DeFi: Ether Exodus?

Sharing people: Yang Mindao finishing: Uncle Red Army (Boundless Community)


Hello everyone, I am Yang Mindao, founder of dForce and Blockpower.

dForce is a blockchain-based decentralized financial (DeFi) and currency protocol platform that provides the underlying infrastructure for DeFi and open financial applications.

The USDx protocol has been launched, which is a highly scalable and stable index-type US dollar stable currency agreement using a basket of stable coins as a reserve. In addition, our community has developed a decentralized currency currency market such as; I hope to create an open and highly scalable development finance ecosystem.

I have been in the currency circle since 13 years and ICO participated in the Ethereum ICO for 14 years. I have experienced many events in Ethereum, including the changes in the location of Ethereum. It is also a witness and witness of the development of Ethereum.

Therefore, when the host said that I would give a share a theme, I have turned over the various events that Ethereum has experienced over the years, confused, confused, crazy and repositioned .

These sufferings, struggles, and rebirths are like the Exodus, which tells the story of Moses leading the Israelites, experiencing hardships, leaving Egypt, and searching for the promised land of God.

Early Ethereum: Making the World Computer

I am not sure that Ethereum has completely found its own promised land, but going to Central Finance (Open Finance) Ethereum has found a very successful foothold after years of hardships. Whether it is a stable currency or a DeFi agreement, most of it is now built on Ethereum.

The earliest Ethereum is about this narrative: To be a world computer.


Have to mention TheDAO fork

The early development and drama of Ethereum, including the big fork caused by TheDAO, led to the advent of ETC, and Poloniex's on-line ETC without any indication, letting a forked coin that nobody cares, after giving financial attributes, changed overnight. It is worth the price.

Due to the effect of value, the political power of the "faction" was quickly condensed.

During the hard fork of Ethereum, many of the early investment in Ethereum were difficult for people to sleep for a few weeks. The highest point was ETC price 0.005 BTC. ETH was about 0.018 BTC at the time, and ETC was close to 30-40% of ETH's market value. Now this The ratio is 2.7%.

The ETH fork caused by ETH is the first time in the history of digital currency. The market behavior reversely affects the community consensus . I call it a kind of community protest driven by liquidity and marketization.

Then the various fork coins, including BCH, are textbooks that draw on ETC forks.

Through liquidity and market pricing, reverse access to community consensus and launching protest campaigns and liquidity attacks are a very low-cost way to get a new currency to get a liquidity consensus.

Bifurcation surprise: find the promised land

This is also the first time in the history of crypto to reverse the influence of social consensus through market behavior. From this point of view, in fact, Ethereum has been conducting various types of social experiments.

From the birth, the fork, and the ICO madness, Ethereum has never been looking for a good position, from the world computer to the AXO , until the beginning of this year, DeFi, Ethereum found its own Promised Land – Establish a global value and settlement network.

DeFi field, there are two levels, the first is the asset layer (layer 0 ) , mainly including ether, ERC20 assets, ERC20 stable currency, of which ERC20 stable currency is the most eye-catching type.

The figure below shows the circulation of stable currency in circulation now (the trading volume is 3-4 times the circulation)

Another picture, you can see, Ethereum's ERC20 stable currency (ERC USDT, PAX, TUSD, USDC, USDx, DAI) accounted for about 53% of the total market share of the stable currency, we expect Bitcoin Omni Most of the stable currency on the agreement will be transferred to Ethereum, and Ethereum may eventually account for more than 80% of the stable currency . Ethereum is at the asset end of DeFi's most important layer0 – the stable currency, which already accounts for most of the market.

DeFi is the blockchain of the Killer App

Ethereum DeFi already has a relatively complete ecology, covering all aspects of finance.

Different from traditional finance, the DeFi protocol has strong composability and interoperability. So it is easy to generate new applications generated by different protocol interactions (such as aggregators such as instadapp), or USDX like dForce, to create a stable, more stable and stable currency through combination.

This means that the DeFi ecosystem will evolve and expand at a geometric speed under the main force of composability and interoperability. Now we can see the new defi protocol/application on Ethereum every day.

This is the old picture.

Ethereum now has a DeFi ecosystem that is three to five times larger than this one.

The modularity and interoperability of the DeFI protocol will further strengthen the network effect of Ethereum itself. When all the "Lego" blocks are in Ethereum, it is very difficult for other public chains to re-establish such network effects. This requires a developer community, development tools, audit case accumulation, modular assets, and protocol templates.

A particularly successful part of Ethereum's DeFi is the establishment of a series of ERC standards that greatly reduce the friction between Ethereum assets and agreements.

