DeFi weekly selection 丨 "1 billion US dollars locked amount", "triple jump in deposit rates", the signal of the Ethereum bull market?

In this issue:

  1. DeFi data for one week: Ethereum's DeFi ecological lock-up total value exceeds 1 billion US dollars, but ETH lock-up volume has declined
  2. The increase of the currency price may cause the ETH lock-in volume to continue to decline. How to attract users to participate in Defi?
  3. The privacy protocol Aztec is launched. What impact will it have on the Ethereum Defi ecosystem?
  4. DeFi stress test: ETH daily volatility is less than 20%, compound contract default risk is low
  5. DeFi golden sentence of the week
  6. DeFi project progress in one week
  7. to sum up

To many people, the big bull market in the cryptocurrency market in 16-17 was largely driven by token financing activities, and for the new cycle, some people began to pin their hopes on the bull market driving force to DeFi. Is it true?

In the last issue of the DeFi weekly election, we mentioned that "the total value of Ethereum's Defi ecology has exceeded 900 million US dollars", and this week, this number successfully broke the 1 billion US dollar mark, setting a record high .

According to the data of 34 Defi projects counted by dapptotal, the current Defi Ecology lock-up fund has reached US $ 1.5 billion, an increase of 16.58% compared with the previous week, of which Maker ’s lock-up is US $ 56149 million, accounting for 37.34%. The warehouse was USD 345.39 million, accounting for 22.97%.

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There is no doubt that these data are very beautiful, but in terms of the amount of lockup, a little unexpected happened.

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According to statistics, the current ETH lock-up volume of the Defi ecosystem is about 4.011 million ETH, which is a decrease of about 20,000 ETH last week.

The increase of the currency price may cause the ETH lock-in volume to continue to decline. How to attract users to participate in Defi?

What is the reason for this?

A reasonable explanation is that the rapid rise in the price of ETH has caused a small number of profit-making disks to choose to unlock cash, and if this conjecture is correct, then assuming that the price of ETH continues to rise, the ETH that chooses to unlock will also Will gradually increase, and this may cause the growth of the total value of the Ethereum Defi ecological lockup to slow down, or even decline.

cryptocurrency coins-Ethereum, Bitcoin, Litecoin, Ripple cryptocurrency concept stock of physical bitcoins gold and silver coins

(Picture from: tuchong.com)

So what are the reasons to promote user participation in Defi?

One of the most direct factors is the increase in the interest rate of stablecoin deposits. As the market demand for stablecoins has increased significantly, the interest rates of stablecoin deposits have recently shown a clear growth trend.

For example, in the past month, Maker has made three adjustments to the deposit rate of the stablecoin Dai, which has now increased to 8.75% (annualized).

In view of the current environment, the market demand for stablecoins will still have a large room for growth, which may cause the Defi ecosystem to continue to grow, but it will depend more on the currency price. After reaching a critical point, the market There will be a recession.

The privacy protocol Aztec is launched. What impact will it have on the Ethereum Defi ecosystem?

Today, there is a more serious problem in the Defi ecosystem, that is, the existing value will be broadcasted to open and transparent public networks (such as Ethereum), which means that anyone can view these transactions, which may damage them. Participant privacy.

In most cases, participants are less interested in converting assets into other assets, such as privacy coins.

Fortunately, a new protocol called Aztec was officially launched on the Ethereum mainnet recently, and it has a privacy encapsulation function.

The Aztec protocol utilizes zkToken (a native token with privacy zkSnarks encapsulation), allowing fast and anonymous conversion of Ethereum-based assets.

After going live, Aztec deposits 10,000 DAI and converts it to 10000 zkDai, allowing anonymous Defi activities.

It is reported that Aztec uses two main components:

  1. Aztec Crypto Engine (ACE): a smart contract verifier on the Ethereum mainnet, responsible for checking the correctness of each privacy transaction;
  2. Privacy SDK: a user-friendly tool that can simplify operations and facilitate dapp integration;

It can be seen that the launch of the Aztec protocol will be of great significance to the relatively new industry of Defi, because with the continuous development of this field, the emergence of restrictions will be inevitable.

DeFi stress test: ETH daily volatility is less than 20%, compound contract default risk is low

This week, Gauntlet, a blockchain simulation test platform, released a report on the Compound protocol, which mentioned that even if ETH fluctuates sharply in the future (the daily range is close to 20%), the protocol can also support its total borrowing value Expanded 10 times, while the default rate was controlled below 1%.

According to the report, Gauntlet's research deployed various slippage models, predicted price trajectories of different digital assets, clearing strategies, borrower strategies, and so on, and allowed them to interact under simulation. This simulation test attempts to address three main issues:

  1. Is the agreement secure when the total outstanding debt is high?
  2. Is the agreement secure under highly volatile market conditions?
  3. If Compound wants to support a new asset, how should it set up liquidation incentives and guarantees so that the system has a sufficient margin of safety?

It is reported that the highest period of ETH volatility in history was in August 2017, when its daily volatility reached a maximum of about 20%.

And this research is of reference significance for DeFi participants.

The original author of the report: Gauntlet

Report link: https://gauntlet.network/reports/CompoundMarketRiskAssessment.pdf

DeFi golden sentence of the week

  1. "Cryptocurrency v will jump on the train of DeFi, just as they jumped on the train of the BTC biggestists last year. See how they will change! Which one will first say that ETH is money?" —— mythos .capital founder Ryan Sean Adams
  2. "To date, the assets held by the Bitcoin layer 2 protocol have remained at $ 8 million, while the Ethereum's defi has reached $ 1 billion. Please find out why." Santi.eth
  3. "The total amount of DeFi locks reached 1 billion US dollars, and the actual deposit of 1 billion US dollars into DeFi is two different things. This is because it simultaneously calculates the ETH locked in MakerDAO and the resulting DAI (which is integrated into other DeFi protocols). —— Chris Blec
  4. "Someday, a DeFi protocol will be cracked by hackers, funds will be lost, and then people will be angry, and critics will say that ETH is dead. But you need to understand that this is just a DeFi protocol being cracked, not ether Fang. This happened before, and Ethereum survived. Crypto banks will also be robbed, but we will get better. "-Ryan Sean Adams

DeFi project progress in one week

  1. DeFi agreement PoolTogether received USD 1.05 million in financing ;
  2. RSK launches Ethereum Token Bridge tool, trying to introduce DeFi for Bitcoin ;
  3. DeFi agreement Zero Collateral announced the integration of Compound ;
  4. Dai deposit rate increased to 8.75%
  5. Aztec launches on Ethereum mainnet and launches first batch of zkDai

to sum up

Although there is a certain amount of moisture in the current locked value of the Ethereum DeFi ecosystem of US $ 1 billion, this does not hinder its growth trend. At present, the strong demand for stable coins in the market is promoting the accelerated development of the DeFi ecosystem. On-line will effectively improve the privacy of DeFi, thereby attracting more people to participate.

However, as the ecology develops and more and more immature DeFi protocols come online, the possibility of hacking will also increase, so participants need to be cautious.