The 3.12 tragedy, let us take another look at the pain of the transaction. In extreme market conditions, questions such as unplugging cables, inserting pins, closing positions in advance, and manipulating prices have become commonplace. Because users cannot control their assets and trust is built on untested humanity commitments, centralized transactions always have the risk of single point of failure and the safety of Achilles heel.
Sadly, DeFi, which was originally created to completely solve the problem of trust, has gradually deviated from its original intention in development. With the complexity of business and architecture, many projects have been compromised, and the core principles of transparent operation have been ignored for convenience.
Pain points of current form DeFi
The 3.12 tragedy sounded the alarm, exposing the imperfections of DeFi in the current form at one time. The first is that the collateralized assets are too singular , and the impact of ETH price fluctuations on DeFi is too drastic. Currently, DeFi is mostly based on Ethereum and uses ETH as collateral assets. Therefore, the ETH plunge has caused DeFi to encounter the largest on-chain liquidation in history. Even MakerDao with a mortgage rate of 300% was forced to auction MKR to repay mortgage debt. The performance of the Fang network is insufficient , liquidation has become congested, transaction costs have increased sharply, and Gas costs have become hundreds of times as usual. Finally, because DAI is mainly issued through mortgage ETH, mortgagors will purchase DAI from the market to close the mortgage position to avoid ETH being liquidated. This makes the DAI premium more than 10%. The stablecoin is no longer stable, and MakerDao, known as the DeFi central bank, is facing a huge crisis.
- QKL123 market analysis|October "Autumn event", or market volatility (1008)
- Babbitt site 丨 Li Lin: Upgrade Huobi Cloud to provide digital financial solutions based on blockchain digital currency issuance and payment
- Dai Data Growth Report (2019Q3): Dai usage peaked in August, with active addresses exceeding 100,000
- Digital currency wallet mobile market is a necessary development trend
- The Queensland Real Estate Institute of Australia will launch a blockchain leasing agreement platform to empower the leasing industry with smart contracts
- The market is gradually stabilizing, waiting patiently for new trends
Of course, in this process, there are also cases that did well and gave us positive inspiration. Before the plunge, Uniswap's liquidity had increased significantly. Under extreme conditions, Uniswap became the product with the highest single-day trading volume. The advantage of Uniswap is its incentive model. Each transaction will generate a 0.3% fee. This fee will be returned to the liquidity fund pool after the transaction is completed. The incentive model further promotes liquidity , and good liquidity means that the price trend is smoother, further making its Gas consumption lower than other products, thereby attracting more liquidity and forming a positive cycle.
In summary, what kind of trading experience do we need?
1. Checkable on the chain : At present, many DeFi settlements are on-chain, and the matching is still off-chain. Centralized third parties are required. In essence, changing soups does not change medicines. But the real DeFi product should be completely built on the blockchain.On-chain transactions, on-chain matching, and safekeeping of your private keys. Your assets are all under your control. Nodes, federations and operators cannot misappropriate you. asset.
2. Cross-chain anchoring: A single ecological asset cannot meet the diverse needs of users, and a cross-chain ecosystem should be created. Maker has decided to introduce USDC and introduced multi-asset collateral in November last year. Although this "multi-asset" contains only ERC20 tokens, the most valuable attribute of BTC is not yet able to do "cross-chain" anchoring.
3． Lightning transaction: The user's transaction asset is to initiate an on-chain transfer on the wallet, which is simple and easy to operate. On this basis, it can also allow pending orders to be executed quickly, achieving a central experience.
4． Incentive cycle: A prosperous value-exchange ecosystem needs to have sound roles for all parties to participate in each other and drive each other in order to make the entire economic system self-consistent and self-circulating. A set of superior technology framework can make all roles different. Perform their duties, reduce friction, and add value.
Maybe some friends will ask: The above points are so light, and the developers haven't done it long ago? Even if DeFi achieves these points in the future, why can it compete with centralized transactions? In fact, these are two misunderstandings of DeFi's "methodology" and "worldview". In view of the first problem, the fault lies in DeFi, and the fault in Ethereum cannot meet the developer's vision. In response to the second problem, Defi should not be merely a substitute function of centralized transactions, and there should be no competition in the same dimension. significance.
Methodology of DeFi high score answer sheet
Next, I will use MOV as an example to explain how to submit a DeFi high score answer sheet.
MOV is a next-generation decentralized cross-chain Layer 2 value exchange protocol. It consists of three core modules: the value exchange engine magnetic contract (Magnet), decentralized cross-chain gateway (OFMF) and Layer 2 high-speed side chain (Vapor). A heterogeneous, integrated, diversified asset value collaboration ecosystem.
