practicalryangosling

[practicalryangosling]

Kava BNB lending will undoubtedly be launched soon, and the DeFi market will undoubtedly be "shuffled"?

DeFi market status DeFi has risen rapidly in 2019, and its particular development momentum is incredibly rapid. Judging from the development situation in the initial quarter of 2020, the popularity has not diminished at all compared with 2019, especially the development of stablecoins and the lending market. As shown in Figure 1, right from the start of 2019 to the present, the growth rate of the total stablecoin blood supply is approximately 136%, and the growth rate of the lock-up value of the lending market is approximately 189%. Behind the surge in lock-up value may be the rapid expansion of projects such as for example MakerDao, Compound, and Uniswap.

Figure one As is seen from Figure 2 below, at the time of March 14, the above mentioned three projects accounted for 73% of the total lending market, sharing almost three-quarters of the "cake" in the lending market. DeFi has natural advantages such as for example high efficiency and transparency that conventional finance lacks, so it can form rapidly, looked after brings strong market vitality to the cryptocurrency industry.

Figure II But while lending is booming, it has to face an essential problem. Essentially, lending is a type of decentralized finance and contains nothing at all to do with the platform which it's located, but the current status quo is practically all All of the lending applications are developed and applied to Ethereum. As a result of immaturity of cross-chain technology, lending centered on Ethereum can just only be performed around ERC20 Token. Among all ERC20 Tokens, people that have sufficient blood supply and applications are also limited to ETH. Because of the above mentioned two reasons, the specific development of loan projects is greatly restricted. But you will find already many projects attempting to solve this sort of problems, attempting to introduce more assets into the lending market. Like so that you can introduce BTC into the Ethereum ecosystem, ERC20 Token WBTC generated by 1: 1 anchoring BTC; the Stafi agreement passed The rToken generated by staking assets and the cross-chain assets that could be brought by depending on the Cosmos SDK, the Kava project is one of them. The value of Cosmos cross-chain is to break the "value islands", build a bridge of value interoperability between public chains, promote inter-chain interaction, and accelerate the liquidity of Token. Kava may be the first DeFi project in the Cosmos ecosystem. It really is developed utilising the Cosmos SDK and may better utilize the "interoperability" of the Cosmos Hub to achieve multi-asset mortgage. At the same time, additionally, it may use the natural benefits of multi-asset cross-chain operability to realize multi-asset lending and solve the problem of single mortgage assets. The BNB lending logic in Kava CDP may be the native token of Binance Chain and the only platform currency in the TOP10 market value. Kava may be the first DeFi project supported by Binance Launchpad. Kava is developing a platform that supports multi-asset collateralized debt (CDP) and will give priority to Binance's native Token BNB to build stable currency USDX. The borrowing logic of BNB in ​​Kava CDP is actually much like MakerDAO. People who comprehend the MakerDAO project will be able to comprehend the similar processing logic:

Figure three 1) The consumer sends the BNB held by the consumer to Kava CDP (CDP could be comprehended as a locked contract or a mortgage debt warehouse); 2) BNB is locked in Kava CDP as collateral; 3) CDP will issue stablecoin USDX to users, and the USDX issuance ratio is generated in line with the BNB price submitted by the oracle and the mortgage rate occur CDP. Under normal circumstances, the USDX value obtained by users will undoubtedly be significantly less than the worth of BNB to avoid anchoring risks caused by fluctuations in the worth of BNB. 4) When retrieving the locked BNB, the consumer has to repay the exact same level of USDX since the issued amount, and pay a tiny bit of interest (paid in Kava's token Kava, the current interest is 5%). In Kava, BNB has always been over-collateralized. If the price tag on BNB rises, the USDX guarantee is more sufficient; if the price tag on BNB falls, when it drops to a particular threshold, the locked contract in CDP will undoubtedly be automatically liquidated, and the mortgage assets will undoubtedly be sold at a high price lower than the marketplace to ensure anchoring The mechanism is accurate, users have to add BNB or repay USDX to avoid liquidation from happening. Being an ordinary investor, how to use Kava CDP to have income is a common concern. Let us use the exemplory instance of BNB to illustrate. If your user pledges $1, 000 of BNB in ​​Kava CDP, he can get 666 USDX. Following this operation, the consumer may have stable assets and may use the USDX obtained by pledging BNB to buy other tokens. Staking earns income, or continues to purchase BNB and continue steadily to mortgage to have another USDX, so the assets held can flow and generate more value. Kava CDP chose BNB since the first supported encrypted asset, and liquidity was the initial consideration. As well as the Binance Exchange using BNB to deduct transaction fees, the Binance official website indicates as much as 31 BNB application scenarios that have landed. BNB plays the role of asset blood supply value carrier in Binance Ecology. It can be said that Kava draws the entire The value of Binance ecology. 2nd, Binance Launchpad requires participating users to put up a degree of BNB, that has increased the demand for BNB to a certain extent. For Kava CDP, it includes a strong user base and stands on the shoulders of giants.. Potential BNB Borrowing Problems** ** 1) The problem of the concentration of BNB holdings Kava may be the first DeFi project to guide BNB lending. This is a small innovation in a large field. Minus the "mine clearance" of predecessors, it's inevitable that some potential problems will undoubtedly be withstood. In line with the data displayed by the BNB browser, there are always a total of 134, 870 coin holding addresses, and the BNB holdings of the most notable 20 addresses ranked by holdings accounted for 96. 92% of the total BNB, which means that 0. 015% of users hold 96. 92. percent Of BNB is too concentrated. Essentially, the concentration of BNB holdings has no direct impact on the process of collateralizing and generating USDX in Kava CDP, but includes a relatively large impact on the first BNB chain, which indirectly affects the borrowing of BNB in ​​Kava, mainly such as the original Three levels of chain security, price fluctuations and BNB liquidity. Regarding the security of the first chain, Binance Chain runs on the consensus algorithm that combines BFT and DPoS. The cost of controlling 51% of the computing power in the PoS project is a lot lower than that of the PoW project, and the exact same holds true for DPoS. But it's generally speaking challenging to launch an attack, otherwise it's going to only quickly depreciate the large amount of BNB held. The operations of large currency holders through the secondary market such as for example "smashing" and "pulling" will also cause substantial price fluctuations. Although the possibility of the above mentioned two situations is extremely small, they can't be completely eliminated. Because the price of BNB rises, USDX guarantees could be more sufficient. But if the price of BNB drops to a particular threshold, the device will activate the CDP liquidation mechanism and sell mortgage assets. This can cause some users to struggle to answer the risks caused by price fluctuations in a timely manner, thus affecting users Normal use. It is not difficult to comprehend the impact of BNB liquidity. Numerous BNB is in the hands of some individuals, which reduces the liquidity of BNB to a certain extent. In addition , launchpad's new rules have implemented new rules from the seventh phase, and the amount of days of holding BNB has gradually increased, stimulating users to lock up BNB and further reducing the liquidity of BNB. The above two reasons will limit the borrowing of BNB. 2) Questions as a result of the combination of decentralization and centralization As well as the dilemma of currency holdings, the effective combination of decentralization and centralization can be an essential issue. Even though Binance has been developing in the direction of a decentralized exchange, the fundamental problem has not been solved. Binance continues to be the world's largest centralized cryptocurrency exchange. How can Kava better connect to the central Binance integration? Because of the immaturity of current cross-chain technology, can the security of CDP user asset information be guaranteed in full after cross-chain? Even with the security is ensured, the accessibility to the device will decline. How exactly to ensure the accessibility to the device while ensuring the security, in order to find a balance between your two? A very practical system is neither fully decentralized nor fully centralized, but fully combines some great benefits of the 2, that is also a challenge that the team has to consider in the development. The likelihood of BNB to the Lending Market While analyzing the potential problems of BNB lending in Kava, it's undeniable that BNB lending has had changes to the DeFi and lending market. Considering the current DeFi applications, almost all of them are designed on Ethereum because of Ethereum's mature smart contract platform, stable market value of ETH assets, and extensive user awareness. Kava introduced BNB into lending. For DeFi, it truly injected "fresh blood" into the current lending market, enriched the forms of mortgage assets, and improved asset utilization; for investors, besides the BNB they are going to hold In addition to staking to have fixed income, BNB may also be mortgaged to have stable coins to buy other forms of tokens or for other purposes. Investors have significantly more options and maximize the worth of assets. In line with the development trajectory of MakerDAO, with the development of BNB lending, there will be increasingly more derivatives centered on USDX, and innovation will keep on. Like to facilitate risk management for investors, some options will undoubtedly be launched on the market to hedge against price fluctuations. For services and products, investors can make and sell call and put options to hedge the risks caused by price fluctuations. Or USDX's privacy protection tool to ensure the confidentiality of senders, receivers and transaction amounts. All in all, the innovation of derivatives is likely to make DeFi present a diverse situation. BNB has been launched on the key network. Kava BNB lending breaks the status quo that DeFi projects can just only be built on Ethereum, enriching the forms of mortgage assets; at precisely the same time, BNB-based lending will also give birth to related derivatives, making the entire DeFi industry more imaginative space. It really is comprehended that the Kava CDP is under development, and the BNB mortgage lending just isn't on the web, and the specific operating conditions have to be observed and analyzed after going on the web. Based on Kava's official public information, as well as BNB, Kava will also provide mortgage lending services for ATOM and BTC, which has a market value of 10 times more than Ethereum. Perhaps the lending market will face a "shuffle" movement, and the DeFi industry is just starting to just take shape There is likewise a big explosion. Wetez may be the team that knows the PoS consensus most useful in China. PoS would be the trend of the future blockchain. Welcome to participate the group for communication. Add WeChat Sara17701347289, note the things you might be following, ICON, Kusama, Polkadot, Tezos, Cosmos, ChainX, Loom, Edgeware, Wanchain, I shall pull you into the group.

[practicalryangosling]

PeckShield: There were 4 security incidents on DeFi in June, and 11 incidents of fraud running off the road

In June, there have been 20 prominent security incidents in the blockchain ecology, and more than 1 / 2 of them were associated with fraud. The Balancer and Bancor incidents caused DeFi security to attract attention again. Original title: "PeckShield: An overall total of 20 security incidents occurred in June, and DeFi security dilemmas are once more highlighted" Published by: PeckShield In accordance with data from the PeckShield situational awareness platform, previously month, there has been 20 prominent security incidents in the entire blockchain ecosystem, rated as "Intermediate", involving 4 cases of DeFi, 1 case of wallet security, and 1 case of public chain security., 3 incidents associated with extortion, 11 incidents associated with fraud. DeFi Security There were 4 DeFi security incidents in June, the following: 1) The liquidity pool of the well-known DeFi platform Balancer was attacked by hackers in a lightning loan attack, resulting in a lack of USD 500, 000. After PeckShield security personnel intervened in the analysis, the essence of the issue was quickly located. The deflationary tokens on Balancer and its own smart contracts are incompatible using specific scenarios, allowing attackers to produce STA/STONK blood circulation pools with price deviations and obtain them from it. Profit. The hacker's attack was divided in to four steps, specifically:

* The attacker lent 104, 331 WETH from the dYdX platform through lightning loan; * The attacker over repeatedly executes swapexactMountin() calls until most of the STA tokens owned by Balancer are consumed, and then the next step of the attack begins. Ultimately, Balancer only has 0. 000000000000000001 STAs left. * The attacker used the incompatibility between your STA token and the Balancer smart contract, that's, the mismatch between accounting and balance, to attack, exhaust other assets in the fund pool, and finally make an overall total of 523, 616. 52 USD worth of digital assets. * The attacker repaid the flash loan lent from dYdX and swept away the digital assets obtained from the attack. Graphical hacking process 2) DeBank engineer frenzy_hao said on Twitter today that hackers once more used dYdX's lightning loan to attack the COMP trading pairs in the Balancer the main liquid mining pool, and took away the unclaimed COMP rewards from the pool, resulting in a total profit of 10. 8 ETH. 3) The decentralized protocol Bancor officially disclosed the details of the security vulnerabilities. The event safeTransferFrom, that ought to have already been set as private, means a public function, so anyone can transfer tokens. Fortunately, there was no major security loss. Following the vulnerability was discovered, the team conducted a white hat attack to transfer funds to a safe address. 4) On June 21, security researcher samczsun privately disclosed two vulnerabilities in the contract and lending agency currently deployed by AtomicLoans. Both of these vulnerabilities could cause the borrower to unlock some or most of the BTC collateral without repaying the loan under certain circumstances. PeckShield Comments: As DeFi projects be more and more diversified, hidden security dilemmas are gradually exposed. Because of its close connection with user assets, the security dilemmas of DeFi projects are extremely serious. Since each project is manufactured by different teams and contains limited understanding of the style and implementation of the respective products and services, the integral products and services are likely to have security problems through the interaction with third-party platforms, and then suffer from the enemy. PeckShield hereby suggests that before the DeFi project goes live, it will decide to try its best to locate a team that has in-depth research on the product design of each and every link of DeFi to accomplish a complete security audit to avoid potential security risks. Digital wallet security 1 wallet security incident occurred in June: Researchers from the network security company OpenZeppelin have posted that they have discovered a high-risk vulnerability in the Ethereum wallet Argent. The vulnerability could allow an attacker to dominate user wallets, especially those users that have perhaps not activated the "guard" function. At the same time, the Argent team quickly fixed the vulnerability and contains contacted the affected users. PeckShield Comments: As something for managing private keys, digital wallets will be the closest spot to encrypted assets. Although a cold wallet is definitely an offline wallet that's disconnected from the network, it also has got the danger of being physically attacked and stolen. For hot wallets such as for example web wallets, users must also watch out for phishing, malicious code injection and other attacks. Public chain security An overall total of just one public chain security incident occurred in June: Blockstream's commercial sidechain Liquid Network was exposed to security vulnerabilities. As a result of inconsistent hash times, essential accounts in the network will undoubtedly be affected by technical vulnerabilities, that may cause the theft of hundreds of dollars in BTC. Currently, Blockstream network administrators have temporarily seized 870 Bitcoins stored on the Liquid network by restoring the multi-signature contract. PeckShield Comments: Once a vulnerability on the public chain is discovered, it'll have a fantastic affect the entire chain ecology. Consequently , the public chain must do security testing and vulnerability investigation before the official version is launched, and seek third-party security company audits to avoid the impact of vulnerability threats Public chain ecology. Extortion-related security incidents occurred in June: 1) Researchers from the security company Unit 42 discovered that a fresh malware "Lucifer" is spreading, which is really a variant of an old cryptocurrency ransomware. The newest variant can be used for malicious cryptocurrency mining, nonetheless it may also be used for DDoS attacks. 2) The US subsidiary of ST Engineering Aerospace suffered a ransomware attack. The organization and its own partners were stolen - 5TB of sensitive and painful data. Before the news in February, hacker Maze invaded five US attorneys and demanded a ransom greater than $933, 000 in BTC. Before the news in March, the encryption ransomware organization Maze claimed to utilize hacker pc software to attack the insurance giant Chubb. 3) Kent Commercial Services (KCS), a company in Kent, UK, was recently attacked by hackers. The hackers demanded a Bitcoin ransom of 800, 000 pounds, otherwise the company's data could be leaked on the dark web. KCS said that the company did not pay the ransom and did not involve the theft of taxpayers' personal data. 4) In a reaction to the two unusually high-priced Ethereum transaction fees, researchers from PeckShield security company believe that this might be because of hacker ransom attacks on GoodCycle, a fake exchange from South Korea. Hackers obtained the main rights of the exchange through phishing attacks and other practices, so they used the act of squandering GasPrice to blackmail it. (For details, please refer to Behind the sky-high transaction fee transfer of Ethereum: A hacker initiated a GasPrice blackmail attack? The facts about the sky-high transaction fee transfer of Ethereum: GoodCycle, a fund project, staged a manslaughter! ) PeckShield Comments: Blackmail security incidents have been a significant hidden danger affecting the entire Internet ecology, perhaps not limited to the blockchain ecology. More over, following the gradual popularity of cryptocurrencies in the blockchain field, criminals often utilize the better anonymity of cryptocurrencies such as for example Bitcoin for blackmail fraud. As well as the above-mentioned incidents of fraudulent runaways, there have been also several fraudulent runaways in June that deserve our attention, such as for example: 1) In accordance with data from CoinHolmes, an electronic asset visualization tracking platform owned by PeckShield, from the afternoon of June 22, PlusToken's running funds have changed, 26, 316, 339 EOS, 2, 503 BTC; 789, 533 ETH were transferred. 2) The Seoul police in South Korea launched a study today, targeting two anonymous digital currency exchanges associated with ETH crimes. Criminals used multi-level Ponzi schemes to defraud victims' digital currency. 433 investors have lodged complaints with law enforcement, and 1, 000 investors never have contacted law enforcement. The ETH involved in the case is worth 41. 5 million US dollars. 3) The Iranian exchange bitisis, widely reported by the Chinese media, has fully gone away. Multiple sources remarked that the specific controller behind it absolutely was Chinese fraudsters, plus they mastered several overseas exchanges that claimed in order to maneuver bricks and arbitrage to soak up retail funds and then ran away.. The authorities in a variety of places have filed the case. The exchange transferred user assets to three addresses, among which the platform has urgently frozen the relevant addresses. 4) Bibox officially announced that criminals copied the Bibox APP and pretended to be Bibox customer support to induce users to produce transactions. Users are requested to become more vigilant. 5) Huobi Worldwide received a study a phishing and fraudulent web site pretended to be Huobi and issued an announcement to spread the "ERD Airdrop Campaign" on the community. Huobi Worldwide solemnly declares that Huobi has not released any "ERD Airdrop Campaign". Traders are requested to be vigilant and recognize the official web site address of Huobi. 6) The Matcha Exchange issued an announcement stating that recently, criminals have pretended to be customer support personnel of several exchanges and created fraudulent websites to induce users to trade, or request the transfer of digital assets to fraudulent websites. There is absolutely no official WeChat account fully for MXC Matcha, and any "MXC Matcha" account on WeChat just isn't the official account. If you encounter behaviors such as for example contacting users in the name of MXC Matcha and requesting to "transfer digital assets" to other platforms, it is possible to verify their identity through the customer service channel of MXC Matcha official web site. 7) Recently, the Shandong Yantai police closed the web at precisely the same time in Shenzhen, Huizhou, and Hefei, and successfully expunged a criminal gang that used fake investment platforms to commit fraud under the guise of "virtual currency investment". The amount involved was more than 14 million yuan. 8) The Juye County Public Security Bureau in Heze City, Shandong Province recently cracked a case of a significant telecom network fraud and expunged multiple gangs suspected of committing telecom network fraud in the name of on the web loans and buying "Bitcoin", and arrested 83 criminal suspects. Significantly more than 27 million yuan of funds involved in the case were seized and frozen. At present, 30 major criminal suspects have already been transferred by Juye Police to the prosecutors for review and prosecution. 9) Recently, a Nanning OTC company was suspected of assisting in telecommunication fraud criminals with money laundering, and was caught by police investigation. This demonstrates USDT, cryptocurrency and telecommunication fraud are far more closely integral in China, which may bring more risks of freezing cards to ordinary users, OTC vendors also have to increase their screening efforts. 10) In accordance with previous reports, criminals are utilizing the names of Tesla founder Elon Musk and his company SpaceX to commit Bitcoin fraud on YouTube. In accordance with statistics, an overall total of 214 BTC were provided for such fraudulent addresses, valued at more than 2 million US dollars. 11) DeFi Money Market Protocol DMM's official Twitter stated that its telegram group was maliciously hijacked through the public offering, and the attacker imposted the DMM Foundation so that you can steal funds. Those that were deceived in the token sale were compensated for the corresponding DMG amount, and the ones who wanted to make sure that all the funds lost were compensated appropriately. PeckShield Comments: Various security hazards brought on by users' insufficient security awareness and operational norms have already been emerging in a endless stream. Various incidents such as for example phishing attacks and fraud are typical. Here is a reminder that users should keep all types of personal data carefully, and any small negligence could cause irreparable losses.

