DeFi Research Report | Distributed financial network value initial multi-category interactive tools vying for admission


Finance is one of the relatively mature areas in which blockchain technology is currently used, and it is also the most likely direction to achieve rapid landing. The reason is that it can improve or solve the problems of traditional centralized finance such as user thresholds, counterparty risk, etc., thereby improving efficiency and realizing the vision that all assets can trade freely in the global open market.


DeFi concept: DeFi refers to the elimination or improvement of the drawbacks of traditional financial industry through blockchain technology, simplifying service processes and saving costs, thus improving the efficiency of the financial services industry. The term comes from an article by Brendan Forster in August 2018 entitled "Announcing De.Fi, A Community for Decentralized Finance Platforms", which not only provides a clear definition of distributed finance, but also points out that DeFi must have The four conditions.

  • Market Status: Although DeFi is still in its early stages, since the 19th year, there has been an increase in the number and scope. There are currently thousands of DeFi projects, most of which are deployed in Ethereum, and the heat continues to heat up.
  • Comparison of some project lists: mainly show the classification of DeFi and some projects and public links.
  • Project Rating: Provides three categories of ratings, including decentralized transaction agreements, distributed lending, and encrypted asset derivatives
  • Future prospects: At this stage, DeFi can be a supplement to the form and content of the contemporary financial industry. It is effectively decentralized and centralized, and the future is not limited to the general exchange.
  • Risk Warning: The encrypted digital market has high investment and high volatility risk characteristics, and there are investment risks such as excessive speculation and concept propaganda. This article is only for industry direction research and is not used as a reference for investment.

DeFi concept: Eliminate or improve the drawbacks of traditional financial industries through blockchain technology and improve the efficiency of the financial services industry.

DeFi, Decentralized Finance, which is distributed finance, aims to eliminate or improve the drawbacks of traditional financial industries through blockchain technology, simplify service processes and save costs, thereby improving the efficiency of the financial services industry.

DeFi is not a concept that was introduced in 2018. There have been cases in which blockchain was used to serve entity finance, but no one has clearly defined this classification. Until August 2018, Brendan Forster (Dharma Labs co-founder and COO) published an article entitled "Announcing De.Fi, A Community for Decentralized Finance Platforms". Distributed Finance had its exclusive Noun, DeFi.

From the definition of DeFi in the article, DeFi refers to the decentralized financial platform, which should be part of the Dapp subset, and it is currently a considerable part of the game. Brendan Forster sorted out the DeFi-based project based on the ETH public chain. It is believed that the DeFi project usually requires four conditions: blockchain technology, code open source, service finance, and a certain size development team.

In the second half of 2018, witnessed the gradual rise of DeFi-like projects. In the bear market, DeFi gradually entered people's field of vision and became a dawn of the real implementation of technology in the chaotic blockchain. After entering 2019, due to the continuous improvement of the blockchain industry as a whole, the definition scope and ecology of DeFi have also been expanded in the development process. DeFi is no longer limited to blockchain projects based on ETH for the financial industry, but also includes other distributed open source protocols that use blockchain technology to serve the financial industry.

In general, DeFi utilizes the characteristics of blockchain technology to effectively simplify the intermediary processes of traditional financial industries, improve transaction efficiency and prevent human intervention, and has a certain complementary effect on the current financial industry.

Market status: increasing quantity, a wide variety, preferred Ethereum deployment

Since last year, DeFi has gradually entered people's attention. Although in the early stages, the technical and business models of many projects are not mature enough, there are orders of magnitude increase in quantity and scope. There are already thousands of DeFi projects, including decentralized exchanges and orders. Thin, payment, lending, etc., the entire DeFi ecosystem is constantly improving, the industry is booming.

  • DeFi projects have sprung up, and there are currently hundreds of projects, and the heat continues to heat up.

The blockchain concept has created a bull market for 16 years and 17 years, and it has also caused a mixed bag of industry in the blockchain industry. In the 18-year blockchain industry, the transition from the impetuous period to the cooling-off period, and finance as one of the areas that can be better combined with the blockchain technology and the most successful landing, has become the key development direction of the blockchain industry.

