On January 20th, the online live broadcast of "The Game Breaker - Exploring the Value of Polkadot DeFi with Minterest" co-hosted by Odaily and Minterest was successfully held. (Click to enter the live broadcast room:https://play.yunxi.tv/pages/549cafe8a9ac442e988a3281efaee669?openId=oY3Tsvmr8xQ5lHwP-dBiH8Zn7J4k#/）
The theme of the second roundtable forum was "Next Generation DeFi", hosted by Odaily Winny, and four guests were invited, namely: Josh Roge, CEO of Minterest; Yuki, Chinese Community Manager of Moonbeam Network; Zi, partner of NGC Ventures; Manta Network Asia Holly, Head of Marketing.
Josh Rogers said that DeFi2.0 is a solution for DeFi sustainability. Because the previous DeFi projects were a bit like a Ponzi scheme, there was no very stable thing to support the token price, and there was no very bright future.
He explained that it is very easy for DeFi projects to issue some tokens for free. But how to find a new model in the DeFi field to make the value of the project sustainable and maintain a certain organic growth in a longer period of time, this is the problem that Minterest has to solve now. "Minterest wants to become the cornerstone of the DeFi field. It will always exist there, satisfying the real use value of others, and bringing immediate benefits to ordinary users."
Yuki said that DeFi has always been a rigid demand in the market, but DeFi projects often get into trouble. Using tokens as an incentive to obtain liquidity will only dilute the tokens in the end, and the user loyalty is not high, making it difficult to provide continuous and stable liquidity.
Minterest has proposed an innovative solution, through the agreement to automatically liquidate income and other income, repurchase platform governance tokens, realize value transmission, and truly distribute agreement income to token holders. This approach is in line with the spirit of decentralization and the spirit of Web3. "We have been looking forward to the early deployment of Minterest on Moonbeam to develop their own DeFi ecosystem."
Holly believes that from the perspective of DeFi users, DeFi is just a micro-innovation. The main purpose of DeFi2.0 is to optimize capital efficiency on the basis of DeFi1.0, but it has not brought about major innovations like Uniswap. At present, most of the DeFi2.0 projects are basically based on the underlying construction of the top 1.0 projects. These projects have already accumulated a large number of accumulated users and funds, and have a long-term heritage. Unless there is a change in the underlying technology, otherwise is difficult to replace.
At present, there are major problems in DeFi. Holly thinks that it is the performance of the infrastructure, such as too high gas fee, slow speed, and the degree of decentralization of the new public chain; some product innovations may have a lot, but it has not yet reached the point of iteration. degree. Regarding the future, Holly continues to be optimistic about the transformation of DeFi projects from multi-chain to cross-chain.
first level title
The following is the roundtable discussion
Winny: Hello everyone, I am Winny from Odaily, and I am also the host of this event. First of all, please give a brief self-introduction.
Josh Rogers: Hi, I'm Josh Rogers, CEO and founder of Minterest. (Click to read Josh Rogers keynote)
Yuki: I am Yuki, the Chinese community manager of Moonbeam. It is a great pleasure to participate in Minterest's China online show this time. Moonbeam is a fully compatible Ethereum smart contract platform developed based on Substrate; at the same time, Moonbeam is based on the Polkadot ecosystem. With the consistency of Polkadot technology, we have currently launched two networks on Kusama and Polkadot - Moonriver Network and Moonbeam Network , these two networks are currently fully compatible with EVM, and also realize decentralized on-chain governance.
Holly: Hello everyone, I am Holly, the head of the Asian market of Manta Network. Manta is Polkadot's first on-chain privacy protection project. We hope to provide the highest security level of on-chain privacy protection for various DeFi activities such as transfer transactions of DeFi users through cryptography technology. Manta's early products include MantaPay, a privacy payment protocol, and MantaSwap, the first zk-SNARK-based privacy DEX protocol in the Polkadot ecosystem. With the help of Polkadot's interoperability, Manta can make other parachain assets private and provide on-chain privacy protection services for the entire Polkadot ecosystem.
