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DeFi: no future

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The year 2020 is set to go down in history.

Source: confictions ux advanced | DeFi: nothing to break or build for the future

Source: Conflux Chinese community

Introduction: "2020 prologue to the long see series"

The year 2020 is set to go down in history.

On January 2, 2020, 41 new cases of pneumonia were confirmed. Subsequently, the new crown pneumonia epidemic spread, people's fear is also slowly released. On February 3rd, the day after the Chinese New Year, more than 3,000 stocks fell by their daily limit. The rate of new coronavirus infections in China has slowed since late February.

However, the new crown pneumonia epidemic is still to Japan, South Korea, Europe and the United States and other global epidemic.

On March 9, the international oil price took a precipitous plunge of 31%, the opening of the three major stock indexes plummeted, the dow Jones index fell more than 1800 points, the s&p 500 index fell 7%, triggered the first circuit breaker (an automatic stop mechanism), the biggest one-day drop since 2008, the second since 1997 circuit breaker.

Under the impact, the global stock market diving, Britain, France, Germany, Italy and other markets have plunged. On March 12, the dow Jones, nasdaq, s&p 500 three major indexes all sharply plunged, again triggering a circuit breaker.

"I haven't seen anything like this in 89 years," buffett said.

The body that old leek is cut does not have whole skin, new leek is eager to try ground bottom copy. Good news for new infrastructure, buy! Oil crash, buy! Gold plummets, buy! The length of time it takes to complete the self-cultivation of chives has once again broken the record.He also said that I am greedy when others are afraid."There have only been three meltdowns in the history of the U.S. stock market. The last one was on March 9, 2020. I remember that day as if it was just a few days ago." A group of people commented: "dude, is this a good time for bottom-hunting?"

01. Domino effect shuffles the digital money market

As oil prices collapse and U.S. stocks collapse, will digital money be a safe haven? The third halving of bitcoin, known as "digital gold," is expected to take place on May 25, 2020. In the middle of 19 years, the currency circle began counting down to the halving of bitcoin. Some economic models even predict that bitcoin could rise to $100,000 in half.

Remember, nakamoto designed the blockchain system in the first place because of the inflation problem caused by the U.S. government's unlimited money creation during the 2008 economic crisis. In this new monetary system, everyone had the right to keep accounts, money could not be issued at will, and the whole accounting book was open and transparent.

One bite and the job is done. As a result:

You heavy position A share, he sohu ha crude oil, I copy the bottom currency ring.

The coinage of 2020 seems to have taken the wrong script, instead of the expected gorgeous reversal, on the contrary, the collapse of bad luck like dominoes can not be stopped, knocked down the last piece of confidence in the hearts of people.

On March 12, 2013, bitcoin plunged nearly 50% to a low of $3,800 in two days, wiping out nearly 430 billion yuan in 24 hours, its biggest one-day drop in six years. More than 100,000 people were exposed to the crash, which totaled about $2.93 billion.

In the face of the unprecedented decline, the important role of maintaining the stability of the block chain system, the survival of the mining machine, aroused deep concern. On March 13, fishpond published a power off coin price chart, calculated by the electricity price of 0.38 yuan/KWH, there have been 10 types of mining machines touched the power off price, including: what M3, avalon A741, wing bit E9 +, ant T9 +, avalon A821 / A9, core T2, as well as the mainstream of the market ant S9, the total power off 220000.

Digital gold in hand, never thought the story would end:

You chose to hang yourself. He slept on the tracks. I stood on the roof.

The collapse of the currency price caused panic among the holders of the currency. When they wanted to stop their losses in time and flee the market, many central exchanges experienced downtime and maintenance, which limited the withdrawal of erc20-related currencies, prevented users from closing their positions in time, and even suspended OTC trading.

Communities are exploding, fears of contagion are accelerating, and the "technical maintenance" of centralised systems seems feeble.

Bitcoin, the totem of the coincircle, collapsed, followed by ethereum, EOS and other mainstream currencies.

ETH fell 65.2% from $250 to as low as $87 and EOS fell 53.18%. At the same time, ethereum, which hosts a large number of DeFi and DApp applications, exposes performance bottlenecks.

Since each step in the ethereum chain requires the consumption of Gas Price cost, the miners will determine the priority of the packaged transaction according to the Gas Price level. Once there are a large number of transactions, the transaction with high Gas Price will be packaged in priority, while the transaction with low Gas Price Price will be in a waiting state, which will affect the normal process of transactions and cause massive congestion of ethereum network.

On March 12, the ethereum transaction fee rose to about 10 times as users transferred money, filled positions, and filled positions. At one point, it required a Gas Price of 1 ETH to be successfully packaged into a transaction. That day, ethereum's transaction fees were $564,000, far more than the $298,000 paid by users on the bitcoin chain. Even so, improving the handling fee won't solve the ETH system's native performance problems.

