Looking back at the lightning evolution of DeFi in 2020: from DEX and lending to high-level derivatives and insurance, etc.

Original title: "2020 "DeFi Carnival" Summary, where is the new direction for the next year? "

Original author: Five Fireball Leader

Last week’s year-end summary mentioned that there are only two themes in this year’s circle : One is BTC and the other is DeFi. BTC is a feast for outsiders (institutions), while DeFi is a carnival for insiders. What changes has DeFi experienced in the past year, and what does it look like now?

I still remember the vernacular a few weeks ago The article "In the never-ending rapid evolution of DeFi, skyrocketing algorithmic stablecoins Just a few people's carnival? ", which made such an "intergenerational classification" for DeFi:

The first generation: MKR, KNC, ZRX - DAI was born, DEX comes into view, the most classic DeFi!

Second generation: LEND, SNX, REN - flash loans, derivatives, cross-chain appeared!

The third generation: COMP, CRV, AMPL - Liquidity mining kicks off! Here comes AMPL!

Fourth generation: YAM, YFI, CVP——Liquidity mining upgrades! Yield and Governance Aggregator Appears!

The fifth generation: Hegic, pEN, BarnBridge - high-level complex derivatives appear! The concept of tiered funds and bonds is here!

Sixth generation: KP3R, COVER, AXIE - developer crowdsourcing, blockchain native insurance, game + DeFi + NFT...

Seventh Generation:…

Along the lines of this intergenerational classification, we can see the whole DeFi What has changed over the years. It is no exaggeration to say that whether you understand these projects and when you started to understand them will directly determine how much you will earn this year...

The first generation: MKR, KNC, ZRX, DAI were born, DEX came into view, the most classic DeFi

MakerDAO was born in December 2017, but most people started using DAI for the first time in 2020 . Before that, with regard to stablecoins, everyone seemed to only know USDT in CEX.

ZRX and KNC are the first time that people in the circle have come into contact with the concept of DEX, especially KNC, as a project that was previously "platformed" by V God, After 2019, the transaction volume has steadily increased, and 2020 will enter explosive growth.

It can be said that the first shot of DEX and Swap was fired in 2020.

Of course, the status of the current KNC boss It has long been replaced by Uniswap, and the proportion of DEX has plummeted. In the world of DeFi, nouns alternate so quickly and cruelly.

Second generation: AAVE, SNX, REN, flash loans, derivatives, cross-chain emergence

The second generation of DeFi is still a project before 2020, interesting The most important thing is that these three current star projects in the DeFi field have all experienced a period of painful struggle, and then transformed, transformed and sublimated.

AAVE——The earliest project was Etherlend, a project in 2017. After going online for a while, it caught up with the bear market in 2018, and then almost returned to zero.

The reason, in addition to the bear market environment, also has a lot to do with the business at that time. The main P2P lending platform at that time was equivalent to a matchmaking. This model is like the earliest order book DEX, liquidity is a huge problem, so it has not been implemented at all.

AAVE was transformed on January 9 this year, introducing a decentralized borrowing pool model, which is equivalent to changing from an "order book" in DEX to an "AMM pool". Then you will see - a myth of a hundred times in one year...

At the same time, AAVE's most famous flash loan can be regarded as an understanding of the charm of DeFi killing traditional finance. The best reading", readers who don't know it, must look for the application scenarios of flash loans (even including being used by hackers).

SNX is an 18-year project, formerly known as Havven. At first, it wanted to be a stable currency, but later found that the road was not working, and transformed into a synthetic asset, Token model Being greatly empowered, in 2019-2020, the myth of a hundred times the currency price has also been realized.

At the same time, SUSD has become a stable currency supported by many protocols at present, in line with the old saying that "if you want to plant a tree, you will not succeed, but if you do not intend to plant a willow will make a shade".

Ren is also a project in 2018. At the beginning, it focused on dark pool transactions, but at that time there were not many DEX "clear pool transactions". Not to mention, later the project looked cool, and immediately transformed into a breakthrough in the direction of cross-chain pledge, bringing BTC into the ETH DeFi ecosystem. Then it happened to catch up with the high-speed train of DeFi this year, and the currency price also soared.

Ren has not given up on the original intention of dark pools. I believe that after the further development of DEX and the increase in the number of people and trading volume by an order of magnitude, the demand for dark pool transactions It still exists, and Ren may be able to use it for a second boost at that time, which is not good.

The third generation: COMP, CRV, AMPL, liquidity mining kicks off! The debut of AMPL

The three projects COMP, CRV, and AMPL are actually completely different. COMP is the leader of borrowing in 2018, AMPL is the Bitfinex project in 19 years, and CRV is 2020 Years of stablecoin swap projects.

However, the three projects were basically popular at the same time, that is, from June to August this year. Compound has been in operation for two years, and in June this year, it officially issued tokens—"Borrowing is Mining", which officially set off an upsurge in DeFi project token issuance and liquidity mining.

CRV followed closely and issued coins in August, which supported half the sky of the income aggregator represented by YFI (most of the strategies of the aggregator at the earliest were Stablecoin mining, users mortgage stablecoins into the CRV pool to mine, withdraw and sell CRV in exchange for yield).

And AMPL was silent for a whole year after its release, and suddenly the concept of Rebase became popular, and then the market value soared from several million to 6 in just one month 100 million, it can be said that it is one of the fastest projects besides YFI.

Rebase has been officially known to everyone since June this year, and countless imitation disks have been born, as well as improved Rebase-like algorithmic stablecoins, such as ESD , Basis, Frax, etc.