In the future, Manta will also have its own smart contract platform, on which developers can build various privacy products and application scenarios. We hope that Manta can become the infrastructure for privacy protection in the Web3 world in the future.
secondary title
Q1
Winny: In the past two years, DeFi has flourished and TVL has grown by leaps and bounds. However, we have also found that some stubborn problems are still difficult to solve. Some DeFi projects will adopt liquidity mining in the early stage to motivate and attract users. However, such liquidity It cannot be maintained for a long time, and user loyalty is not high. As the price of the currency fell, it eventually fell into a death spiral. Therefore, a number of new projects focusing on the concept of DeFi2.0 have appeared in the market recently, aiming to control liquidity through protocols for sustainable ecosystem development and design a new token economy Models realize value sharing. However, DeFi2.0 has also been questioned as a micro-innovation. I would like to ask all guests, in your opinion, is DeFi2.0 a fake demand, and how big is its demand in the real world?
Yuki: From the perspective of a user, I think it is of course a rigid demand in the market.
Some clues can be seen from the data. Although there are some recent DeFi projects that everyone considers representative, the prices of their tokens in the secondary market may have declined, but the total locked value (TVL) of the entire DeFi has always remained the same. Very stable, hovering around $245 billion. This state is only about 6% lower than the historical high in 2021, which is still higher than the annual market average, so we can see that the market's demand for DeFi is getting higher and higher.
Second, from the perspective of the development status of Moonbeam and Moonriver ecology, there are many familiar Defi figures, and the perspective of user choice represents the market. They hope to make their assets obtain liquidity and the possibility of high-efficiency interaction, and DeFi is often an excellent scenario. So is it a false demand? Obviously not.
Holly: From the perspective of DeFi users, I feel more like micro-innovation. The main purpose of DeFi2.0 is to optimize capital efficiency on the basis of DeFi1.0. In fact, we have not seen that it has brought more significant innovations like Uniswap did.
At present, most of the DeFi2.0 projects are basically based on the underlying construction of several top 1.0 projects, such as Uniswap and Aave. These projects already have a large number of accumulated users and funds, and have a long-term heritage. Unless there is a change in the underlying technology, I think it will be difficult to be replaced.
At present, the main problem of DeFi, I feel, is the performance of the infrastructure, such as too high gas fee, slow speed, and the degree of decentralization of the new public chain. There may be a lot of innovations in some products, but it has not yet reached the level of iteration.
The guests at the previous roundtable also mentioned that DeFi is currently in a stage of slow growth as a whole, and various products are also involving each other. Still need to go out and find some ways to other tracks. We can also see that the ecology generated around Curve, various cross-chain transactions, and aggregation platforms are also interesting things.
Zi: What Yuki and Holly said just now is quite good. I don’t think it doesn’t matter whether it is DeFi 1.0, DeFi 2.0, or even DeFi 1.5. The core question is what kind of improvement does the new product bring and what kind of problem does it solve?
Take Uniswap as an example. Before it appeared, there was no such product on the market that featured the formula "X*Y=Z". After it, there is this so-called DeFi1.0. So my opinion is that as long as there is improvement, there is more innovation, whether it's 1.0, 2.0 or 3.0, it's good.
What Minterest does better is that they strengthen the incompleteness of the existing lending market. For loan agreements such as Compound and Aave, the liquidators are all third parties, and the benefits after liquidation are not given to their own agreements, nor are they given to the tokens of the agreements themselves. Minterest has improved on this and realized a closed loop, repurchasing Token through agreement income, and the value of Token has also been supplemented. It is a very good concept in itself, so there is no need to classify it as DeFi2.0.
Josh Rogers: Moonbeam is a very important partner of Minterest, and I think DeFi2.0 is a sustainable solution for DeFi. Because the previous DeFi projects were a bit like a Ponzi scheme, and there was no very stable thing to support the price of tokens. The future will look gloomy, and there is no very bright future.
All Minterest models are built on the idea of sustainability. Because the blockchain industry has a characteristic, it is very easy to replicate, because everything is open source, and a new project can be launched very quickly. But this does not mean that it will be successful in the future, it can develop sustainably.
Because it is very easy for you to issue some Tokens for free. But how to make the value of a project sustainable and maintain a certain organic growth in a long-term time frame is a problem to be solved. Especially in the field of science and technology, a start-up company can be established very quickly, develop very well in the early stage, and soon become lonely. How to find a new model in the DeFi field so that it can develop sustainably in the long run? This is the problem Minterest is now trying to solve.
The characteristic of DeFi is sustainability. We also think that DeFi is a very interesting industry. It is still in a very early stage and is developing very rapidly. It is also a very exciting opportunity for the foreseeable future years.
