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Beyond Ethereum, What You Didn't Know About Uni and Aave

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We're trying to start with the Ethereum ecology and explore what projects have the ability to be the underlying infrastructure of an on-chain ecology. What are the potential players in other emerging on-chain ecosystems?

Today's crypto industry is rapidly evolving towards multi-chain coexistence. Just a year ago, Ethereum was the only player in the market that could be called a fully fledged public chain. But since the end of last year, BSC, Solana and other public chain ecological rise gradually. Polygon Ecology, which focuses on Ethereum's expansion, has also exploded recently.

Which projects in these emerging public or side chains have the potential to become the core infrastructure of the new ecology, and are there any possibilities to replicate the success of similar projects on Ethereum? This paper tries to briefly comb the current development status of these projects, and tries to summarize their development trends.

The three major infrastructures of the ecosystem on the chain

Ethereum is undoubtedly the public chain with the earliest ecological development and the most mature at present. Defi, which is currently popular, was first born on the Ethereum platform. So what are some of the projects in the Ethereum ecosystem that could be called critical infrastructure?

Through simple research, it can be found that the core infrastructure of the Ethereum ecosystem can be divided into three categories: trading, lending and stablecoin.These three types of items are far ahead of other categories in terms of transaction volume, fee income and market value of tokens. Among the three, the mortgage stablecoin is not difficult to apply to any public chain due to its simple issuance and easy migration. Therefore, in the following, we will focus on the analysis of the products of trading and lending.

A partial list of Eco Head items on the chain

BSC

Binance Smart Chain (BSC) basically inherited all the technical features of Ethereum, greatly improved the transaction speed while reducing the degree of decentralization of the system, and thus attracted many new users with small amounts of money. Therefore, the projects on BSC also show a high degree of similarity with similar projects on the Ethereum platform.

(1) Trading platform

Pancakeswap has dominated the BSC network in terms of volume locked up by volume, with $7.9 billion in total volume locked up and close to $1 billion in daily volume.

Pancakeswap, in terms of the underlying architecture, is basically the code that directly forks Uniswap V2 without much underlying innovation. But it has made bold improvements to Uniswap's token system and added many new features, such as lotteries, beyond transactions, to meet the more diverse needs of its users.

Pancakeswap's token issuance does not have a hard top, and it uses a mechanism similar to Ethereum's on-demand issuance. In the early days of the project, Pancakeswap provided incentives to liquidity providers with near-triple-digit annual increase rates, helping the project to successfully get off to a cold start and thus gain an early competitive advantage. In addition, Pancakeswap also adds a token destruction mechanism so that the total amount of tokens in circulation can maintain a dynamic balance.

In addition to Pancakeswap, MDEX platforms have recently shown a trend of catch-up in volume. But MDEX still struggles to compete with Pancakeswap in terms of lock-in volume.

(2) Lending platform

Despite the recent attacks, Venus remains the unshakable leader on the BSC platform in terms of total borrowings.

Total borrowing is still $1.2 billion. Compared with the market share of total borrowings of Venus, the borrowings of other lending platforms on the BSC platform are negligible.

It is important to note that readers are urged to carefully assess the risks associated with their savings and investments, as some analysis suggests that the recent attacks on Venus were actually the result of an inside job by the project team.

Polygon

Although Polygon is not an independent public chain, as a side chain expansion scheme for Ethereum, Polygon's ecology is still somewhat independent. Like other platforms, Polygon's main strengths are transaction speed and fees.

(1) Trading platform

QuickSwap is a major trading platform created and promoted by the Polygon team, and currently accounts for about 70% of the trading volume on Polygon Ecology. Unsurprisingly, QuickSwap is also a forked Uniswap V2 trading protocol. However, due to the improvement of the underlying public chain performance, QuickSwap trading can have a better experience and lower costs.

(2) Lending platform

Aave, the leading project to move from Ethereum to Polygon, has an overwhelming advantage in the lending space for the new platform. At present, the lockdown capacity of the project ranks first, reaching $3.1 billion. There is no need to introduce the AVE mode too much. Users can also directly switch to Polygon network for borrowing and lending on the AVE official website.

Solana

Solana is by far the most unusual public chain to be included in the comparison. Currently the Solana platform does not directly support EVM virtual machines, choosing instead to program in the Rust language. This poses a significant obstacle to directly porting code from successful projects on the Ethereum platform. But as a result of the higher development threshold, but blocked a lot of soil dog project harassment.

Solana Public Chain has extremely high transaction performance, and its TPS is much higher than that of Ethereum, so you can build logic on top of it like a centralized order book exchange.

(1) Trading platform

Solana Ecology began to erupt at the end of last year. Unlike Ethereum, which was driven spontaneously by the community from the bottom up, the rise of Solana Ecology is more due to the strong intervention of FTX, a centralized trading platform. Its leading development of SERUM trading platform combines the classic order book with the AMM model and begins to build its own independent ecosystem through an efficient underlying trading architecture. It can be said that the ecological projects related to SERUM have basically monopolized the financial category of the Solana platform at present.

(2) Lending platform

Oxygen is a Solana-based prime broker service focused on providing leveraged trading services to investors through borrowing. Unlike common lending agreements on Ethereum, the same collateral can be used multiple times on Oxygen.

