Polkadot is currently the fifth-ranked star project in terms of market value. Although the parachain has not yet been launched and the ecology has not yet started to operate, the top five market capitalizations have shown the market's recognition and expectations for Polkadot and its ecology.

There is no doubt that the market expects Polkadot ecology. The popularity of DeFi has made the gas fee of Ethereum so high that it is basically impossible for ordinary users to use it.Before the launch of ETH 2.0, the Polkadot ecology is likely to take over this part of the overflow ecology, which may usher in a period of rapid development for the Polkadot ecology.

At present, the most concerned field in the industry is DeFi, and the Polkadot ecology is the same. Countless eyes in the market are paying attention to the development of Polkadot DeFi ecology. The Institute has also been paying attention to the development of the Polkadot DeFi ecology, and has created several articles related to the Polkadot DeFi ecology.first level title

1. Why introduce external assets

The most important indicator of DeFi is the amount of locked positions. When we observe the development of the DeFi ecosystem, we mainly judge by the amount of locked positions. Owning assets is the basis for the operation of all DeFi products, and often the larger the asset volume, the more prosperous the ecological development.

At present, the main asset of Polkadot ecology is DOT. Judging from the current price, the market value of DOT is about 20 billion US dollars. In addition to KSM, ACA and other DeFi projects, the combined market value is not too high. Moreover, a large number of DOT and KSM have to participate in Staking to ensure network security, and the scale of tradable assets is far smaller than its market value.

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2. What are the channels for introducing external assets?

From the current point of view, there are three main channels for introducing external assets into the Polkadot ecosystem, namely:

• The introduction of major assets such as BTC, ETH, USDT;

• Introduction of Staking assets;

• External assets are uploaded to the chain.

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The introduction of BTC, ETH, USDT and other assets

BTC is the cornerstone of the encrypted world, with the largest volume. Any DeFi ecosystem that wants to achieve good development cannot do without the introduction of BTC. The introduction of BTC assets will greatly enhance the imagination of its DeFi ecosystem.

At present, more than 160,000 bitcoins have been introduced into the Ethereum ecosystem, with a market value of more than 6 billion US dollars. At present, the total lock-up volume of the Ethereum DeFi ecosystem is 49 billion US dollars, and BTC accounts for more than 12%.

Compared with the Ethereum ecosystem, the introduction of BTC is more important for the Polkadot ecosystem with a smaller native asset volume.

ETH is the second largest encrypted asset with a market value close to 200 billion US dollars. For the Polkadot DeFi ecosystem, the introduction of ETH is also very important. Even compared with the characteristics of BTC assets that are difficult to keep properly, the introduction of ETH may be smoother. In fact, what Polkadot wants to introduce is not just ETH itself, but all ERC assets that may be applied within the Polkadot ecosystem.

The introduction of stablecoins such as USDT is relatively simple, and stablecoin issuers will actively issue them.

In fact, there are many projects in the Polkadot ecosystem that use "cross-chain" as their main business. They want to become a cross-chain hub connecting Polkadot and external assets, such as Darwinia, ChainX, etc. There are also projects that specialize in the introduction of off-chain assets. Such as Interlay, Ren and so on.

Darwinia has currently opened the two-way cross-chain bridge of Ethereum, realizing the cross-chain with Ethereum, and opening up the channel for asset introduction. Later, Darwinia will also expand to CRAB Network, TRON, BSC, EOS and other chains to open up channels for multi-asset interoperability.

What ChainX is currently doing is introducing BTC into the Polkadot ecosystem, and is currently upgrading its cross-chain solution. At the same time, it is also seen that ChainX is opening up other public chain ecosystems through bridges.

Interlay launched PolkaBTC, a Bitcoin-anchored currency, which also intends to introduce BTC into the Polkadot ecosystem through a decentralized approach, and it has already launched the test network.

Ren is a cross-chain DeFi protocol. It has realized the cross-chain of BTC, ZEC and other assets on Ethereum. The renBTC issued by Ren has a large market share in the Ethereum ecosystem. At present, Ren has reached a cooperation with Acala, and will build applications in the Polkadot ecosystem based on the Acala network, thereby introducing assets such as BTC and ZEC into the Polkadot ecosystem.

Judging from the current Polkadot ecology, there will be no shortage of cross-chain introduction channels for major encrypted assets such as BTC and ETH. There are also many projects that build cross-chain bridges by themselves, especially the Ethereum cross-chain bridges may be so many that they become standard configurations.

From the perspective of the development of Ethereum, Ren and Keep, who introduced BTC to Ethereum, have performed well. We will wait and see who can run out of the Polkadot ecosystem.

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Introduction of staking assets

Staking is an important way for PoS public chains to protect network security, but when users participate in Staking, assets will lose liquidity. And with the continuous development of DeFi, more and more assets enter the DeFi field, and Staking assets will decrease, which will have an impact on network security.

In order to solve the above problems, there have been a number of projects dedicated to releasing the liquidity of Staking assets, such as Bifrost, Stafi, etc.

According to Stakingrewards data, the current total market value of PoS assets is 312.5 billion US dollars, the market value of Staking assets is 62.5 billion US dollars, and the average mortgage ratio is 63%.

