DeFi Zhouxuan 丨 Locked positions back to 1 billion US dollars, a new wave of DeFi is coming

Selected content of this issue:

  1. One week of DeFi data: Defi ecological lock-in funds returned to 1 billion US dollars, an increase of 7.9% over the previous week;
  2. Through the buffer mechanism, achieve a stable non-custodial stable currency;
  3. A new wave of Ethereum DeFi derivatives;
  4. Cao Yin: Maker's Easter Eggs reveal which possible major business innovations in the future?
  5. One week DeFi project progress;
  6. to sum up

According to the data of Dapp Total, the total value of the 36 DeFi applications that have been counted is 1 billion US dollars, an increase of 7.9% from the previous week. Among them, the amount of ETH locks is 3.511 million, an increase of 10,000 from the previous week. EOS locks The volume was 83.65 million, an increase of 3.46 million from the previous week. The three projects with the highest share of lock value distribution are: Maker, EOS REX and Edgeware, which account for 33.06%, 20.1% and 11.51% respectively. DeFi周选丨锁仓重回10亿美元,DeFi新浪潮正在袭来 The simultaneous increase in the total amount of locks and the number of locks may indicate that the DeFi market has emerged from the impact of 312 "Black Thursday". In addition to the positive trend in data, some new solutions will also have a positive impact on the DeFi market.

Through the buffer mechanism to achieve a stable non-custodial stablecoin

A seemingly contradictory problem appears in the decentralized stablecoin. Although the goal is to stabilize non-custodial assets, these assets can only be stabilized by adding unrelated assets, which are currently under centralized custody (eg. Maker recently incorporated USDC collateral). In fact, this question applies more broadly to synthetic assets and cross-chain assets. How to solve this problem? Researchers have proposed an alternative market-based mechanism that can enhance the stability of stablecoins while maintaining a non-custodial state.

This mechanism creates a buffer that distinguishes those who are willing to exchange stablecoins for custodial assets in crisis from those who need to be completely decentralized.

Regarding this mechanism, the researchers also wrote a 36-page paper to explain in detail. This article is a simple explanation. Interested readers can read the full paper (


But like bitUSD, bitBTC, Steem-Dollars, and NuBits, they have all experienced severe decoupling (that is, instability) in history.

In view of this situation, one solution is to introduce irrelevant custodial assets, so the greater flexibility of the system depends on the escrow stable currency or the exchangeability with fiat currency. For example, the USDC recently added by Maker is such an example. Of course, this will also introduce other risks, including counterparty risk, bank run risk, asset confiscation risk, etc.


Although these measures to integrate custody assets can effectively increase the stability of the stablecoin, it comes at the cost of greater centralization and returns the system to the "custodial" state, which leads to a seemingly contradictory Where: Although the goal is to manufacture non-custodial assets, only adding irrelevant assets (currently centralized custodial assets) can make stablecoins completely stable .

Alternative solution: non-custodial vault insurance pool

Researchers have proposed an alternative: provide buffers to suppress deleveraging effects without directly incorporating the assets under custody. The working principle of this buffering mechanism is to separate those who are willing to convert stablecoins into custodial assets in crisis from those who require complete decentralization.


(Picture from Pixabay)

The Maker system collects fees from leveraged participants. If leveraged participants lock Dai in the savings pool, part of it will be transferred to Dai holders as an interest rate. By improving the mechanism, this savings pool can provide a buffer for the deleveraging effect.

Dai holders participating in this savings pool will be compensated by offering leveraged participants repurchase options. Dai holders can choose to implement repurchase in collateralized assets or other forms (such as escrow stablecoins). In this way, this mechanism can provide some benefits of "perfect" stability settings, while allowing Dai holders to choose the degree of decentralization they want. In this mechanism, Dai holders who do not need a high degree of decentralization will choose to get compensation from the savings pool, while Dai holders who need a high degree of decentralization will choose not to use the savings pool.

