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Confirmed to become listed on the wave of decentralized governance: Aave founder talks about DeFi challenges and economic model plans

In addition to liquidity mining and token pledge rewards, Aave founder Stani Kulechov also unmasked that the economic model "Aavenomics" and governance plan will enable LEND token holders to vote on smart contract changes, making the Aave protocol ecosystem completely decentralized. Extended reading: "Aave COO confirms the liquidity mining plan, and elaborates fearlessly to explore the details"

Original title: "Aave founder Stani Kulechov: DeFi's liquidity may be dispersed across different networks" Compiled by: Staking Rewards Translation: Porridge Overnight When speaking about DeFi liquidity, Stani Kulechov, founder and CEO of Aave, said that the existing market liquidity is targeted in Ethereum, which is very beneficial to Aave, but that he believes that liquidity may be dispersed in the foreseeable future. In a number of different networks, this involves their efforts to fully capture these fluidities. Additionally , that he also mentioned that even though Aave currently holds the management key, in the next month or two, they'll achieve decentralized governance, allowing LEND token holders to vote on smart contract changes.

SR: Are you able to briefly introduce yourself as well as your cryptocurrency business? Stani: I did so some coding work when I was a teenager, nonetheless it wasn't until I was studying law at the Academy of Helsinki that I must say i entered the cryptocurrency field. Ethereum really brought me in to this world. I do believe it's so cool. You'll have some immutable and traceable smart contracts. I have always been thinking about finance, and so i started to consider just how to apply it to the financial field. Particularly I do believe it could completely change lending. If you can lend money to the others without having to do background checks or trust them, this will make lending smoother and faster. I acquired deeper and deeper in to the Ethereum community and started to consider just how to put it to use to create a decentralized and trustless financial system. I first started with ETHLend, and then ETHLend evolved in to today's Aave. Both ETHLend and Aave have borrowed crucial aspects of the original financial system, that we think is very important, because old-fashioned finance has many cool components that have shown to be effective. Traditional finance, or "OldFi, " inspired some aspects of ETHLend and Aave, but then we tried to boost it and decentralize it. Why choose DeFi? SR: What do you consider could be the most prominent advantageous asset of decentralized finance (DeFi) weighed against old-fashioned finance? What is the trick weapon of DeFi? What exactly are you personally most thinking about? Stani: I do believe one of the primary features of DeFi over "OldFi" is that it generally does not require trust and transparency. Users can get a handle on the flow of their funds. They are able to do that without trusting anyone. Compared with old-fashioned finance, DeFi has a high rate of return, which is excessively attractive to conventional depositors. It is 2020 and money shouldn't be dormant. Once people realize that their money can perhaps work for them around the clock, there's absolutely no reason to deposit all your money in a conventional bank, where you have minimal interest. Additionally , DeFi doesn't require any trust, or disclosure of your identity, back ground, and so forth It creates the financial system far more convenient and fair for everyone, even those excluded from the original financial system. Additionally , for technical users, DeFi also provides more opportunities, such as lightning loans, that may never be performed in the original financial system. For me, it's really great to observe that the DeFi industry has fully gone up to now. Now there are so many projects that have contributed to the ecosystem, and new projects emerge each day predicated on previous ideas. I do believe this composability could be the secret weapon of DeFi, which could be the most exciting part for me personally. The DeFi community, plus the Ethereum community, have now been spending so much time to greatly help one another and grow together, which has produced some very good ideas, which are made on each other's foundation and contribute to new projects and innovations. The technical composability in DeFi is really more in regards to the human composability of town, which is why things happen faster in DeFi, and it's also problematic for you to keep up with everything that happens on the market. In the DeFi field, people always have the willingness to innovate, and the reason why OldFi lags behind is really because there are not too many people in this community who're constantly striving to boost. Challenges facing DeFi SR: In your opinion, what are the notable challenges that DeFi has to over come before it may be undoubtedly adopted? How does Aave solve these challenges? Stani: Before DeFi enters conventional applications, among the challenges it must over come is always to make DeFi more user-friendly. For most people, the thought of ​​DeFi is revolutionary. When I introduce the concept of DeFi to newcomers, they normally are astonished, specially just how much interest you can earn from deposits, because no normal bank permits you do. I do believe for most people, the definition of "blockchain" or "cryptocurrency" could be scary, so making sure an individual experience is as intuitive that you can could be the key. At Aave, we will help users integrate some tools. Argent is a good example since it is simple and simple to use, and it's also an easy task to access Aave along with other DeFi protocols directly from the wallet. For conventional adoption of DeFi, it is crucial to really have a platform like Argent, that may simplify the whole process and supply users with a seamless platform to explore DeFi options. We have been nearer to conventional adoption than many people think, and an individual experience is improving each day. The feedback from the Aave community can also be one of our most useful assets to over come these challenges. When people use DApps, we have been always spending so much time to boost an individual experience. We've been asking "how to produce it easier for end users to accomplish this", "is the process intuitive" and so on. We have been very fortunate to have this active and responsive community. Staking vs lending SR: How can you start to see the relationship between Staking and lending of PoS crypto assets in the foreseeable future? Maybe there is competition? Or will it be harmful? Stani: I do believe staking plays an essential role in security for blockchain networks. Some PoS encrypted assets could have functions made to protect the protocol itself. For instance , "Aavenomics" is a staking mechanism that allows the pledger to supply security to the liquidity provider of the Aave protocol. It is a key section of protocol scalability and attracting liquidity providers. I do not see various staking mechanisms competing with each other, but various ways of participating in the network, and each method has a unique risk and reward mechanism. For that reason the pledger can select the way they want. Risk SR of the Aave platform: How can you assess or quantify the risks active in the Aave platform? Such as for instance financial security. Stani: We simply take safety very seriously, and I must say i think safety should function as the top priority of DeFi. The composability of DeFi rocks !. If among the components is insecure, it will expose the ecosystem to new threats. For that reason measures to mitigate risks in DeFi are extremely crucial. For the Aave protocol, we have completed 2 security audits, one is through Open Zeppelin and the other is through Trail of Bits. You can find the results of the 2 audits on our internet site. We always desire to be transparent about risks and regularly issue security updates which will contain any new information. We also have an ongoing bug reward program. If anyone finds a bug in the code, we will reward you. Our risk management team has spent lots of time analyzing and evaluating the risks involved in using Aave. We have also released a risk framework. Before adding a fresh currency to the Aave agreement, we will conduct an extensive risk assessment. It may be within our risk framework. Is Aave centralized or decentralized? SR: Have you got the proper to utilize the private key of the smart contract? How can you store it? Maybe there is an urgent situation shutdown? What are the plans to produce smart contracts immutable? Stani: At this time we do have access to the private key. In the first launch phase, we want to ensure the security of the protocol in the event any issues arise. However , we will soon launch decentralized governance, and the ownership of the Aave protocol will undoubtedly be utilized in the governance smart contract. When the governance is deployed, LEND token holders will be able to vote on changes to the smart contract. DeFi composability SR: What do you consider about cooperation or integration with other DeFi agreements? Stani: The composability of DeFi is amongst the coolest areas of the ecosystem, and we work hard to ensure our partnership and integration always support this composability. We have seen the synergy of numerous projects in the DeFi field, and we believe that it is cool to create together between projects to boost an individual experience. Needless to say, we must measure the security issues of integration. Interoperability SR: You think blockchain interoperability is a meaningful development that could promote DeFi? Stani: I agree with this point of view. At the moment, the liquidity of DeFi is targeted in Ethereum, which is very beneficial to Aave. However , I really believe that the liquidity of DeFi in the foreseeable future may be dispersed among a number of different networks, which requires our efforts in order that we could capture these liquidity. Bitcoin and DeFiSR: What role do you consider Bitcoin will play in the DeFi field? Stand: Unlocking Bitcoin's liquidity in DeFi has huge potential. Conservative cryptocurrency holders usually hold Bitcoin, and in Bitcoin's own network, you certainly can do limited things. To be able to use Bitcoin in DeFi brings lots of liquidity to the field and promote the growth of DeFi. Eventually, Bitcoin may be used as a tool to enter DeFi. How exactly to evaluate collateral SR: How can you identify which assets are suitable as DeFi collateral? Stani: Before adding any assets to the Aave agreement, our risk management team will conduct an extensive risk assessment relative to the danger framework I mentioned previously. In the event that you read our risk framework, you'll find most of the currencies available in the Aave agreement and explain why they could be used as collateral. Currency that is only allowed for deposit and lending (not as collateral) is less risky to the agreement, so if assets can be used as collateral, they must meet stricter standards. Additionally , each currency added to the Aave agreement as collateral will increase the agreement's bankruptcy risk, since it implies that the agreement is more vunerable to market fluctuations. Additionally , the centralized currency accepted as collateral will expose the agreement to centralization risks (having a currency that uses single point of failure advances the threat of the Aave agreement). Basically, we will first go through the risks of smart contracts and give attention to the security of the code, and then we will study the counterparties in governance (to measure the governance of currency and managers). If these risks aren't excessive, we will study market risks., Including volatility risk and liquidity risk. They are the primary things that we must consider before adding new collateral.