First, be completely decentralized. The biggest difference between MOV and DeFi built on Ethereum is that all links are on the chain, including pending order records, transaction records, open and transparent, and cannot be tampered with. Even if you use a centralized node service, you can still check the ins and outs of your assets on the chain, and you can't fake them;
Second, the premise of achieving complete decentralization is high performance. Ethereum is currently building segment 2.0. In fact, it has taken the lead in using technologies such as layer2 for DeFi than the original chain and vapor. MOV-based side chain Vapor, one block every 0.5s, each block can accommodate 8000 transactions, the peak TPS reaches 16, which allows traders to experience the same smooth experience as a centralized exchange.
Third, increase asset diversity through cross-chain. MOV integrates BTC, ETH and USDT into MOV to meet the diverse needs of users, while increasing liquidity, it can also pave the way for subsequent multi-asset DeFi applications. This solves the problem that a single ecology often cannot take into account, lacks an influential liquidity conversion medium, and forces the combination to cause the system to fail to operate continuously due to differences in economic models.
Fourth, to nurture liquidity through incentives. MOV Ecology has a self-consistent economic closed loop. It defines six main participating roles, sets clear economic incentives for each participant and each link, and maintains a dynamic balance of cost and benefit ratio at different development stages.
Fifth, the most important thing is the risk control mechanism. At present, developers often only consider the security of their own protocols, and the DeFi ecosystem lacks an overall risk control system and payment mechanism. The core of MOV's OFMF management architecture is to build a trustless secure asset custody system that detects and prevents suspicious activities and prevents intrusions. The federal node of the hosting service can establish an insurance mechanism, and if a security event occurs, the reserve pool will be used to repay the user's loss. Even in terms of feeding prices, many projects ignore this seemingly insignificant auxiliary facility and believe that it is only good to cooperate with a certain company. The subsequent single-point containment and data errors will bring structural damage to the system. MOV is very Attach importance to the construction of prophecy clusters on its own decentralized chain.
The above five points are actually about the methodology of MOV's construction of DeFi, but what guides the specific operation is a high-dimensional worldview. MOV should not just be an alternative function of centralized trading, to make senseless competition in the same dimension.
The BiyuanChain team innovatively proposed the idea of "transfer is transaction", which will fundamentally subvert the definition of decentralized transaction protocol, and then blur the following boundaries:
1. The boundary between the exchange and the wallet, the wallet is the trading place, and there is no third party to collect and match orders; 2. The boundary between the field and the field, the wallet is both on and off the field; The boundary between transactions and transfers, transfers are just the transaction behavior of a designated counterparty, which is a specific transaction.
The so-called transaction matching is a transfer behavior without specifying a counterparty. It is a BUTXO in which assets are exchanged for assets and Tokens are exchanged for Tokens. The so-called market order is just a special transaction that does not specify a counterparty or a transaction price.
The trading logic is nothing more than three major variables: trading counterparty, trading price, and trading time. MOV will provide SDKs for each module and combine different trading variables to implement flexible and high-speed magnetic contract templates to meet the diverse and high-level business needs of DeFi. Mature middleware services, especially for liquidity developers and business parties, open quantitative strategy support, market maker APIs and matching interfaces, and encourage the continuous creation and enrichment of DeFi in a fair, open and free on-chain value exchange market Ecological scene.
This is a self-consistent ecology that aggregates the mainstream roles of the current blockchain industry through a decentralized value exchange scenario, including transaction users, wallets, digital asset custodians, public chain project providers, liquidity facility providers, Derivatives and DeFi application project parties, etc., there may be diversified requirements, such as privacy protection, on-chain credit, on-chain oracles, etc. The integration and support of these infrastructures will bring traders and project parties Great convenience and appeal.
For traders, it meets mainstream value exchange needs in terms of asset diversity and liquidity, is superior to existing exchange markets in user habits, fees, and entry points, and provides spread arbitrage mechanisms and multiple trading strategies. Affects the user's asset storage habits, transfers are transactions, rest assured, easy transactions.
For access to the public chain , an open ecology, detrusted and standardized gateway will greatly simplify the cost of consensus and technology access for cross-chain collaboration, and feed back the asset flow and user diversion of the access to the public chain.
In the end, people will gradually discover that I come to the MOV ecosystem not only because I want to exchange a bitcoin for how many stable coins, but because everything a bitcoin can do in the blockchain world can be done on MOV So, this is the great convenience and transparency that goes beyond centralized transactions.
It is worth mentioning that MOV will be launched in March , and other DeFi applications will also be launched one after another.
Click the link below to get early access to the beta version of Tycoin:
https://www.yuque.com/docs/share/698dedc6-7d09-4d03-aa8f-0b6d693ab739 (supports non-secret payment, ETH cross-chain. Android requires manual download)