No Defi outside Ethereum?
Defi is Decentralized Finance, a concept that ignited in the cryptocurrency circle in 2019, reflecting to some extent the compromise of the blockchain. The financial sector is where the blockchain can be subverted.
However, Defi projects such as MakerDAO, Dharma, dydx, and Compound, which are available for enumeration, are built on Ethereum. After the booming development in 2018, decentralized financial ecology including lending, forecasting, and trust has been derived from Ethereum. Among them, MakerDAO has the largest market share.
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Other public chains are also in this area, such as Ethereum's biggest rival EOS.
At the end of May, EOSREX (EOS Resource Leasing Platform), which had been running for less than a month, accounted for more than 50% of the total amount of mortgages in the Defi market, surpassing ACEDAO, the Defi project on the Ethereum for the first time. With the rapid start, BM can't help but blurt out "the future of decentralized finance is on EOSIO."
This sentence now seems too early, 2018 gambling still occupies 99% of the DApp ecosystem EOS, and started a little late on Defi (data source *DApp.com). But at least it also caused infinite thoughts. As the second largest smart contract public chain after Ethereum, does EOS have the opportunity to overtake in the Defi field?
If we look back at EOS's test trajectory on Defi, it is not difficult to find that EOS and Ethereum have commonality in the early stage of Defi development: lending, stable currency, DDEx became the original Defi product form; but the difference is due to the main network resources. With special settings, EOS added a Defi product to the resource arbitrage.
This paper takes a look at some of the EOS Defi trajectories, trying to explore the necessary factors for the development of Defi in the public chain, and the possible advantages and disadvantages of EOS.
EOS Defi inventory
The block has used a chart to summarize Ethereum's list of projects on Defi, which are divided into payment, trust services, infrastructure, exchanges & liquidity, investment, KYC, stable currency, forecasting market, insurance, lending, etc. category.
Apply similar standards to the EOS, and also sort out the Defi eco-version of EOS:
In addition, if the definition of Defi is more generalized, EOS can also calculate the current wealth management of the centralized managed wallet, such as the RAM loan of Hufu wallet and EOSREX mining.
In general, EOS investors started experimenting with arbitrage on resources (RAM, CPU, Net). In addition, due to the prosperity of DApp, there are many decentralized exchanges on EOS. The current new trend is decentralization. With the loan, the size of the head Defi DApp is still acceptable.
Arbitrage experiment of main network resources:
Promising but oversupply
EOSREX is a special product of EOS on Defi.
For the gas in Ethereum, EOS divides the main network resources into three more complex categories: RAM (memory), CPU, and Net (bandwidth). However, in EOS, between non-developers and developers, the main network resource demand is not balanced. In order to reduce development costs, the resource leasing platform emerges as the times require.
What we can see is that from the earliest EOS Bank, the Bank of Staked of the LaoMao team, EOS Cloud, chintai, iBank, Firecoin Mine Pool, Whale Exchange CPU Rental, Changsi EOS Changbao, MEET.ONE developed various types of rental products such as CPU explosions, Hufu wallets, and ZKS.
In most of the above rental platforms, the lessor obtains rental income by renting its own EOS. This leasing model, which uses mortgage EOS to revitalize idle resources, is more like regular bank management, stable and risk-free, and interest rates are directly proportional to the time of rental.
The emergence of Rex has deepened the concept of "decentralization", and through the addition of platform tokens, the main network resources will be "passified", giving dividends, thereby creating arbitrage space outside the rent.
In Rex, the Rex token is the resource token, and the lessor pledges the EOS in exchange for the equivalent Rex token, and the Rex token is entitled to the Rex dividend based on the proportion of the Rex token pool.
In addition to the rental income, the dividend includes the ram transaction fee and the short account bidding fee from the eosio.token contract.
In other words, Rex's interest is floating, determined by the rental demand + system revenue. For example, the current impact of oversupply – the current Rex pool has 93.43 million EOS leases, but leasing demand only accounts for 2% of the Rex pool, keeping Rex's return at a lower rate. But recently, with BM buying 330 G RAM for its social program Voice, it has pushed the price of RAM up, and indirectly promoted the annual rate of Rex.
At present, when the CPU/Net demand has not been significantly improved, the time value of REX is not high, but the short-term arbitrage still exists in the market under the stimulation of short account bidding and RAM processing fees.