Although DeFi is a new concept that was introduced last year, there are hundreds of projects that continue to operate, and there are more DeFi projects in the future. For the time being, at least 38% of the blockchain projects in the top 1000 market value directly serve the financial industry. It can be said that more than one-third of the blockchain projects can be classified as DeFi, and the number It is still increasing.

The proportion of DeFi projects in the top 1000 market capitalization, data source: CoinMarketcap, Tongxuetong Research Institute

DeFi project quantity trend chart, Daxie think tank

The earliest application of DeFi can be traced back to Bitcoin for peer-to-peer payment in 2008, followed by some blockchain projects to enter the market with the vision of serving finance. After the Ethereum main online line, DeFi began to show its prototype in 2016, such as EtherDelta as a decentralized ERC20 token trading platform, financial inclusion based on distributed ledgers, and Etherisc based on the concept of decentralized insurance, although the project A small number is also a pioneer of DeFi.

Since 2017, more DeFi projects have entered the market, and the overall number has begun to show a slow growth trend. At the same time, there are more types, such as the stable currency DAI to anchor the US dollar, VariabL focused on the derivative service, and Lending class EthLend.

By 2018, with Brendan's definition and classification of DeFi as an opportunity, more and more investors are paying attention to the DeFi project. Not only has DeFi increased in quantity, but also gradually began to form an ecosystem, slowly improving the industry's ecology. closed loop. For example, the forecast-based derivatives platform Augur, the asset management MelonPort, and the Kyber Network for the pass replacement.

  • There are many types of DeFi projects, and borrowing, decentralized trading agreements, and derivatives services have become hot areas.

DeFi is growing rapidly, with thousands of projects running in just over a year. These projects cover many different categories, including stable currencies, lending, derivatives, exchanges and more. However, because the blockchain is still an emerging industry, development is not standardized enough, so there is no clear classification standard for DeFi. Here we mainly refer to a classification standard called awesome-decentralized-finance on GitHub, which is also a classification standard currently accepted by the public. (See the next page for the list of DeFi projects)

Among them, the more common hot areas are forecasting, lending, decentralized trading agreements, derivatives, stable coins, etc.

In terms of the amount of locks, borrowing projects account for nearly 85% of DeFi's total lock-in quota, which is an absolute hot spot, followed by DEX agreements such as reserve and order books, and the derivatives service market. Others such as Swap DEX and payment classes only occupy a small amount of locks.

For DEX, the transaction amount is a more reasonable indicator than the amount of lock. The DEX-related agreement accounts for approximately 75% of the entire DEX transaction and is a popular branch in the DEX field.

The DeFi project takes ETH as its main position and its market performance is relatively eye-catching.

According to some of the directories given on GitHub, although the ETH public chain itself has certain performance limitations, most DeFi-like projects are more willing to deploy on the ETH public chain. On the one hand, because the ETH public chain is the best choice for the mainstream public chain, it has a large number of users and a high degree of user trust, and can quickly absorb more user groups. On the other hand, the world's top investment institutions are paying attention to ETH. The second and third layers of the chain are used as long as the project is good enough to not be favored by investment funds.

Number of ETHs locked in the DeFi project, source: ETH Locked in DeFi

It can be seen that since most DeFi projects are deployed on the ETH public chain, ETH is mostly regarded as one of the important certificates of the lock. Here, we only select 5 well-known DeFi projects from the ETH public chain for analysis. Since July last year, a certain amount of ETH has begun to enter the DeFi project, mainly in Augur. On September 25th, Compound entered DeFi and broke out on the 3rd, surpassing Augur's 2 months of ETH. On October 28th, dYdX began to enter the market, but before the middle of November, the amount of ETH locks had not improved much. On November 2nd, Uniswap entered the market and exceeded dYdX as soon as it entered the lock. Since the end of November, as the users in the blockchain industry have gradually begun to focus on the DeFi field, the overall situation of DeFi is clear. Compound and Uniswap have been volatility, dYdX

It has also gradually improved. However, since February of this year, Augur's lock volume has been in a gentle downward trend. The institute believes that liquidity may be lacking compared to other platforms, and as a predictive platform for derivatives, Augur may have certain A design flaw that determines the potential attack vector based on the difference between the market's expiration date and its resulting date. Users are still subject to this potential attack, but the official has not announced improvements, affecting the user experience, which is probably one of the important reasons for the decreasing volume of locks.

