The amount of locks exceeds MakerDAO's EOSREX, not enough to declare the future of DeFi

Just the reproduction of the lease on the chain.

Editor's Note: On DAppTotal's DeFi lockout value list, EOS REX squeezed MakerDAO to second with more than 20 days. We are naturally curious about the reasons for its rapid increase. This is not only related to the operating mechanism of the two public chain ecosystems of EOS and ETH, but also related to the actual needs of the two modes of leasing and lending.

01

Before we understand EOSREX, let's talk about the resource allocation mechanism of EOS.

EOS system resources are mainly divided into network bandwidth resources (NET), CPU computing resources (CPU), and running memory resources (RAM). NET and CPU are occupied resources and can be released after use. RAM is a consumable resource and will be reduced when used up. The acquisition of these three resources requires the user to mortgage the EOS token.

Therefore, EOS users and DApp developers first need to purchase EOS tokens and mortgage them to the EOS system account to get access to NET, CPU, and RAM. The more EOS a user holds or mortgages, the more resources that can be invoked in the EOS system.

The original intention of the EOS resource system was to achieve resource-optimized configuration and fulfill the promise of “reducing developer costs and making users trade free” in the white paper.

However, at the end of 2018, the continued popularity of the quiz and game Dapp resulted in a constant shortage of CPU resources. Under the shortage of resources, there was a large amount of speculative behavior in the market, which caused the CPU price to rise continuously. The ordinary users were unable to transfer the account at one time, and even the account itself was inactivated. It was necessary to “recharge and restart”, and the EOS network was once paralyzed. At the time, according to DAppTotal, "The quiz TOP10 game consumes 84.15% of the entire network CPU resources."

In this context, in order to solve the problem of resource shortage, the REX concept proposed by BM in August 2018, after a series of simplifications and the actual situation of the existing EOS CPU lease, officially opened the main online line in May this year.

What exactly is REX?

In simple terms, REX (Resource Exchange) means that EOS holders can rent EOS on the resource trading platform to those who need to purchase resources (CPU/NET) and charge interest income; resource renters can rent a large amount of EOS. Resources (CPU/NET) for a period of time (typically 30 days) to reduce the development cost of EOS Dapp developers.

In essence, REX is the income model of principal + interest . EOS holders can earn interest here, and Dapp developers can get CPU resources at a lower cost without having to buy EOS.

02

To make it easier for everyone to understand, let us illustrate by example:

EOS holders: Bob has 1000 EOSs and has no plans to sell them recently. In order to obtain lower risk interest income, these 1000 EOSes are converted into REX tokens. Correspondingly, the resource usage rights of these 1000 EOSs can be rented to others on EOS REX;

EOS resource leasing party (such as EOS Dapp developer): Alice currently has only 100 EOS, but he needs to use a lot of resources (CPU/NET) to develop Dapp, which requires about 1000 EOS resource usage rights;

Now Alice has two options to choose from. One is to purchase 900 EOSs and make up for 1000 EOSs and corresponding resources. Or it is too expensive to go to EOS REX to rent Bob's 900 EOS resources for 30 days, provided that Lease interest is not high.

After 30 days, Bob gets more than 1000 EOS (principal + interest), and for Alice, if you renew your lease, you can continue to use the resources.

03

In addition, the impact of the emergence of REX on the EOS ecosystem and EOS holders is multifaceted:

The first is to improve governance on the EOS chain.

We know that EOS uses the DPOS consensus mechanism. Twenty-one out of the block nodes were voted by EOS holders. As of June 4, less than 300 million EOSs were voting, accounting for 28.76% of the total EOS (1.043 billion); more than 50,000 EOS accounts were voting, accounting for only EOS accounts (1.15 million). 3.33%.

That is to say, EOS voting is dominated by large households, and there is a clear lack of extensiveness and incentives for ordinary holders.

To this end, REX sets a hard rule: if an EOS holder wants to get revenue through REX, he must first vote for the node.

In this way, people forced to participate in voting for profit-seeking (locking revenue), which can dilute the impact of EOS large-scale elections on node elections and enhance the security of the EOS main network.

Second, it is to reduce the flow of EOS.

The more people who participate in REX, the more EOS will be locked, and the less EOS in circulation, the further the EOS price. Of course, the premise of EOS stockholders considering lock-in is that they can get considerable profits through REX. Once the revenue is attractive, external funds may also be attracted to REX and enter the EOS ecosystem.

From the data point of view, REX went online for a month and the momentum of development was rapid. According to DAppTotal data, as of June 4, 2019, 21 DeFi projects totaled $1.2 billion in lock-up funds, of which REX locks $630 million, accounting for 53.32%, becoming the number one DeFi project with lock-in amount; MakerDao Locked warehouses were 430 million US dollars, accounting for 34.62%. Compound locks are $28 million, accounting for 2.38%; other DeFi applications such as Dharma, Bancor, Augur, and xDai account for 9.68%.