[practicalryangosling]

How do cryptographic certification systems such as for instance ZK Rollup improve DeFi expansion, privacy and fairness?

Extension schemes such as for instance ZK Rollup have introduced two different types of entities: a little group of powerful participants invest plenty of resources to do intensive calculations; and a large group of weak nodes are responsible for verifying transactions and ensuring that the calculation results are auditable. Original title: "Introduction | Can stylish cryptography tools help DeFi? 

The Decentralized Finance (DeFi) movement vowed to equalize the financial world and allow it to be more fair and transparent. However , if DeFi is always to accomplish this goal on a worldwide scale, a decentralized blockchain like Ethereum must expand its throughput! Which means that we need to use new cryptographic proof schemes (some people will reference these schemes collectively as "zero-knowledge proof" or "ZKP").

A cryptographic proof system like zk-STARK (which will undoubtedly be deployed on the Ethereum mainnet) is not the sole solution. Other methods include Plasma, Ethereum 2. 0, many so-called "Ethereum killers" proposals, and the most recent Optimistic Rollup proposal. In this essay, we shall explain the current challenges faced by decentralized cryptocurrencies, the paths of varied cryptographic proof systems to solve these issues, and why zk-STARK is the most suitable for solving this issue. The era of decentralization and expansion of processing capacity is an era where computer system throughput continues to improve. From bandwidth, to storage space, to the amount of pixels on a screen, every thing is continually improving. So , just why is it so hard to improve the transaction processing speed of Bitcoin and Ethereum (measured by TPS "transaction per second")? The solution is that people also want to ensure decentralization. The necessity for the blockchain to stay permission-free is that each and every user who uses an ordinary notebook can verify the integrity of the transaction history. There is a core principle here, which we call "acceptable accountability", meaning: we cannot rush to improve the processing capacity of the machine, otherwise it will degenerate in to a centralized payment system with just a few chaebols. The type of get a handle on (that is, the "current financial system"). We must break the blockchain trilemma and produce a decentralized financial system that is distinctive from conventional systems For that reason all extension schemes, including Plasma, Optimistic Rollup, and our method (based on a cryptographic proof system, frequently known as the ZK Rollup scheme), introduce two different types of entities: a little group of "strong" participants, Need to invest plenty of resources to do intensive calculations; there's also a large group of nodes, which are responsible for verifying transactions and ensuring that the calculation results generated by powerful participants are auditable. How do we scale throughput while ensuring decentralization? Then allow powerful participants calculate, and the weak participation guarantees to ensure auditability. Whether the strong participants are malicious is not important, the main thing is that the weak participants can guarantee accountability! Before diving in to the details, let's take a look at the cryptographic proof system. You have to know a little bit in regards to the cryptographic proof system. The cryptographic proof system was founded in 1980; its great value to the access-free blockchain has led to the emergence of the Cambrian of new theoretical constructions and new protocols in the blockchain field recently Big explosion. In these, we shall only concentrate on STARK, which is also a kind of proof solution that our StarkWare team is getting ready to bring to the market. Cryptographic certification systems frequently include two kinds of roles: the prover and the verifier.

* Prove: The prover wants to convince the verifier a certain computational statement is correct, such as for instance "I have processed these 10, 000 transactions, and the hash value of the resulting database is X". The verifier will provide an item of evidence with this computational statement and send it to the verifier. * Verifier: The verifier will verify the evidence-instead of naively repeating the first calculation process-if the data may be verified, the verifier will think that the prover's statement holds true. note! In a cryptographic proof system like STARK, the computational burden of the prover and verifier is asymmetric! When compared with simply performing the first calculation process, the calculation overhead of the prover is significantly larger; whilst the verifier is on the contrary, as a result of the huge overhead that the verifier has paid, the quantity of calculation that the verifier has to perform is smaller than the original calculation process A whole lot more. For instance , if 10, 000 transactions were originally required to be executed, the verifier only must pay the computational overhead of 10 transactions. Additionally , the cryptographic proof system enables you to conceal input (in the aforementioned example, the facts of the 10, 000 transactions may be concealed); this kind of cryptographic proof system is named "zero-knowledge", the abbreviation is ZK- STARK. How does the cryptographic certification system extend DeFi? So , in what ways can today's cryptographic certification systems help DeFi?

* Scalability * Privacy * Fairness, we shall come one at a time. Improve scalability with STARK Let us go back to the absolute most fundamental challenge: to steadfastly keep up inclusive accountability while expanding the throughput of Ethereum. We truly need a technology that will greatly increase throughput (by allocating the computational burden to a small number of "strong participants"), even though many "weak participants" can fully verify the computational integrity of these powerful participants. ), and it'll maybe not boost the burden on weak and small participants. Other extensions, such as for instance Plasma and Optimistic Rollup, depend on Fraud Proof, and we explained in this article why the cryptographic proof system is just a better solution (Editor's note: start to see the hyperlink at the conclusion of the text for the Chinese translation "Proof of Validity vs . Proof of Error"). Utilising the scalability of STARK (the speed of verification is an exponential of the speed of constructing a proof), we could bravely let any powerful entity become a prover, even Darth Vader & Sons (Darth Vader & Sons, the big one in Star Wars) The puppets controlled by the villain are fine. The main element here's a strong prover should attach a concise proof to any or all his operations, and all weak nodes can simply verify these proofs. For that reason through STARK (and other cryptographic proof systems), we could guarantee inclusive accountability, while providing almost unlimited throughput expansion (strictly speaking, we "can only" achieve exponential expansion).

In greater detail, the basis of ZK Rollup's scalability solution is always to allow large computing tasks (or a large number of small computing tasks) to be executed off-chain, and the off-chain computing resources are a lot more abundant; then the calculation execution process is generated The proof validity is delivered to the blockchain (accompanied by way of a promise of the new state); then a validator smart contract verifies these proofs. After verification, network participants can think that the complete calculation is valid (and at the same time do not need to trust any entity). It really is properly because we do not have any trust assumptions that people can fairly accept a valid evidence, even when it's issued by the Black Warrior. This isn't just talking-you will be able to put it to use on the mainnet in a few days! These are maybe not items that remain on paper: using StarkEx, our scalability engine, we have achieved a throughput greater than 9, 000 self-hosted transactions per second (a 2000 times increase compared to the Ethereum main network) )! Moreover, this isn't the limit: we are maybe not limited by blockchain resources, only by cloud resources. The end-to-end trading services and products will undoubtedly be launched on the mainnet soon. The initial DeversiFi decentralized exchange supported by the StarkEx engine will undoubtedly be launched in a few days. And an NFT exchange supported by StarkEx can be under intense development, that'll support the trading of in-game assets.

Enhancing privacy and improving transaction processing speed by ZKP is not an adequate condition for public chains to become popular. We also need privacy. The pioneers of people chain discovered the benefits of ZKP for privacy before they discovered the benefits of ZKP for scalability. The Zcash blockchain, launched in 2016, may be the first system that uses the ZKP scheme to supply covert transactions. Privacy can be critical to achieving an efficient market. When traders trade available in the market, they both want to be free and not to expose their unique information. Access-free blocks (and DeFi) are completely transparent in design: in order for all small nodes to verify hawaii of the blockchain without introducing any trust assumptions, all transactions will undoubtedly be made public on the chain. For that reason the process is: how exactly to obtain privacy without sacrificing the trust-free nature of DeFi? You are able to take advantage of ZKP's zero-knowledge attributes! As stated above, zero-knowledge proof we can prove a computational statement without making private input public. When this attribute is applied to the blockchain, unique information may be included in the private input, and the data won't expose this input at all. The result is that most people are happy: privacy may be protected, and at the same time anybody can verify hawaii of the blockchain without introducing trust assumptions, perfect. This isn't even bragging, you can already put it to use! A few teams have previously used ZKP on Ethereum to create privacy enhancement solutions, including Tornado. cash and AZTEC. Tornado uses the coin mixer method, while AZTEC uses the transaction pool method (which is more effective? ). We are expectant of other available choices to emerge.

Note: Privacy does not mean anti-regulation. The requirement for privacy of market participants can coexist with the necessity for regulators to see or watch and monitor the healthiness of the market. For example: a company can create a zero-knowledge proof tax payment, in place of sharing all its books with tax collectors. The privacy of organizations is protected, and regulators can trust that taxes have already been collected (examples of this is seen here). ZKP's enhancement of fairness in a reasonable market is not just meaningful in philosophy. Traders will always be far from trading venues they think are unfair. For that reason fairness is helpful to liquidity. There are many approaches to harm the fairness of the market, but most of them involve the abuse of the best of advance knowledge by system operators (such since the exchange itself). ZKP might help participants make certain that operators cannot abuse their own privileges and cannot be partial. A prominent example may be the front-running transaction. Preemptive trading implies that market makers use advance information to trade before the others know the data, which is illegal. About the impact of runaway transactions available on the market, everybody's estimates will vary, however the accepted conclusion is that the impact is huge and it is maybe not conducive to advertise efficiency. ZKP can solve the issue of preemptive transactions, because the privacy protection of traders can not only prevent other traders, even operators can not see through-this means that operators cannot profit from informed privileges and invite operators to come back to their The original location. Develop to see this kind of solution. There is still plenty of work to do! You want to allow it to be easier for developers to have these technologies, but additionally to improve the efficiency of these technologies. Moreover, you want to develop the Layer-2 solution, and we also have to think of how exactly to maybe not break the strong composability of DeFi. Gleam lot of work to be performed (if you wish to have an intuitive understanding of the perfect solution is, you can look at the principle of conditional payment. And how StarkEx enables you to achieve fast withdrawals). The scalability and privacy of the cryptographic certification system can transform DeFi from the sandbox of financial innovation to a worldwide force that will change the prevailing financial system. Cryptographic certification systems, such as for instance ZK-STARK, not only have advantages over other solutions when it comes to scalability, but additionally support better market design and create better markets with privacy and fairness.

[practicalryangosling]

One minute to comprehend the DeFi lending agreement Aave unsecured credit and risk

Aave's unsecured credit function isn't ideal for borrowing between non-acquaintances, and more ideal for borrowing between institutions. Original title: "Aave launches unsecured credit function, is DeFi coming? 》 Written by: emusher On July 8th, the Ethereum lending agreement Aave announced the launch of a brand new feature called Credit Delegation, which allows users to provide peer-to-peer loans without collateral requirements, which can be significant for the large-scale expansion of DeFi Meaning, but it also introduces new risks. In this regard, Aave CEO Stani Kulechov explained how this feature works via Twitter:

Depositors can entrust their credit line. For instance , Karen deposits a USDT to Aave and entrusts her credit line to Chad, who are able to withdraw funds such as ETH from the Aave agreement.

Karen and Chad reached an agreement on loan terms, such as repayment, interest, and contract. The signing process of this agreement is implemented through OpenLaw, which ensures the enforceability of the loan, exactly like signing an agreement with DocuSign.

Following the agreement took effect, Karen created a CD vault smart contract, allowing Karen to set the credit limit and currency according to the agreement, and Chad could withdraw the loan through the borrow() function and repay the loan through the repeat() function. This open personal credit line has had flexibility to Chad.

Through entrusted loans, Karen can theoretically get yourself a higher mortgage interest when depositing with Aave, and Chad can borrow cash from Aave without collateral. How to control the danger of Lao Lai? We all know that in the standard lending industry, it's very common for borrowers to deliberately neglect to repay after making unsecured loans. This type of person is also called "Lao Lai. " Consequently , some individuals questioned the new features released by Aave. For instance , Crypto Kenneth commented on this: "If Chad is an old man and isn't ready to pay the amount of money, how do he punish him? Without a complete identity and the particular implementation of the agreement, Chad can quickly borrow the funds and run away. " In this regard, Stani Kulechov's explanation is: "You do not wish to delegate your credit to somebody you don't know, you may only delegate it to Chad you're knowledgeable about. " The implication is that Aave's credit authorization function would work for unsecured loans between acquaintances. Basically, this sort of lending requires the principal to totally comprehend the borrower or be able to judge the borrower's credit risk. Concerning the risks of the new features, DeFi Dude also raised his questions: "Is there a way to limit the credit limit? Easily entrust my credit limit to Chad, but I do not want him to make use of all my available credit limits, how is it possible? Will the credit limit drawn by him affect my liquidation? price? " In this regard, Stani Kulechov explained: "Yes, you are able to (1) limit the quantity you wish to authorize, (2) set the currency you need Chad to withdraw, (3) turn off the credit line so that Chad can't withdraw any available entrusted credit line. And the quantity he can withdraw can only just be within the product range of Aave's loan-to-value ratio. " Significance of Unsecured Lending for DeFi Expansion At present, most DeFi lending agreements adopt an over-collateralization mechanism. For instance , if I mortgage ETH worth $10, 000, I could only borrow DAI worth less than $7, 000, which greatly limits The possible use cases of blockchain lending are discussed. The peer-to-peer intermediary method adopted by Aave can theoretically bypass this restriction and permit the agreement to recuperate the borrower's loan away from blockchain. But its current plan means that it isn't ideal for borrowing between non-acquaintances, and more ideal for borrowing between institutions. In this regard, DeFi investor Stefano ₿ernardi also expressed his views: "Can more individuals donate to Karen's CDV? Or can people gather funds through Aragon DAO and use a real estate agent to open a CDV? "

According to Stani Kulechov, at the beginning, you will see a B2B relationship involving the principal and the borrower, but in theory it can be expanded through the asset pool model to diversify risks. Nevertheless, this new DeFi lending service will have more risks than over-collateralized lending. In addition , Kulechov stated in a interview with the media that DeFi as a whole remains too small and the needs more measures to produce it main-stream. He also added: "It is important for borrowers in order to convert stablecoins into fiat currencies with less fees. "

[practicalryangosling]

Comprehend in one article, the "past and present" of Decentralized Finance (DeFi)

What the translator wrote in the front: MYKEY has just launched two activities recently: redeem DAI inside a limited time, and OASIS deposits a network fee. Put simply, are you a new comer to DAI and DeFi? Do not worry, today's translation will require you to know them.

