Source: Orange Book
One year ago, we just introduced Compound , a decentralized DeFi protocol in the Orange Book , which is dedicated to solving the most basic lending needs in the financial field.
One year later, Lightning Loan was born, and a hacker used 5 DeFi products in a block of time to complete an arbitrage (or attack ) worth 51 BTC , causing a community uproar.
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A year ago, not many people really believed that DeFi would become the mainstream narrative of Ethereum. At that time, Dapp was just cold, and the most common reaction to mentioning DeFi was: Too small to support large-scale mainstream applications (yes, at the time, people were still delusional about blockchain adoption by ordinary consumers) People are drumming in their hearts, wondering what power the so-called decentralized finance can have with the traditional finances, and they can falter.
A year later, DeFi became essentially the mainstream narrative of Ethereum. The reason is not because everyone believes in DeFi, but because, to a certain extent, only the story of DeFi has survived. DeFi became the only remaining narrative on Ethereum.
One year ago, borrowing money on DeFi required excess assets as collateral, coupled with the slow on-chain transaction speed, and the user experience was completely hung up by traditional finance. In addition to the concepts of "decentralization" and "won't run away", The DeFi products that are visible to the naked eye are almost all that have been solved by traditional finance and the rest.
A year later, there were more DeFi products and more types, and a zero mortgage loan agreement had just appeared. Shouting for many years, "the decentralized system's innovation and iteration speed will surpass the centralized system" seems to really have some eyebrows: this model of lightning loan is exactly what traditional finance can't do, and DeFi only costs one Years quickly evolved into new forms that did not exist before.
According to the teacher of Humanity, DeFi is like a living organism, and its speed of evolution is thousands of miles. We will see similar applications that ordinary people understand in the future. Teacher A Jian believes that Lightning Loan is the most extreme form of DeFi's "composability", extreme enough that everything happens only in a flash. Any number of contracts can be combined in a single transaction in one instant, or when nothing happens.
It's like if you are going to travel somewhere, you need to grab tickets, arrange transportation, book hotels, buy tickets, all these things can happen at the same time or can be cancelled at the same time, which has great convenience for consumers. Today we need to use different apps to operate in the Internet. This is not yet possible, but blockchain and DeFi can do it.
Only by witnessing DeFi's journey through the year can I convince myself that certain concepts and ideas that people have talked about very early on are really powerful, not just empty words. If you only look at a certain moment, it is actually difficult to feel the speed at which "innovation" is happening.
The vast majority of people value short-term practical benefits, and it is harder for them to believe in "ideas", and it is even harder to foresee long-term changes. A year ago, many people were looking for the direction of the "post-ICO era" of Ethereum. Many people couldn't find this direction and concluded that there was a chance of Ethereum killer. Then, there may be new unexpected killer applications, which will trigger a new climax), and the survival of DeFi narrative should be a valuable lesson for many people.
For many public chains, the year DeFi has passed is a year of alarm. Perhaps the design of Ethereum is not perfect, but the bridge was built in the trembling wind, and more and more things are connected to the bridge, making the bridge more and more valuable, and The gap between competitors is widening. DeFi became the moat of Ethereum.
Of course, DeFi is still not fully proven, and it is still very small. Opportunity does not exist. Some people can even argue that Ethereum's DeFi builds financial Lego on a weak foundation. Those strange currency blocks rely on each other and add more risks to each other. In fact, it is increasing systemic disaster. Today, the damage caused by hackers using lightning loans to attack bZx is not large, and there will be more severe attacks and cruel tests in the future.
That's true. But I think this is more bad news for Ethereum competitors. After 10 years, Bitcoin has become a unique digital gold and decentralized currency. These 10 years are not only the 10 years of technical perfection, but also the 10 years that have stood the test of time and accumulated people's confidence. The block expansion dispute was not dead, the fork was not dead, and the halving was not dead, so BTC finally won.
So is Ethereum. After experiencing the DAO attack and ETC fork, Ethereum will need to experience more attacks on the DeFi protocol in the future. It is these attacks that will make DeFi more difficult and tested than traditional finance in a short period of time, learn more lessons, complete faster iterations and innovation. It is also these attacks that will make Ethereum stronger.
To borrow a word from Ryan Sean Adams:
What happens when you attack DeFi?
DeFi wins. I have no doubt that other public chains can shorten the time required for technological development, and even directly enjoy the results on Ethereum DeFi, but build a community and ecology that can incubate innovative activities, and let this community and ecology get people Trust is another thing that does not have a shortcut. If you look at it this way, you really don't have much time for other public chains.
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