Regarding the implementation of the mechanism, it can be similar to the chai contract. In the first step, the leveraged participant needs to pay a certain fee to join the vault insurance pool. In return, they received an option to buy back Dai. This option gives them the right to obtain Dai in times of crisis to repay Dai loans from their vaults. In the second step, the user can add Dai to this insurance pool, and the Dai in the pool is forwarded to the Dai savings rate to earn interest (when it is again above 0%). The insurance pool can also earn interest by providing fast loans. In addition, users earn second interest through fees provided by leveraged participants. Charged assets include asset pools provided by leveraged participants, such as ETH, BAT or USDC. The interest rate can be adapted to the market mechanism of the pool: when the insurance demand is high and the supply is low, the fee will be high to encourage users to join. When the demand is low, the cost will be adjusted accordingly.

Crypto assets expanded beyond stablecoins

The model (and the solutions proposed thereby) are more widely applicable to synthetic assets, cross-chain assets, and ultra-mortgage loan agreements. Synthetic assets usually use a similar mechanism, but use different anchor targets. Migrating assets from Bitcoin to Ethereum ’s cross-chain assets also tends to rely on similar mechanisms. In decentralized structures such as XClaim and tBTC (or more precisely, escrow structures with on-chain recourse), in addition to deliverable BTC assets, vault operators must also lock in ETH collateral, They bear the ETH / BTC exchange rate risk and face similar deleveraging risks.

Overall, this new model creates a buffer zone that will increase the long-term stability and survival rate of non-custodial stablecoins and similar assets.

Author: Cornell University doctoral student Ariah Klages-Mundt

Original link:

A new wave of Ethereum DeFi derivatives

Ethereum is ushering in more and more financial primitives. The author Kerman Kohli first popularized these financial primitives, and then introduced the corresponding existence in the DeFi ecosystem.

Its coverage includes:

  1. Forward contracts and futures contracts;
  2. Option contract
  3. Swap contract (also known as swap contract);

1. Forward contracts and futures contracts

Futures contracts are a method used for the following purposes:

  1. The buyer acquires the asset on a specific date in the future;
  2. The seller sells assets at the asset price of a specific date in the future;

You can also own futures of one asset, but settle with another asset. For example, ETH futures settled in USD instead of ETH.

The forward contract is similar to the futures contract, the difference is that the forward contract is customized according to the following characteristics:

  1. Number of units
  2. Acceptable parameters;
  3. Where assets are to be delivered during settlement;
  4. The time interval for delivery when due;

In the field of cryptocurrency, settlement is efficient, because it is only the computer pointing and transferring to the wallet, so there is no physical settlement risk.


On December 10, 2017, the CBOE Futures Exchange launched the first ever Bitcoin futures market. In the DeFi world, there is currently no on-chain futures market available. Of course, there are some forward-looking projects exploring this field:

  1. Power futures for cryptocurrency mining, they can help miners hedge risks;
  2. Lockdrop futures that are traded before the asset is available and settled when the asset is available. If the market is large enough, you can do the same for illiquid ICOs;

According to the author's current knowledge, the main DeFi participants exploring in the futures field are:

  1. AMM-based futures have an on-chain leverage of up to 20 times, and it is currently in the Alpha stage. To the author, this seems to be a crude work of on-chain speculation;
  2., a futures exchange without KYC, looks like a polished finished product and has been put into operation, but there is not much hype;

2. Option contract

In the past month or two, we can see that a large number of option products have appeared in the DeFi ecosystem. Options are similar to forwards and futures, except that the buyer has the right but no obligation to purchase assets on a certain date in the future.

Depending on who has the option at expiration, we have put or call options.

  1. Call option refers to the right to purchase assets at a certain price in the future;
  2. Put option refers to the right to sell assets at a certain price in the future;

Example 1: I bought a call option for $ 155 and the strike price is $ 150. This means that if the price of ETH reaches $ 200, I can buy ETH for $ 150, with a profit of $ 45 (instead of $ 50, because I paid a $ 5 premium for the call option).

Example 2: I bought a put option for $ 155 and the strike price is $ 150. This means that if the price of ETH reaches $ 100, I can sell ETH for $ 150 and make a profit of $ 45 (instead of $ 50, because I paid a $ 5 premium for put options).


The reason why there is a premium is because the counterparty of the option only provides the seller with rights, but no obligation, and both the futures and the forward have obligations at the time of expiration, so no premium is charged.