The promise of cryptocurrency is to generate income payments universally available to everyone else, regardless of where they truly are on earth. Decentralized finance (DeFi) or open finance takes this promise a step further. Suppose the global open alternatives to financial services which are being used today, such as savings, loans, transactions, insurance, and so forth, could be accessed by anyone on earth through smart phones and the Internet, and implemented on smart contract blockchains such as Ethereum. Smart contracts are programs that run on the blockchain and may be automatically executed when certain conditions are met. These smart contracts enable developers to create more technical functions than just sending and receiving cryptocurrency. These programs are what we now call decentralized applications or dapps. You can think about a dapp being an application built on decentralized technology, as opposed to an application built and controlled by a single centralized entity or company. Although some of those concepts may possibly appear to be future ideas-automatic loans are negotiated directly between two strangers around the world, without bank intervention, many dapps are actually implemented. You will find DeFi dapps that allow the creation of stablecoins (cryptocurrencies whose value is pegged to the U. S. dollar), lending funds and earning interest on cryptocurrencies, loans, exchange of just one asset for yet another, long or short assets, and Implement automated higher level investment strategies. What exactly is the big difference between these DeFi dapps and conventional banks or Wall Street counterparts? The core of those organizations just isn't managed by institutions and their workers, but by code or smart contracts to write rules. After the smart contract is deployed to the blockchain, the DeFi dapp can run on a unique with little or no human intervention. Even though in practice, developers usually maintain dapps through upgrades or bug fixes. The code is transparent on the blockchain and anyone can review it. Still another trust relationship is established with the user, because anyone gets the chance to find out about the event of the contract or find errors. All trading activities will also be public, anyone can view. Even though this might cause privacy issues, transactions are anonymous automagically, that's, they truly are circuitously associated with your real identity. From the first day, Dapp started to develop for the global market-whether you might be in Texas or Tanzania, you should use the exact same DeFi service and network. Of course, local regulations may possibly apply, but technically speaking, many people connected to the Internet may use most DeFi applications. You can create it “without permission” and participate “without permission”—anyone can cause DeFi applications, and anyone may use them. Unlike finance today, you can find no gatekeepers or lengthy accounts. Users interact directly with smart contracts through their cryptocurrency wallets. Flexible user experience-don't just like the interface of a particular dapp? No problem-you may use a third-party interface, or you can build your own personal. Smart contract is similar to an open API, anyone can build applications for it. Interoperability-New DeFi applications could be built or combined by combining other DeFi services and products (such as Lego blocks), such as stable coins, decentralized exchanges and prediction markets could be combined to create brand-new services and products. DeFi is now one of the fastest growing areas in the encryption field. Industry observers make use of a unique new indicator-"ETH locked in DeFi" to measure traction. During writing, users have stored significantly more than $600 million worth of cryptocurrency in these smart contracts. Are you interested? Let us have a closer look at a few popular DeFi dapps available. You will need a cryptocurrency wallet with an integrated dapp browser (such as Coinbase Wallet) to connect to these dapps. You can even use most dapps on the desktop by selecting the Coinbase Wallet option and scanning the QR code.

It's still in its infancy for dapps, so DeFi users should conduct research on new products and services. Like any computer code, smart contracts could be susceptible to accidental programming errors and malicious hackers. Stable currency and decentralized reserve bank: MakerDAO Maker is really a stablecoin project in which each stablecoin (called DAI) is pegged to the U. S. dollar and backed by collateral in the form of cryptocurrency. Stablecoins provide cryptographic programmability with no adverse effects of volatility caused by "traditional" cryptocurrencies like Bitcoin or Ethereum. You can try to produce your own personal DAI stablecoin on Maker Oasis dapp. Maker isn't only a stablecoin project, additionally, it hopes to become a decentralized reserve bank. Holders of a different but related token MKR can vote on important decisions, such as stability fees (similar to how a Federal Open Market Committee of the Federal Reserve votes on the federal funds rate). Still another stablecoin with a different architecture could be the U. S. Dollar Coin (USDC), where each USDC token is backed by a U. S. dollar held within an audited bank account. Borrowing: Compound Compound is really a blockchain-based lending dapp that may lend cryptocurrency and earn interest in it. Or possibly some funds is necessary to pay rent or buy groceries, nevertheless the funds are tied up in cryptocurrency investments. Then you can certainly deposit cryptocurrency as collateral into the Compound smart contract and put it to use as collateral. The composite contract automatically matches borrowers and lenders, and dynamically adjusts rates of interest predicated on supply and demand. Other popular borrowing/lending dapps are Dharma and dYdX. Aggregators such as LoanScan track the borrowing and lending rates of each and every dapp, in order to check around to obtain the very best rate. Automatic token exchange: Uniswap Uniswap is really a cryptocurrency exchange that operates entirely predicated on smart contracts, enabling you to trade popular tokens directly from your wallet. That is different from exchanges like Coinbase, which store your cryptocurrency and keep your private key for safekeeping. Uniswap uses an innovative mechanism called automatic market making to automatically settle transactions near market prices. Along with transactions, any user can become a liquidity provider by providing cryptocurrency to the Uniswap contract and finding a part of the exchange fee. That is called a "pool". Other popular decentralized exchange platforms (DEXes) include 0x, AirSwap, Bancor, Kyber, IDEX, Paradex and Radar Relay. All architectures are slightly different. Prediction Market: Augur Augur is really a decentralized prediction market protocol. Using Augur, you can vote on caused by the function, unless you add value to the vote to help make the "skin in the game". Prediction market platforms such as Augur and Guesser are nascent, but give a vision into the future, and users may use the wisdom of the crowd to create better predictions. Synthetic Asset: Synthetix Synthetix is ​​a platform that enables users to produce and exchange synthetic versions of assets, gold, silver, cryptocurrencies, and conventional currencies (such while the euro). Synthetic assets are backed by excess collateral locked in Synthetix contracts. Lossless savings game: PoolTogether The composability of DeFi gives it unlimited new possibilities. PoolTogether is really a lossless game in which participants deposit DAI stablecoins into the ordinary lottery pool. At the end of each and every month, a lucky participant will win all of the interest earned and everyone else will withdraw their initial deposit. Therefore , what's the next phase for DeFi? Since the birth of human civilization, money and finance have appeared in one form or yet another. Encryption is just the most recent digital incarnation. In the next couple of years, we may see all of the financial services used in today's legal system being rebuilt for the crypto ecosystem. We now have seen asset issuance and exchange, lending, lending, custody, and derivative services and products built for cryptocurrencies. What's next? The very first generation of DeFi dapps relied heavily on collateral as protection. Put simply, you need to already own cryptocurrency and provide it as collateral in order to borrow more cryptocurrency. More conventional unsecured lending will need to rely on an identity system to ensure that borrowers can establish credit and boost their borrowing capacity, exactly like today's SSN and FICO scores. However , unlike today's identity and credit systems, decentralized identities must be both universal and privacy-protective. We now have also seen innovation in the insurance field. In these days, many DeFi loans are over-collateralized (which ensures that these loans are inherently safe since there is an adequate buffer of reserve assets). However , the black swan of DeFi is really a smart contract vulnerability. If your hacker discovers and exploits a bug in the great outdoors source code of the dapp, millions of dollars may be used up straight away. Teams like Nexus Mutual are building decentralized insurance, when the smart contract is hacked, this can benefit users as a whole. Still another trend we see is really a better user experience. The very first generation of dapps was built for blockchain enthusiasts. These dapps do a good job of demonstrating the exciting new DeFi possibilities, nevertheless the usability remains notably insufficient. The latest version of the DeFi application prioritizes design and ease of use in order to bring open finance to a wider audience. As time goes on, we hope that the encrypted wallet can be the portal for the digital asset activities, exactly like today's Browser could be the portal for accessing global news and information. Imagine a dashboard that not just shows what assets you have, but additionally exactly how many assets are locked in different open financial agreements (loans, asset pools, and insurance contracts). In the complete DeFi ecosystem, we now have also seen the trend of decentralizing management and decision-making power. Although the term "decentralization" is employed in DeFi, many projects today have a primary key for developers to close or disable dapps. That is done to facilitate upgrades also to provide emergency shut-off valves in the event of error codes. However , while the code becomes more tested, we are expectant of developers to abandon these backdoor switches. The DeFi community is tinkering with various techniques to allow stakeholders to vote on decisions, including through the use of blockchain-based decentralized autonomous organizations (DAOs). Some magical things are happening in the great outdoors financial system-cryptocurrency is making money online, and we are seeing a massive leap in the number of choices of currency functions. This is a rare chance to see brand-new industries bloom from scratch. The DeFi field will first catch up with today's financial services industry. But with time, even when the energy to build financial services is democratized to anyone who are able to write code, it'll be difficult to know what innovation will be produced.

[practicalryangosling]

A write-up to understand the history of finance and regulation, as well as the Yin Jian for DeFi

Encrypted financial technology has the opportunity to democratize financing channels and make the economic climate more efficient and transparent, but it might also create new kinds of systemic risks which can be difficult to understand and govern.

Author: Mario Laul, block chain investment institutions Placeholder researcher Translator: Lu Jiangfei The development history of the financial industry has some crucial patterns, decreasing being the systemic crisis, the collapse of asset prices or income streams that followed, and the multiple games between financial innovation and supervision. In the field of open and automated encrypted financial services (so-called DeFi), if architects can comprehend these interactions, they could better assess potential risks to cope with different economic and regulatory scenarios. This informative article will give attention to historical cases associated with this and try to analyze the potential long-term importance of this wave of financial innovation. Financial and creative destruction Austrian-American economist Joseph A. Schumpeter once noticed that the core of capitalism lies in creative destruction-as old-fashioned ways of doing things are replaced by innovative alternatives, economic structure usually Go through repeated and sometimes painful reorganizations. Austrian-American economist Joseph Schumpeter, pictured from Forbes The creative destruction of the financial industry mainly occurs in two ways: firstly, to introduce new inventions and successfully market them, which requires financial support; secondly, the financial industry it self is continually innovating, helping to make the shape of financial relations more and more The more diverse and complex. Generally speaking, innovation is beneficial, but innovation also introduces new risks which can be difficult to understand initially, and in addition it is sold with cyclical instability that's easily contaminated by currency dilemmas. Because finance plays a central role in economic development, financial innovation also poses a question to people: what kind of appropriate supervision the financial industry should really be subject to without harming its role in promoting social progress. There are lots of examples in modern western history that the changes in financial methods have promoted economic transformation and made existing regulatory frameworks obsolete. Alternatively, whenever innovation results in new kinds of participation in financial markets, in addition, it triggers institutional restructuring, including new regulations, to address consumer protection, market integrity, and (perhaps most importantly) social and economic stability. Worries. Listed below are some typical examples (if you aren't interested in the historical overview, you can skip this paragraph, we will emphasize the relevant content again whenever we discuss DeFi later). In the late 18th century and 19th century Britain, the mix of "limited liability" and "transferable joint stock" Even though the two have already been invented before, the mix of both under the background of British industrialization has played a key role in the synthesis of modern financial markets and commercial supervision. "Joint stock financing" is mainly utilized in industries that need a lot of upfront capital expenditures, such as shipping, mining, railways, public utilities and insurance. This form of financing directly promotes the development of great britain securities industry and various laws associated with it, Media and administrative functions. Regarding investors' personal debts, controlling an upper limit on the debts of the entities they invest in can promote more risk-taking behaviors. Alternatively, since the acquisition and transfer of ownership became easier, the general public market attracted a wider selection of investors, in the wealthy (the core way to obtain funding for emerging, unproven industry exploration) and banks (more mature In addition to the credit sourced elements of enterprises), more sourced elements of funds have already been added. The ever-expanding securities industry has promoted new kinds of capital, but it in addition has made the financial system more and more complex, while formal regulations, standards and risk management methods have not been developed, plus some have even been ignored. In a speculative and impulsive environment, this may naturally result in extortionate and bad behavior. Along with having less an institutional framework to cope with systemic shocks (such as England in 1825, sometimes called the very first modern financial crisis), the end result should be A number of crucial reforms. Crucial interventions include:

* In 1812 and 1821, the London Stock Exchange (London Stock Exchange) implemented self-regulatory measures to reduce fraud and improve research on market participants; * In 1816/1821, the world's first gold standard was established to restrict the federal government and financial sector; * The nation Bankers Act (Country Bankers Act) was introduced in 1826, allowing the establishment of banknote-issuing joint-stock banks outside London, aiming to make the British bank system more competitive and flexible, and better serve the growing industry Economic services. The Bank of England opened its first branch in 1826 under the National Bankers Act Needless to say, every one of these regulatory measures have fallen in to ideological controversy and set the background for new challenges later on. The regulatory milestones since that time include:

* "Joint-Stock Businesses Registration, Incorporation and Regulation Act of 1844" (1844 Joint-Stock Businesses Registration, Incorporation and Regulation Act) aims to simplify the business formation process and increase public confidence running a business; * The 1855 Limited Liability Act (1855 Limited Liability Act) regulates limited liability and necessarily expands the scope of application of limited liability; * "1844 Bank Charter Act" (1844 Bank Charter Act), designed to reduce the destabilizing effect caused by extortionate banknote issuance. Banking Charter Act of 1844 In a rapidly expanding economy, the latter is now an obstacle as people are expectant of. So long as a full-blown liquidity crisis occurs, the bill will soon be postponed, and the lender of England will gradually get to be the ultimate means to fix the currency problem. Progress as a result of the U. S. financial meltdown in the late 19th and early 20th centuries In the historical development of the US financial market and corporate governance, this was an eventful period, with many different innovative methods, and the background was large railway companies and industrial trust companies (such as Standard Oil and American Steel). During periods of financial activity, you will find frequently more controversial operations, such as stock mixing, such as anti-competitive business methods, which are in the shadow of creative companies. In addition , people are increasingly focused on the growing wealth and power in the hands of a little group of financiers and industrialists. The entire society is full of hostility towards large enterprises. This is followed closely by various regulations directed at reducing Their education of economic centralization has increased corporate information disclosure. The most famous regulatory regulations of this period are the 1890 Sherman Antitrust Act, the 1914 Clayton Antitrust Act, and the 1914 Federal Trade Commission Act. "(1914 Federal Trade Commission Act). The most important thing is a series of cycles of rise and fall occurred in those times, such as 1884, 1893, 1896, 1901 (the first currency markets crash of the New York Stock Exchange) and 1907 major crises. The specific reasons for each crisis will vary, and this article will not explain it at length. These crises not only caused severe damage to the financial market and the whole economy, but also stimulated some fierce debates on whether the institutional basis of the US financial system should really be devoted to gold. The last consequence of the debate was the 1913 US Federal Reserve System. set up. Usa Federal Reserve Board, 1917 It is worth noting that although the 1913 Federal Reserve Act (1913 Federal Reserve Act) promulgated in 1913 represented a significant change in federal legislation, many regulatory powers still stay in the US states and private industry institutions, including local clearing houses., Banking associations, financial groups, professional service providers such as rating agencies, and of course stock exchanges. Today, the legislators and industry associations of the US states still play an essential role in US financial regulation. The currency markets boom of the 1920s, the 1929 crash, and subsequent regulatory measures in america The marketplace boom gave birth to a crisis and eventually generated the Great Depression. This technique led to an unprecedented spread of common stock ownership. Facts have proved that the fiercely competitive securities industry has turned into a fertile ground for various bad behaviors. On the one hand, people generally expect to make quick profits in the currency markets; on the other hand, many individuals start to buy stocks with installments if not borrow cash. The 2 sides formed a dangerous combination. At precisely the same time, investment institutions started initially to hire a lot of securities salesmen, the main job of the people is always to get the most urgent stockholders in the vast crowd of investors. Compared with stock issuers and their representatives, these investors are inevitably at a disadvantage in terms of information. An important development at this stage may be the emergence of investment trust institutions. For those "securities whose buyers can't be found elsewhere, " investment trust funds are becoming a convenient dump. Even though investment trusts existed before, their number surged in the 1920s. In the United Kingdom, investment trusts tend to choose diversified and long-term investment strategies. On the other hand, many investment trust institutions in america didn't shy far from speculation, but were actively constructing increasingly complex capital structures. All of the above occurred in an environment where the regulatory and information disclosure standards are still relatively underdeveloped, which also caused the financial meltdown of 1929 to cause unprecedented losses. The federal government subsequently adopted some emergency intervention measures to stabilize the bank system and control deflation. Along with various updates to state-level regulations, there are also landmark changes in federal legislation to boost investor protection and establish market integrity. The most famous examples include:

