is to directly hit the core needs of the market. In other words, only when the investment and speculative needs of the market are maximized, will DeFi applications have a steady stream of traffic and capital influx. However, judging from the current market that is still dominated by arbitrage, the level of awareness of DeFi developers seems to need to be improved.
[5] Sorawit Suriyakran，《Short Selling without Counterparty using Bonding Curve》，Band Protocol