If you do a simple and rude calculation, the REX daily transaction amount * corresponding days, it is not difficult to find that the total REX transaction can also be compared to the total transaction amount of all EFI Defi in the first quarter of 2019. The former data comes from DApptotal sampling, which comes from DAppcom's “DApp market first quarter report for 2019”. The report shows that Defi accounts for 6% of EOS's total transaction volume of more than 500 million.
Looking forward to the re-launch of the DApp market, as the demand for CPU rentals grows substantially, Rex's yields will also rise.
Emerging battlefields – decentralized lending
Looking back at the Defi road of Ethereum, decentralized lending is undoubtedly the most intense.
EOSDT and PIZZA-USDE on the two EOS projects, the central logic of the two is to convert the EOS certificate into a stable currency, which is similar to MakerDAO. It also introduces the stability fee, the explosive mechanism, the auction system, and the governance. Wait for new risk control measures.
This model can be traced back to 2016, the mortgage mechanism proposed by BM on the exchange Bitshare: the user generates the fixed currency BitCNY anchored by the over-collateralized BTS. If BitCNY continues to purchase the BTS for serial mortgage, the user can pass the Ways to do more leverage to achieve the effect of wealth.
EOSDT ranks in the top five in the total ranking of DApptotal's locked positions, and has closed $17.34 million so far.
EOSDT is led by a foreign team called EOS Equilibrium. The central idea is to over-collateralize EOS to obtain a stable currency EOSDT equivalent to 1:1. If the value of the collateral is less than 170% and the position is not timely, 20% will be deducted. The fine, the partner serves Oraclize for the oracle, and the latter also serves Ethereum.
In the Equilibrium architecture, there is also a MKR-like governance token, which is used to create and remove positions, vote for risk parameters, change fees, interest rates and mortgage levels, and monitor EOSDT's market supply. However, EOSDT has not yet transitioned to a decentralized governance mechanism.
The EOSDT founding team said that it chose to start with EOS and EOSIO technology because it is faster than Ethereum, transaction costs are close to zero, and it has a strong enough infrastructure to provide a high-quality experience for a large number of users at the same time. In addition, at the time of the investigation, they learned that the wallet merchants and DApp project parties have a lot of demand for stable coins.
Currently EOSDT only charges a 1% management fee, and most of the mortgage funds come from EOSDT investors. They also revealed that BM had expressed interest in EOSDT.
From June 8th, PIZZA, the founder of the airdrop, is the initiator of the SuperNode HelloEOS.
According to the statement, PIZZA began preparations in early 2018. Considering the EOS main online line and starting to get out of the long bear trend, both developers and users are continuing to lose, and they will be online on May 1 this year.
PIZZA maintains 175% of mortgage support, and a 10% penalty will be deducted if it is not repaid in time. Although the current mathematical modeling data is still in the process of improvement, he said that the current research results are that it is not appropriate to directly deduct 10% of the system. It should be similar to the auction after the system auctions the debt warehouse. Fee nature.
In addition, unlike the auction system that MakerDAO hides in the code, DAI may have problems in the event that the auction is not timely and the system risk is accumulated. PIZZA will open the auction system to users. When the debt warehouse bursts, the auction user will have about 3% profit margin, and when it falls to around 1.5% profit, the system will take photos with the users to avoid the risk of falling through. Subsequent access to major decentralized exchanges and centralized exchanges will allow the EOS of the short position to be sold directly on the exchange, which will increase the liquidity of the system.
At the same time, PIZZA will control the mortgage ratio of debt warehouses to reduce systemic risks. In addition, PIZZA will also open a savings interest, similar to the stable currency bank, users deposit into USDE.
According to DApptotal data, the current growth rate of PIZZA on the 7th, 7th, and 7th transactions exceeded 100%.
Where are the opportunities for overtaking EOS Defi corners?
EOS is still lacking compared to Ethereum, both in terms of type and size.
The start of the night may be the biggest factor, but after careful study, what kind of soil Defi is suitable for is still a problem to be thrown in this article.
This problem can be split into several steps to think about.
First of all, why is Ethereum the preferred reason for Defi project developers?
On the one hand, due to the early appearance of the Ethereum public chain, and the first public chain project to support smart contracts, it has become the second largest digital asset by market value, which has become the favorite place for developers of early Defi projects.
In addition, Pan Chao, head of MakerDAO China, told Odaily Planet Daily that MakerDAO chose Ethereum because of the network effect, security and sufficient decentralization brought by Ethereum assets.