* The 1933 Securities Act introduced more stringent securities registration requirements; * The 1933 Banking Act established the Federal Deposit Insurance Corporation (FDIC); * The 1934 Securities Exchange Act established the United States Securities and Exchange Commission (SEC). After the collapse of the Bretton Woods system in 1971, specially in america, the gradual deregulation and technological development world wide generated the global financial meltdown (GFC) of 2007-2008. There is certainly one word that can better describe this era, and that is: financialization (financialization), that's, relative to other areas of the economy, banking institutions and tools are becoming more and more crucial. Recent developments in this region have occurred within or through the so-called shadow bank system, that's, operating beyond mainstream banking supervision. Considering that the early 1970s, the wave of financial innovation has attracted attention. It is a huge research task to make a complete list, nevertheless the most obvious trends are the following: financial digitalization, increasing use Leverage, securitization, and quantitative risk models, deterioration of regulatory and endorsement standards (resulting in higher debt levels), and the proliferation of increasingly complex and esoteric lending options, a few of which are triggering the financial meltdown and the Great Depression in america Played a key role in the crisis. As in the last three periods, the outbreak of the crisis also triggered discussions on the necessity for proper financial supervision. Nevertheless , besides the 2010 Dodd-Frank Act, 2011 Consumer Financial Protection and some emergency interventions triggered by the European debt crisis in 2010-2012, Actual regulatory measures are in reality limited by a specific extent. At precisely the same time, unconventional monetary policies such as quantitative easing, zero interest levels and even negative interest levels are becoming the newest normal. Along with the emergence of new trends in distributed computer systems, cryptography, and automation technology, all of this supplies a background for the emergence of encrypted assets and DeFi. What's the (not) special of DeFi? In every financial fields, possibly the most notorious sentence is: "This time differs from the past. " Indeed, each economic cycle unfolds in a unique historical environment. It will be too easy to say that the underlying mechanism remains ostensibly unchanged with time. Nevertheless , there are still some crucial historical laws that can't be ignored. Before thinking about the relationship between these facets plus some of the more unique characteristics of encrypted networks and DeFi, we will first look at the following reasons to understand why observing the development of the emerging industry of DeFi produces a powerful sense of deja vu: To comprehend DeFi in a broader financial context, three basic elements associated with financial innovation and development are extremely crucial. First, various potential financial assets/contracts are constantly growing, and the issuance, trading, and monetization of the assets/contracts are continuously simplified and democratized. DeFi is merely the newest example. Second, use technology to operate financial markets. From railways to telegraphs to Consolidated Tape System (Consolidated Tape System), computers, the web and high-frequency trading robots, the financial industry has always been at the forefront of adopting new technologies. Today, DeFi are at the forefront of use case development for decentralized networks and smart contracts. The third point involves the evolution from brokers/agents (trading with respect to the others and earning commissions) to traders/principals (trading independently accounts, at their own risk). This shift from person to overlapping roles with the others has occurred in the history of several financial markets, such as commodities, foreign exchange, stocks, interest rate swaps, and even subprime mortgages. New risks. Because this kind of systematic conversion is likely to make crucial market participants accept responsibilities which they might not be in a position to take. An identical perspective enables you to analyze DeFi, such as regularly assessing the extent to which crypto financial service providers (such as exchange operators and major brokers) can be involved in (potential leverage) position transactions utilizing their own accounts. The emerging industries which were still informal and marginal in the beginning will undergo a process of institutionalization and specialization. So far as DeFi can be involved, this calls for the emergence of encrypted financial agreements and institutions that offer services, such as data curation and disclosure, exchanges, interest accounts, lending, investment management, structured services and products, insurance, and so forth Some professional intermediaries will begin to appear, such as Stake Capital, Chorus One, and Staked. Industry associations may also be created, such as MAMA and POSA, and much more and much more formal governance structures will soon be established, such as on the web forums and ecological System funds, voting mechanisms, procedures for changing protocol rules, decentralized autonomous companies of exchanges, and so forth In regions with underdeveloped market infrastructure and regulatory standards, the emergence of new financial systems provides ample room for fraud, manipulation, as well as other suspicious behavior. This aspect is further amplified in DeFi. The reason why could be some ideological motives, or it could be due to the technological choices made in the first startup of the. Generally speaking, innovation activities tend to produce a mismatch between market methods and existing regulations. It's two effects: first, this case has generated a philosophical discussion about whether the minimum and/or self-regulation is better, or whether to update external supervision; second, you will see some kind of creative destruction consequently. Additionally, it introduces new dilemmas and challenges. The important thing is that the latter is frequently misunderstood and underestimated until shock events including the financial meltdown occur. An identical situation can happen to DeFi, and it will also face new systemic cybersecurity threats. For DeFi networks and related applications, the capacity to deal with these risks and answer potential crisis situations would have been a essential competitive advantage. Over time, market participants and regulators will discover that position will gradually shift to an even more stable, compliant, and consumer-friendly system.

Financial stability may be summarized in to two goals: First, the prudential supervision of rights and responsibilities in financial contracts takes a balance between allowing voluntary agreements and avoiding overheating relationships. The latter may lead to some undesirable consequences. Such as for instance deflationary spirals, extreme unfairness and even social conflicts. As DeFi continues to evolve, finding this balance will end up increasingly crucial. Second, try to reduce the chance for price collapse in many economies, specifically asset/collateral prices (the result is negative equity, insolvency) and income flow (the result is bankruptcy, that's, the mandatory repayment can't be made). While achieving these goals, healthier market discipline can't be undermined, because market discipline can stop the expansion of unsustainable economic arrangements. These considerations need certainly to take into account the larger context, such as power relations and wealth inequality, both of which are very important determinants of social and political conflict. To give a specific example, if we use a financial instrument to value debt as well as other liabilities, and the economy associated with it is growing, then reducing the method of getting such financial instruments (or providing a hard and fast level of supply) It'll benefit asset holders, creditors and landlords; if your more inflationary method of getting this tool (preferably for real value creation) is adopted, it'll benefit entrepreneurs, debtors and workers. Different orientations could have an impact how people view the fairness of the financial system. There is absolutely no doubt that the emerging encrypted financial economy also has to cope with these basic dilemmas. All in all, financial innovators tend to underestimate the causes behind the institutional and regulatory arrangements that build existing systems. Actually these systems and regulations have emerged after a any period of time of trial and error in the ever-changing economic and political environment. In the crypto-finance industry, people always feel that "the old system is outdated. " They mainly discuss dilemmas on the basis of technological and social changes. Thinking about the development stage of the, people do lack experience and historical perspective. In other words, each generation must learn lessons from practice by itself, and strive to utilize the uniqueness of its own time to create the greatest possibilities. Nevertheless , if we only regard DeFi as a brand new chapter in the giant axis of credit history, our analysis continues to be maybe not comprehensive enough. We should also give attention to the uniqueness of DeFi and its particular potential to alter the world. They are associated with the basic driving facets of the financial economy, such as asset prices, maintaining income streams (so that repayments can continue), the ethics of market participants, and business The accumulation of integrity, systemic risks, and the continuous evolution of supervisory roles. The uniqueness of DeFi can be as follows:

* The principles of open source, decentralized, permission-free network, cryptographic verification, and self-control of data provide DeFi with some interesting features, including the chance for code and ledger forks, improved control of information that is personal, and enhanced privacy, The ease of combining multiple protocols or applications right into a single interface (combinability). As DeFi gradually improves in terms of user experience, the true potential and value of the features will end up more apparent. * DeFi is indigenous to the web, so it has the characteristics of digitalization and globalization since its birth. Compared with previous generations of financial technology, DeFi is also more decentralized, so it is also difficult to be censored or regulated. Nevertheless , as time goes by, if the existing digital divide gradually decreases, then DeFi may become a huge equilibrium force, allowing financial services to reach everyone more easily, provided that he/she has an Web connection Computers and mobile computing devices. The reach of financial services is really a key element of economic opportunities, and the popularization of financial services is also the inspiration of an inclusive and prosperous society. * DeFi is built on a globally auditable digital ledger, and in addition it utilizes the trust and contract execution guarantees provided by the distributed computing network (most of them are currently built on Ethereum). In theory, this enables for automated risk management and much more precise regulatory supervision. Ideally, assuming DeFi can expand and enter the mainstream, it'll undoubtedly make the financial system more efficient, transparent and flexible. Nevertheless , because it has contributed to unprecedented global integration, complex and unfamiliar financial forms, it could also reduce the effectiveness of national supervision and cause various new systemic risks. Understanding and solving these dilemmas, specially in crisis situations, not only includes a profound effect on the future of finance, but also on the global society. * Aside from the deployment of network hardware, the emergence and development of DeFi are in reality relatively independent of other areas of the economy. Consequently , we must distinguish between two systemic risks: internal and external. There is lots of discussion about internal risks, specially regarding the growing importance of Ethereum and several leading financial applications based on Ethereum (such as MakerDAO). There isn't much discussion on external risks, but as DeFi is increasingly in contact with and built-in with old-fashioned financial systems, and is used to coordinate production and transactions in the real economy, external risks deserve more careful consideration. A more substantial background includes the increasing importance of crypto assets in old-fashioned investment portfolios (the price volatility of crypto assets is also becoming more and more important), and at the same time, more and more debt and income denominated in cryptocurrencies.. With the continuous development of this new economy, it is necessary to understand the associated balance sheet with the price of encrypted assets and cash flow exposure, in order to assess how likely it is within DeFi and its particular experience of other areas of the economy Can cause systemic risks. * The blockchain network and the open financial system built onto it really are a continuous driving force which makes the global management infrastructure super rational and automated. If it could be successfully expanded, it could produce a bureaucratic system of unprecedented scale, where human administrators are gradually being replaced by machines. On the one hand, this may bring amazing efficiency improvements in information processing and facilitating transactions. Alternatively, these systems may gradually evolve in to some kind of "silicon cage"-in this society, more and more administrative decisions appear to require hardly any subjective input. It follows a set of abstract, The rules of the "system" which can be automatically executed. This method is too big and complex, no single human group can conduct direct review or governance. To some extent, this really is also hawaii of society even as we know it today. Nevertheless , if there is a worldwide decentralized computing network that's both systematically crucial and difficult to unilaterally control, then your situation may well be more complicated and difficult to describe. Summary The financial services provided through open source protocols and decentralized networks have come to us. Before, concerns about consumer protection, market integrity, and economic stability played a decisive role in formulating financial supervision and institutional foundations—every time with a specific crisis. And encrypted financial technology has the opportunity to democratize financing channels and make the economic climate more efficient and transparent. Nonetheless it might also create new kinds of systemic risk, especially when encrypted assets and DeFi applications are getting to be more and more vital that you coordinate real economic behavior. Because the complexity of the device increases, it could become increasingly problematic for humans to understand, directly control or manage it. The core goal of financial services is always to continue steadily to support those behaviors that ensure human health and happiness. Are DeFi and encrypted financial technologies a kind of future humans want? Perhaps only time can provide the answer.

[practicalryangosling]

DeFI: What if the future of open finance look like?

DeFi it self still has many risks and challenges, but can we stand on the basis of these financial originals and luxuriate in the future open financial infrastructure? This issue invited a classic friend from the Wuya community, Liu Yi, the founder of cdots, to talk about: From DeFi to Open Finance. Readable, listed below are the core points:

* DeFi partly replaces the financial services given by conventional financial intermediaries, with three additional features: permissionless, anti-censorship, and minimum trust. * On the list of three aspects of finance, DeFi is severely limited with regards to credit and leverage, but basically eliminates counterparty risk. * DeFi simplifies the origin of credit and turns risk from the pedigree right into a single point. This isn't financial progress, but regression. * The future open financial market should be compliant, but to conform to future regulations, maybe not current regulations. * Open finance is a market that integrates various financial intermediaries and many decentralized encryption protocols. Beginning with the exchange model, we are able to speculate on the overall structure of open finance as time goes on. * Public chain application chain every one can take to, so long as we say that we are actually innovative, avoid being scams, do not visit private pockets, do not waste social resources, the present domestic policy easing must allow every one to do it, this really is our accumulation of reform and opening up experience of. Shared by: Liu Yi Organize: blockpunk (Wuya Community) 01 DeFi could be the abbreviation of Decentralized Finance in English. Look at these two words apart. To begin with, what is finance? Huang Qifan said that finance is obviously very simple, that is, managing money for the rich and financing for the lack of money. This sort of intermediary service is known as finance. What exactly is decentralization? The word decentralization is quite vague and contains different meanings in different contexts. If it's used to modify a certain service, I think it means that the service has a few attributes:

* No permission Unlicensed means that anybody can use a self-generated ID to use the service without registration, without providing identification information, and minus the approval of anyone or organization.

* Anti-censorship Anti-censorship, which means that anybody can use the service equally, and can maybe not be discriminated against or denied service as a result of differences in identity or data.

* Minmise trust Minimization of trust means that the consumer only must trust the encryption protocol community as a whole, that he doesn't have to trust individual or perhaps a few entities, nor does that he need certainly to trust the counterparty. DeFi is a decentralized encryption protocol that partially replaces the services given by conventional financial intermediaries. The information of the service hasn't changed. It still manages money for the rich and financing for the lack of money, but its attributes have changed, that is, it has got the above three attributes under decentralization. 02 Is DeFi the future of finance? Finance has three elements: credit, leverage and risk. After adding this decentralized attribute, all three aspects of finance have changed. The first is credit. Credit refers to the dependence between people, organizations and organizations, and the forming of a mutually trusting production relationship and social relationship throughout commodity transactions. Credit is dependent on identity, that is, which person, organization, and what or simply how much credit they will have. DeFi has no identity, so there is no conventional credit. Or DeFi credit currently has just one source, which can be over-collateralization. Beneath the premise of exceeding the mortgage, the leverage ratio is limited. We are able to compute this leverage ratio: For example , MakerDAO has a mortgage rate of 150%. Under ideal circumstances, the price of DAI is strictly one dollar. Then we pledged 100 US dollars of ETH and got DAI of 66. 7 US dollars, and then used the DAI of 66. 7 US dollars to get ETH, and obtained DAI of 44. 24 US dollars in mortgage. Circulating this technique of purchasing mortgages, employing a geometric series formula, with a principal of 100 US dollars, it is possible to hold a CDP (mortgage contract) of 300 US dollars for the most part, that is, 3 times the leverage. So can DeFi add higher leverage? The calculation process just now has explained that the leverage ratio depends upon the pledge ratio: leverage ratio n = mortgage ratio ÷ (mortgage ratio-1) Because all DeFi is over-collateralized, the mortgage ratio is obviously higher than 1 ) Small the pledge rate, the higher the leverage ratio. Nevertheless , the price of encrypted assets is quite volatile. In order to ensure security, it really is difficult to increase the leverage ratio in this place. From the analysis just now, we are able to observe that DeFi is severely restricted with regards to credit and leverage. ** ** 03 What are the advantages of DeFi? At present, the risk is reduced, and some people even believe that the risk is eradicated. So where can it be reflected? Mainly it really is counterparty risk and intermediary moral hazard. DeFi basically made it happen to eradicate counterparty risk. Nevertheless , as a result of two technical obstacles, the intermediary moral hazard of DeFi, that is, the moral hazard with this encryption protocol, is not completely eradicated. The first technical obstacle is that the present types of DeFi agreements are basically smart contracts, but smart contracts lack governance practices. The possible lack of governance means brings two issues: The first problem is that the agreement can't follow the city consensus to upgrade and evolve; the second problem is that after you look for a flaw in the smart contract, you can't modify it, and you may only consider your self unlucky. For that reason to have a certain degree of contract upgradeability and get a handle on losses in the event of defects, DeFi smart contracts have a backdoor for administrators to varying degrees, or super permissions, allowing developers to perform emergency braking, Or change the scope with this super authority. The second technical obstacle could be the lack of reliable decentralized oracles. Many DeFi protocols require off-chain data. I think these two technical obstacles could be solved:

* The solution to the initial obstacle is to develop a dedicated "application chain" to understand DeFi, which can be actually the topic of cross-chain talks. Unlike the smart contract DeFi, the application chain can achieve effective governance.

* The second question, decentralized oracles are currently underway in several projects, and of good use solutions should come in the next couple of years. Following the two technical barriers are removed, the intermediary moral hazard of the DeFi encryption protocol could be driven out. 04 You think this is the embryonic kind of future finance? I don't believe it is because finance isn't to eradicate risks, but to encapsulate various assets and cash flows in to products and put them on industry for trading to meet up different needs in the three dimensions of risk, yield, and maturity. The degree of financial development could be measured by the scale of the financial market and the diversity of financial products. From this perspective, DeFi isn't as good since the financial market composed of Chinese banks and pawn shops 300 years ago, let alone the present worldwide financial market. DeFi simplifies the origin of credit, and changes risk from the pedigree to just one point. This isn't financial progress, but regression. ** ** Now DeFi is much like several curious children who have discovered a set of novel Lego blocks. This group of blocks contains some models of completely new financial components. We are able to take to our better to develop encryption protocols and do decentralized community operations., Do agreement governance and so forth. Some of them will gain experience and become designers for the future Open Finance Building. 05 Exactly what will open finance look like? Though it is difficult to predict now, I think two points tend to be more certain:

* Open finance is a regulated and compliant market.

* Open Finance is a market where various financial intermediaries and many decentralized encryption protocols are collaboratively integrated To describe these two points of view, you need to understand some basics of financial markets and financial supervision. Finance is definitely an intermediary business, why do we truly need an intermediary? As a result of information asymmetry, this causes two major forms of issues:

* One type does occur before the transaction is concluded, which is sometimes called reverse selection, that is, underneath the condition of information asymmetry, inferior products will occupy industry and good products is going to be eradicated.

* One type could be the problem that comes after the transaction is concluded, that is, moral hazard. Beneath the condition of asymmetric information, the transaction agreement is generally incomplete. After reaching an agreement, one party to the transaction won't have to bear most of the consequences for its own failure or negligence, which will damage the interests of the counterparty. This really is moral hazard. For example , after somebody gets fire insurance, they no more pay attention to fire protection. Anyway, if your fire does occur, the insurance company accounts for the compensation, but this harms the interests of the insurance company. In the financial market, it really is to depend on financial intermediaries to fix the difficulties of reverse selection and moral hazard brought on by information asymmetry. Nevertheless , in the case of information asymmetry between your entrusting parties of the intermediary, the issue of reverse selection and moral hazard of the financial intermediary has appeared. Without strict supervision and professional intermediaries, serious adverse selection and moral hazard is going to be caused. For that reason capital markets all over the globe are under strict supervision. Finance must be supervised, maybe not due to the game between countries or government departments for power and profit, but as the financial market can't develop without supervision. 1CO is visible as a test of open finance in the field of direct equity investment. In the absence of supervision, the response choices and moral hazard performance are vivid. For that reason open finance should be a compliant regulatory market. The question now could be how exactly to supervise, how exactly to conform to regulations, and whose regulations come in compliance. No-one can answer systematically at present, and the solution won't be available soon. Some scholars declare that blockchain entrepreneurs embrace regulation. I think this really is too early. Blockchain entrepreneurship is to conform to future regulations, maybe not current regulations. ** ** This appears like an impossible task, but it isn't difficult. Just do these two things:

* The first point is that blockchain entrepreneurship is to do real innovation. For example , DeFi is to make the financial market better, fairer, and safer. If it's separated from the essence of finance and doesn't help the real economy, it could only be a scam in the last analysis.