If we look at DeFi from the perspective of Chinese chronicles, Bitshare should belong to Fuxi's Five Emperor era, which is also the mythological era; while MarkerDAO is probably a summer dynasty, China enters a verifiable era of historical records; now DeFi belongs to a hundred schools of thought, a hundred flowers Spring and Autumn Warring States .

If we say that we are always looking for the killer app of the blockchain, then DeFi as a whole or category, is in line with this feature.

Stabilize the currency, get the world

If you have a stable currency, you can also enter the interest-earning agreement to get interest above the balance. The following is the current interest rate of the stable currency, USDC is between 4.15 and 4.91%; DAI is between 5.8% and 6.8%; USDx is 8.26%.

Most of the transactions on the Ethereum are now DeFi transactions. The most important thing is that DeFi solves the real problem . For example, you can borrow money from DeFi's lending agreement to lower the cost of capital than the centralized service.

Above is USDC, DAI's current interest

This is the current interest of USDx

The most important point is that these markets are interoperable. As long as you have access to the Internet, you can directly obtain these capital returns far above the balance , and you don't need to trust a central party. It is the most revolutionary application in the DeFi field by stabilizing the currency to open up the global capital market isolated by the region.

We have already seen a globally interoperable and unified capital market. The reason why there is a difference in interest rates between the US dollar stable currencies is because of the differences in their respective supply markets and frictions. With the deepening of DeFi development and the strengthening of liquidity, the averaging of capital costs will eventually be achieved through global arbitrage .

Ethereum data: all the way up  

Speaking of the development of Ethereum itself, one of the most critical indicators is the number of transactions on the chain , which is very stable:

In addition, DeFi's Ethereum locks the value – all the way north:

Lonely: the value of the chain of assets outside the chain

Compared with the value of locking Ethereum, I think it is more important to lock the value of the assets outside the chain, such as the circulation of the French currency, and the circulation of the gold token.

When more and more out-of-chain assets are anchored in Ethereum, they will be completely separated from their own chain value, and the security value will be substantially improved. This will also make Ethereum completely different from other POS chains (other pos can only rely on its own token value to ensure its own security).

Since then, Ethereum does not need to rely on transcendental beliefs to determine its own network value, but to rely on extra-chain assets ($100 billion in extra-chain assets), until then, Ethereum may actually find its promised land.

Q & A session

Q1: Is the positioning of Ethereum's "World Computer" accurate? Are there other descriptions that are more suitable for the latest situation?

Yang Mindao : As I said, this is the idea that Vitalik is still 17 years old. The global value and settlement network should be a more reliable description.

Uncle Red Army: Need a catchy slogan, such as "world finance".

Yang Mindao: Although many people in the community are not willing to admit, financial agreements and applications are basically the mainstream discourse of Ethereum.

Q2 : Some people think that Ethereum currently has the effect of DeFi self-reinforcement, that is, based on the DeFi activity of Ethereum, will the development of Ethereum be more like DeFi tilt, and other non-DeFi applications may be relatively crowded? How do you think about this statement?

Yang Mindao:

Ethereum's gas market is a very good market regulation. One of the reasons why DeFi can be fired is that the DeFi protocol and application single transaction volume is relatively large, so it is not sensitive to the price of gas . This market will push applications and protocols that require higher tps to Layer 2 protocols. All of this is regulated through the market.

Of course, we expect ETH 2.0 to improve the throughput of layer1 and solve some problems, but this is far from meeting the needs of many applications, and can only be solved by centralized/semi-centralized or side-chain/chain-chain.

This problem is the worry of the growth of the public chain. If other public chains become popular, the same problem will occur.

Uncle Red Army: So the application of DeFi does not belong to the "high frequency low" type?

Yang Mindao : High-value low-frequency trading. Now dex can also provide some high-frequency trading, through the chain.

Q3: What are the public chains that can be compared with Ethereum? Where are their opportunities?

Yang Mindao:

Not seen in the scope of the glasses, there should be a range of astronomical glasses. However, it is also the distance of light years.

I think that the opportunities of other public chains may be in the direction of more vertical or regional integration, using the market and landing advantages to accumulate potential energy. I am still optimistic about the Chinese market and the public chain and DeFi focusing on the Chinese market. The home advantage is the biggest advantage.

The biggest problem with other public chains is that, or the paradox is that all their money and technical investment may be more powerful in helping Ethereum to be free. Therefore, in fact, I have always suspected that Ethereum 2.0 is not coming out, it is in the "sucking star Dafa." More absorption of other public chain research and development and technology, and then integrated into 2.0/3.0. Taiji thief ~

Uncle Red Army: This V God and the team seem to have said that it will absorb the technology of other public chains. I remember who sent a reference form.