Assuming that 30% of the assets are re-mortgaged using the liquidity release model to obtain liquidity, based on the total amount of 62.5 billion US dollars, it will generate nearly 20 billion US dollars of negotiable assets.With the advancement of ETH 2.0 Staking, more and more ETH will be mortgaged through the liquidity release model.

Since many public chains have not developed an ecology, the system tokens are useless except for staking. After the liquidity is released through the liquidity release model, these assets are most likely to enter the DeFi ecosystem.

At present, Bifrost and Stafi in the Polkadot ecosystem are dedicated to releasing the liquidity of Staking assets. With the development of these two projects, a large number of external assets may be introduced into Polkadot’s DeFi ecosystem.At the same time, in Polkadot's own Staking and slot auctions, the liquidity release business will also greatly reduce the amount of DOT/KSM locked up and increase the amount of tradable assets.

At present, Bifrost has launched the liquidity release business of ETH 2.0 Staking. Users who pledge through Bifrost will get vETH, which can be circulated and traded. While obtaining Staking income, users also obtain liquidity.

At present, Bifrost is holding a minting airdrop to introduce more ETH assets. This airdrop will distribute 500,000 BNC tokens, and it is expected to generate vETH worth 25 million US dollars, and these vETH may enter the wave in the future. Card ecology.

The specific rules are as follows:

Start time: 14:00, February 8

Participation channel: vtoken.io/drop

The minting airdrop is divided into three rounds, with a limit of 5,000 ETH minted in each round, and a total limit of 15,000 ETH. Each ETH in each round can get 50, 30, and 20 BNC token airdrops respectively;

The hard cap time of each round is 72 hours. If the vETH quota is full, the round will end immediately. If the vETH quota is not full at the end of 72 hours, the BNC rewards for this round will be divided according to the vETH coinage of the participants in this round;

The interval between the end of each round and the opening of the next round is 30 minutes.

Since the opening time of the next round is 30 minutes after the end of each round, if the quota of each round is filled up soon, the three rounds of airdrops may end within 2 hours.

For Bifrost, its main business is to release liquidity for Staking assets, and it is a more appropriate token distribution model to motivate users to participate through the coinage airdrop model, which is also a common model for such projects.

Bifrost tokens are not currently listed, and the total number of tokens is 80 million. If Bifrost is valued at 300 million US dollars, each BNC is worth 3.75 US dollars. Calculated at this price to participate in this airdrop, the minimum value that each ETH can get is 75-187 US dollars. The current rate of return of ETH Staking is about 11%. According to the above calculation, the reward of Bifrost directly exceeds the return of normal staking for one year.

In the future, with the launch of the Polkadot parachain, vETH will be able to circulate within the Polkadot ecosystem, introducing vETH as a life-bearing asset into the Polkadot ecosystem, while at the same time participating in DeFi to obtain benefits. This has achieved multiple Possibility of income.

In fact, a unique asset type has been formed here, that is, interest-earning assets. Using interest-earning assets to participate in the DeFi ecosystem will become popular in the future. In the current Ethereum ecological DeFi ecosystem, this is not uncommon. At present, Maker already supports the use of LP tokens on Uniswap as collateral to generate DAI, and there are also some other products that support or are expected to support the use of interest-earning assets on its platform , circulation.

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Introduction of off-chain assets

Compared with the native assets in the encrypted world, the introduction of off-chain assets is a broader market. Currently, Ethereum Ecosystem Maker and Aave are exploring this aspect, but it has not yet been implemented.

3. Summary

3. Summary

DeFi is decentralized finance. The financial system must have assets to operate and create wealth.At present, the scale of Polkadot's ecological native assets is small, which is not good for the start of Polkadot's DeFi ecology. Therefore, relying on the cross-chain advantages of Polkadot's ecology to introduce external assets is the core factor for the explosion of Polkadot's DeFi ecology.

As far as the introduction of external assets is concerned, the direct introduction of high-quality assets such as BTC and ETH is the simplest and highly operable, which is also strongly supported by Polkadot officials.

There is also a relatively large space for the release of staking assets, but judging from the current situation of ETH 2.0, it requires relatively strong resources and strong operating means to succeed, and the competition is quite stimulating. In contrast, the competition for liquidity release of other public chain assets is not so fierce, but currently one of the services is basically not online, and the specific effect needs to be tested by the market. Overall, it is worth looking forward to introducing assets to the Polkadot ecosystem through the release of Staking asset liquidity.

The space for introducing off-chain assets is the broadest, but the operation is also the most complicated, which is still far away in the current situation.

Judging from the above situation, the current Polkadot ecology does not lack channels to introduce external assets, but only lacks the opportunity and motivation for users to migrate assets.

As the Ethereum network becomes more and more congested, users are more and more likely to enter the Polkadot ecosystem. But in the end, it is still necessary to rely on excellent products to continuously gather users and assets, and then form a network effect, which is the only way to continuously expand the ecological attractiveness and continuously attract users and assets.

Further reading:

Further reading:

1. On the eve of the Polkadot slot auction, an overview of the current progress of the Polkadot DeFi protocol

2. The slot auction is ready to go, and you can see the whole picture of the Polkadot slot auction!

Disclaimer: This article is the author's independent opinion, does not represent the position of the Blockchain Institute (public account), and does not constitute any investment opinion or suggestion.

Disclaimer: This article is the author's independent opinion, does not represent the position of the Blockchain Institute (public account), and does not constitute any investment opinion or suggestion.

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