* The second point is that resources really should not be wasted excessively. This fund is employed in the development and operation of the encryption protocol. If the agreement is successfully implemented, then a entrepreneur and other participants in the community will share the advantages; if the agreement isn't successful, then so long as the entrepreneur doesn't fill his pockets, this can be a reasonable price paid by the society for innovation. Real entrepreneurs do not have to deal with regulatory problems, the future supervision will embrace you. 06 Open finance is a market where various financial intermediaries and many decentralized encryption protocols are integrated. Everyone undoubtedly has no objections, nevertheless the key is how exactly to integrate? Or what type of structure will open finance present? So last month, the well-known crypto investment fund Multicoin published articles called the exchange is open finance. But to be precise, the exchange should be the embryonic kind of open finance, and the overall structure of open finance as time goes on could be speculated from the type of encrypted asset exchange. ** ** The climax of the 2007 subprime mortgage crisis was if the US government refused to bail out Lehman and allowed it to go bankrupt, which triggered a tsunami in the financial market. Why did the United States make this decision? Because bailouts can cause moral hazard, if large financial institutions understand that the federal government wont relax and watch them enter into trouble, they will be more confident and bold in speculation. Actually large financial institutions have indeed taken advantage of their status which can be too big to fail to harm the interests of the entire society. In the financial meltdown of 2008, an incredible number of families in the usa lost their homes, and the US government failed to help these people. But following the collapse of Lehman, the Treasury Department and the Federal Reserve were afraid of triggering a chain reaction that could cause the entire market to collapse, so that they could only allocate funds to help large financial institutions. This caused strong social dissatisfaction. The Occupy Wall Street movement in 2011 was the darkest moment in the usa. I also withstood the same incident in the crypto market. In 2014, the MT. gox exchange accounted for 80% of the worldwide trading volume of encrypted assets, but following the attack, MT. gox went bankrupt no one was rescued. It failed to spread to a large area. But I used to deposit coins within my wallet as opposed to on exchanges, so I was unscathed. But if I buy financial products from Lehman, can there be in any manner to avoid the losses brought on by the collapse of Lehman? Contemplating this question, every one will see that Lehman and MT. gox are both essential financial intermediaries, nevertheless they are extremely different. Lehman is definitely an investment bank. Along with intermediaries, it acts as a counterparty for investors and financiers in a lot of transactions. In a complex financial transaction network, the collapse of Lehman has turned a lot of assets in to toxic assets, and a lot of counterparties (ie its affiliated institutions) come in crisis. Nobody knows the extent of losing and the magnitude of losing., Therefore it is worth the name to affect the complete human anatomy. Easily invest in this Lehman financial product, there is no way I can avoid its failure. ** ** Actually calculations following the subprime mortgage crisis unearthed that Lehman's net loss had not been large. If there is no panic in the market at that time and liquidity was maintained at a reasonable level, Lehman could completely tide over the difficulties through borrowing or additional issuance. For that reason the collapse of Lehman Brothers, or the entire subprime mortgage crisis, reflected the structural flaws in the current financial market. The crypto-asset exchange could be the embryonic kind of open financial intermediaries. It gives services for matching transactions and collects service commissions, but doesn't become a counterparty. More importantly, encrypted assets are recorded on the distributed ledger of the blockchain and have to be directly controlled by the private key. The exchange isn't the best bookkeeper. 07 Old-fashioned financial intermediaries have assumed the triple roles of server, counterparty, and bookkeeper. Open financial intermediaries only provide services and assume the main responsibilities of bookkeepers, and may maybe not become counterparties. ** ** There is also a form of basic ledger that serves since the responsibility of the full bookkeeper. It is a public chain like Bitcoin, nevertheless the number won't be large. Because value storage it self has a network effect, the more people utilize this asset to store value, the stronger its social consensus and the better the liquidity of the asset. Later on, you will see a large number of forms of encrypted assets, and people will only hold several, and only buy or exchange them for other assets when needed. Users and financial institutions may have accounts on these basic ledgers. For that reason users can directly get a handle on their assets through private keys. In addition to the basic ledgers, you will see a lot of transaction agreement ledgers (or application chains), which are in fact various kinds of financial markets, such as for instance equity markets, lending markets, and derivatives markets. I think you will find two forms of these transaction agreement books:

* One type is where financial institutions become bookkeepers, and financial intermediaries remain enterprises, such as for instance centralized exchanges. Businesses can choose their place of registration, and in addition choose which regulatory authority to supervise. These financial institutions must have accounts with this basic ledger (such as BTC), that is, they must announce their fiat currency accounts and basic ledger accounts to the society and regulatory authorities, which can be equal to the bank's basic reserves.

* The other category could be the transaction agreement ledger, and the present DeFi agreements belong to this category. For example , MakerDAO, he'll accept the pledge of basic assets and output a secured item bound to USD. The input and output assets of these transaction agreements should mainly be basic assets, such as for instance RMB and Bitcoin. These agreements don't have clear investors and operation and maintenance entities, so that they need community token incentives for maintenance. This sort of agreement is cross-border, nevertheless the authorities can supervise the issuance and trading of community tokens. 10 Question Q1 Uncle Red Army: I mentioned a lot of problems associated with regulation and the central bank. What exactly will your role take the future of the central bank's digital currency and the future pattern? Liu Yi: I think the central bank's digital currency is useless in the short to medium term, specially in a country like China where electronic currency is now popular. In the future, it's going to change the structure of the entire financial market. China's DCEP maintains a two-tier structure, which can be transitional, avoiding the impact on industry structure, specially reserved for commercial banks. In the future, I think the central bank's digital currency is likely to make commercial banks lose their current dominant position. Q2 blockpunk: Will commercial banks transform under this shock? In what direction? Liu Yi: The present financial intermediaries are facing the issue of transformation. Actually the greatest transformation is to split up from the identity of the counterparty and bookkeeper, and focus on providing intermediary services. This way, one of the greatest structural issues in the financial market could be avoided: financial institutions are too big to fail, or monopolies can hijack the entire society. On the list of a large number of listed companies in China previously decade, half of the gains were created by listed banking companies. Why do financial institutions want to make so much money? For the reason that they are within an overly essential position. Along the way of capital allocation, commercial banks not just acted as a service provider, but actually acted as a middleman, in other words, they made the difference. And because of its network effect, it actually monopolizes industry, so the price difference earned can be larger and larger. I think the future financial intermediary should be service-oriented, depending on this knowledge of investors and financiers, and the ability to obtain data and analyze data, to supply services and earn profits, instead of price differences. This kind of supplier could be seen as a channel provider or perhaps a distributor. And the status of financial intermediary must also be permissionless. If all of your business organizations have sufficient knowledge of this financial business, or when you have enough user data, it is possible to effortlessly complete this financial transaction intermediary, it is possible to become a trading center, and the future is Competition for efficiency. Q3 Uncle Red Army: Some individuals complain that DeFi products have poor user experience and barriers. They believe that DeFi can only become a niche product in certain crypto circles. What do you think in regards to the current situation? Liu Yi: Now all addresses are decentralized, we are able to choose. Put simply, application-based encryption protocols have poor user experience, are slow and high priced, and have complicated technologies. And DeFi is really because the frequency of transactions is low and the worthiness of just one transaction is high, therefore it has a higher tolerance for poor user experience and high usage costs. So he's the general one of the short ones and sticks out. With the advancement of technology, this dilemma could be solved, I think. Q4 Uncle Red Army: *At present, every one basically recognizes that DeFi could be the main battlefield of Ethereum. Recently, Kava in the cosmos ecosystem has also been launched. What do you think of the development of other DeFi in the non-Ethereum ecosystem? What real issues do they have to overcome? Liu Yi: * Everyone knows that my cdot project is cross-chain, which can be my main research direction. Once cross-chain is achieved, the sort of assets you can use first expand. The marketplace value of ETH is 20 billion U. S. dollars, and industry value of BTC is near 200 billion U. S. dollars. If it could cross ETH and BTC, the quantity of assets which can be utilized by the agreement will very nearly double. Ten times. The second it's possible to visit other ledgers as time goes on, such as for instance central bank digital currency. Or access to tokenized securities, gold or other derivatives. The more forms of assets it is possible to access, the more basic assets it is possible to expand. Because DeFi's leverage ratio and product utilization are not high, the quantity of basic assets determines simply how much business you can do. An important factor of DeFi is composability. Assets and transaction rules in financial transactions, these two things could be combined. Cross-chain not just allows you to expand the forms of basic assets you utilize, but also different transaction rules could be combined. We need to divide it in to different chains, and cross-chains are needed to reach such composability. Q5 Uncle Red Army: *10 24 Following the speech, the voice and popularity of the alliance chain suddenly came up. How can you comprehend the decentralized defi and the alliance chain under supervision? Liu Yi: * Since the alliance chain is a productivity tool, there is no challenge to its supervision. The alliance chain takes its publicly audited database, which can well replace the original enterprise data exchange, EDI system. The productivity tool only improves the productivity with this bookkeeping. The initial enterprise alliance remains, the original method of trading is not changed, and the original regulatory rules still apply. The decentralization, cross-border, no center, the supervision with this encryption protocol is a problem. One of the main points I shared this time with is that you're planning to make a decentralized encryption protocol, no real matter what you do, it's not necessary to worry a lot of about regulatory problems. If you are innovating and promoting the real economy, you might be certainly improving efficiency. Second, you never spend some money senselessly and do not fill your pockets. I think this. Regulation can't show you to achieve this. This really is our experience of reform and opening up. Cross the river by feeling the stones. When you cross the river, you can get the opinion of the federal government or regulatory authorities. Q6 Uncle Red Army: So can the application chain also be understood as a positioning between your public chain and the alliance chain? That is, it is not as large as the general public chain rather than as dead since the consortium chain? Liu Yi: Because we did not have the idea of this application chain, all of us call it the general public chain. Actually the majority of the original public chains are only non-access, in other words, they are public. For general-purpose public chains, you can do various applications to them, however in fact, public chains will also be open, they just do not strive for general-purpose use. Q7 Uncle Red Army: After playing it, approximately many people have a confusion. Finance needs supervision, and there exists a moral hazard problem if there is no supervision. Supervision can only do alliance chains. Could it be a complete window of time and energy to start a business? Liu Yi: Uncle, this is the main point I wish to express: both public chains and application chains can be carried out. Just say that you could do innovations, avoid being scams, do not visit your pockets, do not waste social resources, so now, specially in China, give Everyone's policy easing period allows every one to produce innovations. Actually I think the alliance chain doesn't belong to the blockchain world, just once we usually do not regard the interior information system of the enterprise within the Internet industry. Because we did not have the idea of this application chain, all of us call it a public chain. Actually the majority of the original public chains are only non-access, in other words, they are public. For general-purpose public chains, you can do various applications to them, however in fact, public chains will also be open, they just do not strive for general-purpose use.

[practicalryangosling]

DeFi star project Balancer was attacked again, a quick analysis of compound financial model vulnerabilities

Unlike the 29th attack that simply exploited contract vulnerabilities, this time the hacker cleverly used the Compund financial model and created a lot of COMP tokens out of nothing. Original title: "Is there a future for DeFi? The Balancer is attacked again" Published by: CertiK

After CertiK captured the Balancer attack at 2 am on June 29, "Empty Glove Ether: Balancer Attack Analysis", at 8 pm and 11: 23 pm Beijing time on June 29, CertiK Skynet system (Skynet) checked again Two Balancer DeFi contracts with similar axioms were abnormal. The 2 abnormalities occurred in block number 10360609 and block number 10361515. Distinctive from the attack on the 29th that simply exploited contract vulnerabilities, this time the hacker cleverly used the Compund financial model, and created a lot of COMP tokens out of nothing. The star DeFi project was attacked 3 times in one day, making supporters concern yourself with the ongoing future of the entire DeFi market.

Event Overview On June 29, following the attacker borrowed tokens from the dYdX flash loan and minted them, obtained cWBTC and cBAT tokens through uniswap flash loan, and then traded the borrowed tokens in a large amount in the Balancer token pool. Trigger the airdrop mechanism of the Compound protocol to get the airdropped COMP tokens, and then make use of the susceptible gulp() function of Balancer to update how many token pools, then remove all tokens and return the flash loan. The attacker is the same as exploiting the compound protocol's financial model, lightning loan and Balancer code vulnerabilities, and it has COMP out of nothing, and the full total profit is all about 11. 5ETH. CertiK analysis: psychological profile of the attacker The 2 attacks at 8 pm and 11 pm on June 29th used the same technique and used the same payment address, that was confirmed as a team. Even though those two attacks and the 2AM attack on the 29th both used the gulp() of the Balancer contract, the attack practices were different. The latter two attacks used the vulnerabilities of Compound's financial model as opposed to pure code vulnerabilities. In addition , the gains of the last two attacks are much smaller than the profits of the very first attack, and the hacker who carried out the very first attack doesn't have reasonable motivation. CertiK judged that the last two attacks were imitation attacks using similar axioms 14 hours following the first attack. New DeFi Security Challenge This attack used mainly vulnerabilities in the design of the financial model, in place of vulnerabilities at the code level. This new attack mode bred by the DeFi market makes the only real "code audit" service of most blockchain security companies useless. Old-fashioned security technologies that only give attention to the code level and cannot analyze the abstract model cannot cope with the new challenges brought by DeFi at all. And DeFi without model-level protection can just only be paid down to an ATM that is acquainted with DeFi financial model hackers. Does DeFi security warning do more harm than good? This imitation attack has caused many individuals to question the blockchain security company: Will the analysis articles of the security company teach more folks how exactly to attack? Why have various safety warnings perhaps not improved the safety environment? Do we absolutely need security warnings? CertiK's point of view is that not merely safety warnings are needed, but in addition faster and deeper! Unlike old-fashioned software systems, all transactions and all contract calls on the blockchain are open and transparent. After the attack, the transaction records on the blockchain are the most straightforward textbook for hackers. Blockchain security companies must issue early warnings before imitation attacks to protect related companies. Nevertheless , the recent frequent attacks prove once again that security early warning is not even close to enough, and cannot basically change the existing security status of DeFi as well as the entire blockchain. Can there be still a window of opportunity for DeFi security? To be able to basically change the security status quo of DeFi, we should introduce new security mechanisms for new smart contracts (such as DeFi, IoT). This security mechanism must be able to perform model-level analysis, and must be able to conform to the development of new forms of contracts, and make an effort to intercept it all through an attack, in place of warning after an attack. The CertiK team has been morning and night to produce a new secure DeFi mechanism predicated on CertiK Chain-CeDeFi (Certified DeFi)-that could be trusted DeFi, which can completely change the existing passive security status quo as time goes on. Simply take the attack on Balancer at 11 PM for instance: Step one: Borrow three tokens of WETH, DAI and USDC through lightning loan from dYdX, the amounts are 103067. 20640667767, 5410318. 972365872 and 5737595. 813492 respectively. 2: Make use of the tokens obtained in Step one to mint the three tokens (cETH, cDAI and cUSDC). 3: Use uniswap to borrow (borrow) and mint (mint) cWBTC and cBAT tokens through flash loans. Step 4: Bring the obtained cWBTC and cBAT to the token pool. At the moment, how many cWBTC and cBAT owned by the attacker are 4955. 85562685 and 55144155. 96523628, respectively. Step 5: Use cWBTC and cBAT to conduct a lot of transactions in the token pool respectively, thereby triggering the Airdrop operation to distribute the unattributed COMP to the token pool. Step six: Call the gulp() function to synchronize the existing number of COMP to the Balancer smart contract, and take out cWBTC, cBAT, and the excess COMP put into the token pool. When exiting the token pool, how many cWBTC and cBAT owned by the attacker can also be 4955. 85562685 and 55144155. 96523628. Nevertheless , as a result of additional COMP generated by a many transactions in the token pool, the attacker obtained additional COMP tokens. Here, the attacker also can decide to directly enter other token pools, reuse the attack practices from step 1 to step six, and acquire additional COMP tokens. Step 7: Repay the flash loans of uniswap and dYdX and leave the market. Step 8: The attacker can still make use of the same method (step 1 to step 7) to launch attacks on other token pools. The attack mechanism is comparable, nevertheless the forms of tokens borrowed through flash loans and used to attack are slightly different.

[practicalryangosling]

Another big era of DeFi? A synopsis of the options that come with popular decentralized options platforms such as Opyn and Hegic

With the popularity of DeFi in the crypto world, which option agreements will detonate users and communities in the future DeFi outbreak? Written by: Ryan Tian, ​​Nicholas Krapels, at FinNexus Recently, the "liquidity mining" notion of governance tokens represented by Compound's $COMP and Balancer's $BAL has detonated the crypto industry, and the decentralized lending platform Compound has surpassed MakerDao in just 1 week. Top of the list. Liquid mining itself is not a novel concept. It's called "Farming" in foreign social platforms, that is distinguished from public chain PoW and PoS "mining". Because the price of $COMP continues to go up, the worth of $COMP The chase of COMP has made "income mining" feverish again in the industry.