Future plans SR: Are you able to share Aave's roadmap for the following year? Will there be any such thing we could are expectant of? Stani: We just released the second currency market of the Aave agreement-the Uniswap market! It is a big step we have taken and the second market in our multi-market strategy (the OG Aave market we released in January was the first). The Uniswap market allows Uniswap liquidity providers to borrow through Aave and Uniswap to be used for DeFi loans, thereby increasing the demand for stablecoins. The Aave protocol can be the protocol for creating the currency market. Soon we will introduce the Set market and so on. This is all I do want to say now. Ultimately, it is possible to create your own currency market! Additionally , in the next month or two, we will publish our token economics or "Aavenomics" and our governance. LEND token holders will be able to vote on smart contract changes, thereby enabling the Aave protocol ecosystem Completely decentralized. Another interesting section of Aavenomics is that it could put LEND in the security module to supply a safety net for liquidity providers to resist various protocol risks. Similarly, we will have plans to incentivize liquidity providers.

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Analyze DeFi economic incentives and risks: stablecoins, governance and DEX, etc .

Think about the risk structure behind the rise of DeFi, stablecoins, lending agreements, decentralized exchanges and other fields. Original title: "5 Big Risks DeFi Got to know! 》 Published by: Ariah Klages-Mundt Translation: Jing Kai More individuals began to pay attention to the main topics DeFi governance. The memory of "Black Thursday" throughout the collapse of the crypto market in March in 2010 in addition has intensified people's concerns about DeFi. Folks are focused on the lack of understanding of the chance structure of DeFi. In this article, we're mainly centered on the stable currency field, but similar thinking could be applied to many broader fields of encrypted economic systems, including cross-chain protocols, home loans, and decentralized exchanges (DEX). We think that in certain DeFi systems fashioned with extensive governance power with no social recourse, the participation of rational subjects could be zero. It is because the price of adjusting incentives in these systems could be prohibitively high (this is similar to requiring banks to have a long-term P/E ratio of just one, 000 to ensure depositors' funds are not stolen). Our framework provides a solution to model these systems and generates some unanswered research questions which will be the main element to the development of DeFi. Certainly one of Compound's recent hot news in the DeFi field is the issuance of Compound's COMP token, which has develop into a leveraged risk circus. Driven by the reward mechanism, users have played a crazy game of leverage. As you can plainly see on the Ethereum network, all this is going on. Traders conduct COMP liquidity mining (Yield Farming) by maintaining complex multiple positions: for example , depositing ETH and USDC, lending a lot of BAT tokens; then, re-depositing BAT to a new Compound account to borrow ZRX tokens out, then deposit ZRX to the previous account, lend more BAT tokens, etc . (Translator's Note: Yield Farming, which means that token holders deposit funds on the platform, provide liquidity for the platform, and acquire the token incentives supplied by the platform, that is mining for liquidity) May very well not have looked at this type of operation before, but do not think about any of it due to this article: God operation, I will try it too! We have been obliged to emphasize that type of operation accumulates the risks of layers of leverage, especially in low-liquid markets such as for example BAT and ZRX. The risks involved are worthy of your personal analysis and analysis. Look at the multiple liquidations on Black Thursday! This low-liquid market is simple to govern and an easy task to attack. The others can use this to trigger the liquidation process and benefit from your losses.

Using high-risk assets for "Yield farming" is very dangerous and an easy task to hang. Don't add user funds to BAT liquidity mining with high leverage. Everybody, have a snack! If its goal is always to increase audience coverage, then a release of COMP is without a doubt successful. What's more obvious is that Compound has temporarily increased liquidity gains and solved the problem of "the chicken or the egg" when using the platform. Ironically, it sets up a platform for large-scale stress testing. In several reports, few people talked about Compond's initial goal: to foster "an increasingly large ecosystem [... ] could have the motivation to control the ongoing future of the agreement with good governance. " The distribution of COMP tokens is actually to achieve a wider distribution of governance rights among platform users, to ensure that users can manage their particular security. How to design a motivation mechanism to align the interests of participants is really a broader issue in the whole encrypted economy system. Using stablecoins as the background of analysis, we've created a framework to quantify the incentive problem. This framework could be widely applied to encrypted economic systems. We put forward a simple question of incentive security in the device: [Incentive security] After thinking about the attack situation, can all parties continue steadily to participate, can they nevertheless be mutually beneficial? If not, then a system won't work as the equilibrium participation is zero. Like if the incentive mechanism makes the attack profitable, then rational participants will price this risk when determining their education of participation. Only after answering this question can we comprehend the question of economic stability. [Economic stability] Can the incentive measures in the device produce stable results? May be the incentive mechanism sustainable? From the perspective of the model we've constructed, as the scale of the device expands, just how to provide continuous security incentives to combat governance attacks? This question is important. If the return on the attack is greater than the price of the attack, then it really is profitable to govern the attack. The reward is proportional to the worthiness of the assets locked in the device (AUM): if the governance power is strong, the collateral could be directly stolen (and the related liquidity pool on the DEX is cleared); even though the governance power is not so strong, the collateral assets can nevertheless be stolen indirectly, By manipulating parameters and preventing users from exiting, it may succeed even though there's a time delay in governance. The price of the attacker includes the worthiness of the governance token. For the "honest" governor, the fundamental value of the governance token value arises from the provision of future governance fees and institutional responsibilities (such as legal recourse). Stablecoins, synthetic assets and cross-chain assets For noncustodial stablecoins (as well as synthetic assets that use similar mechanisms and cross-chain assets of BTC), the worthiness of security governance has to exceed the worthiness of locked assets, which is a certain multiple of the latter Numerical value. When contemplating the long-term equilibrium with moderate growth expectations as time goes on, the problem of scale is going to be reflected. In cases like this, today's value of future expenses (even the unrealistically high proportion of AUM, that's, the worthiness of the assets locked in the system) can't Reach the level of AUM multiples. In cases like this, the security of the decentralized governance system depends on the device participants holding governance tokens holding numerous governance tokens in order to enhance its market value. This may feed back into the incentives of those other parties to participate, and there's absolutely no guarantee for the existence of balanced participation. Like in order to ensure their stable positions, stablecoin holders might need to hold numerous risk management assets, that might violate their intent behind holding stablecoins. This led us to an informal conjecture (and also an important direction for future research! ). [Conjecture] In several DeFi systems fashioned with extensive governance rights with no social recourse, the participation of rational people could be zero in equilibrium. The point is that the price of adjusting incentives for participants in these systems could be prohibitively high. Let's just take the bank's situation as an analogy: in case a secure incentive mechanism is implemented, the bank's currency markets value must certanly be a multiple of the total deposits, so it is maybe not worthwhile for depositors to participate. Put simply, the bank's long-term P/E ratio has to reach about 1000 (and supported by depositors) to ensure the bank does not steal depositors' funds. The clear answer currently implemented is simply centralized governance. This solution relies on a form of institutional responsibility, which is often described in our model. This example does not fundamentally cause problems. In fact , many conventional financial systems operate this way. This is the reason the worthiness of the bank doesn't need to be repeatedly the total deposit. Nevertheless , we have to publicly acknowledge that type of trust could be essential. Solving these problems in a totally decentralized manner continues to be a challenge to be solved. Decentralized exchange (DEX) incentive models will also be meaningful for some DEX. Like in case a DEX runs its own independent blockchain (this chain is jointly controlled by the DEX governor), when an attack does occur, the governor can restrict users who provide liquidity to the platform, making them struggling to withdraw, even in governance This is especially valid if you have an occasion delay. In DEX, fee accrual ("honest" governance profit) is proportional to a percentage of the total transaction volume over some time, which may be many times the instantaneous AUM value of the exchange, and the safety of incentives continues to be associated with AUM. For Uniswap, the annualized transaction volume could be about 100 times the deposit. In comparison, the accrual fees generated by the stablecoin system could be about 1/4 of the deposit supply. Weighed against stablecoins, the governance accrued fees of DEX could be much smaller, but this factor around 400 times makes the feasible area of ​​incentive security for governance attacks in DEX could be larger. This leads us to the following informal conjectures to compare the feasibility of different types of DeFi applications. [Conjecture] Weighed against stablecoins, DEX is easier in order to avoid governance attacks from an economic perspective. Considering these possibilities, when designing DeFi services and products, the research of common incentive mechanisms is a lot more essential. With your preliminary discussions on loan agreements, let us return to home loan agreements, such as for example Compound. These have the same structure to noncustodial stablecoins. Nevertheless , they truly are slightly simpler because borrowed assets are largely exogenous. As a result of this exogeneity, participants could be more likely to exit the device ahead of the governance attack is successful (that is, throughout the governance time delay). Like consider that the borrowed asset is USDC; in cases like this, the vault can deleverage and exit whenever you want through the issuer creating new stablecoins at face value (specifically, once they wish to withdraw, they don't depend on Dai holders to sell Dai back again to them). Essentially, governance delay in this environment is really a more powerful preventive tool, but if it involves an elaborate price feed mechanism and/or an attack where miners can extract value, there could be exceptions. This means that some small market capitalization assets in Compound can start to deviate from the exogenous situation. The BAT and ZRX markets are basically overutilized because they are currently conducive to liquid mining. Like the use rate of BAT is currently 91%, the nominal value of BAT deposited at present is 234 million, and the total market value of BAT is 377 million (although this section of BAT could have a certain net value because it arises from multiple borrowings, and then BAT is deposited repeatedly). Because of the structure, the large-scale liquidation of BAT could have a deleveraging effect just like that of a well balanced currency, that will be discussed further below. Data from Compound on June 23, 2020 One question remains: In the long run, does the distribution means of COMP tokens help motivate users to align their interests? Put simply, did it reduce user costs when resisting governance attacks? At first, this looks promising. Users get governance shares through participation, so they really need not consciously raise the governance market value in order to protect the security of the system-they just won't need to sell the COMP shares they get. But once users receive shares, which become section of their investment portfolio, they are going to choose whether to maintain this risky position. Although the distribution of COMP has undoubtedly attracted many new users to the Compound platform, it really is still as yet not known perhaps the distribution mechanism of COMP (or every other distribution mechanism) will help the device achieve a far more stable governance balance. Stablecoin: Design, Model and Risk Below we start from several typical forms of stablecoin and describe the risks and trade-off dimensions of different functional components. The big difference between custodial stablecoins and noncustodial stablecoins is obvious. The former relies on some sort of trust in an authorized, as the intent behind the latter is always to de-trust. The figure summarizes and analyzes the stablecoin design based on some of the most essential risk dimensions Custodian stablecoins In terms of custodial stablecoins, you can find three different types of stablecoins. They all are anchored through the task of arbitrageurs, who is able to create/redeem stablecoins for the topic matter. The reserve fund of stablecoins maintains a reserve ratio of 100%, just as the ETF of USD on the blockchain. These include TUSD, USDC, and later iterations of Libra. The second type, including Tether, resembles a bank or money market fund, with a partial reserve mechanism. This type of stable currency faces the chance of de-anchorage just like bank operations. In October 2018, this case occurred in the Tether stablecoin (USDT). When its partner exchange Bitfinex suspended the USDT exchange for legal currency, the crisis of Tether followed. As funds flowed from Tether to assets with less credit risk, the currency's anchor to the U. S. dollar was broken and arbitrage occurred. The writer was struggling to re-anchor Tether to the united states dollar. We've noticed that in contrast to conventional banks, these "banks" like Tether could be less regulated and audited, and may not need government guarantees and can't handle bank runs. In October 2018, Tether was off anchor from the U. S. dollar The third kind of stable currency is directly issued by the central bank. Currently, the central bank only provides reserve deposits to commercial banks, as the CBDC's goal is always to provide consumer-oriented deposits, possibly in the form of tokens. These custodial stablecoins face risks just like those of conventional financial systems. These risks mainly originate from counterparty risks, such as the danger of custodians breaching their contract to fulfill their linked value obligations. A related risk is the review risk, that's, the custodian selectively chooses which claims to honor. The characteristic of noncustodial stablecoins is that it no further depends on specific custodians like custodial stablecoins. What replaces these social institutions is the economic structure, which establishes an economic climate between participants through smart contracts. noncustodial stablecoins are similar in structure to dynamic versions of risk transfer tools, such as for example collateralized debt certificates (CDO). CDO is supported by way of a pool of mortgage assets and divided into different credit tranches. When there is a loss, the low-level credit tiers absorb losing first, and after every one of the low-level credit tiers are paid off, the high-level credit tiers absorb losing. Within our research paper, we provide a broad idea that can decompose the look of all noncustodial stablecoins to the following functional components. The following figure draws the look of several stablecoins and describes how they truly are associated with one another in the form of some components.

