Opinion: Who is DeFi's second turn?

Author: Jorge S

Source: Toku View

Editor's Note: The original title was "Who's the Second DeFi?

When calculating the ranking of DeFi projects according to the size of the lock-up volume, MakerDAO topped the list with a total amount of 380 million lock-ups, although its overwhelming dominance is slowly growing as new projects continue to emerge and develop. Weakened, but the position of the boss now seems very stable. For Synthetix, who is in second place, the situation seems not so easy.

Synthetix's Death Spiral Turns On?

Synthetix is ​​undoubtedly the most dazzling star in the DeFi ecosystem in 2019.The currency price has risen all the way, and the size of the lockup has also risen. It has successfully replaced Compound as the second-ranked position, and the scenery is instantly unchanged. However, the mode of derivative transactions of native token generation of its mortgage project has also faced many disputes.

Proponents believe that it is a beneficial innovation in the token economic model, which successfully integrates the network value into native tokens. Opponents believe that the end of the crash is inevitable. Among them, Cao Yin, the managing director of the Digital Renaissance Foundation, is the most representative:

This kind of project that synthesizes assets by relying on the native tokens of the project is actually a building built on the beach. A similar model has long been ruined in China's A shares. The company raises its own stock price, then pledges it to the securities firm, and sets aside money to continue to speculate. The essence of this model is to attract market capital to follow the trend through a performance pull disk, and then freeze the liquidity through the lock-up or burning mechanism to form funds. The effect of sustained net inflows to set prices. This game is very dangerous, because when the price is too high, the entire situation will become a dammed lake. As soon as someone starts to sell, it will immediately cause a catastrophic bankruptcy, which will cause a death spiral. SNX will plummet and mortgage assets. Out of stock, SNX plunged more, and mortgage assets continued to be out of stock.

After entering December, Synthetix has finally continued to continue to grow at a high speed, and the currency price and the size of the lockup have stagnated. After entering January, they both turned around and made people wonder if the death spiral had started.

It is worth noting that in addition to selling SNX directly, Synthetix can also exchange sETH into ETH through Uniswap. This will calm down the selling pressure of SNX to a certain extent, and everyone who provides liquidity at Uniswap must bear the responsibility of the Synthetix project. Risky. At present, the price of sETH on Uniswap has begun to de-anchor. All signs indicate that the situation is not so optimistic. The key depends on whether the project party is able to continue to pull the plate and stabilize the situation.

If Synthetix finally loses, will the second position return to the hands of Compound?

The Dilemma of Compound

Although snatched second place by Synthetix, Compound is still a star project that cannot be ignored in the DeFi ecosystem. However, since MakerDAO launched the multi-mortgage version and DSR, Compound has been forced to bear great competitive pressure. Specific analysis can browse our previous articles .

As we previously speculated, MakerDAO has raised the deposit rate to 6%, which is the same as the loan rate! It is still profitable without interest spreads, and I have to say that MakerDAO is an amazing innovation.

In the face of MakerDAO, Compound can do really little. At present, it still has the advantage of supporting more types of mortgage assets, but supporting non-mainstream currencies also inevitably exposes itself to greater risk exposure.

As you can see from the picture above, Compound is undergoing an increasing squeeze from MakerDAO.

If Compound's situation is not optimistic, then we must continue to look at the question of who is the second child. InstaDApp with a locked position of $ 45 million is currently in the fourth position, but it is not suitable for horizontal comparison with the previous project, so we came to Uniswap, which locked a position of $ 30 million.

Maybe not the second child

Uniswap is steadily moving forward in 2019, and it is looking good. As a very important building block in DeFi Lego, Uniswap provides liquidity for many projects, making many attempts possible. However, the size of its 30 million USD lockup is still too small compared to our expectations of DeFi's second child.

If all of the less optimistic speculations before us are unfortunately true, let's simply leave the second child's position vacant. I hope that 2020 will allow all projects to grow rapidly and new projects to appear constantly.