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FTX Founder, Serum Advisor SBF Discusses Serum's Ultimate Vision

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Why DeFi may become a trillion-dollar industry? If DeFi can develop into such a huge industry, why I think Serum is the most likely to achieve this goal.

Original title: "FTX founder, Serum consultant SBF discusses Serum's ultimate vision"

Original source: Serum Information Platform

Among the weeds, it is inevitable to get lost. Everything has advantages and disadvantages, the important thing is not to be able to list them one by one, or to prove how knowledgeable and knowledgeable you are, but to evaluate and weigh these advantages and disadvantages.

Whether Decentralized Finance (DeFi) can develop into an industry trend remains to be seen In doubt, I can't answer this question. Perhaps none of DeFi can become the mainstream of society.

Perhaps DeFi will become the mainstay of tomorrow.

01. What is the meaning of DeFi?

This question may seem silly to some, but to others DeFi itself is stupid one. This part aims to answer questions for the second group of people.

I was one of those people too. A year ago, I was still very skeptical about DeFi. If you asked me what I really thought at the time, I would rate it as "slow, expensive, buggy, and underpowered."

But a few small things changed my mind. Before talking about how DeFi overcomes its own disadvantages, let’s talk about the original question, why should we bother about DeFi?

For some people, it may be decentralization plus resistance to censorship It is enough. But I don't think so, at least not enough for our goal of being bigger and stronger. Visa, NYSE, Apple, and Nissan may write some empty promises for these values, but at the end of the day, DeFi’s massively expanded audience is all about showing the world that on-chain Architecture can make their products better, not worse.

In my opinion, the key lies in "composability".

A group of people built Uniswap, a standard (AMM-based ) decentralized trading platform. Another group built Aave, a standard decentralized lending protocol.

Now you want to build an embedded margin transaction Decentralized trading platform, how do you do it? Do you want to build your own infrastructure such as risk engine, liquidation engine, DEX, etc.?

No need!

Let's say Bob has some USDC and he wants to do it 2x Multiple ETH. So, you can create a front-end (GUI) with just one click:

Use USDC to buy ETH on Uniswap

Transfer ETH to Aave, lend ETH, borrow USDC

Transfer USDC to Uniswap, buy ETH

will Transfer ETH to Aave, lend ETH, and borrow USDC tokens

Transfer USDC to Uniswap, buy ETH

(If you want the process to be easier, you can use flash loans to cut a few of these steps.)

The key is: the projects on the chain are all public, without permission, and written in the same language, so we can splice them together to build new things, and realize the effect that one plus one is greater than two.

We only need to create a With the front end of the first step, a decentralized exchange with margin trading function has been successfully built.

If you want to provide loans for leveraged transactions and obtain corresponding yields, It is only necessary to splicing the lending/loaning agreement to the DEX. Alpha Homora does just that.

You can use Binance lending function and Coinbase order book function to try to achieve the same appeal, but the effect may not be good. You may encounter various problems such as interest rate limits, borrowing limits, withdrawal limits, withdrawal delays, etc., and there may be liquidation risks in the middle.

But in DeFi, it’s all possible.

Another case comes from Serum. We assume that you want to create a fast and affordable decentralized exchange DEX on the Solana public chain.

You can learn to use Rust to build an on-chain transaction matching engine , test it, find market makers, create a GUI, etc...

Alternatively, you can fork a front-end GUI that links earned transaction fees to your own address, and personalize it however you want. Ten minutes later, you can have the most advanced decentralized exchange DEX.

Bonfida front-end GUI interface

So, why should large-scale projects be built on Serum?

Because assuming you are Robinhood, a well-known American brokerage, you need to User transactions provide high liquidity, so you will not need to personally contact, negotiate, compare, handle settlements, communicate quotations, etc. with proprietary trading companies. All you have to do is to build a front-end DEX GUI for a decentralized exchange, and you can achieve what you want in 10 minutes.

If you want to create a token and make it online successfully For trading, you can hire R&D personnel to develop tokens, and business development personnel to communicate with Binance, FTX, and Coinbase on exchanges, etc. Or you can create tokens directly and add DEX trading pairs or AMM pools. Place an order on the market, and your token will be available for trading in ten minutes.