* Main value objects. The economic structure of the stablecoin value basis mainly arises from market expectations under a certain system. Divided in to three types.

* Exogenous collateral: As well as the stable currency system, collateral has other uses, such as for example ETH in Maker. * Endogenous collateral: The goal of creating collateral is always to serve as the subject of collateral for stablecoins. * Implicit collateral: In cases like this, rather than using explicit collateral, market mechanisms are accustomed to dynamically adjust supply to stabilize prices. This really is just like endogenous collateral, but you can find essential differences in the obligation to absorb losses. * Risk absorbers: At a certain level, some speculators will absorb financial risks and seek profits (similar to the primary division of CDO). This is often the participation of individual entities with collateral, or it's really a separate similar equity position in the network, or the role of participants acting as miners (or verifiers) in the network. * Stablecoin holders: the main human body that constitutes the demand side of the stablecoin market (similar to the holders of the higher level credit tranches of CDO) * Issuance: The niche or algorithm that determines the issuance of stablecoins. It can be determined by multiple individuals in the device, or it may sort out algorithms. * Governance: The main human body or algorithm that manages the protocol parameters, similar to the stock position when managing CDO. * Data provider: Import the information of external assets in to some functions of the blockchain. * Miners: determine the individuals who verify and package transaction operations in the fundamental blockchain layer. The style of different noncustodial stablecoins shows how several components are interconnected. This sort of noncustodial stablecoin brings new risks, so existing financial models cannot be used "out of the box". Here we discuss three forms of new risks. The danger of deleveraging first is the danger of a unpredictable manner of deleveraging, that's, the debt level of maintaining stable currencies decreases too fast, that leads to the break of the anchor. This risk is substantial. Like in the 36 hours from March 12 to 13, 2020 ("Black Thursday"), industry turmoil associated with the coronavirus caused the crypto market to get rid of 50% of its market value. On the ETH network, this leads to network congestion and high gas handling fees, which often decelerates the transaction speed and leads to transaction failures. This caused serious problems for Maker's Dai. Vaults are trying to deleverage since they can't increase collateral or repay their Dai debts. The Keeper either can't quickly obtain Dai's liquidity or can't take part in all debt auctions. Some individuals even started bidding for ETH at a cost near 0 DAI, and almost got about 8 million US dollars in ETH for free. When Black Thursday does occur in March, the affect the price of Maker Dai Source: OnChainFx We've summarized several noteworthy noncustodial stablecoin de-leveraging events, as shown in the dining table. For the designers of stablecoin projects, these events are worthy as case studies.

The danger of oracle failure. Secondly, the oracle service that provides data from the surface to the blockchain may also fail. This can be a major accident, or it might be the result of an attack. Exactly the same risk includes a significant impact and contains occurred several times-we have summarized the notable events in the dining table below. Like in June 2019, FX's price feed error caused the KRW (South Korean Won) price on Synthetix to sky-rocket. At 3 am Sydney time, one of the price feed APIs began to fail intermittently, leading to the purchase price to be had that was 1000 times higher than the current exchange rate of the Korean won. Even though there's a defense mechanism to abandon the outliers, some unfortunate and coincidental results, in the particular calculation, the oracle machine still used the greatly increased expense. As a result, several transactions made a profit of just one, 000 times, causing a profit of more than $1 billion in less than an hour or so. A few incidents of invalidation Governance attacks and miner attacks We've already discussed protocol governance attacks above. In addition , miners also can participate, which is often understood as the second governance method, because miners can decide whether transactions are packaged in to blocks and determine the order of transactions. Smart contract risk As the stable currency adopts algorithmic execution method, without the specific agency supervision, errors in its specification or implementation could have a significant impact. From a modeling perspective, smart contract risk resembles counterparty risk (in this case, it identifies the chance of bugs in execution). The figure below shows what are the results when this type of bug is maliciously exploited. As a result of re-entrancy bug, the locked assets in the lending agreement dForce were stolen and changed from $25 million to $19, 000 within a few hours.

Establishing a risk-based economic foundation We've proposed some models that can be used as the basis for risk analysis of those risks. A assortment of models we propose draws on the main city structure model. Taking inspiration from the models developed in the context of initial public offerings (IPOs), we adjusted these models to capture incentives for governance token holders, stablecoin holders, and risk absorbers. The second kind of model is the bifurcation model. The main city structure model only considers an individual time step: Based on the expectations of agents, they are going to choose to perform certain actions within the next round. The bifurcation model is an extension of multi-round proxy decision-making. The third kind of model is the price dynamic model, which simulates the interaction of different individuals in a structure similar to the CDO, combined with feedback effect in the stablecoin system.

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OKLink Jiang Zilong: The thinking that DeFi brings to the marketplace is that while supporting technology, there is certainly an urgent need to set regulatory standards

On July 5th, the "2020 Hangzhou Blockchain International Week" organized by Hangzhou Future Science and Technology City Management Committee and Babbitt occured in Hangzhou underneath the guidance of the Yuhang District Government of Hangzhou City. Jiang Zilong, Business Leader of OKLink, OKLink, attended and shared.