Number of ETHs locked in the Maker project, source: ETH Locked in DeFi

The DeFi category has performed well in the market in the past year, especially for projects deployed on the ETH chain. Eight of the top 10 are projects on the ETH chain. Among them, Maker's performance is more eye-catching, and the market value ranking has been on the line from now to now. It has surpassed many major circulation certificates and is currently stable at around 20.

Since the admission of Maker on December 18, 2017 to March 19, 2019, the performance has been relatively stable, and the trend has shown a steady upward trend. Especially after September 6, 2018, the upward trend has intensified until 2019. It fell slightly after April 10. The reasons for the impact have a greater relationship with the industry environment and user trust. But in general, after entering the Maker project, the performance has been good, almost occupying half of the DeFi project, and willingly sit on the ETH public chain DeFi champion.

Locked warehouse value distribution, data source: DappTotal

Lock warehouse value distribution trend, data source: DappTotal

Since the launch of EOSREX on May 1st, 2019, it has surpassed many similar projects in an instant, and it has not been developed for more than one month. As of May 22, EOSREX has surpassed Maker in the first place in the DeFi field, making many projects look back. . Until now, both the number of users and the amount of locks are the first to be worthy of the name. The reason is mainly because it is the system leasing contract of EOS main network. EOS is a mature public chain as a guarantee. Whether it is technology or background, it is deeply trusted by users.

Daxie project rating involves enumeration

Since DeFi has not been so popular last year, Daxie thinks about the DeFi ecosystem and is working on the well-known DeFi project in the market, looking forward to discovering a better business model combining blockchain technology with the financial industry.

  • IDEX: Decentralized Exchange

  • EOSREX: Borrowing

  • Uniswap: Decentralized Trading Agreement

  • Dydx: Derivatives Agreement

Future prospects: combined with traditional funds, become a supplement to the existing financial industry

At this stage, DeFi is still a baby in the shackles. All development models need to be constantly explored and tried. The only certainty is that DeFi can make up for the modern financial industry by using the traceability, intangible modification and high transparency of the blockchain. Part of the drawbacks. But from the current situation that the industry infrastructure is still not perfect and the public acceptance is still very low, DeFi still has a long way to go.

  • At this stage, DeFi can be a supplement to the form and content of the contemporary financial industry.

For the time being, DeFi can't break away from or even replace the traditional financial self-reliance portal. If the infrastructure is not perfect and the user trust is not high, if you want to achieve stable and long-term development, you must play a role in the contemporary financial industry. Supplements in form and content. Formally speaking, DeFi's ideas and tools are more open, and the threshold for financial investment participants is relatively lower, which helps the financial industry to cover the expansion of users; in terms of content, it gradually weakens the intermediary role of third-party institutions and reconstructs Trust mechanisms, as well as innovative open-ended financial models, help reduce trust costs, streamline processes, and increase transaction efficiency.

  • Effective decentralization and centralization are not limited to pass transactions.

Most blockchain projects claim to be completely decentralized, but they are only ideal blueprints when actually operating. Although there is indeed a ternary paradox in the blockchain, decentralization is relatively less urgent than efficiency and security, and the pursuit of complete decentralization is currently difficult to achieve. Under the premise of compliance, the DeFi project can only reach more mass assets by combining some of the advantages of centralization and effective decentralization.

At present, the volume of DeFi funds is limited by most of the certificates. There is actually no clear appreciation logic and scarcity. The lack of public acceptance leads to insufficient liquidity. The survival and development of DeFi requires a large amount of funds as support. In addition to BTC and ETH, it is difficult to find good assets with high liquidity, so the combination with traditional funds is also imperative.