Yang Mindao: Yes, so the R&D expenses of Ethereum = the total amount of ICO in all public chains. (Other ICOs in the public chain are doing research for Ethereum)

Q4: In the statistics of dapp, it is often used in Taifang, wave field and EOS to compare, how do you see the wave field and EOS?

Yang Mindao : My point of view is all the opinions of developing DeFi developers, which is why DeFi does not go to EOS or wave field development? The main reason is that DeFi is doing financial agreements, considering long-term and security. This is not the same as the game. The game is a guerrilla war, where is the wool to go.
DeFi is a long-lasting battle . Don't stabilize the coins on a chain. The next day, the chain runs.

For example, if you send a chain with only 7 nodes, even if your DeFi is doing well, the code is safe, and you can't stand a kidney stone. DeFi needs a stronger foundation than kidney stones.

Q5: There are two voices in the Ethereum 2.0 segment. One is the industry's doubts. It feels technically difficult, and many of the public chain results that are tried in this area are not very good, so the implementation is very difficult; God also replied that the technical problems have basically been overcome. So what is the difficulty of achieving fragmentation? Is it only the team of V God?

Yang Mindao : The film has been shouting since 2015. There are a lot of public chains in this area, and the technical difficulty is very big. For example, rchain has gone bankrupt.
How to solve the coordination of transactions in different partitions, how to perform inter-dependency transactions in the fragmentation is very difficult. Fragmentation of other chains is not necessarily useful because there is no test for chains with large market capitalization.
Technical tests without market capitalization and economic incentives are not true tests. Therefore, there are about four or five public chain teams trying to solve this problem, and whoever makes it, Ethereum is the biggest beneficiary.
Uncle Red Army: Isn't the testnet simulation test still working?
Yang Mindao :

The real test needs to have sufficient economic benefits. Ethereum is a $17 billion test network. Hackers all over the world will help you test. If you are only a $10 million public chain, you can't prove it even if you run out of the film. You are safe. Because hackers are not thinking about you. And other public chains do not have enough DeFi applications for multi-layer testing.

Uncle Red Army:

Speaking of the team to talk a few more words. Most of V's team doesn't know. How do you feel about V's multiple development teams from the perspective of your knowledge?

Yang Mindao : The difference between Ethereum and Bitcoin is that this was also emphasized by Ethereum, which is multi-team, multi-client and multi-language.
Although the richness of this ecology is very costly (the Ethereum Foundation almost went bankrupt). At the time of Shanghai Love's ddos ​​attack, if it wasn't for the client that was maintained by the Parity team in Ethereum, Ethereum stopped working. Multi-team multi-language multi-client is a security setting. It is also a kind of "luxury" that most public chains can't afford.
Uncle Red Army: Can you understand that you put risk in multiple baskets?
Yang Mindao :

Well, biodiversity will increase resistance . The most criticized bitcoin is the centralization of development, basically in the hands of several members of the bitstream core of blockstream. Decentralization at this point is necessary.

Uncle Red Army:

Said the team continues to talk about the leader, I feel V God is a bit like Alibaba's Ma Yun? What do you think? How do you see the difference in leadership style between V God and Gavin from your perspective?

Yang Mindao : Haha,   V is like Washington; Gavin is like Roosevelt . One does not need power to build influence; the other is that it is strong anyway.
Uncle Red Army: Well, everyone really feels that V God is like a shy little girl on each meetup.
Yang Mindao : The public chain needs an influential and influential person, such as Gandhi, who can still call the world away from the scepter.


Q6: Do you think that 32ETH as the Validator is the threshold or the threshold is low?

Yang Mindao : Actually, it is comparable.
32ETH is about $5100, Tezos needs $5,000 (8000 xtz), Cosmos node, ($240,000), so I think it is a very low threshold.
And here you need to consider the return on funds. This is in line with the rational person's assumption that if the return on capital is 5%, assuming the aws node cost is $200 a year, the lowest threshold can be set at $4,000.

Q7: staking of ETH2.0 seems to be able to achieve multi-person staking with the help of smart contract, and the total number of 32ETH can be started together. How do you see this way of looking a little decentralized staking? Does this method mean that there will be a big impact on the staking pool service?

Yang Mindao : Actually, the staking of many chains is very simple now. You can simply click on the wallet, and as long as you don't make nodes, staking itself has no threshold.
The problem is that many stakes may eventually settle on some platforms, such as exchanges, which are basically the big nodes of the pos chain. Most of the staking modes are arranged at the protocol layer . In fact, the second layer application is not needed to achieve decentralization. Now the problem of pos is bigger than the infrastructure . For example, most of them use aws, aws has a problem, it is estimated that 80% of the nodes of pos will hang, which is a bigger concern.