OKLink Business Leader Jiang Zilong attended the ``2020 Hangzhou Blockchain International Week'' He described at the meeting that following the Bitcoin block reward is halved, institutional capital will enter the marketplace to be involved in mining. Lending options associated with mining will gradually be enriched. Opportunities for professionals and retail investors coexist, however the threshold of the mining circle will gradually increase. Both markets could become more divergent. He said: “By observing the on-chain data given by OKLink, we unearthed that following the Bitcoin block reward was halved, the last dynamic balance was broken. At this time, the pricing of Bitcoin is closely associated with the trading market and the mining circle. After this balance is broken For the short term, the marketplace could be more silent. I personally believe professionals and retail investors may have opportunities, however the two markets will become more differentiated. Conventional mining is gradually shifting to an asset-heavy and high-threshold industry, shifting from extensive growth to Professional and refined competition. " Bitcoin completed the third block reward halving in the first morning of May possibly 12, and the block reward was changed from 12. five Bitcoin to six. 25 Bitcoin. After the Bitcoin block reward is halved, the income of retail "miners" will soon be reduced by half, however the cost will stay unchanged, that'll threaten their competitiveness. At the moment, they could be in a position to use computing power-related wealth management products to aid profit, however the profit continues to be At a disadvantage; alternatively, increasingly more institutions, including exchanges along with other institutions, have begun to enter the mining circle, launching and using mining-related financial loans, including mortgage lending, cloud computing power, and so on to lessen risks and increase competition force. It's worth noting that following the "3. 12" incident (at six pm on March 12, 2020, Bitcoin fell rapidly from almost 8, 000 US dollars to six, 000 US dollars, and the price continued to fall, oscillating around 4, 000 US dollars). Mining-related financial loans have sprung up like mushrooms after a rain, and many institutions desire to lock in profits and acquire benefits through financial transactions, especially the "cloud computing power" that's standing in the air. About the cloud computing power projects currently in the marketplace which have been overly hyped, Jiang Zilong believes that the cloud computing power market continues to be in the first stages of development. Investors must not indiscriminately follow the idea of "cloud computing power" and keep their eyes open. (Cloud computing power: The mining farm packs and sells machine computing power, labor costs, and electricity invoices to users, and settles the mined coins to users. ) He said: "If you're a trading speculator, it is possible to consider subscribing to relevant Tokens to be involved in the case of good early psychological expectations. But in the event that you explore the mining link, especially IPFS mining (a point-to-point (P2P) distribution) Type file storage protocol) is being hyped on the market, that has promoted the high premium of mining machines and computing power. At the stage once the revenue continues to be unclear and the computing power premium is high, it is not suited to miners to enter the game rashly. I would recommend that we have to do research. Or take into account the future of distributed cloud storage. " Jiang Zilong mentioned that the on-chain mortgage products at this stage can meet the needs of users, and users in the mining circle may use on-chain mortgage products to ease the pressure on income and reduce their particular investment risks. Nevertheless when using on-chain mortgage products, users have to be careful not to indiscriminately boost the utilization rate of funds. He explained: "Currently, the on-chain mortgage products can meet the needs of users. For users in the mining circle, they have to ensure short-term income after mortgage, and you don't have to extremely increase capital utilization. For traders In other words, the digital asset field is inherently highly leveraged, and its trading strategy is the core of the problem. Consequently , the high volatility of short-term digital assets means that the use of funds cannot be indiscriminately increased. "

OKLink Business Leader Jiang Zilong attended the ``2020 Hangzhou Blockchain International Week'' At precisely the same time, users need to always focus on relevant chain data to create timely judgments in the marketplace. As a blockchain data provider, OKLink mainly provides two types of support for the cryptocurrency market. One is tech support team. In the first stage, the OKLink blockchain browser has provided users with almost 40 million address tags for free. Users will not only always check the data on the multi-currency chain on the OKLink blockchain browser, but also always check the dynamics of large transactions in line with the on-chain data given by OKLink. The second reason is product support. At the moment, OKLink has launched corresponding services to ensure that users can maintain stable value all through mining transactions. Whether it is cloud computing at the forefront or the booming DeFi, Jiang Zilong believes that while encouraging technology, regulatory standards are urgently needed. He said: "The biggest thinking that DeFi brings to the marketplace is not only the respect for rules, but also the proper attention to procedures. While encouraging technology and development, it is necessary to set up regulatory red lines. For users, they must maybe not touch Touch the red distinct money laundering using financial loans associated with legal currency. "

[glowingobsidian]

About the recent hot and unusual DEFI's side-to-side battle

This year's currency circle serves as a packed with thrills and excitement. First, Bitcoin broke ten thousand dollars at the start of the year, which attracted countless visitors to wave the flag and shout, as though one hundred thousand dollars were before them. Then in March, once the global assets collapsed, the currency circle also staged A "Desperate Diving" directly caused many people to "leave the currency circle completely"; then it began to have good and the bad, plus some projects also fought straight back. After months of tossing, it developed to the current currency circle. Kind of situation. Today, the currency circle is calm on the surface, in fact it has already been undercurrents. Some main-stream coins have quietly given up positions, plus some projects have grown to be the focus of much attention.

There is absolutely no doubt that the absolute most eye-catching items in those two months are the DEFI projects. Maybe you can still find people who don't understand DEFI. All things considered, in the currency circle, irrespective of how fast you are, there are several slower than you. Lots of people just pay attention to a name and know it but do not know why. Moreover, I will explain demonstrably to every one in the vernacular, after which discuss comprehensive, some of the current status of DEFI, and what the future of DEFI might appear to be. 1 . Talk about DEFI in an easy-to-understand way Routine, first may be the literal interpretation of the name: DE is Decentralized, FI is Finance, together it is the abbreviation of DEFI (Decentralized Finance), needless to say, it's also called Open Finance.

DEFI actually identifies a decentralized protocol used to create an open economic climate, which aims allowing anyone in the world to conduct financial activities any time, anywhere. Wait one minute, it would appear that this explanation is too large, can you say something which every one can understand? can. DEFI would be to directly replace individuals with code automation in financial activities by way of a one-stop operation, not forgetting the efficiency improvement, but also directly eliminates the "sickness" of human operation.

DEFI applications include decentralized exchanges, derivatives, payments, digital assets, as well as other types. However , Belden might be a logic. The core would be to replace the role of people in financial activities with smart contract codes. Decentralized exchanges are DEX, payment may be the Lightning Network, and digital assets are like some DEFI. Stable coins... Derivatives really are a bit special, and I will explain them later. 2. The recent madness of DEFI The thought of DEFI was actually proposed since 2018, however when it certainly shined, it had been recently. Why? Due to skyrocketing! In the past, the absolute most famous DEFI project was the stablecoin project like MAKERDAO, as well as other projects were ostensibly dormant. However , recently this token about the concept of DEFI has been constantly rising and rising! It looks like there is no ceiling. The first to ever bear the brunt may be the foreign super-hot project compound. Its token comp used to increase tenfold in one single day. Within a fortnight following its launch on June 16, the first price of 0. 08 ETH (approximately US$18. 5) Completely forward, the best rise to 381. 89 US dollars, the best increase is close to 20 times.

Moreover, because of the crazy rise as well as other facets, compound successfully realized the login to coinbase, because coinbase's currency selection and listing will always be very strict, meaning that DEFI has completely established the image of "tall" abroad. This has triggered a spiral increase in users. Until recently, the amount of compound locked (in fact, the mortgaged assets) has reached significantly more than 700 million US dollars.

Still another representative token of DEFI, LEND, has also increased by nearly 30 times from the bottom of the year for this, that has caused a lot of tickling insiders...

Along with COMP and LEND, the decentralized DEFI project's tokens BNT, KNC, LINK, LRC, REP, REN, and so forth have all increased by significantly more than BTC and ETH this year. The information are the following:

A great many other DEFI projects will also be surging, such as for example SNX, IDEX, DMG, and so forth, which may have also caused a lot of enthusiasm in the currency circle. Based on the ranking of DEFI projects by. defipulse, it could be seen that the DEFI projects of decentralized lending take into account 1 / 2 of the most effective ten, and the residual decentralized exchanges, payments, assets, and so forth also occupy a location.