Composability means that all DeFi-based applications can be combined with each other , new products can also be immediately integrated into the system. It seems that each project has been equipped with a financial ecosystem with complete services at the beginning of its inception.

But the above does not prove that DeFi will inevitably continue to grow and develop.

But if DeFi does well enough, it can show huge Advantages can also attract and eventually convince most companies to put their business on the chain.

You can imagine what a DeFi with one billion users will be like grand scene. And this is our goal.

What will DeFi be worth at that time?

Now it is difficult for us to answer. What we describe below does not really estimate its value. We can only talk about which value it can achieve in theory.

We can make a rough estimate for now.

1) If these giants unite NYSE+ARCA+CME+ICE+ …, what would be the effect of decentralization and a 0.0025% (0.25 bps) fee per transaction?

So, the daily trading volume is about $10 trillion. If the 0.25bps fee reduces the transaction volume by 75%, and then 20% of the total volume is transferred to the decentralized platform, the final daily transaction volume will be around 500 billion US dollars.

This will bring in $3 billion in annual revenue, and the valuation will be around $100 billion.

2) What impact will DeFi have on social media?

Social media will enable:

Open access to API

Freely create front-end GUI, client, etc.

Open search

Cross-community release

Resist censorship

If the public chain taking Solana as an example can maintain a handling fee of 0.00002 US dollars, and the throughput is sufficient, then

For Twitter:

Average cost of $10,000 per day

Valuation of $30 billion

For Facebook:

Average $100,000 per day

Valuation of 800 billion US dollars

Pictures will be uploaded to the chain Some difficulties, may need to use IPFS or other technologies. In theory, we might be able to move 30% of social media, which would be a $300 billion valuation.

3) What impact will DeFi have on structured products?

Most structured products are easy to chain.

BlackRock alone is valued at $100 billion.

So the total value of this part can reach 500 billion US dollars.

4) How will DiFi affect credit cards?

VISA's TPS (the number of things that can be processed per second) is about 2,000 to 50,000, and the scalable blockchain can also reach this TPS, and its valuation is about 500 billion US dollars. In this way, the entire chain can have credit card companies worth 1 trillion.

…and this is just the beginning.

These are very rough estimates - not to be taken seriously. This is not the value of the blockchain, they are only the value of companies and/or DAOs that can theoretically be on the chain.

However, it can be clearly seen through calculation that theoretically, on-chain The total value of companies can reach 1 trillion US dollars, and they are compatible with each other.

Of course not saying that this vision will happen, just that it It is possible.

DeFi may fail if DeFi is known for fraud and failure This will be especially the case if the company is known rather than relying on the name of its strongest product.

But DeFi may succeed. And once it succeeds, it will be an achievement that will shake the past and shine today, and its size will not be underestimated.

02. What are the advantages of Serum?

Solana public chain

DeFi could potentially have billions of users on-chain worth trillions of dollars. So what kind of blockchain can realize this grand vision?

1) Can process tens of thousands of transactions and data per second 100,000 orders

2) Capable of handling 10 billion social interactions per day Media interaction, approximately 100,000 times per second

3) ;The handling fee is less than $0.001

4) Progress

With the continuous advancement of global technology, the throughput of blockchain must also increase accordingly.

5) Able to process all requests within human reaction time

for most In terms of products, usually when we click a button, the expected response time is about 0.1 second, and if there is a delay of about 1 second, it will make people feel very crashed.

6) Product mix

If you can't combine products, many companies will lose Great added value, that is to say, there is a high probability that every industry will hope to become a composable shard.

7) Be able to decentralize and keep open

So basically the blockchain needs to evolve to have the following characteristics:

1) 1 million TPS processing capacity

200,000 times per industry Fragmentation

2) 0.001 USD handling fee

If the handling fee is too high, the Leading to excessive costs for sending orders, posting updates, etc.

3) Synchronous growth with Moore's Law

Specifically speaking, by cooperating with Moore The law parallelizes to expand the overall computing power.

4) Decentralized and open

5) 100ms block time

Which existing blockchains can meet the above requirements?

Barely.

At this stage, there are 200,000 transactions per second in a single shard It will destroy all blockchains.