I myself have said elsewhere before that Minterest is my last entrepreneurial project, and I will devote the rest of my career to the growth of Minterest. At present, DeFi is a very good opportunity, and it may be an opportunity that we only have once or twice in our lifetime. It is also very exciting to be able to devote yourself to this industry for a long time.
In the past fifteen years, we use the fashion circle as an analogy, there are all kinds of fashion, and there are popular colors every year. For example, jeans may be a must-have item for each of us. Minterest also wants to become such a cornerstone in the DeFi field. It will always exist there, satisfying the real use value of others, and bringing immediate benefits to ordinary users. I also think that there are currently problems in the DeFi field, and like the problems in the previous first-generation and second-generation Internet, it will be well resolved.
Q2
Winny (round table host): The second question, in the opinion of the guests, compared with DeFi 1.0, in what aspects should DeFi 2.0 innovate? You can talk about it from the perspectives of economic model, infrastructure, business level, etc. In addition, in which areas may future development face obstacles? You can combine specific projects and examples for analysis.
Yuki: Whether it is DeFi1.0 or DeFi2.0, it is only a difference in definition. The goal that DeFi developers want to achieve is to obtain continuous and stable liquidity for this ecology or a project; at the same time, they hope that these liquidity providers can obtain long-term incentives.
In this regard, developers have made various attempts. For example, some projects will continue to open new pools, retain users and maintain its liquidity through continuous incentives through new Tokens; some projects have built-in thresholds to ensure liquidity by raising the threshold of funds. In the end, these programs will be tested by the market one by one.
Among them, we have also seen some disadvantages, many projects will dilute their own native tokens. With the emergence of higher income, users will leave the original platform for profit. When a new pool is established, more assets will flow in in the short term, but the original Token of this project will also be diluted. At the same time, the assets used for incentives are impermanent. Users can come to contribute assets and liquidity, or take away all the achievements on it, and then throw the original Token of this project to the secondary market. We are also constantly searching to see if there are some new solutions that can alleviate the current dilemma on the chain.
In November last year, Minterest announced that it would be deployed on Moonbeam. At that time, their plan was to provide some unique functions through the Moonbeam ecology. This function includes the on-chain liquidation process introduced by Zi just now, including automatic agreement revenue repurchase platform governance tokens , which I think is a good attempt.
As the DeFi protocols mature, many protocols start to use the financial indicators of traditional companies as a reference, one of which is protocol revenue. Minterest has made a very interesting point, distributing all protocol income to its own token holders. This method is in line with the spirit of decentralization and also in line with the spirit of Web3. So we have been looking forward to the early deployment of Minterest on Moonbeam to develop their own DeFi ecosystem.
Holly: I personally pay more attention to the DeFi innovation, the transformation from multi-chain to cross-chain. For example, the Aave3.0 plan is to deploy products with cross-chain liquidity on one chain, rather than deploying the same product on different chains to split liquidity.
The concept of privacy finance developed by Manta also focuses on cross-chain. Because we are a Polkadot ecological project, we will also cooperate with Polkadot's XCM (cross-consensus message format) and decentralized bridges to allow more assets to be private through Manta instead of us deploying on other chains product.
At present, the underlying architecture of the entire EVM chain is actually without privacy. We are building a solution using the fast consensus protocol Layer1, and Polkadot's GRANDPA consensus protocol is one of the fastest consensus protocols on the market. By building a privacy protection parallel chain on Polkadot, it can truly achieve the compatibility of decentralization and privacy.
In addition, the important reason why Manta chose Polkadot is because the Polkadot parachain architecture can also allow Manta to achieve interoperability with other parachains, such as Moonbeam and Acala. In this way, any parachain can transfer and exchange privacy tokens through Manta in the future, which also brings many cooperation opportunities for Manta and various DeFi products in the Polkadot ecosystem.
Zi: Most of the DeFi 1.0 we see meets basic financial needs, such as deposits, loans, transactions, and leverage. At the same time, the integration between them is also very poor, and they are basically independent modules. In addition, the economic models of these projects are also very simple at the beginning of their creation. Now after a long period of trial and error, I feel that a more radical or reasonable economic model can be designed in the DeFi 2.0 stage.
For example, the recently popular Convex Finance, which separates governance and revenue, has proved to be a good practice; Platypus Finance (PTP) on Avalanche has adopted a model similar to Convex, and its TVL is approaching 1 billion US dollars. These solutions are very good at combining the profits of the entire product and closing the loop with their own token output and token usage scenarios, bringing a very good economic acceleration to tokens.