For some time, individuals from all walks of life were excited about DEFI, and began to search for DEFI projects every-where, wanting to just take the opportunity to produce a fortune. Recently, a trading platform Hufu (HOO. com) just stepped on the wind, and the united states directly launched the comp for the first time, and gained the popularity of DEFI. It has gained a lot of traffic, after which it is continuously increasing. There are many DEFI projects, and it may be considered extremely popular for a while. Its founder reviewed the current situation and create a DeFi special development fund, which is used to guide the stable development of blockchain decentralized finance, and it may be regarded as a relatively beneficial contribution to DEFI. Some friends may not know Hufu. In fact , this exchange can be an old brand. It started as a wallet after which transformed in to an exchange. The volume of spot transactions and the amount of spot transactions far exceed those of second-line trading platforms; platform lending and custody The business is promoting smoothly. The existing loan amount 's almost 100 million U. S. dollars, and the monthly turnover of custodial merchants has exceeded 20, 000 BTC. I've tried many innovative products before to attract traffic, like the auction of algo and IEO of nervos, and so forth This time the particular capture of DEFI seems unintentional. In fact , one minute on stage, 10 years of work off stage, the project is condensed behind it. Follow the team's efforts. Additionally , Hufu's boss Wang Ruixi is also a particularly interesting person. The stranger has some personal relationships with him. He also wrote articles about him "The Past of the Tiger”. Hahaha, I will perhaps not expand it anymore, otherwise I am afraid someone will run. To the contrary, I thought it had been a hard job for the tiger talisman.

Although the domestic exchanges were a bit slower, each of them swept up immediately. In accordance with CoinMarketCap data, the Comp token is currently on line on significantly more than 40 centralized exchanges in China. Among them, some trading platforms have also launched Comp contract trading, allowing users to go short; the derivatives exchange FTX has brought a step further, in addition to the COMP contract, the DeFi index quarterly contract, perpetual contract and leveraged tokens are simultaneously launched, allowing users to The whole DeFi field is short. And some perhaps not especially well-known projects, such as for example Tron-based synthetic asset platform OKS, have now been successively grabbed by a few exchanges. This situation is really surprising. Other DEFI-related projects have now been queued up on the schedules of some exchanges, and when the time is right, they are going to roar to the market. What's a lot more funny is that some projects such as for example Dforce. Even though their token DF has been launched on many exchanges, their team actually did not intervene. Anyone in charge reluctantly claimed: “Most of these went directly without contact, some ahead of time. Say hello (listed currency). " This sort of "strong upper" is apparently an unspoken rule in the crypto market, plus some exchanges use "help you to advertise" being an excuse for prevarication. All in all, throughout June, the currency circle was ostensibly immersed in the warmth brought by some DEFI projects, and also the broader market was affected to a certain degree. It really is no exaggeration to say that days gone by June can nearly be called "DEFI Month. " And DEFI established fact to every one in the currency circle, and after it has changed into a spot for hype, the test of DEFI has just begun. 3. Problems faced by DEFI You said that DEFI is really hot, is it roaring or perhaps not? Now needless to say it is roaring! All things considered, the current currency circle is really difficult, and any direction that can bring heat to the currency circle is precious.

I must say that it's a bit enchanting that DEFI is blowing in a gust of wind. Even though every thing is correct, all things considered, in the currency circle, every thing is good so long as it rises, but DEFI still has some inherent problems. If these problems can't If resolved, development may belong to chaos.

To start with, DEFI is usually to be built in line with the prosperity of the currency circle. Even though it emphasizes that it's "decentralized finance", decentralization is only an application, and the core vocabulary is finance. Since the saying goes, "If there is no skin, Mao will soon be attached. "? When the currency circle is not actually undergoing an essential bull market, the prosperity of DEFI actually ensures that the currency circle is currently in serious involution... how will you say? This means that DEFI's current rise actually has its limits. When the limit is estimated, whoever is left will be able to be satisfied with peace. This sort of thing can just only be achieved beautifully by big capital; Secondly, DEFI it self is not perfect, which will be associated with the innate attributes of smart contracts. The larger the complexity of something, the larger the likelihood of problems. If something goes wrong with some DEFI projects, it isn't a trivial problem. Consider N money, as the code bugs are locked up and cannot be removed. It's so sour... ahem, besides, there is a invest the currency circle. The milk may be the mother. How many hackers are staring at the smart contract, every single day they've been gearing around make some make money from it. The decentralized DEFI system Uniswap, LENDF and CODEX have had serious problems... As for the specific details, I will write articles later. Again, in short, it is actually risky to deposit profit the DEFI system... Once more, once the forest grows up, you will find all kinds of birds. DEFI's limelight will immediately generate a lot of followers. If you want to hurry up on hot projects, copy codes, and participate in fraud, all things considered, the currency circle, unless you hurry up I am afraid I can not even eat the hot shit when I start. The ecology of DEFI might be confused. However , this is a stubborn disease inherent in the currency circle, and it will not just eventually DEFI. Any hot currency circle looks like this. They are also some of the derivatives of DEFI stated earlier, which are now "alternative capital disks". This sort of DEFI is really embarrassing. Participants should needless to say try not to lose their assets in vain due to these rat shit. Finally, the threshold of DEFI has to be further lowered. In these days, many people participating in DEFI are only residing at the idea of buying on the trading platform. The actual participants in DEFI are now some senior capital veterans and wool parties. They eat both of the earnings of DEFI, and earn interest and currency profits. They're stupefyingly stable, and there's some residue left. Fans let retail investors take over. DEFI has yet to further simplify the complexity, to ensure that ordinary people can participate more easily, otherwise, they are going to always be smashed, even the strong sheep won't be able to hold it. I wrote a lot of DEFI's faults in a scattered way. Isn't there many people who suddenly felt fear? Can there be the next for DEFI? Don't worry, let us look down. Fourth, the future of DEFI In fact , the view of DEFI varies from person to person. All things considered, your honey, your arsenic, any new thing is developed with controversy. And in the currency circle, I am perhaps not afraid of controversy at all. The more intense the argument, the better. I am perhaps not afraid to getting people's heads in to dog's heads. I am afraid of obscurity... As for some of the problems stated earlier, they've been inevitable pains in growth.

Everyone else should grasp one thing, that's, so long as the currency circle continues to produce, the future of DEFI will become increasingly more space. The development of the currency circle is truly a means of continuous siphoning of the real economy, and DEFI is really a method to optimize and re-allocate the assets that enter the currency circle after the siphon is completed. As for if to buy tokens with the idea of DEFI will become rich, it is a topic where the benevolent sees the benevolent and the wise sees the wisdom. All things considered, the currency people care about if the tokens will rise. If the hero is simply on the basis of the rise, that is certainly Very incorrect. The popularity of DEFI will surely perhaps not continue to be so high. All things considered, this wave of DEFI's popularity is drawn from abroad. The loan of comp, namely mining, makes many foreigners feel fresh, however when it is put in China, the old leeks are typical This behavior has been bombed by mining, therefore the attitude must be a lot more plain, smiled slightly, never smoked, but satirized the foreigner who had never seen the world. In my opinion that with the passing of time, foreigners can also remember it.

The next step is to check forward to if the bull market is coming. If there is an outstanding bull market in the future, DEFI is still invaluable. Whether it's decentralized lending or decentralized exchanges and DEFI-based stablecoins, it might be in the currency Min hand is available in handy. If it certainly becomes a booster for the bull market, this gameplay of DEFI is really incalculable. If you want to study or ambush DEFI tokens, you could as well head to Hoo. com. So , the question is, when will the bull market in the currency circle come? Waiting on line, really anxious...

[glowingobsidian]

A straightforward comprehension of Opyn: providing social scalability for DeFi

In the early days of DeFi, it was like a western gold rush expedition, filled with opportunities and risks. The largest risk may be the hacking risk of smart contracts, that might result in the loss of all user assets; there is also the black swan risk of mortgage assets (such as ETH), that'll cause heavy losses to users. Even though DeFi can bring good benefits, these potential risks also make DeFi controversial. DeFi has to explore social scalability In the last articles, Blue Fox Note focused more on the scalability of technology. As a result of consensus requirements of the blockchain itself, its throughput and speed are naturally limited, but this short article focuses more on social scalability Sex. If we solve the technical scalability problem, such as for example through layer 2 and sharding solutions, are users willing to use it? DeFi must also solve security as well as other issues. Clearly, the multiple risk events that occurred in DeFi before experienced an adverse affect the social scalability of DeFi. Therefore is there any way to fix these issues? Probably one of the most crucial may be the insurance mechanism, which can give people playing DeFi satisfaction. At exactly the same time, this insurance is best to  generally meet the trustless traits of the encryption community and decrease the friction cost of artificial negotiation. Like there is no need to define the character of the danger (is it liquidity risk or hacker risk, and so forth ). Only simple and trust-free can bring a smoother experience to DeFi and supply social scalability for DeFi. Blue Fox Note today introduced Opyn, which will be an agreement to fix the above issues, trying to bring risk hedging to the DeFi field. Therefore what exactly is Opyn? To put it more obscurely, it's a convexity agreement. Putting it simple, it is an option agreement that does not require escrow and an insurance agreement that does not need a license. There are three main entities on Opyn, one may be the seller of options, one other may be the buyer of options, and one other may be the arbitrageur of options. Different entities have different purposes and together form an option market, and the synthesis of this option market will help DeFi users protect the worth of the assets. Opyn is growing rapidly Opyn: Provide insurance services for DeFi users DeFi's insurance service is significantly diffent from that of Nexus Mutual. Nexus Mutual is a mutual insurance platform predicated on Ethereum. Opyn mainly provides insurance services to users through put options. There are currently two main categories: one is ETH's protective put options, and one other is insurance for Compound storage of funds (USDC and DAI). Opyn's ETH protective puts and Compound storage asset insurance The protective put option of ETH is the same as insurance contrary to the price of ETH. As shown in the figure above, at the time of the writing of Blue Fox's notes, there are four protective put options on ETH on Opyn. Like the deadline for exercise is 16: 00 GMT+8 on June 19, 2020, and an ETH put option with an exercise price of 240USDC features a protective price of 8. 3896 U. S. dollars for 1 ETH during writing Blue Fox Notes, which will be relatively costly. The initial reason was that it took quite a while. It absolutely was fourteen days ahead of the right to be exercised. Second, the transaction price was very close to the spot price. The price of options which are close to the expiration time and a long way away from the transaction price is relatively cheaper. As shown in the figure below, in under an hour or so, while the price of ETH rose slightly, the possibility oETH dropped slightly.