More worryingly, even in the long term, Almost all blockchains also fall short of these requirements. Most blockchains, even the fastest ones, have no plans to focus on further increasing throughput. Instead, they are still sitting back and enjoying the aura that they can currently maintain the needs of 100,000 users in the DeFi ecosystem at low prices.

The current processing capacity of ETH is only 15TPS, even ETH2.0 It is also not planned to upgrade the processing capacity to the order of 200,000 TPS in a single shard with atomic composability.

The faster chain can generally handle up to 1000TPS, the fastest Probably around 50,000 TPS.

Therefore, the only blockchain that can truly realize the grand ambitions of DeFi is Currently, it is capable of processing tens of thousands of TPS, and has planned a blockchain that will upgrade the blockchain in the future.

In other words, it must be the fastest chain currently, and It will continue to improve its computing power as the number of components increases exponentially.

Solona fits the bill. At present, it can handle 50,000 TPS, expand synchronously according to Moore's Law, and has formulated detailed plans to plan how to optimize different parts of the system in the next few years to achieve an exponential increase in the amount of computing. Solana’s fees are also cheap.

Solana’s block time is currently around 400 milliseconds, but by processing Can be compressed to around 150ms.

The core element is that Solana has set goals as early as its establishment, and will invest a lot of resources in future upgrades. The core team and ecosystem participants shoulder this mission when they join the team, and will continue to cooperate to help expand and upgrade.

If Solona fails to meet these necessary conditions, the Surprises are also disappointing.

In addition to it, what other blockchains can meet the requirements?

Serum Platform

What DeFi needs to become bigger and stronger is a suitable blockchain. But just having a blockchain is not enough: a blockchain is just a proposal for how a group of people should come to consensus if they were to join the chain.

If DeFi wants to scale up, users need to choose this blockchain . And there are very, very many users.

As long as DeFi users can reach 10 million, the rest will be Self-advancing: DeFi may become a default, obvious option for companies that are figuring out how to get on-chain.

But how should we get such a huge number of users? First, we need a very different type of consensus: in a sense, it is equivalent to a Schelling point (a Schelling point, the natural selection tendency of people in game theory without communication), that is, if any Anyone who wants to create DeFi will refer to this consensus model.

Ethereum has this capability. But no other chain currently does that.

But Serum shows a way to go. At present, it has the most powerful DEX on the whole chain in the world, and this ecosystem is growing rapidly. And, behind the scenes, there are apps with hundreds of millions of users trying to use Serum. The construction of the entire large system has already begun.

More than that, Serum has a complete support system: they promise to Will integrate and develop technical support, products, liquidity, and foundations. The coalition of groups built on Serum is huge.

This does not mean that Serum will be successful.

But it does mean Serum has what it takes to succeed.

With these foundations, step by step, we are moving towards that grand vision go ahead. This week, I've seen social media apps, fantasy sports (virtual sports simulations), token minting, data storage (oracle), automated market makers (AMMs), options, Fully functional beta versions of Chainbridge, and many more.

Wormhole

Where did Serum come from?

The first proposal for the Serum project was a Google document describing the A protocol for archiving website screenshots on Ethereum.

It gradually evolves over time until it accumulates to a quantitative change.

But its most basic characteristics have never changed:

Serum will be completed within two months.

The value of Serum will always be a cool decentralized application.

There is a decisive fork in the road of evolution:

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Improve on the original basis

Create a new chain

If you choose the first path, Serum should have been built long ago, and you will be able to fully participate in the turmoil of the DeFi fire At the same time, tokens with complete functions for sale should have been issued and have reached their peak.

Choose the second way, Serum may develop into a A platform for billions of users. But it will take months to complete the first generation product, years to build a huge ecosystem, and decades to realize its ultimate vision, all under the premise that Serum can successfully gain traction from the beginning.

The Serum project chose a path less traveled, and thus it was born The fundamental driving force and vision of DeFi are consistent with this article: do your best to realize the grandest and most ambitious vision of DeFi.

We have come a long way since Serum was founded. (But after thinking about it, it was only three months.) The road ahead is still long and dangerous, and even every two steps forward will lead to a step backward. But I guess that's what it's like to have great ambitions.