During this period, the stable currency, an important medium of exchange, gained a premium. Whether it is futures hedging, or mortgage to cover the position, or take the opportunity to buy the bottom, are inseparable from the value of risk fluctuations of the minimum stable currency. As everyone rushes to cash out, the central exchange's copy of the USDT will soon show up as a hard - to - pay prototype. Just like the N95 mask during the epidemic, USDT firmly holds the banner of "in short supply" and "in urgent need" with its indispensable position as a medium of exchange and hedging tool. The USDT's exchange rate briefly exceeded 8 when there were too many vacancies.

DAI, which USES digital assets as collateral, is like an overseas mug-mask facing a multi-country scramble to both repay the mortgage and liquidate the principal, temporarily drying up liquidity in the absence of timely macro-control and pushing up prices.

Many outsiders are beginning to question the value and meaning of digital cryptocurrencies: "bitcoin, a naked scam. Digital cryptocurrencies will go to zero sooner or later."

The pot of deception, we do not back.

In addition to the epidemic situation and the impact of the global economic downturn on investor sentiment, the author believes that one thing that really needs to be blamed is that a large number of currency holders still rely on centralized mining pools, exchanges and lending services, which violates the original intention of decentralized systems such as bitcoin. In the face of the conflagration, the ills and limitations of the centralized system have helped fuel the panic.

Another is the inevitable performance bottleneck of decentralized networks.Economic crisis will occur periodically, the emergence of the crisis does not matter, more important is the platform's emergency fire-fighting ability.

02. It's none of your business to destroy you -- fragile DeFi blocks

In times of crisis, faced with the "technical adjustment" of the centralized exchange and lending platform, the DeFi platform seems to be able to turn around and fight a good battle due to the high barriers to use and the poor interactive experience.

DeFi, called Decentralized Finance, is a financial instrument running ina Decentralized system. The bitcoin system came into being after the 2008 financial crisis. More than 10 years later, in the face of another global financial tsunami, has DeFi, a decentralized financial product on the public chain such as ethereum, delivered a satisfactory answer? The natural advantage of decentralisation should have been to reduce the cost of credit and return value in the event of a big crisis.

However, as the market for digital currencies like bitcoin and ethereum fluctuates, DeFi's vulnerability becomes apparent.

If the common chain is the foundation, then DeFi applications built on it are like building blocks. The foundation is not strong, no matter how high the bricks will fall against the wind. The lock-up value of the DeFi market, which is booming and promising in the future, has also returned to pre-liberation with overnight fluctuations in the coinage.

According to Debank, DeFi's total lock-up volume fell to $660 million on March 12, down 46% from DeFi's peak lock-up in 2020. DeFi's liquidation totals more than $23 million, 15 times the previous day. The big ethereum jam also contributed to the total amount of clearing in the entire DeFi market.

● the fall and rescue of central bank MakerDao on ethereum

The DeFi king, MakerDao, the central bank on ethereum, is not immune from this shock. On the night of March 12, MakerDao cleared more than $10 million. Due to the Maker of the liquidation procedure is, in the form of mortgage auction market downturn caused during the auction, clearing staff generally with the mindset of the rule to participate in bidding, part of the liquidators by improving the Gas fee, with 0 knife have white Wolf to auction the collateral ETH, valued at more than $800 as a direct result of the bad debt of more than 500 pieces of DAI bin.

On the night of March 12, the ethereum network was jammed for at least four hours, according to auction records, and the auction ended three hours after the $0 bid with no other bids.

With more than $5 million in distressed debt positions, Maker had to start a rescue mode, reducing DAI's stable rate from 8% to 4%. On March 16, the Maker foundation again voted to reduce DAI's stable rate to 0.5%, and plans to auction MKR on March 19 to pay off the mortgage debt.

● a liquidity crisis in lending agreements

As most DeFi lending agreements rely on over-collateralization, more and more accounts trigger liquidation as a large number of loans fall below the mortgage threshold. DeFi product with small capital pool at this time broke out the liquidity crisis, the user's deposit was lent, the loan account had not been liquidated in time, the deposit user could not withdraw money, the experience was very bad.

After two days of bloodshed, the DeFi market also greatly reduced the amount of deposits and loans:

● embarrassment for DeFi users on classic cars

Ethereum users in a market crash are like refugees in a vintage car seeking shelter from a flash flood.

Old car speed is slow, very period a transfer transaction tardily cannot go up a chain, borrower cannot add collateral in time, can only helplessly see an account be cleared.

Old car fuel costs surge, fleeing users love to cut meat but can only bite teeth into the belly.

Old car navigation can not keep up with the environment, a large number of predictive machine feed can not be updated in time, traders can not timely spot price trading. On the night of the crash, the price of the MakerDao predictor hovered for some time.