If the possibility buyer Xiaolan buys the above put option of 1ETH, then, ahead of the expiration of 16: 00 Beijing time on June 19, 2020, if the price tag on 1ETH drops to $210 and the consumer exercises the best, then your oETH option buyer can follow Sell ​​1ETH at the price tag on 240USDC to produce a profit. In this way, option buyer Xiaolan doesn't have to be worried about falling ETH prices. Additionally , if Xiaolan believes that the price tag on ETH won't be less than 240USDC before expiration, he is able to also sell his oETH options to the others in advance. Opyn: Income opportunities for option sellers At the moment I looked at Opyn from the perspective of option buyers. Therefore where did the options originate from? Who'll bear the exchange obligation when exercising the best. This has to be borne by the seller of Opyn options. What's interesting is that this kind of expiration exercise does not require permission and trust. The smart contract helps to ensure that the customer can complete the transaction at the originally agreed transaction price when the option expires. Why can it be achieved? To begin with, Opyn's options are generated by sellers through mortgage assets, which will be like the mechanism of Maker to generate Dai. By collateralizing USDC, oETH options may be generated. Suppose an option seller, Xiaohu, desires to be involved in these ETH put option product with a transaction price of 240 USDC and an expiration time of 16: 00 GMT+8 on June 19, 2020. She only has to pledge the corresponding USDC. The corresponding oETH option may be generated. When the right is exercised, the customer can exchange it at the price tag on 1ETH 240USDC, and the exchanged USDC originates from the mortgage assets when the seller generates oETH. So why are Opyn's option sellers willing to bear the obligation of exchange? Because option sellers received protective fees in advance. Just like in the above product, only 1ETH is protected, and the customer pays a fee of 7. 2 US dollars. Sellers of put options believe that the price tag on ETH may possibly not be less than 240USDC before expiration at 16: 00 GMT+8 on June 19, 2020. If the price is not less than 240 USDC, the customer won't exercise the possibility, and the possibility seller is the same as earning 1 ETH 7. 2 USD in fees. (The annualized income of option sellers can reach 108. 94%) In the face of high returns, option sellers are willing to generate oETH options. But it must be noted when the price is lower than 240 USDC, especially less than 231. 79 USDC, then your option seller may possibly incur losses. The extent of losing depends upon the amount of decline in the ETH price in those times, if it's during the 3. 12 black swan period, ETH fell below $100, which may be described as a large loss. For buyers, the price tag on ETH may be protected at $240. These downside risks will ultimately be calculated in to the price of the possibility. The longer the time to exercise the possibility and the closer the transaction price is always to the underlying price, the higher the protective cost and the more costly the possibility. Opyn: Opportunities for arbitrageurs Since Opyn's option products and services may also be ERC20 tokens, these tokens may be traded on DEX (such as Uniswap, Balancer). As a result of existence of the secondary market, while the option exercise time approaches, while the underlying price rises or falls, the price tag on the possibility changes. People will trade the possibility in accordance with their very own judgment, thereby generating arbitrage opportunities. In the beginning the price tag on the possibility was set by Opyn, but with the entry of arbitrageurs, the possibility gradually formed an industry price. For oETH options, the price relates to the volatility of ETH and the residual time of the ETH exercise expiration time. Like some users can purchase options on Opyn after which sell arbitrage predicated on price changes. Like in the figure below, a user bought a protective put option for 1 . five ETH, spent an overall total of 12. 6412 USDC, and sold it when the price of ETH was close to the option transaction price, and sold an overall total of 15. 28 USDC, which took less than 10 hours., About 20% profit. Obviously, the price tag on the possibility changes with the price tag on the underlying asset, and there are risks here.

As Opyn options products and services are ERC20 tokens, with the participation of arbitrageurs, the options market begins to truly have a certain amount of liquidity, which in turn promotes the active participation of option buyers and sellers. Options and the social scalability of DeFi In the DeFi insurance market, along with Opyn, there is also Nexus Mutual, but the mechanism of Nexus Mutual is significantly diffent from Opyn. Nexus Mutual has strict limits on the quantity of insurance, and its own insurance coverage also offers certain restrictions. Like it mainly prevents risks brought on by hacker intrusions, but temporarily does not provide services for risks such as for example liquidity. Additionally , when a claim event does occur, personnel need certainly to participate, which is necessary to distinguish between code errors and hacking. Because of human involvement, this may lead to higher execution costs. Because Opyn adopts the possibility model, its protective put options can offer objective insurance services, regardless of the reason for the assets (hacking or market crash, and so forth ), can offer protection. At exactly the same time, as the option model has objective exercise standards, option buyers can exercise their rights so long as they meet up with the conditions. Both parties need not consider insurance fraud, nor do they need to consider the complicated affairs of artificial claims and fraud assessment, which can save costs. Obviously, Nexus Mutual can be essential to the development of DeFi. As a mutual insurance, additionally it is an important attempt for the development of DeFi. As of the writing of the Blue Fox Note, the existing total active insurance of Nexus Mutual reached 16, 326. 15ETH, and the existing Opyn option insurance service Nor manages to do it fully cover Nexus Mutual's services. Once a user provided Opyn with almost $70, 000 in pledge funds in Nexus Mutual (the pledge deadline is December 26, 2019), after which some users purchased a one-month insurance for Opyn in Nexus Mutual, with an insurance number of 2. five Ten thousand US dollars, which will be much like providing insurance services for Opyn users through Nexus Mutual, realizing reinsurance of insurance business. In the standard financial market, which market has got the most liquidity? Derivatives market. In the derivatives market, which asset type has got the largest trading volume? Options. The annual trading volume of options reaches hundreds of huge amounts of dollars. The good liquidity of options brings hedging, financial insurance and leverage services to advertise participants. For DeFi to reach social scalability and to reach a bigger populace, options certainly are a very critical part, since it can offer participants with insurance services and may get a grip on participants' maximum losses. Opyn is an option agreement that can provide insurance services for the DeFi field. Opyn is simply first. More projects is going to be dedicated to this option field that needs no custody, no license, no trust, and DeFi users with richer risk hedging and insurance services. Option services will gradually become a essential Lego foundation in the DeFi field, thereby promoting the prosperity of DeFi.

[glowingobsidian]

Agreement sinking: DeFi protocol will eventually replace cryptocurrency exchanges

DeFi protocols are reliable and neutral. Weighed against centralized protocols, they truly are more dense and can sink to the bottom of the cryptocurrency stack. Original title: "View | Agreement sinking: Where will the DeFi agreement go? " "(The Great Protocol Sink) Compiled by: Ryan Sean Adams Translation & Proofreading: Min Min & A Jian I think these people who despise decentralized finance are wrong. The decentralized financial agreement could have the last laugh. That's right, the current scale of decentralized finance is still small—its users scarcely match the people of a tiny city. Comparing decentralized finance with a centralized exchange with countless users can be as ridiculous as comparing Bitcoin to main-stream currencies in 2012.