The first use case for options is insurance (although it has now turned to price speculation). Currently, there are three competitors in the DeFi ecosystem:

  1. Opyn: Essentially, Opyn is an option agreement, which starts from selling put options and provides insurance for users to deposit stablecoins in the DeFi agreement. The idea is simple. Put options sellers will sell $ 1 for $ 1.05, which means you have to pay 5% of the insurance premium.
  2. Nexus Mutual: The core value proposition of Nexus Mutual is insurance, but its behavior is similar to an option agreement, except that you have no right to exercise options. What does it mean? Well, NXM is the native token of Nexus Mutual, which represents the ownership of capital in the capital pool. According to the prediction model, all capital exceeding the payment amount is owned by the NXM holder. In this sense, you are equivalent to buying an option, but NXM token holders have the right to decide whether to pay you. Of course, the subjectivity of the hacking attack ultimately depends on the NXM holder, and when the hacking attack is determined to be effective, the price paid by the holder will also be in the best interests of Nexus Mutual.
  3. Hegic: Hegic is another option agreement. Currently the website is very original and the contract is also in beta.

Other nominated projects:, still in beta testing, will be launched soon.

3. Swap contract (also known as swap contract)

The easiest way to consider swap transactions is to exchange cash flows on pre-specified conditions. In the traditional world, a company may issue a bond that pays LIBOR + 1.5% profit. To make their interest payments more predictable, they may sign an agreement with another party that pays a fixed amount of interest (eg 5%). If the LIBOR interest rate is increased above 3.5%, then they will be secured, because their interest payment is fixed at 5%. If the LIBOR rate falls below 3.5%, then they will suffer losses because 5% will exceed the actual payment required. The easiest way to think about it is that you are guessing about interest payments, not the value of assets.

As far as the DeFi market is concerned, the most demanded liquidity swap market is the fixed and variable DeFi loan interest rate swap market.

As of now, the space of the DeFi swap market is very limited. The two items the author can find are:

  1., a swap application, is expected to be launched later this year.
  2., a very simple project, the interface is too difficult to use.

For these projects, liquidity is likely to be the biggest bottleneck, and buyers and sellers are currently unable to make a good bet.

Taking into account their current stage, it is easy to ignore them, but these DeFi protocol innovation steps are gratifying.

Original link:

Author: Kerman Kohli

Cao Yin: Maker's Easter Eggs reveal which possible major business innovations in the future?

Last week, after the Maker Foundation released 13 MIP drafts, Cao Yin, a partner at Digital Enlightenment Capital, interpreted them for the first time. These improvements are mainly divided into three categories:

  1. MIP0: Maker Improvement Proposals Framework, or MIP framework, which is the constitutional document of the future Maker decentralized community governance, which clarifies the role of various MIPs, MIP proposal, implementation, processes and cycles, and the role of MIP related personnel
  2. Core Foundation MIP series (CFMS: Core Foundational MIPs Set);
  3. Collateral increase MIP series (COMS: Collateral Onboarding MIPs Set);

Article link:

In addition, the author also found some very interesting "eggs", these eggs reveal the possible future major business innovations of Maker.

Egg 1: Synthetic assets on Maker?

Egg 2: Maker wants to build an off-chain reserve bank?

Egg 3: Maker wants to economically incentivize voters?

Article link:

Progress of DeFi project in one week

  1. tsis founder Thesis completed 7.7 million US dollars in financing, distributed capital and other investment ;
  2. Decentralized automatic market maker Balancer goes online ;
  3. Augur v2 release deployment details ;
  4. Coinbase injects USDC assets in Uniswap and PoolTogether ;
  5. Consensys ’Codefi product introduces new Inspect features to improve the transparency of DeFi ;
  6. Tezos announced that it will enter the defi market by issuing tzBTC ;
  7. The MOV federal node was officially unveiled, and the destruction plan was revealed by the original team ;

to sum up

Last week, the DeFi market of Ethereum gradually recovered its vitality. After the crisis, new products and some advanced solutions will inject more vitality into this ecology. At the same time, other public chain DeFi products have gradually begun to exert their strength. On the other hand, the market value of the stablecoin market is accelerating towards the $ 10 billion mark, and this will undoubtedly bring a huge boost to the DeFi market.

In the face of the unstoppable wave of DeFi, will Ethereum be alone to seek defeat, or will there be a situation in which public chains contend?

It seems that this will be a very interesting long-term competition.