Interested friends can refer to the previous article In the endless and rapid evolution of DeFi, the skyrocketing algorithmic stable currency is just a carnival for a few people? ", in the past 6 months, the stable currency has evolved 4 generations...

The fourth generation: YAM , YFI, CVP, liquidity mining upgrades, revenue and governance aggregators appear

Simply speaking, the previous governance pain point - because the governance Token held by a single retail investor accounts for too small a proportion of the total circulation, its decision-making power cannot directly affect direction of the project.

At the same time, most governance tokens cannot bring any income to users, so CVP provided a set of solutions similar to Compound by borrowing the platform. Integrate governance tokens into a pool through mortgage lending, specifically provide liquidity for governance tokens, and aggregate the rights of governance tokens.

The fifth generation: Hegic, pEN, BarnBridge, high-level complex derivatives appear, and the concept of hierarchical funds and bonds debut

Hegic, pEN, and BarnBridge are already three projects after September this year, which can be regarded as the second half of DeFi. DeFi has entered a relatively mature period, Wall Street's financial gameplay has been moved to the blockchain, and high-level complex derivatives are the biggest sign.

These three projects are basically incomprehensible without some financial knowledge. It is not an exaggeration to spend a whole article introducing each one, so I won't introduce it in detail here, just a one-sentence introduction. The previous article DeFi can't stop! The financial "building" of Ethereum is gradually taking shape" has a more detailed description of the three projects, and interested readers can go to see it.

Hegic——If Oypn is an order book option, Hegic is an AMM option, just like the difference between Idex and Uniswap;

pen——ETH-collateralized stablecoin that does not require MakerDAO's 150% overcollateralization, but is implemented in the form of risk-graded bonds;

Barnbridge is a protocol that tokenizes various volatility in the circle, and hedges various risks in the circle by establishing tiered yield bonds.

Sixth generation: KP3R, COVER, AXIE, developer crowdsourcing, blockchain native insurance, game+DeFi+NFT

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If the fifth generation of DeFi is to "blockchainize" a financial model in the real world, then the sixth generation of DeFi is to directly use the blockchain , to build a business in the real world and its own unique native business.

Take Cover as an example. In the past, the leader of the blockchain insurance industry was NXM. The probability is not small.

Nexus Mutual's contract insurance pricing is developed by a team of serious actuaries based on various parameters, and is determined by a special calculation formula. The parameters include the contract The amount of pledged NXM, insurance amount, insurance time, etc. Buying a business requires KYC.

Cover reflects insurance pricing in the price of CLAIM Token, the lower the price, the lower the premium, and the price of CLAIM is determined by market supply and demand, that is, The premium level is determined through the game between users, and KYC is not required to purchase business.

Obviously, NXM is more like the blockchain of traditional insurance, while Cover reconstructs insurance on the blockchain. Chain-native businesses will be seen more and more in the future DeFi world.

For example, KP3R is a project that solves the original pain points of the blockchain. At present, all smart contracts cannot be automatically triggered to complete the automation work.

As DeFi becomes more and more mature, DApp automation has gradually become a rigid need. For example, regular liquidity mining, withdrawal and sale, re-investment, stop-profit and stop-loss, regular acquisition of quotations for trading pairs, etc.

And AXIE is the representative of the new generation of chain games, combining multiple elements such as games, NFT and DeFi, it is the new exploration of blockchain games direction.

The seventh generation: in progress, two directions have been seen

The seventh generation of DeFi is already underway. Based on my current observations, at least the following two directions have been actively explored.

Better algorithmic stablecoins - mentioned that algorithmic stablecoins have evolved for 4 generations, especially the SEC's recent prosecution of XRP. Overall, there is a sense of distrust for USDT and USDC, which are mortgage-type stablecoins that can be destroyed by regulation at any time.

It can be seen that funds have recently poured into second-, third-, and fourth-generation algorithmic stablecoins such as ESD, DSD, Basis, and Frax, but no one cares about the first-generation AMPL .

As a big V in the circle said, DeFi is like a living body, with a natural impulse to expand, based on the native algorithmic stable currency of the blockchain It is undoubtedly a Holy Grail-like existence, and it depends on which project can achieve the final consensus.

No matter who wins in the end, it can be regarded as the third milestone project of the blockchain after BTC and ETH.

Data stream option trading ——Recently, I saw a project A that did not issue Token, and has begun to design option derivatives for arbitrary data streams. What's more ingenious is that the introduction of the recently popular Rebase mechanism has eliminated the dependence on the opponent's disk from the bottom.

For example, you are bearish on a data, such as the US consumer index, and then mortgage 1000 A Token (A Token is assumed to be 1 knife at this time) Enter the contract and short the consumer index. After a few days, the settlement date will arrive, and you judged correctly, your A Token will become 1500.

If the price of A Token is two dollars at this time, you will only get 750, if the A Token is only 0.5 dollars, then the system will give you 3,000 instead It is not 1500 A Tokens, the extra ones are automatically rebase by the system.

Theoretically, with the oracle machine, this project can provide option services for any data stream. And because of Rebase, this project guarantees fixed income for any option user, and eliminates the demand for opponents, which is equivalent to predicting the market + derivatives + Rebase.

Summary

In 2020, the development of DeFi is too fast Yes, if you are not familiar with the existing 7th generation products, you need to make up lessons quickly.

The currency circle may be gradually weeding out the previous currency hoarding parties (except BTC), look at the performance of mainstream currencies this year, and look at the senior farmers in the DeFi circle The yield, I think you should know what I'm talking about.

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