Today, the cryptocurrency stack looks like the picture above. BTC and ETH will be the cryptographic currencies at the bottom-the currency settlement layer. ETH and BTC capture value in the shape of liquid market capitalization-I call it economic bandwidth (Editor's note: see "ETH Will Become Trillions of US Dollars Economic Bandwidth" at the conclusion of the article). The cryptocurrency bank (centralized exchange) uses economic bandwidth as trading pairs, liquidity and pledges, provides services such as for instance lending, payment and pledge, and dilemmas stable coins and tokens of gold and securities. It may be believed to have done everything Actions you can take with money. These cryptocurrency banks include Coinbase, Gemini, BlockFi, and BitMex. Decentralized financial protocols such as for instance Maker and Uniswap also make use of a cryptographic currency layer. The development of the agreements is quite fast-the decentralized financial agreement has locked in 1 billion US dollars-but far less compared to the value captured by cryptocurrency banks. Weighed against centralized transactions, derivatives, stablecoins and loans, DeFi is just a drop in the bucket. For instance , the loan level of decentralized finance last year reached 700 million U. S. dollars-not too good! Nevertheless , Genesis, the cryptocurrency bank, has surpassed the whole decentralized financial sector in its lending within a quarter. Nevertheless , predicated on decentralized financial agreements, there is indeed much to be performed. These agreements have reliable neutrality, plus they are more dense than centralized agreements. What goes on when liquid is poured in to a glass? The denser liquid will sink to the bottom. Exactly the same does work for the monetary system-the monetary agreement will sink to the bottom and be the beds base layer. Why not give still another chestnut? Binance has issued BNB tokens, hoping that other projects uses BNB tokens since the currency layer, and hope that other banks uses BNB tokens since the core trading pair and build about it. Nevertheless , Coinbase won't do this, and neither will Gemini and Kraken. BNB tokens aren't neutral and for that reason less dense. BTC and ETH are denser, for them to become the basic layer of the currency stack. That is called agreement sinking. The more the density of the decentralized financial protocol, the more it sinks in the currency stack and can eventually replace the cryptocurrency bank. Put simply, the long run situation is going to be as shown below:

As time goes on, the cryptocurrency bank will still connect to the currency layer, but wont interact directly, more through decentralized financial protocols. These banks wont create loan pools by themselves, but use Compound; they're not going to find sources of liquidity by themselves, but use Uniswap; they're not going to provide DAI loan interest rates by themselves, but use DAI Savings Rate (DAI Savings Rate, DSR). These won't be accomplished over night. At first, the cryptocurrency bank would only obtain the liquidity of "long-tail assets" from Uniswap. But soon, they will obtain liquidity of all assets from Uniswap. No, these banks wont die, as long as these agreements are packaged with value-added services, they will still flourish. What they are able to offer you isn't only DSR (the DAI deposit interest rate supplied by MakerDAO), but additionally other services, such as for instance "If you register before March 6th, you may also get an additional 10. 25% interest rate! " Do you consider this really is impossible? Nevertheless , the last example is just a living example on OKEx. why? Cryptographic asset banks like OKEx can't take on the risk/return rate of DAI deposit interest rates—and they don't might like to do so—they better borrow the decentralized financial protocol and put on the skin of value-added services. Their opponents are traditional banks, perhaps not decentralized financial agreements. Nevertheless , each time a cryptocurrency bank adopts a decentralized protocol and injects funds, the protocol will become stronger, its network effect will also increase, its value increases, and it surely will become fat (Editor's Note: See "Fat Agreement" at the conclusion of the text for the Chinese translation). No, Coinbase wont deliberately develop a competitive product of DAI deposit interest rate. Coinbase uses this interest rate to launch financial products on this basis, and continue steadily to take on OKEx and Binance, because the latter will surely utilize the DAI deposit interest rate to launch financial products. It requires time. It will require decades for the decentralized financial agreement to sink. Nevertheless , decentralized financial protocols will eventually replace traditional banks, just as cryptocurrency systems are replacing legal currency systems. You can summarize a complete cryptocurrency theory: because the density of cryptocurrency is more than that of legal currency, it's going to sink to the building blocks of human society and be the building blocks of the whole society. Here is the sinking of large agreements. This trend has occurred when Bitcoin appeared ten years ago. This trend will continue in the field of decentralized finance. I have perhaps not made any predictions for 2020 before, in this short article, I will make a prediction: In 2020, a minumum of one Class A cryptocurrency exchange will adopt the DAI deposit rate. It will likely be more interesting in the event that you look longer. Finally, the dense decentralized financial agreement will become our basic banking business layer-the decentralized financial agreement will replace traditional banks. The traditional banking industry either adapts to it or ends up in a dead end.

[glowingobsidian]

Review the crucial progress of the DeFi project in May: MakerDAO, Aave and Compound

MakerDAO added WBTC as a collateral asset, Aave supported Uniswap's fund pool equity as collateral, and Compound announced the token distribution plan. Original Title: "First Class Warehouse Research Report: Summary of Major DeFi Progress in May" Author: High grade Neither black swan nor hacking occurred this month, and major DeFi projects spent May possibly safely. In accordance with data statistics from February 24 to May possibly 25 (as shown in the figure below), because the "312" plunge, the ETH stocks of the major lending pools have remained at a rate, and there is no new inflow of funds (because the quantity of funds in Maker far exceeds other Platform, therefore the picture will not include Maker in the picture for comparison). Source data: Defipulse. com, finishing: first-class warehouse As time goes on, we may have the ability to see major platforms launch various services or new gameplay in order to attract users and funds to enter industry. Now, let us take a good look at the DeFi lending market in May. The project progress is sorted in order of ranking, and the ranking is based on data from the Coinmarketcap website on May 29, 2020. MakerDAO (MKR), #295 Monthly progress New collateral type WBTC: Maker added WBTC since the fourth form of collateral asset in the system. WBTC (Wrapped Bitcoin) can be an Ethereum ERC-20 token issued by multi-party custody and 1: 1 anchoring BTC. The full total issuance of WBTC is all about 3, 800, and the quantity currently locked on Maker has now reached 2, 637, accounting for 68. 48% of the full total supply. The SCD system is closed: Multi-collateral Dai was officially launched in November 2019, and the team has already started initially to transition from the single-collateral Dai (SCD) to the multi-collateral Dai system. After the 312 incident, due to the severe liquidity dilemmas faced by the Sai system, the SCD shutdown process accelerated, and the SCD system was officially shut down on May 12.

Considering that the 312 plunge, the ETH assets in DeFi never have returned to the trend, and Maker has taken not quite $25 million in capital to DeFi because the introduction of WBTC, and MakerDAO is just about the largest holder of WBTC. At present, it seems that Maker's drainage effect is fairly good. The introduction of BTC investors in to the DeFi field might help Ethereum and DeFi ecology inject more diversified assets and expand the scale of market funds. June plan · The Oracles V2 released by the Maker Foundation in 2019 will include access to the white listing of price feeds for oracles, and the DeFi Saver happens to be being put into the white list. · Maker's initial 13 proposals have been passed. The method and basic framework for Maker's improvement proposals have been determined. The following task is always to continuously improve and realize community autonomy. Aave (LEND), #735 Monthly progress The Uniswap market is officially launched: Aave has officially supported the utilization of Uniswap's capital pool equity as collateral. In addition to placing assets in Uniswap to earn interest, Uniswap agreement users can also mortgage them in Aave to acquire liquid funds. Since Aave may be the first protocol to integrate UNI tokens, and the UNI token it self is supported by way of a token pair and contains risky parameters, the team has customized a couple of risk parameters for UNI tokens (as shown in the figure below):

In addition , because the liquidation procedure for UNI tokens is more difficult (the liquidator has to liquidate on Aave and redeem it on Uniswap), in order to incentivize liquidators to execute liquidation, all UNI token liquidation bonuses are set to 10%. view Aave's approach not just increased the fund utilization rate of the Uniswap pool, but additionally expanded the platform's own asset scale, making it better to absorb external funds, helping it achieve a magnitude breakthrough faster. Aave's next move is always to launch the TokenSet market. Judging from the current series of practices, Aave's goal is not only to soak up a single encrypted asset, but to integrate the liquidity of the complete market. As time goes on, more DApps will undoubtedly be used as liquidity. provider. June plan In a recently available summit, Aave unmasked that it will change its token economic model from a token burn off model to an accrued fee model. LEND will undoubtedly be like the MKR mechanism in MakerDAO. LEND will undoubtedly be pledged to acquire agreement fees. At the same time, once the platform generates money owed, additional LEND will undoubtedly be issued as compensation. This means that transaction fees won't be used to burn off LEND, but will undoubtedly be allocated to those that pledge tokens. At the same time, in order to boost the pledge rate of LEND and increase the liquidation risk protection, additional LEND will undoubtedly be issued to force users to pledge. The specific details never have yet been announced. The team should launch a straightforward governance model in the short term so the community can assess the new economic model. Compound, the token hasn't yet been issued May possibly progress COMP token distribution plan: Compound announced its token distribution plan. 42% of the full total supply (4. 23 million) will undoubtedly be distributed to users. The distribution method is borrowing and mining, that's, users who use the Compound protocol to conduct borrowing transactions will get COMP free of charge. The more the loan amount, the more COMP will undoubtedly be obtained. These 4. 23 million tokens will undoubtedly be put into an intelligent contract, and 0. five COMP will undoubtedly be issued for each Ethereum block, meaning that approximately 2, 880 COMP will undoubtedly be circulated everyday, and it is expected that the distribution will undoubtedly be completed in four years. view Within our monthly report last month, we published a token distribution policy for COMP. In this course of action, Compound managed to get clear that 50. 05% of the tokens were utilized by the agreement users, but this time only 42. 3% premiered, and there's still 7. 75 percent Of tokens never have yet been plainly allocated.