The same is true for Minterest. Its economic model will also use the profits of the entire product, especially the liquidation income, to repurchase Minterest Token. Taking liquidation as an example, every time Ethereum drops by 10%, billions or even tens of billions of dollars of tokens will be liquidated in the market, and the liquidation profit is generally 3% to 5%. If this part of the profits can be fed back to the subsequent tokens, it can bring a very strong increase, and it can also enhance the confidence of Token holders and their desire to hold for a long time.
Josh Rogers: When it comes to DeFi, Aave, Compound, and MakerDAO have iterated with each other and developed a lot of innovations. I think Compound has brought a very important innovation, the so-called liquidity mining, which releases returns to ordinary users. The Compound pattern became a recognized infrastructure and a must-have requirement for other projects.
The three projects mentioned above are all built on Ethereum. In my opinion, all three projects are built on the framework of historical traditions. As I mentioned earlier, its certificate, token price, and the success of the agreement, there is not much correlation between them. The concept of their design is actually the concept of traditional business.
The idea of DeFi1.0 is to use the decentralized protocol, and the team behind it to support the operation may be most of the profits obtained by some early investors. DeFi2.0, or specifically Minterest, is not the case at all.
The Minterest team will not take profits from DeFi itself, but will build a system where the value of each user can be increased. This agreement is completely transparent, without any black-box operations, and we guarantee that every user can obtain the maximum benefit and value. DeFi2.0 is much more than that, including establishing a cross-chain market, connecting to Solana, etc. These tasks are also in Minterest's planned roadmap.
Compared with the previous generation of DeFi, the next generation of DeFi needs to attract more new users to the cryptocurrency industry. In my opinion, these are very natural evolutions, and people will naturally optimize their business models. Just like from Web1.0 to Web2.0 to Web3.0, it is a very natural historical evolution.
In the entrepreneurial work, my only personal advantage is that I am older than everyone - I have 25 years of experience in start-up companies, so I can look at this issue from a longer-term historical environment and historical nodes. I hope this can be improved in the future. Help everyone.
Q3:
Winny (host of the round table): Now the development of DeFi seems to have entered a bottleneck period, and the head pattern of each track is relatively solidified. In the opinion of all guests, what conditions should be met in order to become the next popular DeFi application, and the progress of the next generation of DeFi What is the direction?
Yuki: DeFi can be built into a very professional public chain, or it can be a decentralized application (DApp). But in general, a very complete infrastructure is the foundation, providing it with the soil for construction and development.
Answer from the perspective of Moonbeam, if developers want to enter a new ecology and make their projects into popular applications. First of all, it must have enough rich and easy-to-use developer tools; moreover, developers can easily enter the new ecology, and the entire environment is very friendly to developers, ensuring ease of use, low cost of use, and high performance, thus forming The network effect of the active ecology makes connections between Defi businesses. Moonbeam has been making efforts in the above directions, integrating more developer tools, reducing the gas fee of the entire network ecosystem, and building a better "Lego world of DeFi".
Moonbeam is built through Polkadot, which can share security, low Gas fees and all the functions brought by Polkadot relay chain and parachain among Polkadot.
Of course, Minterest deployed in the Polkadot and Moonbeam ecology can also enjoy the above functions, and Minterest can get twice the result with half the effort through this ecology. The same set of protocols/codes can be deployed on Polkadot in Substrate or in EVM-compatible Other ecology, serve multiple purposes.
So I feel that another direction, or the strategy of simultaneous development of multiple chains, will form a network effect on DeFi in the short term and play a very big role in promoting it.
Holly: Now DeFi and even the entire cryptocurrency industry are actually in a very early stage. Perhaps our next-generation DApp is not an improvement on the original basis, but comes from unprecedented innovation, which requires us to explore some new paradigms and models. At present, the homogenization of DeFi products is very serious. We need to conduct more explorations in some infrastructure and ecological construction to find some new progress.
From Manta itself, we feel that ZK-based private payment and transactions may be a direction of innovation. By building Web3.0 products, let DeFi have real privacy.
You can see that DeFi is in full swing now, but the privacy track does not seem to have a particularly popular project. It makes people feel that doing all kinds of DeFi, transfers and transactions on the chain, no one cares too much about the topic of privacy. At the same time, we are talking about the concept of Web3.0, which has a very important point - users need to master their own identity and data ownership.