As far as the network effect is concerned, the asset side and the issue side are both ends of the Defi core. The borrowing and derivatives are the issuers, and both require the asset side as a guarantee. Compared with other public chains, Ethereum is itself a better asset. In addition, there are also many ERC20 assets that have practical uses and a certain scale.
At the same time, after a long period of development, Ethereum is sufficiently complete in terms of security; in addition, compared to the node governance system, the Defi project on Ethereum does not need to face the problem of governance.
Second, what are the concerns about deploying the EOS public chain?
The answers we hear have development thresholds, security, and node centralization.
The first two answers came from the decentralized exchange DDEX's COO Wang Bowen. From the decentralized exchange DDEX created at the end of 2017, the transaction volume has been ranked first in the world in terms of transaction volume, and Tron and Binance chain are now deployed.
In the case of smart contract languages, EOS's EOSIO-based blockchain uses WebAssembly (WASM) to execute user-generated applications and code, unlike Ethereum's virtual machine EVM, "converting languages can be difficult and risky." DApp developer Chen Wei also said that DApp is indeed more troublesome in the process of porting to the EOS public chain.
Fortunately, at the June 1 conference, BM announced that B1 designed the virtual machine (EOS VM) for the EOSIO blockchain to run the contract, which would make EOSIO 12 times faster than the original. It is foreseeable that Defi's obstacles in the development threshold will disappear.
And safety is especially important for Defi, which holds huge amounts of wealth. According to blockchain data and security service provider PeckShield, between July and December last year, there were 49 security incidents in the DApp on the EOS chain, affecting 37 DApps, resulting in a total loss of nearly 750,000 EOSs. The currency price at the time of the attack was converted, and the total loss was approximately $3.19 million.
The reason why EOS security issues are more explosive, Johan, a slow fog technology security architect, believes that it is mainly "new things, lack of experience of developers, lack of audit of contracts", with the maturity of the ecosystem (including developer experience, development tools, industry Mature practice), "There have been few security incidents recently."
In addition, EOS node centralization has become the most frequently heard answer.
The hidden concerns include: the security risks brought by the centralization of EOS nodes. In this regard, Johan, a security architect for slow fog technology, said that from the current situation, more than 95% of the security problems on EOS are problems of smart contracts. There is no security problem caused by nodes doing evil. In addition, security issues need to be dialectical. The security advantage of EOS comes from its transparent, verifiable and manageable.
There are also asset freezes that may result from EOS governance. Before the interim constitution was replaced, the EOS Core Arbitration Court ECAF, which had been in operation since the EOS main online line, was controversial due to the order to freeze the assets of dozens of wallets. In fact, privileged institutions' rulings on asset freezes are not friendly to Defi, which is heavy on liquidity.
However, with the development of the governance mechanism, in April this year, the EUA (EOS User Agreement) has replaced the interim constitution, and the ECAF has been abolished.
In addition, the centralization of nodes may not be friendly to Defi product developers on the To B side. After all, the nodes may have an advantage in the key channels of wooing EOS.
Third question, what are the advantages of EOS?
Compared to Ethereum, the biggest advantage of EOS is performance. 梓岑 believes that based on EOS high performance and high liquidity, chain settlement can be shortened to a few seconds, which is enough for real-time settlement, and better adapted in the application scenario with high turnover rate, such as DApp, decentralized exchange.
But is the performance an emergency pain point on the Defi Defi? Still debatable.
Pan Chao believes that slow speed is not a problem with Defi, but a feature. Taking Maker as an example, the delay can even avoid the risk of a short-term downside caused by a short period of time; in addition, important large-value transactions are carried out on the main chain to ensure security, while micropayments are completed in state channels or side chains. Wang Bowen also said that DDEX uses a chain-linking, chain-based trading mechanism to reduce the use of resources on the chain to a large extent.
He believes that being fired is not a bad thing, and opening a position is a way to eliminate systemic risks. Because of insufficient performance, it should have been opened without a burst, which will only lead to the accumulation of system risks.
In summary, we believe that Defi's suitable soil needs to have: high enough market value; rich assets; adequate safety; low enough development threshold; liquidity. Among them, governance and performance are opportunities for EOS to achieve overtaking in corners.
Text | Aloe Operation | Gaiao Edit | Lu Xiaoming
Produced | Odaily Planet Daily (ID: o-daily)