June plan The smart contract for the distribution plan of COMP is running on the Kovan testnet, and the distribution may very well be activated in June. What's New in DeFi HackMoney, the very first on the web DeFi hackathon held by ETHGlobal, also attracted the interest of DeFi practitioners. At present, the event reaches the end of on the web review. Countless hackers have submitted 120 DeFi projects and projects associated with Aave. There are 46, many of which are extremely interesting projects: Cryption, an interest-bearing DAI ETF, creates a balance (multiple exchange pool) containing aDAI, cDAI and DyDAI in the DyDx platform, and each token has a corresponding weight of 33. 3%. Whenever a user provides liquidity to the balancer, he'll have the corresponding Balancer liquidity token, which can hedge the user's DAI rights and interests in the Aave, Compound, and DyDx protocols. (Balancer is really a trading protocol based on the AMM model newly launched in April).

YieldHero is really a tool that can easily exchange collateral between different aTokens to ensure the most useful returns. Currently, this tool is deployed on the Balancer platform.

The OpenKYC protocol uses encryption technology to safeguard the privacy of KYC and credit ratings, and is employed for ID verification of DeFi services.

Defend. Money, a decentralized insurance pool, allows users to hedge the chance of crypto asset fluctuations. Use Defend. Money to share with you part of the risk of the liquidity pool to acquire high returns, thereby attracting more users (a total of 4 people in the team, 2 Chinese).

DeFi777 allows users to connect to the DeFi protocol on Ethereum without installing a Dapp browser, and will easily use Uniswap, Aave, Balancer and Set. DeFi777 is more friendly to users who are perhaps not especially knowledgeable about DeFi, making it simple for new users to begin with.

Summary Currently, major projects are earnestly launching new versions or developing user-friendly tools. One of the reasons is that in the absence of new funds entering industry, major platforms grabbing traffic and funds can become a trend later on. How? "Open source" may also be a question that major projects need to consider. But you will find lessons learned from "312" and various hacking incidents. Perhaps a complete set of clearing mechanisms and user fund security remain the lifeblood of attracting users.

[glowingobsidian]

Just how to track a myriad of DeFi data? This listing of resources is worth collecting

DeFi data exceeds the entire site and tools, covering aspects such as for example visualization, statistics, and APIs. Original title: "Collection! Make DeFi "visible to the naked eye", and use these data resources to grasp the newest DeFi trends"

Since the end of 2017, decentralized finance (DeFi) has been growing at an alarming rate. Many of these protocols are made on the Ethereum network and continue steadily to take over their gas usage. These DeFi agreements don't require central authorization (or the target is such) for lending, derivative products, exchange and payment. I do believe that the emergence of DeFi at the end of 2017 and the development of 2018 have brought Ethereum to the second mainstream application besides ICO (the first one is really a stable coin) and rescued the Ethereum network. Many (if perhaps not all) of the DeFi protocols are centralized in some manner, nevertheless the ultimate goal will be completely decentralized. Therefore , at present, they must be called permission finance (permission finance) or PeFi, simply because they can offer services to any user on the planet, regardless of their geographic location, local regulations and laws, credit score or occupation.

Listed here are the reference resources I have compiled, covering DeFi data, visualization, statistics and APIs. The newest update time of the resources is March 31, 2020, and can continue to be updated to add new resources, delete discontinued resources, and so forth Overview DeFi Pulse (DeFipulse. com) DeFi Pulse (DeFipulse. com) DeFi Pulse is a wonderful resource and starting place for finding advanced level DeFi data. The sum total value "locked in" data point shows the total amount of Bitcoin, Ethereum or DAI utilized in the DeFi ecosystem. Data for tracking and mapping lending, derivatives, payments, transactions, and asset agreements on Ethereum. The homepage of the website lists all agreements and their rankings by total locked value. Each agreement page has key growth statistics, simple graphs, application summaries and related links. The DeFi list page has a complete pair of resources, including projects, wallets, interfaces, newsletters and podcasts.

DeFi Rate (DeFirate. com) is comparable to DeFi Prime. DeFi Rate provides lending rates for many popular DeFi protocols (including Aave, Compound, Curve, Dharma, Maker and Nuo Network). The "Projects" section of the page provides subdivisions of DeFi fields such as for example lending, DEX, derivatives, asset management, wallets, and insurance. For users who wish to understand the DeFi project, read reviews and understand the newest changes, it is a good destination for a find.

LoanScan (Loanscan. io) LoanScan provides financial details about the DeFi protocol. The current interest levels and borrowing rates of Compound, dYdx, Dharma, Maker DAO, Nuo, Aave, DDEX can be viewed in an easy dining table. In addition, it shows the rates of centralized services such as for example BlockFi and Nexo. It is a legitimate starting place when searching for high-level exchange rates and analysis of USD, USDC, USDT, DAI, SAI, TUSD, PAX and GUSD. Loanscan also provides historical interest levels of MCD, Compound and DyDx, loan details (source, outstanding, repayment) and mortgage details (supply, ratio, liquidation). You can find free API documentation here.

Dai Stats (Daistats. com) Developed by Mariano Conti, Dai Stats is really a simple dashboard with analytical functions that can provide details about the total amount of DAI, the total amount of SAI, the ETH locked in Maker DAO, the existing stability fee, and the mortgage Product ratio, number of opened vaults, Maker destruction rate as well as other statistical information. The dashboard has been updated to include statistics BAT and USDC, that have been included with the Maker DAO agreement to help liquidity.

Alethio DeiFi Tableau Visuals (public. tableau. com/profile/alethio. defi) Alethio has provided DeFi with a visual dashboard. Views and charts include ETH locked in DeFi, Sai locked in DeFi, Synthetix overview, DeFi interest levels, compound liquidity, and so forth The visual effects come in Tableau format, and the visual effects may be made beautiful and customizable through sliders and filters.

DeFi Explore (defiexplore. com) This is a good tool for finding step-by-step details about multi-collateralized debt (MCD). The search function allows users to locate by CDP ID, transaction or address. Some statistics provided are the highest CDP position, the sum total number of CDPs, DAI debt and the listing of system collaterals. DeFi Explore also provides data about USDC and BAT locked in the agreement, which are fairly new options that come with the Maker agreement.

DeFi protocol statistics and visual effects The Aragon dashboard (scout. cool. aragon / mainnet) is comparable to the setup protocol dashboard, and Scout also has an Aragon dashboard. The sum total number of businesses created, active businesses, daily votes, and average balances (ETH, DAI, SAI) are some of the advanced level visualizations and charts on this dashboard.

Aave Watch (aavewatch. now. sh) Aave is an open source DeFi protocol for lending digital assets, including SNX, USDT, MKR, TUSD, ETH, ZRX, and so forth The dashboard statistics are the deposit rate, borrowing rate, available supply and borrowing amount for every single asset. Aave can also provide lightning loans captured on the Aave monitoring dashboard.

MKR tool (mkr. tools) Developed by Mike McDonald, the MKR tool is an analysis dashboard of the Maker DAO platform that can track protocol statistics, including CDP transactions, DAI transactions, stability fees, and token data on DAI and MKR. The historical CDP visualization shows the mortgage rate as time passes. As of March 26, 2020, this dashboard has not updated its API to track multi-collateral DAI. This statistic only relates to single mortgage DAI. For over all DAI statistics including MCD and SCD, please visit Daistats. com.

Set Protocal dashboard (scout. cool/setprotocol/mainnet) Scout's "Set Protocol" dashboard provides statistical information and visual aftereffects of the "Set Library". The visual content includes the sum total library balance and the details of the library balance by asset: WBTC, SAI, USCD, WETH, cUSDC, DAI and LINK. The transaction volume graph is extremely useful for reference when searching for cumulative trading, weekly rebalancing, and 24-hour statistics. Transaction data, transaction set overview and robot set overview numbers may also be displayed in dining table format. Statistics may be filtered by way of a specific date. When searching for specific data (such as the number of holders, monthly traders, addresses and direct etherscan links), it is advisable to make use of the official Token Sets website.

Synthetix Stats (synthetixstats. com) This is a very cool, customizable dashboard high in graphs and widgets for the Synthetix protocol. The widget includes statistical details about active exchange users, new and unique exchange users, SNX locked total value, SNX supply, exchange wallet, top holders, and so forth The chart includes visual effects related to quantity, cost, SNX purchase, cost, supply, quantity per address, asset allocation, and so forth The state Synthetix dashboard wont work from March 28, 2020, so I strongly recommend using Synthetix Stats.

Other resources

* Bloxy Maker Dao Analytics-only supports SCD. * Coin Interest Rates——Nuo, DyDx, MakerDAO, Nexo, Compound, and so forth borrowing APR, lending APR, total borrowing and market size statistics. * Liquidity Pools-Uniswap, Curve and Bancor liquidity pool statistics. * DeFi Scan (DeFiscan. com)—Compound, Uniswap and SpankChain browsers. Search by address or ENS domain name. * Whois0x (whois0x. io)-Ethereum block explorer, showing address balance, ERC20 tokens, collectibles and DeFi positions. * The above are some English web sites for DeFi statistics. In fact , there are lots of exemplary blockchain data providers offering Chinese DeFi data, such as for example Tokenview, DappTotal, QKL123, and so forth