Due to the community users can not timely fill the short position led to the liquidation of 8 BTC, baked boy see distressed.

The underlying network demand for better performance from social users is also evident: & NBSP; & have spent

Amid the storm, decentralised exchanges are doing just fine.

According to statistics, the trading quota of the decentralized exchange exceeded 100 million us dollars on the evening of December 12. The fly in the ointment is the high cost of ethereum Gas. Escape from the fire through DEX, also cut off the half of the meat, really annoying.

We still have a long way to go in the development of decentralization. DeFi ecology is still young, but it still has a future. In these two days of rough waves, the central exchange can at any time to close the operation of the withdrawal of currency became the eye of the storm, and the trading volume of the decentralized exchange let us see the public in the face of the crisis of the balance of trust, more people to choose the determination of the decentralized system.

The unstable foundation, the ecological construction above the prosperity, is only a mirror in the water, vulnerability. If the foundation is robust enough for all transactions to be conducted in an orderly manner without bandwidth constraints, then DeFi will stand the test of time.

03. 岂曰无衣，与子同袍 ——将开放式金融进行到底

A lot of people say that performance is less important than eco-construction, and each new public link says it has better performance, but which one is better than ethereum?

In front of the waterfall, the performance of the underlying infrastructure is particularly important. This isn't the first time ethereum has jammed. When the CryptoKitties game was first launched in January, the public rush to pet cats led to the first congestion on ethereum, with transaction fees reaching a high of $0.02 for the first time. In July of '18, a cash game called Fomo 3D was launched, which directly caused ethereum to pass 70,000 pending transactions, causing another blockage. By march of this year, everyone had already watched the episode.

In 2008, the financial crisis caused 8 trillion euros of economic losses to the global financial sector. In 2020, the currency circle settlement congestion will peak at 16 million dollars.Compared with the scale of traditional financial market, the scale of financial assets on ethereum is so small, but such a small transaction scale, ethereum can not bear, not only can not experience the test of market changes, but also let people touch the ethereum ecological ceiling.

Developers in the community are collectively calling for ETH2.0 to come soon. Apart from POS under the mechanism of zero phase can experience on the test of security, is enough to see everyone's goal is the same: market requires a high performance and security of the underlying network infrastructure, only enough to build solid foundation to repel a flash flood and storm scale building, only holds enough wide runway numerous mercedes-benz luxury cars.

We all know the truth, but practical deployment always requires forward-looking thinking and vision. We can never predict risk, but it is certain that risks and accidents will occur periodically.

In February 2009, when A bushfire broke out in Australia, China turned to China for help. Eleven years on, Australia has yet to learn the lessons of planning its own environmental mitigation satellites. In September 2019, when Australia's wildfires burned for the first four months of the year, everyone witnessed how the government's response was so inadequate that it missed the opportunity to control them effectively.

Data from the last two days show that ethereum has blocked nearly 80,000 transactions due to poor performance, with an average chain time of four hours. MakerDao's massive clearing auction bid bid was unable to go through the chain within three hours, resulting in the early bidder of DAI 0 being awarded $4 million worth of collateral at no cost.

Imagine if MakerDao had been built on the underlying network of conficux, with 3,000 +TPS processing speed and second-level chain performance, and more than 80,000 blocked transactions in just a minute, the clearing process would have been silky smooth.

Today this sudden currency as Australia's airborne fire, emergency rescue, the etheric lane with a spoon, a drop in the bucket is difficult to compete with the giant flame, if ecological members can learn from, satellite monitoring facilities planning and mitigation, and as soon as possible to prepare the latest model of water drop bombs, Conflux mission will be reached, with safety technical support to DeFi decentralized advantage developed to get incisively and vividly in the next test.

Going where ethereum has gone is what Conflux was born for.

On the underlying network behind conficux, fuel costs for sports cars are expected to drop significantly, and developers on conficux can significantly reduce transaction fees by paying for their users. The speed of the sports car will be a hundred times more.

Conficuux currently implements block second-level chain and minuter-level validation, which directly addresses the nature of network congestion and makes decentralized experiences comparable to centralized. The safety of sports cars cannot be questioned.The POW's never-ending world server lets users navigate DeFi in a decentralized manner, and everyone can enjoy the civilization fruits of the open source movement.

The performance improvement of the underlying infrastructure of the public chain will bring about a positive chain reaction.

When users experience decentralized facilities as much as centralized ones, they can gradually wean themselves off centralized pools, exchanges, and lending services and embrace the nature of decentralized networks. Even in extreme market conditions, it can keep the entire facility intact in the face of high winds and fires, and can even be a real safe haven in a disaster.

The most advanced technology always needs a process of social cognition and acceptance, and its industrial development speed is closely related to social cognition and the degree of policy openness. Toba also hopes that the developers of DeFi, even if they are used to driving old ethereum cars, will occasionally try new cars and tracks.