At present, all the information on the blockchain, such as addresses and transfer records, are public. Through machine learning or big data mining and other technologies, user information can be obtained very easily. Although everyone does not have extensive and strong privacy awareness yet, if they want to realize the vision of Web3.0 in the future, people must have the right to control their own private information. This is not a must, but privacy must be an option.
Another point is that if you want to break through the current bottleneck of DeFi, you need new funds. A very important part of the source is the introduction of traditional financial funds. This is also the consensus of many mainstream foreign institutions.
In the future, DeFi will enter the mainstream financial markets of various countries like traditional financial tools. But this premise must be based on the decentralized infrastructure and at the same time ensure the privacy of financial data, so that DeFi can provide alternatives to these traditional financial tools.
We have also seen that many cryptocurrency institutions now have their addresses tracked in real time on the chain, causing them to seek DeFi products with stronger privacy. Therefore, we feel that if DeFi wants to reach a higher level and break through the growth bottleneck of TVL, privacy may be the next very important issue that must be solved.
At present, privacy is not very popular, but if Web3 wants to succeed or get out of the circle, we think privacy is a very important opportunity in the next three to five years.
Zi: Yuki and Holly just said very well. The degree of application of developers is the key to determining innovation. At the same time, privacy has always been criticized by some institutions. As an investment institution, we are also very concerned about the ecology and development of these two aspects.
The previous bubble of DeFi was too big. Now it cannot be said that it is a bottleneck period, but more of a burnout period. In the past, some worthless agreements gained a high market value, and many traders sought after them, which is definitely not sustainable; and at that stage, bad coins drive out good coins, and valuable agreements will be hurt instead. From last year to this year, it was actually a process of burning bubbles, continuously weeding out those protocols that had no innovation and no value; the TVL of the remaining products such as Aave did not actually drop much.
DeFi is a very important development direction of blockchain. In the past, many DeFi protocols issued tokens very quickly, and the community did not stay, it was a wave of flow. How to make the token economy long-term and continue to stimulate people to hold it, including locking tokens in the entire economy or more scenarios, is actually very important.
The first generation of DeFi before, they all did very basic. These basic modules can have more complex combinations and more complete functions. In the traditional derivatives market, financial instruments are very complicated, but what is presented to users is relatively simple forms of financial management and funds. So I think that in the future direction of development, DeFi can be made more complex in the background, can combine more functions, and interact more with other protocols to create more possibilities and even bring users Higher profits or different risk combinations; but what is presented to users must be a simple front end, so that the user's threshold for getting started will not be too high.
Minterest has taken a big step in the economic model, including the entire liquidation process, which is the best practice after overall optimization. In the future, I hope that Minterest can integrate more financial tools in the background, as well as other Polkadot and Moonbeam protocols, integrate more possibilities through cross-chain methods, and create more products for front-end users. Of course, the front end must be simple and easy to use.
Josh Rogers: Blockchain is essentially a digital platform, the DNA of a digital platform. The new digital platform is to find new users from the previous generation of the Internet.
In my opinion, there are thousands or hundreds of DeFi projects, and a considerable part of them are only experimental and will slowly disappear over time. Looking at history, it is very important to note that the very important players in many industries in history may not be the first in the industry, such as Google and Airbnb. They were not the first, but they were the most powerful players in this segment later. So the most important thing is that we look for a correct model.
Back to the question itself, what kind of conditions need to be met and what kind of functions need to be provided? It doesn't really matter. Like Google and Facebook, they have also done a lot of trial and error. Some functions may be retained, and some functions may be eliminated. Google has done more than hundreds of projects, all of which were eliminated later, but now Google and Facebook are a collection of functions.
Speaking of DeFi, in the future DeFi will also emerge with a collection of such functions to provide a comprehensive ecology. It may not be possible for every project to fully create its own independent functions. Maybe everyone provides a comprehensive set of functions to improve efficiency and return real benefits, benefits and functions to users.
A lot of DeFi projects may disappear in the future, but those that can really survive and develop well are projects that can bring more value to the ecology, and projects that can give more value back to ordinary users. Only by being adopted on a large scale can DeFi be promoted to maturity.
Xiaojie (host of the round table): This round table is over here. Thank you very much for your wonderful sharing, and I hope you will support Minterest a lot.