Other EVM compatible public chain

Fantom

FANTOM is a public chain developed by a Korean team. At present, the heat of the discussion is not high, and the users are few. Now in the ecosystem of the platform, there are several competitors in the trading field. Spookyswap is currently in the forefront in the amount of locked positions, but it only reaches the scale of $200 million. The user interface is similar to that of Uniswap, but you can see that the price limit function is now supported. It was followed by Sushiswap, the second largest in the world, with $65 million in lockups.

The lending platform on FANTOM is currently only Cream, with the current lockup capacity of 8 million US dollars. Cream itself is a Compound bifurcation project, initially deployed on Ethereum, and later gradually supported BSC and FTOM networks. Although the lockup volume of FANTOM platform is small at present, there is no more powerful competitor.

xDai

XDAI is a side chain of Ethereum and the most unique token economy system among all public chain platforms. It gave up the right to issue its own currency, instead using DAI, a cross-chain stablecoin from Ethereum, as its native token (much like Hong Kong's pegged exchange rate system).

DeBank already supports data browsing on XDAI. As you can see, on the trading track, Bao.Finance has the largest lockup volume, reaching $20 million, but the daily trading volume is still not high, only about $500,000. In addition to the trading function, the BaO.Finance agreement also combines the functions of synthetic assets. At present, there is only Agive in the lending field, but only the pledge function is opened at present, and the lending function has not been online yet. It can be seen that the whole ecology is in the early stage of development, and the number of users and trading volume are not active enough.

Avalanche

Avalanche is also a native EVM-compatible public chain. One of the larger decentralized trading platforms that has been deployed is Pangolin. Pangolin uses the same automated market making model as Uniswap to provide high volume, low cost trading of Avalanche and Ethereum assets.

Summary of competition mode of each track

1. Trading platform

Decentralized trading platforms have blossomed in Ethereum. During last year's SWAP war, various projects claimed to be able to solve Uniswap's problems of high slippage and variable losses. However, after nearly a year of development,In the current market, except Curve, which can maintain a certain market share in the stabletop trading field, the rest are basically left to Uniswap and its imitators after fierce competition.

It is for this reason that we see an extremely monotonous pattern of development in the later public chain ecosystem:Almost all of the transactional products fork the Uniswap V2 code and combine Sushiswap's token economic model and product strategy.

This collective "tribute", on the one hand, demonstrates the success of both in terms of transaction logic and token mechanism, and on the other hand, intensifies the competition between similar products. Uniswap itself can now gain further advantage over the competition with a more advanced infrastructure (version 3).Other emerging trading platforms can only gain market share through stronger operations, more aggressive token incentive models, and a more market-based product strategy.

Of course, there must be a special mention of Solana's unique ecology. Not only does Solana have no native support for EVM at the bottom of the public chain, but Serum, the main trading platform on Solana, is also quite unique. It not only redesigned the product logic from the bottom, bold integration of the order book trading mode. With a number of optimizations for professional traders, it has also met the needs of institutional investors that were previously ignored by the market. Regardless of whether SERUM is ultimately successful or not, its bold innovation will leave a valuable legacy for the industry as a whole.

2. Lending platform

It should be said that compared with the different market making models of the trading track, the lending platform is similar in the underlying business logic, almost all of which is based on the over-mortgage model. The only thing that shows some difference is the risk control strategies and token incentives of each platform.

The recent attack on Venus, the leading lender on the BSC platform, can be said to be a problem in the design of the risk control system. For users and investors, apart from the token incentive at the initial stage of the project, it may be the best way to protect their assets in the long run to choose the platform with more stable operation and more perfect risk control system.

3, the bottom public chain

The success of the project is bound to depend on the success of its bottom public chain. Therefore, the judgment of the bottom public chain has also become a problem that investors need to pay attention to.

Based on the current market conditions, it can be said that as long as the expansion problem of Ethereum is not solved for a day, the market will have a great motivation to find a new platform with lower fees and higher transaction volume. In the eco-type public chain that has achieved initial success at present, except Solana, almost all the players have chosen the technical path compatible with EVM.

EVM compatibility gives the new public chain a huge startup advantage, which can directly leverage many of the infrastructure that has already matured on Ethereum, such as the MetaMask wallet, Debank browser, etc. (thanks to the Debank team's active adapters, of course). At the same time, good projects in the Ethereum ecosystem can be deployed on other EVM-compliant public chains with only simple adaptations. The most typical example is Sushiswap, which has deployed its smart contracts on eight EVM-compatible public chains.

Naturally, EVM and its mainstream programming language, Solidity, have some inherent flaws. But if you want to start all over again, you really need to put more effort into infrastructure construction and ecological cold start. At present, except Solana, which has entered a virtuous circle to some extent with the strong promotion of the FTX team, the rest of the public chains have chosen to be compatible with EVM in various ways. Can say,The choice of EVM compatible public chain ecology, no matter for investors or project parties, is the current more prudent strategy.

Due to the limited space, this paper is difficult to carry out a comprehensive analysis of many other ecotypes of public chain. But that doesn't mean these chains don't have the potential to transcend existing platforms. We have noticed that many public chain projects, such as Near, Cosmos, Polkadot and Algorand, are currently actively promoting community and ecological construction. We expect to see more platform ecosystems mature in the near future, bringing more choices and investment opportunities to the average user. We are looking forward to the true advent of the multi-chain era.