The emergence of REX has spurred MakerDAO, which has continued to occupy the leading position of DeFi for nearly 2 years. (More real-time data on REX can also be found on the EOS Authority website)

We have summarized three reasons why REX has become a DeFi "black horse":

1. Provide solutions for the industry. Compared to the purchase of EOS, the leaser consumes a small portion of EOS to obtain the temporary use of the required CPU and EOS, saving money and resources.

2. Technological innovation. REX uses the Bancor algorithm to construct a series of actions such as store-transaction-lease-end transaction. The user does not need to calculate the total amount of the lease by himself. The platform automatically calculates according to the real-time EOS/REX conversion ratio, which is simple and logical.

3. Risk management innovation. REX sets certain conditions for both parties to ensure the validity of the transaction, including REX holders must participate in the SuperNode voting; after purchasing REX, it takes 4 days to unlock the sale of REX; REX tokens are only used for determination The unit of account for the rate of return is not affected by fluctuations in the price of the currency.

Although the REX was launched for a short period of one month, it has propped up the financial ecology of EOS on the supply side, but the demand side is not optimistic.

04

According to "Settings", there are two types of REX users, one is DApp developers and the other is DApp enthusiasts. However, from the data point of view, the demand for these two types of users to rent CPU / NET is not strong.

05

06

The EOS community has improved CPU leasing through a variety of mechanisms. There are many projects that provide CPU rental in the market. Some EOS wallets and trading platforms (such as Chintai) are also involved. The supply is sufficient, and DApp developers can have more choices.

The DApp has not been hot for a long time, and the price of the CPU has dropped back to a reasonable level. For the development team with funds in hand, there is no need to go through complicated operation procedures, and you can exchange the resources directly in the system to exchange the CPU.

07

From the above figure, we can see that the EOS CPU usage rate averaged around 209.32M in the past 23 days, only occasionally the peak value will reach 3.09B.

Therefore, from the perspective of supply and demand, EOS resources are currently oversupply, and with the launch of REX, the relationship between supply and demand will be more inclined.

The Odaily Planet Daily Research Institute interviewed several EOS nodes and DApp project developers, saying that they would not choose to rent resources on REX.

Sun Yushi, co-founder of EOS Beijing, said that the EOS node itself has less demand for resources, and the main demand is DApp. The current price of resources is relatively cheap. Take the CPU. In the peak period, the whole hour is often pulsed, and they have mortgaged over 100,000 EOS when they did EOSDOTA. It is now a lot smoother and the overall price is cheaper.

NEO, EOS Joy's technical lead, said that there are occasional huge resource requirements in the DApp development process, and that when you don't have much EOS at hand, you will consider temporarily renting some resources. There are many rental channels, not limited to REX, mainly depending on the price. And because the resources are being restored all the time, only when your consumption speed is greater than the recovery speed, the lack of CPU resources will occur. In addition, because Snake is a 3 minute game, CPU resources per unit time are very small compared to games like DICE.

And there are not many DApp enthusiasts on the market today. Although the number of DApps on EOS has increased, the most lively games are mostly quiz games (and the gap between real active users and surface data).

Gao Feng, the head of Meet.one, told Odaily Planet Daily Research Institute that the current DApp project on EOS, the CPU is basically enough. Moreover, the development of DApp mainly occupies RAM, and the CPU is undertaken by the user (ie, the player). Meet.one does not currently rent a CPU and can pledge enough EOS to the resource leaser.

08

According to the Spiderstore data site, as of June 4, the DApp's 24-hour active users on EOS were 112.31 million. As shown in the above figure, only 4969 accounts are renting CPUs, indicating that there is still a lot of room for improvement on the demand side.

Stand taller, does REX's glory mean that EOS is the most suitable public chain for DeFi?

The answer is not necessarily.

Currently, the DeFi market is both ETH and EOS.

Although, the unique resource usage mechanism and the innovation of the Bancer protocol give EOS an innate advantage. However, in terms of development maturity, Ethereum still carries the most valuable assets and has higher liquidity.

At the same time, the security performance of EOS has also been criticized. According to blockchain security company PeckShield, as of December 26, 2018, there were 45 DApp security incidents in the EOS ecosystem, resulting in a loss of nearly 740,000 EOS. The Odaily Planet Daily Research Institute has analyzed security incidents, mainly random number cracking, smart contract vulnerabilities, and the use of controllable random number seeds. These hidden dangers obviously limit the development of REX. After all, REX's funding pool stores a large amount of EOS, which will become the target of hackers.

However, there are already projects on the EOS that are similar to MakerDao lending products (such as USDEEOS), indicating that there is still a lot of gap in the decentralized financial market, waiting for further development.

Text: CiCi; Editor | Hao Fangzhou, reporter Aloe also contributed to this article.