Compound is not complicated from the economic model. It's a cryptocurrency market borrowing and lending protocol and are at the essential layer of decentralized financial DeFi applications. There is absolutely no doubt that it'll play an essential role in the future of DeFi, however it is just part of the foreseeable number of DeFi agreements, that'll increasingly become alternatives to conventional financial services predicated on centralized solutions. We genuinely believe that in the future development path of decentralized financial DeFi, decentralized options will certainly become an essential application with competitiveness and explosive potential next round. This short article centers around the analysis of 8 major decentralized options platforms which were released or continue to be in the testing stage which were popular recently, and conducted detailed research and comparison of their economic models. The authors of this article, Ryan Tian and Nicholas Krapels, are participating in the style of the FinNexus decentralized options agreement. Develop to write this research on centralized options to the general public, that'll benefit the entire DeFi community's understanding and development of the decentralized options market. Overview Defiprime. com, a well-known decentralized financial information integration platform, defines decentralized financial DeFi on its homepage the following: "Decentralized Finance (DeFi) could be the movement that leverages decentralized networks to transform old financial loans in to trustless and transparent protocols that run without intermediaries. " "Decentralized Finance (DeFi) uses decentralized networks to transform conventional financial loans into a kind of disintermediation, trustworthy, and transparent agreement. " After that great plunge on Black Thursday in March 2020, DeFi's lock-up value quickly rebounded. In accordance with Defipulse's tracking, DeFi's total holdings (TVL) have exceeded 1 ) six billion US dollars during editing. This really is due primarily to Compound and The growth of WBTC. In addition , it seems that every day new projects are announced to enter the DeFi family, and DeFi practitioners also refer to this kind of scalability and composability as DeFi Legos (DeFi Legos). For further reading on "composability", please refer to Nicholas Krapels' article:

* Does FinNexus have any competitors? The emerging DeFi system won't have too much zero-sum competition, and collaboration could be the spirit of DeFi. In the DeFi field, most of the early successful projects (namely Maker, Compound, and Aave, with an overall total locked value of US$1. 16 billion during writing) are dedicated to the direction of decentralized lending and borrowing of encrypted assets. These three platforms alone take into account most of the value of DeFi locked assets today. But our FinNexus team believes that the construction of this kind of application protocol continues to be at the end of the DeFi protocol stack, and possesses indeed made a huge contribution to the implementation of DeFi, however it is not the whole of the decentralized financial market. With the expansion of the DeFi market, the Cambrian explosion of DeFi applications is coming, and the diversification will greatly increase. At precisely the same time, the diversification of DeFi applications may also expand the interactive highway beyond Ethereum, and between agreements The interoperability and composability between assets and even chains have high level to a whole new stage. Derivatives Derivatives are called the ultimate goal of conventional financial markets. The use of financial derivatives is ubiquitous in conventional financial markets, and there are specific controversies. Differing people might have completely opposite perceptions of these. Some individuals call them angels of opportunities for investors, while some think they are. The devil that increases financial market risks and brings market recession; but its development speed and volume are worth the role of the ultimate goal of financial markets. It's estimated that the full total market value of conventional financial derivatives exceeds one trillion US dollars. At precisely the same time, this huge market has played a vital role in the growing global financial market, greatly enriching the diversity of financial instruments, and facilitating complex trading strategies. The derivatives market provides transaction depth for the entire financial market, and consolidates and strengthens the marketplace pricing of relevant underlying assets in the financial market through information interaction and feedback mechanisms. With the deepening of the application of decentralized financial DeFi, the development prospects of the decentralized derivatives market are unlimited. What are derivatives? Derivatives frequently refer to a financial instrument contract whose value is dependent upon or hails from an underlying asset or a group of assets. Futures, forward contracts, options and swap contracts are typical derivatives in conventional financial markets. In the crypto market, you will find already a large number of centralized financial derivatives in the present centralized exchanges. Like Binance, BitMEX, Huobi, OKex along with other exchanges have user-oriented futures trading platforms, but these exchanges now have options. It's blank or perhaps getting started; for options, currently more well-known centralized cryptocurrency derivatives platforms include Deribit, FTX and LedgerX, etc ., and for institutions that specifically seek experience of Bitcoin, the Chicago Mercantile Exchange (CME) There was relatively adequate liquidity. In accordance with CryptoCompare, the trading volume of crypto-asset derivatives hit a record high in Might 2020, and trading activities surrounding cryptocurrency options have increased significantly. Like lending applications, the next stage of DeFi development is to replicate the functions of those centralized market behemoths through decentralized protocols. If the entire DeFi market and applications are a pupil, then decentralized financial derivatives are newborns, however they are growing rapidly. In 2019, we witnessed the rise of the decentralized derivatives platforms Dydx and Synthetix. This season, there have been some great DeFi derivatives project launches, including the decentralized futures trading platform Futureswap and UMA, with a goal of "honest oracle mechanism which you can use to create customized and personalized financial products". Innovative projects. Options will always be the first choice in the ranks of financial derivatives. While the above-mentioned centralized options platform is constantly hitting new highs in trading volume, the decentralization movement of cryptocurrency options can also be starting. In the end, for the DeFi field, with high volatility, options have multiple attributes of hedging, insurance, and highly leveraged speculation. They are bound to be always a welcome fellow member. We predict that because the total holdings will increase next couple of years At 10 billion U. S. dollars or more, cryptocurrency investment participants may also need a convenient decentralized mechanism to simply help them manage risk exposure. This short article will focus more on the decentralized options platforms currently available or announced in the marketplace. To be able to comprehend some basic terminology of options, we suggest that you read Ryan Tian's previous articles here:

* Guide to FinNexus option terms In the event that you remember these things, options are not difficult * Guidelines for using FinNexus options Before you invest money, you ought to first recognize that all options can be utilized. The comparison chart preview of the decentralized options platform:

OPYNOPYN is really a general option protocol in line with the "Convexity Protocol" and built on the Ethereum blockchain, allowing users to create options using its unique oToken. opyn. co offers an easy-to-use interface to purchase and sell put and call options on ETH. In the first days of its establishment in 2019, OPYN conducted a business trial of margin trading and transformed in to an insurance platform in February 2020. Users can buy insurance because of their Compound deposits to prevent the platform's technical risks and related financial risks. At the conclusion of March 2020, OPYN launched the first batch of protective alternatives for ETH holders. These oTokens are ETH put options that provide liquidity through Uniswap, so the products may be viewed as insurance products for DeFi users. Therefore the OPYN platform had not been born for speculation. The picture below shows 4 ETH put options and 1 call option announced on the OPYN internet site on June 15, 2020.

oToken is supported by the Convexity protocol predicated on smart contracts. Each option product of oToken smart contract must specify 8 different parameters: (1) expiry time (2) underlying asset (3) strike price (4) exercise asset (5) call or put (6) collateral category (7) Margin necessary for mortgage (8) American or European options. To be able to ensure the liquidity of the marketplace, the key parameters of the existing options are mainly controlled and produced by OPYN. Option sellers can cause option token oToken by locking the collateral inside a certain time period through the interface of the official internet site. Option sellers can sell these oTokens on Uniswap to earn option premiums.

Data from Dune Analytics shows that OPYN options products are developing very fast.

DeFiPulse's tracking data shows that the total amount of locked positions on the platform is rising.

In the first couple of months after the OPYN mainnet went live, sole option products such as ETH put options were provided. On June 12, the first OPYN call option was launched on the platform; at exactly the same time, on June 26, the $COMP option was launched. With the diversification of OPYN's option product varieties, it can be expected that OPYN's lock-up value may also grow rapidly in the future as market demand increases. The picture shows the co-founders of OPYN celebrating the first release of call options Currently, OPYN requires owner of the choice to really have a full mortgage. When users open an ETH put option contract and cast option tokens, they must deposit 100% of the USDC number of the contract's exercise price as a margin to lock up. Similarly, users who open an ETH call option contract and cast option tokens must deposit the corresponding number of ETH Deposit the contract and lock it as a margin. Different options produced from different combinations of these 8 parameters are marked and distinguished by different oTokens in OPYN and controlled by split up smart contracts. Like to cast an oTokens with 200USDC because the strike price of an ETH open/drop option, the user needs to pledge 200USDC as a margin in the contract and commence the casting process. These oTokens with ERC-20 attributes are fungible and interchangeable, meaning that the holders and sellers of options wont face counterparty risks alone. OPYN's decentralized option model differs from the choice model in conventional finance with regards to margin requirements. In conventional financial option trading, the margin needs to be locked in the trading account, and the necessary margin is significantly less than OPYN. Since OPYN requires a decentralized smart contract to manage the generation, trading, exercise and settlement of option contracts, it proposes that option sellers have to exercise the choice contract at the exercise price and fully mortgage and lock the exercised assets In the contract, the most obvious advantage of that is that the contract won't have to concern yourself with the danger of liquidation and even default due to insufficient seller margin, even if there's a market crash such as Black Thursday; while MakerDao suffered losses during this period because of the liquidation mechanism. Even though the purchase price fluctuation of the underlying encrypted asset causes the choice seller to suffer potential losses, it generally does not need to be liquidated, because the assets for the physical delivery of the choice contract have now been mortgaged and stored in the oToken smart contract for the creation of a certain option. Liquidity after options are generated can also be an essential element of an adult derivatives market. Currently Uniswap continues to be the key trading host to oToken. In the Uniswap liquidity pool (LP), a classic XYK model is applied (readers that are interested can refer to Ryan Tian's article on the transaction model), but this model has certain drawbacks. When the liquidity provider (Liquidity Pool Providers) When both tokens are added to the liquidity pool (Liquidity Pool, LP), if the values of the 2 tokens in the trading pair fluctuate together, whether it is a family member increase or decrease, provided that they are from the flow The relative price of the sex provider at the purpose when it joins the liquidity pool, the liquidity provider are affected non-permanent losses (Impermanent Loss, IL, also refer to the hyperlink above for further reading). Therefore , if the relative prices of the 2 assets remain the same, the liquidity provider gains probably the most. Since oToken's liquidity relies on Uniswap, the above mentioned potential dilemmas have a poor affect oToken's liquidity providers. Option sellers are essentially forced to sell in order to get yourself a premium, instead of provide long-term liquidity, because the value of options will inevitably depreciate over time at theta rate, that is also known as the full time decay of options. Because the expiration time approaches, the decay speed increases. Therefore , liquidity providers are extremely likely to suffer huge non-permanent losses when providing individual oToken liquidity. Judging from the existing platform structure, it seems that most of the liquidity is supplied by OPYN itself, and as users open options to offer liquidity to the Uniswap liquidity pool of related oTokens, OPYN hasn't provided clear in UXUI. Optional interface. Needless to say, people can directly interact with the OptionsExchange contract through etherscan, but this is better left to a skilled blockchain engineer. This feature will threaten the development of the entire trading system, because if the LP's liquidity is not deep enough, it'll be difficult to make a large-scale decentralized oTokens trading market. Currently, OPYN is forced to simply take the initiative to bear non-permanent losses (IL) to attain the start of decentralized options secondary market transactions. Needless to say, in OPYN V2, the team also discussed how to solve this problem. Even though birth of options originates from bilateral contracts involving the two parties, the attractiveness of options in the financial field is dependent upon the high liquidity of the secondary market. We genuinely believe that it’s this that the OPYN team is wanting to reach through their model, by first improving the liquidity and pricing of decentralized ETH options, and get yourself ready for the next step to expand to other highly liquid ERC-20 tokens. OPYN's options are American, and users can exercise their rights anytime prior to the expiration date. But the Converxity agreement that constructs OPYN actually allows the construction of American or European options. In addition , during exercise, the OPYN smart contract requires the actual delivery of the underlying asset, that is, physical delivery and settlement. Like each time a put option is exercised, the choice seller needs to stop trying their USDC collateral and accept the choice buyer's ETH in return at the exercise price defined in the oToken smart contract. Demonstrably, this can be a fast iterative platform. The OPYN platform was certainly successful in the first stage. While attracting users, it also attracted the eye of numerous institutional investors and injected capital. But under normal circumstances, an option buyer wants to hedge, insure or speculate on the purchase price changes of the underlying asset (usually denominated in US dollars). She or he does not care whether the counterparty actually delivers the underlying asset if the option is exercised. They only worry about whether their net potential income can meet the full payment. Therefore , unlike physical settlement, the internet number of potential income of option holders is usually adequate through cash settlement, and the main city intensity is low. It might not even demand a 100% guarantee for your physical delivery, that'll definitely make the choice creation process better. We have also pointed out that the team happens to be discussing the next version of the agreement "OPYN V2", which may add new features such as margin, multi-currency mortgage, and trading system upgrades, and we'll continue steadily to focus on it. Hegic resembles OPYN. Hegic is definitely an on-chain option trading protocol built on Ethereum, but its model is of necessity different from OPYN. The option liquidity pool (collateralized pool) model could be the key to Hegic's option creation and premium allocation method, meaning that the counterparty of option buyers is Hegic's entire smart contract library. Hegic has both American call options and put options on Ethereum (ETH). Therefore , susceptible to the requirements of collateral restrictions, it currently has two pools: a pool with DAI as collateral, which mainly serves users who create put options; a pool with ETH as collateral, which mainly serves users who create call options user. Users who provide liquidity to any of these two option collateral pools can share the proceeds of the choice pool predicated on their shares, and these proceeds result from the choice premium paid by the choice buyer to purchase options. If the relevant option is delivered because of the exercise of the choice buyer, and the collateral is taken out of the pool for delivery to the customer and suffers a loss, these liquidity providers (LPs) may also share the loss in accordance with their share. In addition , unlike the OPYN model, the liquidity provider in the Hegic option model, that is, the collective seller of options, does not directly create option tokens. They are the providers of option liquidity, not the direct creators of options. Therefore , they cannot and also have no right to control the precise option contract information, and the purchaser of the choice decides the precise terms of the choice in the Hegic model. Each option is customized by the customer and is exclusive, and the customer 1) independently chooses the exercise price, 2) the expiration date and time. By giving assets (ETH or DAI) to the pool, just like Aave or Compound, Hegic's liquidity provider will receive automatically generated writeETH or writeDAI option mortgage pool share tokens, and invite the liquidity provider to flow A particular share of the sex pool (mortgage pool). Option gains and losses are shared by all liquidity providers in accordance with their shares. When liquidity providers need to get back the ETH or DAI within their pool, with the benefits or losses they've assumed, they only need to call the withdrawal function of the smart contract, that is, to burn their writeETH or writeDAI tokens, and at exactly the same time return Their share of ETH or DAI in the pool, of course, is so long as the relevant share is not locked and meets the freezing requirements of the Hegic platform for fund access.

At precisely the same time, this mechanism of guaranteeing the fund pool also ensures that the choice positions opened by the pool are always fully secured. For ETH put options, the mortgage pool comprises DAI, and DAI comparable to the ETH execution price in the contract will be locked within the contract period defined by the choice seller. For ETH call options, the collateral pool contains ETH, and very same ETH may also be locked. In option trading, Hegic's liquidity pool could be the only counterparty to option buyers. Liquidity providers (LPs) haven't any direct control on the formation of individual option contracts. On the other hand, over time, they'll passively share the gains and losses generated by the choice liquidity pool. This process saves gas handling fees compared to OPYN model. In the OPYN model, if the option seller wants to create an option and obtain the choice fee income, he must utilize the handling fee in three or four steps, because the period of the choice differs., Sometimes even once per week. In the Hegic model, liquidity providers do not need to create options themselves, for that reason the handling fee is just paid if they enter and exit the asset pool. Still another advantage of the Hegic model is that the customer can select the terms of the choice. They are able to create their own customized options by selecting option type, strike price or expiration date. Provided that Hegic's liquidity pool is deep enough, this model is apparently more flexible than OPYN. Option buyers can choose to purchase in-the-money (ITM), out-of-the-money (OTM) or at-the-money (ATM) call options or put options. Currently, the choice price is predetermined by Hegic algorithm. Option sellers can automatically have the relevant option price by entering the terms of the choice they want to buy. At precisely the same time, Hegic will by hand update the most important element of option pricing in the Black-Scholes formula predicated on historical data. -Implied volatility. Hegic can also be devoted to improving the liquidity of alternatives for option buyers. In the Hegic Agreement v1. 0, if the purchase price moves in the buyer's favor, the customer doesn't have other choice but to select physical delivery exercise. In the Hegic Agreement v1. 1, they could choose to "resell" the in-the-money option contract to the liquidity pool during the holding period. Usually, when exercising American options or futures, we actually call this sort of transaction cash settlement.

