Bi bi AMA | dForce community manager: almost every traditional finance + Internet finance business can be found in DeFi

BlockBeats news. In the first issue of DeFi topic AMA held tonight by Bitpie and dForce, BlockBeats as an exclusive media support, Mr. Chang, dForce community manager, analyzed the current market situation of DeFi and simply explained what kind of parallel world open finance DeFi is. How do users experience DeFi products for the first time? What other pits do you need to be aware of in DeFi?

What is the difference between open finance and traditional finance?

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Taking his own experience as an example, Mr. Zhang expounds the pain points of traditional finance: expensive intermediary fees, ineffective communication process and complicated transaction process. As an open finance, DeFi aims to break this shackle and establish a truly open, fair, convenient and efficient new financial system based on block chain technology and cryptocurrency.

The advantage of Defi

1. & have spent & have spent & have spent Open and transparent: based on the block chain technology and cryptocurrency, all transactions are open, audable, traceable and searchable on the chain, and no one can tamper with them arbitrarily. This will increase the cost of doing evil by centralized institutions and guarantee investors more.

2. & have spent & have spent & have spent Without trust/authorization: DeFi financial administrative authority to review to each user, in charge of your own private key is proof of their wealth, the borrower under the loan scenario of mortgage assets locked in intelligent contracts to protect depositors, open and transparent, at any time to view mechanism which gives people first do not rely on centralized authority financial wealth management services.

3. & have spent & have spent & have spent Disintermediation: the process of the centralized institution is too complicated and tedious. The operation process of DeFi is simple and transparent, and the loan procedures can be completed in a few minutes. The advantage of disintermediation is to save the expensive intermediate cost, effectively reduce the transaction cost of finance, so that the financial service cost is lower

4. & have spent & have spent & have spent No participation threshold: the threshold of net assets and investment amount;

5. & have spent & have spent & have spent High liquidity: as the network is open to the world, the financial services in DeFi are matched globally and no longer subject to geographic limitations.

Mr. Zhang said that although the word DeFi has been around for a year, the fact is that most of my friends who follow the blockchain industry don't know what DeFi is. A significant percentage of those who know DeFi say it is mostly about borrowing and trading based on smart contracts. However, DeFi actually goes far beyond that. The DeFi on ethereum has formed a complete range of financial markets and financial products, and initially formed a chain financial market corresponding to the real financial market, which can be regarded as a small parallel universe, and trading and lending are only the first product forms developed in this parallel universe.

In fact, almost every kind of traditional finance + Internet finance business can be found in DeFi open finance. In addition to this, DeFi has its own innovative Flashloan. DeFi, a parallel universe, has traveled through the history of traditional finance very quickly and is constantly broadening the imaginary boundaries of finance.

Mr Zhang then returned to dForce products: a stable currency, the USDx, and a loan, lendf.me. In just five months, lendf.me is the fifth largest DeFi lending market in the world and the largest USDT lending pool.

The DeFi lending platform must take risk control very seriously, after MakerDAO's problems last week when prices fluctuated sharply. In this regard, the mechanism of dForce has several characteristics:

1. Clearing by position, for example, ETH of 1.5 million us dollars, borrows 800,000 us dollars to stabilize the currency. When the price drops and the collateral is insufficient, only a part of the collateral will be cleared.

2. The clearing price is sold at a discount of 10% of the current ETH price on a first-come, first-served basis. There will be no $0 or low price for ETH assets.

3. There is a circuit breaker mechanism for the price of assets to fluctuate within 1 hour at most plus or minus 10%. The circuit breaker mechanism can effectively reduce the risk of continuous explosion of user's collateral in extreme market conditions.

4. The clearing rules are simple, with one button for direct clearing, everyone has the opportunity to participate.

In the end, Mr. Zhang also briefly summarized the challenges faced by Defi in the future:

1. How to make DeFi known to more people and use DeFi (integration with centralized institutions can make DeFi sink into the original traditional financial system and make it available to ordinary people).

2. How to find space in or out of supervision? When the channel between cryptocurrency and cryptocurrency is enough and smooth, the social software used by everyone adds a layer of cryptocurrency tools, which can easily permeate everyone's life.

3. Interest issue: the open and transparent DeFi finance is a revolution, and if the value of this revolution cannot be correctly estimated, it will be hindered if the interests of others are hurt, and if the interests are not large enough, it will not attract more people to build.

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