Features of Hegic model Hegic's hybrid model has some advantages: To begin with, its UI is extremely comfortable and easy to operate. Even though Hegic model looks a bit complicated, users can certainly buy options on its platform or develop into a provider of options liquidity pools. Second, the options buyers choose more flexible. They are able to select the option strategy that most readily useful suits their risk. Hegic allows users to select any kind of call and put option, any exercise price, and within several selectable periods. Third, compared with option contracts produced by an individual liquidity provider, this can be a safer option creation and aggregation method. Option premiums and risks are allocated among liquidity providers. Because option buyers can decide the terms themselves, they are more prone to create an option product that most readily useful matches their needs and reduces risk. Fourth, due to higher capital efficiency, it may attract more funds to the mortgage fund pool. By separating the roles of the liquidity provider and the choice seller, the liquidity provider can passively benefit from the option premium income of the fund pool by holding a share of the fund pool, and at exactly the same time share the risks of options issued with different terms. In conventional financial markets, the issuers and sellers behind options often result from professional institutions, who use leverage to amplify returns and manage risks through complex hedging mechanisms. Hegic can of course accommodate these giant whale investors, and more importantly, he also provides small liquidity providers with the choice of participating in the pool, and risk sharing is performed through the pool mechanism without fretting about the complexity of financial instruments. These fund pools essentially play the role of the fund's portfolio, and the corresponding writeTokens play the role of the fund's shares. The situation with the Hegic model First, Hegic options are non-transferable and non-tradable. Hegic's options only exist at the contract level, that is different from OPYN's model, which marks options as independent ERC-20 tokens. Even though Hegic options may be customized by buyers' needs, they cannot be circulated in the secondary market after they are made, which limits liquidity. Hegic Protocol v1. 1 will introduce a "resale" function, allowing users to sell positions to the pool anytime before expiration. This mechanism partially solves the liquidity problem. Second, users must earnestly monitor their premium allocations. Inspite of the audit of Hegic's code, some code errors occurred in April, resulting in the permanent lock-up of approximately $30, 000 in ETH funds. In May, because of basic design flaw, yet another loophole appeared in premium distribution. The immediate distribution and withdrawal of collateral and premium returns have caused inequality of risks and returns between early and late liquidity pool entrants. Early pool providers can accumulate option premiums, and anytime, even prior to the options in the pool expire, withdraw their liquidity and the entire related option premium income, leaving only the danger to later pool entrants. In Hegic V1. 1, the choice premium will be distributed after the option expires. Liquid funds will be locked for 14 days from the date of the last deposit. These operations are expected to correct the difficulties in the earlier model. But provided that the premiums are assigned to liquidity providers at exactly the same time, their risks and returns will not be balanced. We genuinely believe that as time evolves, when options are gradually approaching expiration, the model that distributes option premiums on an occasion scale may be more fair and reasonable. Third, the Hegic option pricing model might have defects. Based on the classic Black-Scholes pricing model, the main element to option pricing would be to determine the implied volatility. Option trading is basically trading volatility. The well-known VIX is often called driving a car index, that is in line with the expected volatility of the marketplace predicated on S&P 500 index options. Hegic's option prices are derived from data published by skew. com, and the implied volatility (IV) is by hand updated in the Hegic agreement, instead of being priced by the marketplace in real-time dynamics. Therefore , there may be arbitrage opportunities between Hegic along with other options platforms, but this is not a challenge for now. Since various methods can automatically calculate IV, option pricing could be the most challenging facet of all emerging decentralized rights platforms. In other words, the situation with IV does not only exist in Hegic. Fourth, Hegic options might have insufficient trading liquidity after creation. Hegic options are not tokenized and may only be executed (or resold in V1. 1). Therefore , after the option was created, the blood circulation problem in the secondary market had not been fully resolved. Because in option trading, the game always revolves across the changing expectations of IV. If you believe that the success of options will simply appear in a very liquid market, then Hegic might have plenty of room in this regard.. In addition , how many options largely is dependent upon the size of the choice pool. In order for the fund pool to possess adequate flexibility for withdrawals, each fund pool must reserve a certain percentage of liquidity. Therefore , if the crypto options market is simply getting started, it is a challenge to attract active participants that both supply and demand sides need. Fifth, it'll be difficult for liquidity providers to hedge risks in the emerging decentralized options market. In the original financial market, most of the people who support option products are professionals, and so they have various methods to hedge the potential risks of option products. But the liquidity providers of Hegic options are brought together and collectively behave as counterparties to all or any valid option contracts, that have different execution prices and expiry dates. For Hegic liquidity providers, hedging these risks will be excessively difficult. But Hegic has opened a new door to the decentralized options platform, that is invisible in the original financial field and it has huge potential. ACOACO is really a decentralized option protocol built on Ethereum. It was launched by Auctus in May 2020. The decentralized option mechanism on ACO resembles OPYN. These options are minted as ACO tokens that adhere to ERC-20 specifications, and each token has its own smart contract and unique number. Like a token named ACO ETH-200 USDC-C-26 JUN20–0800UTC represents a call option in line with the ACO protocol with ETH because the underlying asset and a fitness price of 200 USDC (calls are represented by C, and P can be used for puts), The expiry date is 8: 00 UTC on June 26, 2020. The ACO option token is definitely an American option, meaning that the holder can exercise the choice anytime prior to the option expires. To be able to earn reasonably limited, the choice seller must lock the corresponding number of ETH or USDC respectively in the contract to offer adequate guarantee for the choice contract, and cast call option or put option tokens. Like OPYN, option sellers have to bear the expense of casting option tokens and create them in line with the style clauses of options. These options are standardized by the agreement, instead of customized by the user.

For anyone engaged in conventional financial market options trading, ACO's UXUI must be very familiar. It looks the same as TD Ameritrade or Schwab. The exercise of ACO options is not automatic and needs to be triggered by the choice holder itself. The exercise adopts the method of physical delivery. Interestingly, ACO also integrates Uniswap V2's "lightning swap transaction" to directly deliver the internet big difference involving the Uniswap price and the exercise price, ergo having a function just like cash settlement. Generally speaking, ACO is really a good functional platform, it looks more plump than OPYN. But just as the Compound and decentralized lending platforms we now have seen recently, the main element for this battle continues to be how to get users and funds to improve liquidity. Primitive Finance Primitive is really a decentralized protocol for creating option derivatives on Ethereum. It's still in the first stages of development. The platform was launched in early Might 2020, and the first test pool was to trade a short-term expiration ETH put option. The official version of the agreement hasn't yet been publicly launched. Primitive, like OPYN and ACO, uses ERC-20 tokens for options and is known as Prime. But the big difference is that Primitive includes a model design involving four tokens:

Primitive adopts the liquidity design of pooled funds in smart contracts. This liquidity originates from the choice seller who made Primes. Any user who wishes to sell options can deposit profit the liquidity pool. Redeem Tokens may also be minted at exactly the same time. This kind of token can be used to withdraw the trading assets after exercise from the contract in the exercised Primes option. Therefore , in Primitive's model, option products and liquidity pools are all tokenized.

Primitive plans to trade these option tokens through Primitive's automatic market maker (PAMM) mechanism. PAMM was created to pool liquidity and behave as a trading medium. We can think about it as Uniswap's liquidity pool, however it is specifically tailored for option liquidity. For liquidity pool (LP) participants, Primitive in addition has created the Primitive Underlying Liquidity Provider (PULP) of the underlying asset, that is the collateral of the liquidity provider for the liquidity pool A evidence of ownership share. Each time a liquidity provider intends to launch a liquidity pool, withdraw mortgages and earned option premiums, the contract will destroy these PULP tokens, and these tokens represent the corresponding share of their assets and income in the liquidity pool. In the first stage of platform operation, the first liquidity of the flow pool must be guided by Primitive itself. In the process, other users will encourage joining the flow pool through various incentive mechanisms. The agreement continues to be in its initial phases to a big extent, and the precise technical details are yet to be judged. In terms of option pricing, Primitive applied a simplified option pricing model, specially with regards to time value. Interestingly, Primitive uses "demand" as a reference indicator for the implied volatility IV value, which "demand" could be the capital utilization rate of the liquidity pool. In the Primitive option pricing model, it intends to utilize the main city utilization rate of the liquidity pool to push the IV value and apply it to the final option pricing. This really is a fascinating and novel concept. Fundamentally, Primitive plans to utilize the Prime oracle mechanism to aggregate and form a data array with implied volatility and store it in a good contract, and lastly lead off-chain data onto the chain to make a decentralized option pricing application. In the field of decentralized options, Primitive is really a shining star, and there are many new and interesting features being tested in the alpha stage. But at this time, the security audit hasn't yet been completed. We also enjoy the official release of the Primitive agreement. OpiumOpium's goal would be to establish a decentralized derivatives agreement, which agreement has a broader ideal and vision that is not restricted to options products. In accordance with their official documents: Opium is really a universal agreement made to create, settle and trade a variety of derivatives and financial instruments in a specialist and trustless manner. It allows anyone to build customized tradable derivatives on Ethereum. " Unlike the several decentralized options platforms we mentioned earlier in the day, Opium even created its own token standard. In Opium, all option positions are made by means of ERC-721o token, which really is a "Composable Multiclass Fungible Token Standard" (Composable Multiclass Fungible Token Standard). It's a mixture of ERC-20 and ERC-721 token standards, plus some additional functions are added to it. Weighed against the ERC-20 standard, the conventional is particularly suited to the creation and trading of composable financial instruments. Since financial instruments usually are organized and managed as investment portfolios, Opium uses the ERC-721o standard certificate to create it simpler to package tokens representing several financial instruments into a combination, and express it in one token And transactions.

Users can trade multiple positions at exactly the same time, and perform the synthesis, decomposition and reorganization of the Opium combination token according to the ERC-721o standard. The agreement even reaches a broader scope of contracts, such as sports betting or games. Opium network construction has got the following six traits:

The transaction mechanism is essential in the Opium network, where users can exchange multiple assets at exactly the same time. To be able to rebalance the investment portfolio, this process also can greatly save transaction costs. Many tokens may be packaged in to one, the tokens are sent to the prospective address by way of a single transaction, and de-packaged. At precisely the same time, Opium believes that the matching of transaction orders must be done off-chain instead of on-chain, because block generation does take time, which often consumes plenty of computing power and is impractical. Like platform users issue trading guidelines to fund Opium tokens and ERC-20 tokens and exchange for other tokens. The guidelines will be placed by traders, brokers or other users in the relayer of the Opium trading system.

[practicalryangosling]

The little circle of DeFi, the big world of the future

The entire world of blockchain can indeed be called turbulent. In the very first half the year, the thought of PoS staking was still mentioned. In the next half the year, the style of painting changed suddenly to DeFi, which seems to be a revolutionary application field.

Is DeFi short-lived or does it really change profoundly? So how exactly does DeFi evolve? What is the relationship between DeFi and Ethereum? How did MakerDao emerge? Do you know the limitations of DeFi and what new explorations? With your questions, we particularly invited the teacher of the very first lecture on DeFi, the founder of Stafi & Wetez, the author of "Understanding the Blockchain PoS Consensus", and a solid supporter of the PoS consensus. 01 Background: People chain and Dapp are nowhere coming soon, and DeFi is just about the brightest one In 2019, following the 1CO, the exchange wave, the residual blockchain explorers are still innovating. The game between centralization and decentralization hasn't stopped, however the ideal decentralization spirit continues to be the target of (yi) and (yin) rule makers. We have witnessed the innovation of several blockchain projects, from public chains (Ethereum, Cardano) to Dapp (EOS, Tron), from Dapp to multi-chain (Lightning Network, Raiden Network), after which from multi-chain back to platform (Cosmos, Polkadot). In "The Myth of The Infrastructure Phase", Dani and Nick summarized the method of mutual achievement of infrastructure development and application development in the PC and Internet era. They said that in the blockchain, platforms and applications will observe the same rhythm, APP=>  Basic structure=> APP=>  Basic structure... Now, the proliferation of public chains has destroyed the imagination of investors, while Dapp has destroyed speculators' expectations for short-term landing. Practitioners all lament that being near money is just a double-edged sword, but in essence, this really is a different one. The performance of progress is very contradictory. Considering 2019, the bear market remains, but new concepts are still emerging. Staking and DeFi will be the two most beautiful boys on the street. Staking meets people's short-term profit expectations, and DeFi meets people's long-term profit expectations. Both are clearly divided in the cycle of time outbreak. The initial half 2019 could be the staking market, and the next half the year DeFi could be the protagonist. Both have a gestation period, which can be about 50 % a year. Starting in the middle of the year, DeFi Protocol has turned into a sweet potato in the professional circle. As the data of DeFi projects in the very first half the year has grown well, people's attention has begun to shift from the staking market (the staking trillion market that the media frequently claims) To DeFi in the more expensive market. One of the few DeFi projects, MakerDao carries a lot more than 80% of people's focus on DeFi projects. The surplus attention originates from people in the stock exchange, and the demand for stablecoin DAI covers the majority of the current DeFi scenario (that is, the preservation and lending of stablecoins). Based on data from DAppTotal, the total amount of loans for DeFi projects increased from USD 24 million in January to USD 173 million in June, and the total amount of loans also increased from USD 9. six million in January to USD 256 million in June. 02 What is DeFi? A simple definition of DeFi: the abbreviation of Decentralize Finance, literally translated as decentralized finance, following the community understands and diverges, it has a higher rate of meaning, called open finance, or distributed finance, distributed commerce, etc . Based on the above definition, Bitcoin ought to be the earliest blockchain DeFi project, a lot more than a decade from today, but in the new DeFi concept, MakerDao could be the big brother in the current layout, accounting for a lot more than 80% of the interest. Maker is just a project in October 2017. With this project as a starting place, the new DeFi project has been developed for nearly a couple of years. 03 DeFi classification In a lot more than a couple of years, many existing projects have already been refurbished, but you will find very few real newborns. They truly are divided in to three categories, stablecoins, lending applications and decentralized exchanges. All three categories are centralized. The approach of USDT is in accordance with DAI, the financing of centralized exchanges is in accordance with Compound, and Binance is in accordance with dydx. The big difference between your two types is simply the big difference between decentralized and centralized services, anti-censorship, openness and transparency, and irreversible transactions. ** **The biggest big difference is that decentralized projects give the trust of assets to the code. Therefore , an easy understanding of the DeFi project now's that as long as the ownership of the asset is fond of the dog owner by the code, it conforms to the thought of a fresh DeFi project. 04 DeFi features ** The existence of pledged assets**. Unlike traditional finance, many businesses are based on credit, such as for instance some small loans and credit loans. People decide whether to give you financing by evaluating your financial troubles status, work status, marital status, etc . The blockchain is essentially used to realize this group of credit system is extremely suitable, allowing individuals to own each of their own status data, but because the current development of the blockchain continues to be very early, many data structures are not perfect, making the credit-based endorsement The company is actually unable to develop. It can be seen that the decentralized projects surrounding both major kinds of DeFi (borrowing/stable currency) are fundamentally only endorsed by mortgage assets, usually through over-collateralization of assets to have stable currency, after which use stable currency to fulfill Your own personal needs are over-collateralized. Do more. Because of the not enough usage scenarios of Token, a lot of borrowed Tokens (such as DAI) have fundamentally came back to the transaction. First, in order to preserve the value/or even boost the value, the large currency holding institutions will mortgage their assets to have income through lending (year 10%+). These assets flow into the hands of the borrower, and the borrower obtains its own risk return by short or long. The rise in the very first half 2019 can see an important upsurge in mortgage lending. Based on related knowledge, the majority of the borrowed coins have already been employed for long. 05 Ethereum and DeFi ** Ethereum DeFi. ** DeFi projects which are broadly speaking concerned is going to be based on the quantity of collateral or the quantity of lock-up. Those projects with high lock-up amount we have been knowledgeable about, such as for instance Maker, Compound, Dydx, etc ., are typical projects on Ethereum. When it is determined from the quantity of lock-up, nobody Or doubt the truth that a lot more than 90% of DeFi projects are built on Ethereum. Actually , when lots of people look closely at DeFi, they also have to mention Ethereum. Ethereum could be the largest smart contract platform. It gets the second-largest ETH asset by market capitalization. It has a wealth of project parties and developers. Bitcoin cannot support contracts. Fang took this position well Questions about Ethereum DeFi. ** Is there every other project that can replace underneath layer of Ethereum (see a lot of Pandora, cross-chain interoperability, Polkadot, Cosmos and other new public chains), and certainly will DeFi declare that the chain fades through cross-chain? Of course, the premise is that the development of DeFi itself must continue to improve. Addititionally there is the impact of 1. 0 and 2. 0ETH on Ethereum. Sharding, PoS transfer, and EWASM will all have new requirements if not rewrites for new smart contracts. It's not clear whether large-scale dilemmas will occur at the same time. The conversion might not be completed until 2021. 06 DeFi token ** DeFi without Token? **** Many DeFi projects never have issued their very own tokens. Most of these projects are built on Ethereum. It really is indeed an intricate problem to style your own economic model along with Ethereum. You can have a look at the non-DeFi projects built on Ethereum, how to design your own Token model, and feel twisted no matter the way you look at it. ** Chainlink's oracle calls digest ETH, and the contract uses Connect to compensate the info provider; Loom's staking must enter Plasmachain from ERC20, after which locks in the contract on Plasmachain; IoTeX's staking supports the exchange of mainnet IOTX and ERC20, as well as supports Staking of both Token practices, the experience of both practices mixed to an individual is by no means straightforward. After 2018, DeFi projects have already been designed into a Token-free mode (except Maker). A trend I judged is that DeFi projects have also begun to go back to the profit model of "providing services". The "providing services" in DeFi could be based on their very own What generated by the agreement, including the generation of DAI, the matching in Dharma, the transaction in Dydx, etc ., are not much not the same as the centralized method, but they have absolute transparency. **Furthermore, the next upsurge in fee items could need to be decided by a decentralized community as opposed to led by the development team. Of course, ** doesn't rule out that the project uses the blockchain to create a semi-decentralized (Semifi) or centralized project, which aims to resolve the key dilemmas of centralized finance, however, not all, such as for instance asset ownership. It really is difficult to guage the continuity of this Token-free method. Built under a large structure, it is difficult to style an ideal economic model. Although a lot of practitioners have indeed appeared, it has nothing at all to do with the lack of good some ideas. Looking right back at some projects which have already issued tokens, 0x ZRX, it looks a bit tasteless at present. Additionally , pay special focus on projects such as for instance Cosmos and Polkadot offering underneath layer for development. CosmosSDK-based projects have a complete design model, and economic models are indispensable. For Substrate-based projects, if you want to use Polkadot's shared consensus, then these projects The problem is equivalent to that of the DeFi project on Ethereum. Of course, based on Substrate, you can design consensus, independent of Pokaldot, and come back to the specific situation faced by CosmosSDK. ** 07 MakerDao specific example In 2019, DAI and the MakerDAO that generated it became the most amazing in the DeFi landscape. But DAI is not a fresh thing, it is just a mortgage-generated asset. As early as 2014, BM realized the function of generating stable coins from mortgage assets on the Bitshares platform. **On the Bitshares platform, users can acquire a number of anchored assets by staking BTS, such as for instance Bitusd that is anchored to USD, Bitcny that is anchored to RMB, as well as Bitgold that is anchored to gold. This mortgage anchoring concept is in Bitshares The system is very mature and contains a complete group of supporting facilities. There is a integral decentralized exchange (commonly called the inner disk in the community) to support the exchange between multiple trading pairs; gleam centralized gateway that can directly accept Bitcny/Bitusd and other anchors The deposit and withdrawal of assets; there are numerous DACs, etc ., this complete group of packages is now in the circle, and you can see similar figures every where. Bitshares is indeed complete, can you envisage how people in the community think about MakerDAO? Actually , those individuals who have stayed longer in the circle understand that MakerDAO's origin is notorious. MakerDAO was born in December 2017. With the exception of the exchange of mortgage assets from BTS to ETH, the majority of the functions and Bitshares' stable currency function Very similar. People in the Bitshares community didn't show any good looks except to laugh at it. Additionally , MakerDAO was built on Ethereum and used ETH for mortgage assets. During those times, the BitShares community and the Ethereum community were incompatible with one another. Some people in the Bitshares community believed this operation of MakerDAO had not been considered a fork, also it was a naked plagiarism; Others genuinely believe that MakerDAO is too trivial, and only a small the main functions in Bitshares are realized, plus they do not go seriously; many people directly look down on this anchoring mechanism and genuinely believe that the Bit series assets have failed enough. DAI can not succeed at all, it will produce black swans. ** ** Black swan is just a sort of endgame occurring following the anchoring mechanism fails. This kind of endgame theoretically occurs in Bitshares and MakerDAO. It refers to the truth that once the mortgaged assets are in a specific period of time, the worth of the mortgaged assets shrinks dramatically, inducing the mortgager to keep Raise the position or repayment to ensure the career won't be liquidated. When a large numbers of mortgagers cannot perform, their collateral is going to be liquidated, and the liquidated assets is going to be sold at a discount. If you will find inadequate purchase orders in the market to receive the order, the mortgage The anchoring mechanism will fail. The truth is that in the bear markets of 2015 and 2018, Bitshares approached the black swan many times. During those times, the price of BTS fell all the way, and lots of mortgaged BTS assets were forced to be liquidated by the device, but there were not many people in the market who took over. I simply watched the disk and saw a lot of trying to sell orders, and the costs kept going down, but there is nothing I could do. No body could eat so many trying to sell orders. The problem was acutely critical at that time. Can you envisage the psychological shadow of the holding a lot of Bit series assets behind this anchoring mechanism? BTS was defeated such rounds of price erosion, which directly resulted in many people's suspicion about its anchoring mechanism. BTS is not worth anymore. Why can the Bit assets acquired by mortgage BTS have value? **Although the generation of stablecoins from mortgage assets is just a program execution, the worth of the mortgage assets is endorsed behind it. If you find an issue with the worth endorsement, the stablecoin even offers dilemmas. The later story could be clear to everybody. Ethereum could be the second largest in market value. Bitshares was already used in 30. With the black history of community crowdfunding, the departure of BM, the incorrect direction of Bit asset development and other dilemmas, the Bitshares community has long been out of harmony. The Ethereum community speaks the same day. MakerDAO has grown up beneath the strong protection of Ethereum. Although DAI has only experienced bull and bear once, ETH assets have seen bull and bear strong confidence assets many times. The DAI obtained by collateralizing ETH, from birth to Currently, it is fairly stable at around $1, and the over-collateralization rate of over 150% is sufficient to offset multiple rounds of price shocks. You realize, the BTS system has always required home financing rate in excess of 175%, and 150% of DAI hasn't collapsed, which can be enough to show people's confidence in the purchase price support behind ETH, which can be much stronger compared to the price endorsement of BTS. It really is with the shelter of the big tree that MakerDAO has begun to show stronger vitality, and DAI assets have begun to be exported. We are able to now see DAI trading pairs on many decentralized exchanges, even on centralized exchanges. It can be seen that many people mortgage ETH, obtain DAI, after which buy ETH. This is actually the just like people mortgage BTS to have Bitcny, after which buy BTS. Therefore , the trends of DAI and Bit assets are actually virtually identical. MakerDAO can also be walking through the path of Bitshares. One point that the former goes further than the latter is that new DeFi projects have begun to be developed along with MakerDAO. Applied, this really is certainly one of MakerDAO's luckier than Bitshares. Considering MakerDAO and returning to the DeFi layout, actually , many DeFi projects are not as divine while the media said. There are a lot of beautiful and incredible data reports. I've summarized the story of MakerDAO and Bitshares. Probably the most profound experience is, good A well-thought-out project requires a good carrier, and fertile ground can offer opportunities for continuous growth of the project. **For entrepreneurs, to seize one direction and find nutritious fertile soil, the following point to do would be to work hard. The idea of DeFi is too large. At this time, it is difficult to really have a DeFi project that may be large and comprehensive. Many of them are vertical applications. A brand new field must be developed from infrastructure to platform, and from platform to basic equipment. I believe that the development of DeFi has passed the fundamental stage of establishing infrastructure, and contains entered another application development node (to verify the integrity of the last infrastructure). Considering the DeFi projects available on the market now, MakerDAO's stablecoin and lending are one type, the prediction market Augur is one, and the decentralized exchange Dydx is one. You will find very few general categories, but due to the particularity of DeFi, There will surely be some emerging lending options developing. 08 DeFi's future direction Currently, you will find 3 target areas for DeFi projects, stablecoins, lending, and Dex. Some people say that there should be a prediction market. *From the definition of DeFi in the DeFi Overview, the prediction market must be viewed as one of the earliest DeFi applications. Like Augur, people use assets to bet on probabilistic events and get accurate returns.. This is actually the operating mechanism of Augur, but Augur is not developed because of the immaturity of the oracle. *In addition, people's understanding is too shallow in the first stage, and the traffic in the prediction market is actually low, therefore i temporarily put the prediction market Excluded from the present essential areas. ** The development of the three fields are relatively independent, plus they have achieved certain results in exploring stability. Before 2019, there were very few intersections between your three fields, but because they were all on the basis of the relationship on Ethereum, after 2019, you will have more and more cooperation between these three fields. Among them, stablecoins are actually The infrastructure of the latter two, stablecoin lending and trading pairs on Dex, can well bear the medium and certainly will also bring traffic. Dex itself will integrate lending functions to offer users with more trading options. Based on this development trend, you will have more and more cross-experiences among the three. But an awkward situation is that the integral coverage of the three fields of stablecoin, lending, and Dex is very small. An easy to use example is that centralized exchanges can offer a number of products to  generally meet the wants of transactions and peripherals, and multiple trading currency pairs. Leverage, futures, financing and debt financing, and OTC, etc ., while Dex can only do currency transactions, and it's also only ERC20 currency transactions. On such basis as transactions, dydx adds decentralized lending and leverage. Satisfying the whole trading needs continues to be much worse, and the final combination of the three fields could be the trading pair with DAI on Dex, while providing mortgage ERC20 assets to borrow DAI, after which there is absolutely no more. 09 DeFi projects need more asset classes Financial services are not that simple! Based on my understanding of financial services, general financial services revolve around assets themselves. Such assets could be physical assets, virtual assets, credit assets, or mortgage assets. The farther from the particular value of financial services, the more "endorsements" are expected for his or her products. The present development of social financial services can also be because of the comprehensive services surrounding assets, such as for instance guarantees, credit enhancement, insurance, and laws. They're all ways of endorsing assets to narrow the "distance" between them and actual value.. Nowadays, many DeFi projects are financial services themselves, however the corresponding products are really limited, and have less relationship with the available asset classes of the blockchain. Behind this limitation could be the contradiction between your current blockchain and real life. Although blockchain explorers are constantly seeking solutions, it has always been difficult to introduce real assets into the blockchain. In this technique, seeking new blockchain assets has turned into a temporary direction. Among them, the introduction of BTC assets into the contract is amongst the issues that are being solved intensively. BTC does not have a programmable contract, and the cross-chain of PoW has always had the issue of finality, resulting in cross-chain introduction that can't be implemented well. New cross-chain projects are pushing their very own homogeneous cross-chains. Heterogeneous cross-chains are fundamentally in a stagnant state. You can see that Cosmos cross-Ethermint has been developed for so long. Therefore , in the direction of introducing BTC assets, people started to tend to the solution of the DAO organization. Among them, WBTC is just a solution. WBTC is just a sort of ERC20 that members of the DAO organization store BTC at a ratio of 1: 1 and issued on Ethereum. Tokens, WBTC could be circulated on the Ethereum protocol. Many Dex have integral this WBTC trading pair to counteract the BTC trading pair in CEX. This solution is effective and fast, but it addittionally requires science and trust.. 10 Derivatives of Staking Assets-ABS

Staking assets are another asset that everybody desires to solve. Based on statistics, the present value of staking-locked assets is about six. 4 billion U. S. dollars, which really is a large asset class, but there is absolutely no method to circulate due to the lock. When solving this dilemma, I found this form of asset has a typical feature, that is, it has a fixed income right. The corresponding product of this sort of income right in traditional financial services is named ABS (asset securitization). ABS is this sort of asset derivatives, with asset attributes, but a bit from real value assets. Turning staking assets into ABS blood circulation is definitely an innovation in the DeFi field. This innovation is logically and theoretically compatible with DAI. The logic is significantly similar, that is, the mortgage endorsement obtains equivalent value. Mortgage ETH to have DAI, and staking assets to have ABS. The big difference is that DAI and ABS perform different functions. As more and more PoS consensus projects landed in 2019, Staking assets is likewise enriched. XTZ, ATOM, DOT, etc ., corresponding to ABS assets will also increase. The generation of such assets brings DeFi Come more possibilities. Under normal circumstances, each time a new asset is generated, a number of services that run across the asset is going to be derived. If this service is decentralized, it'll be more complete, exactly like if you will find multi-asset trading pairs in DEX, additionally, there are Decentralized deposits and withdrawals, gleam reason for decentralized financing and debt financing. The ABS in traditional financial services requires multiple rounds of endorsement for assets. The cumbersome links are a lot of to assume. Guarantees, credit enhancement, insurance, and laws won't be pulled down. The ABS of staking assets, in my understanding That said, many links could be omitted, because the endorsement of the asset itself could be the public chain, and the thing of credit enhancement can also be the public chain. Here, some unqualified ABS products have already been screened out. The law and insurance are products that require to be increased and decentralized. Currently, you will find already many teams taking care of projects in various vertical fields. The Stafi_Protocol project is turning staking assets into ABS. There are also projects in neuro-scientific decentralized insurance which are exploring. Credit enhancement is not seen yet, however it must not far. It can be expected that with the development of DeFi, you will find positively a lot more than three essential areas, but will gradually increase. And ABS, I believe could be the fourth key area that is almost certainly to develop into DeFi in the future, namely stablecoins. Borrowing, Dex and ABS. *ABS assets, as a solid endorsement asset, are closely related to Dex and certainly will directly become an asset traded on exchanges. Moreover, *ABS assets have an average tendency to decentralize, that is, endorsement is created by public chains and The code guarantees that blood circulation in Dex is very good and "politically correct". Additionally , staking assets can also serve as collateral, generating stable coins or lending. Following the Ethereum transfers to the PoS consensus, the big difference between staking ETH to create DAI and staking ABS (ETH) to create DAI is only the big difference in value. The worthiness of the latter can be above the worth of the former, or that the former is wholly included. Of course, you can issue ABS in a centralized way, but this returns to the issuance of traditional ABS assets. The issuer of traditional ABS assets must seek the endorsement target of the original assets. As well as the public chain endorsement, in addition, it must carry out a number of work such as for instance credit enhancement, guarantee, insurance, and law. If such operations are not carried out, the mortgaged assets are completely centralized. In the hands of the issuer, comparing and trusting the Stafi code, you will need to pay more trust to trust such centralized ABS assets. 11 summary So in summary, assets from staking to ABS are becoming an interest-bearing blockchain asset. This asset supports the integration of various DeFi applications, as well as gets the potential to be the underlying asset of DeFi projects. It will be the ongoing future of DeFi. Field, a vital part, stablecoin, lending, Dex and ABS. ** ** Of course, explorers will continue to look for the entrance of physical assets to the blockchain. USDT is definitely an example. Later, to TUSD, PAX, after which to the recently controversial Libra. Although all of them are stable currencies, the look of them proves that individuals The determination for connecting physical assets to the chain. 12 question Time Question: Would it be denied that DeFi could be the most grounded form of implementation in the current blockchain? If so, what is the main reason? ** I believe it definitely is, because all DeFi now's for currency holders. The DeFI project provides many operation interfaces for currency holders, which users can use directly, but you can still find many concepts that require to be comprehended throughout the use process, and there could be some operational dilemmas, but this doesn't prevent it from being the closest to an individual The decentralized application used. Currently, I still have not seen that various other applications can offer some tools to users to directly interact with blockchain technology, aside from DeFi. Question: What challenges must be overcome when DeFi develops? Along with asset classes, let us speak about a challenge from a developer's perspective. The developer chooses whether to operate the project in an entirely decentralized manner. When we define some extent of decentralization and centralization, actually , we would not have a unified standard. When we define this standard, we shall have some tilt within our minds. The explanation for this tilt may come from technical difficulty., May be the technology, the difficulty could be insurmountable difficulty. It may be that the rapid launch of the project is some factors of the project development speed, plus some will be the needs of the business model. These factors will be the decentralized method that the project causes the project to choose to make use of. Currently, some typically common techniques, particularly some techniques in Silicon Valley, they will clearly explain many can and can't be done, and analyze many technical difficulties and key factors clearly, in order that everybody can see the project side. Is it reasonable to help make the current choice? Recently, I was inspired by watching DianDianCoin. Like the question of whether checkpoints must be centralized is stated in the white paper. It is extremely difficult for us to accomplish decentralization whenever you can, so we work with a centralized approach to achieve Raise the cost of double-spending attacks on the entire blockchain. Although it was very clear, it absolutely was criticized by lots of people, also it was also an issue that many project parties would encounter. Question: Incidentally, to add to this question, is it possible to shortly introduce the rumors that Compound has a backdoor? This dilemma seems to be well-known to everybody. Ordinary users don't appear to pay attention when using it. That is also an average contradiction, that is, would you trust the team? If you don't believe it, be careful if the project side will leave a right back door. You will find even rumors that MakerDao even offers backdoors, but these exact things won't be made public. Actually , any project must be upgraded, and the master of any project dare maybe not be 100% sure that his project doesn't have bugs. Without confirming whether there's a bug, that he can't be sure that he can solve these existing dilemmas. Actually , everybody needs to have a consensus that you need to consider a problem when using decentralized applications, that is, whether your assets are What could be lost, maybe you have expected anything? Question: Will DeFi derivatives have a big bubble risk, just like the subprime mortgage crisis? Once the available assets are relatively small, the derivatives is going to be farther and farther from the original assets, and its own endorsement could have a very long chain. If one link in the chain breaks the entire chain, you will have dilemmas, so In this case, long-term development is unhealthy, so we have been working very hard to bring new asset types into this DeFi field, that may prevent this risk well. And I believe the subprime mortgage crisis will always happen. In the end, human beings are greedy. Some people use this system, plus some people use it, that may cause certain contradictions, dilemmas as well as crises. Question: In the field of staking, we now have discussed the issue of uncomfortable staking gains along the way of price decline. Can you really achieve a breakthrough with DeFi? **For example, using stablecoins to earn interest? During staking, individuals were unable to provide timely feedback on the secondary market. Consequently, even though the interest was received, the entire principal was still not as compared to the staking income. Then DeFI hopes to make use of the contract method, such staking Assets may then flow, letting it answer market prices regularly to resolve some dilemmas during the period of inefficient token lock-up, after which after these coins flow out, you may also make many types of lending options, such as for instance stable coins or For PoS ETFs, these can be carried out, and they're an easy task to do. Question: DeFi is indeed reliant on Ethereum, which can be maybe not the very best news for the DeFI project itself, but can it be good news for the long-term support of ETH prices? I believe this really is an open question, and there's really not a way to provide an optimistic answer. Lots of people suggest that you want to create a DeFi project on Ethereum, because Ethereum already has a siphon effect, that is, lots of people need to use Ethereum in order to make better use of existing infrastructure when doing projects. Take action related, because DEX is on Ethereum, stablecoin is on Ethereum, and lots of applications may also be on Ethereum. So if you are performing a project on Ethereum, particularly a DeFi project with a currency model, if your currency is ERC20 compatible, or if a few of the derivatives you send are ERC20, you may easily circulate in this ecosystem. Find value swaps, which can be very beneficial to the development of your project. That DeFI is created on Ethereum is definitely beneficial to Ethereum itself. Pan Chao also asked a question on the last roundtable panel, can there be any public chain supporting the DeFi project? Actually , nobody immediately answered. I believe it just doesn't. In this case, does it support the price of Ethereum in the long run? I believe it is somewhat, but that he can not measure it quantitatively. At precisely the same time, it will encounter various market factors that make it very complicated. Therefore , it is hard to say that the benevolent see benevolence.