Q8: DeFi currently looks very hot. If all kinds of applications can really land and be accepted by users, does it mean that the value of ETH will be better supported?

Yang Mindao : Now DeFi's value support for the ether has already been reflected. Mainly in two aspects:
  • One is the lock of eth, which hedges the ico's selling pressure.
  • The other is gas and transaction costs. But the greater support for the value of eth must rely on the ultimate lock-POS .

Q9 : ETH2.0's own staking requires ETH, and Ether based DeFi application also requires ETH. Is there a competitive relationship between the two?

Yang Mindao : There is no competition, but it will affect the market supply of eth.
Finally, it is reflected in the price of eth. I think the final collateral of DeFi application should be non-eth assets, such as gold tokens, US Treasury bonds, etc. Since the ultimate need to return to real needs, real-world assets are needed .
Uncle Red Army: So continue with a similar question mentioned earlier: Since the collateral does not require eth, does the other public chain have a chance?
Yang Mindao : The problem is that money (stable currency) is in Ethereum. Other public chains, such as nowadays, are doing staking, and ultimately borrowing local currency instead of stable currency. Only stable coins can be eaten as meals, others are ideal.
Therefore, many chain staking or pledge lending logic is not established, most of them are for take and take , it is only using Chinese air, mortgage more American air, in fact, it is almost the same air.
Uncle Red Army: Yes, I have been discussing this issue in the community before. I feel that a lot of pos are playing a pure virtual game, and I feel that something is wrong.
Yang Mindao : It is indeed a game, just like playing an upgrade. Uncle Red Army: When it comes to pos, I think of a problem, that is, where pos staking and the price drop in the secondary market make the user uncomfortable. I want to propose it and sell it. I can’t mention it in a short period of time. ?
Yang Mindao : Yes, it is actually a 10 yuan coupon. You have to spend 20 yuan to use this logic. However, if the chain itself has practical value, staking is a very good way to coordinate interests. The key is to look at the chain. There is no landing and actual value .
Uncle Red Army: Understanding: The usefulness of the virtual, but can not leave the real. Pure and virtual is imaginary, and the combination of reality and reality is the highest state.
Wang Junwei: How many ETH holders are there?
Yang Mindao : The number of users is difficult to count, the number of addresses is there, all the way to the north, almost 80 million.
Q10: Is it possible for the Ethereum shards to have this situation, that is, a particular application fire can be assigned to a single shard? Indirectly achieve similar effects to the current "application chain"? And, if the application load on a chain is particularly large, the scope of the gas fee is particularly large for the application load on the film or the entire chain. Is the gas fee affected by the slice or all the slices? Will there be a corresponding governance mechanism?
Yang Mindao : In fact, this situation is more suitable to use cosmos sdk or Poca's substrate to deploy a chain of its own, which can solve the problem of throughput, but also have its own economic policy.
Ethereum's sharding is an improvement in layer1, which is not suitable for application . For example, the application of facebook is directly a wallet. I think that the layer1 of the main chain should not consider too much of the single problem at the application level. The simpler the rule, the better .
Uncle Red Army: So can you tell us about the world pattern of blockchain? Such as Ethereum, cosmos and Boca and others? Which kind of market do you have in each of them?
Yang Mindao : After Libra entered the game, I felt that this picture is more difficult to draw. I feel that there will be a lot of hybrid chains, or a licensed public chain . The value of the cross-chain itself is not clearly seen now. Not much, just a few super metropolises, and it doesn't make much sense to cross the desert.
Uncle Red Army: The substrate develops the application chain, and then these application chains make sense across each other?
Yang Mindao : Well, this internal contradiction is solved by itself.
In fact, cross-chain is a kind of sharding. The chain is a "slice". It is very likely that a super-application will not be willing to cross other people. Instead, it will be on its own "chain", "piece" and core components. This is quite clear in defi. For example, the maker must use its own oracle, compound is also.
Uncle Red Army: Is it that everyone wants to build their own moat? Instead of simple sharing?
Yang Mindao : The key is that you can't trust the important facilities provided by others, or the facilities you don't dare to use projects that are weaker than you , especially when it comes to money.
Dazhi: How do you see the gap between these chains in the defi field and the Ethereum? Can defi simply copy and paste into these chains?
Yang Mindao : If the frontal battlefield win rate is relatively low, the defi contract can be, the assets can not be pasted, so defi will greatly strengthen the network effect of the public chain, the battleground of the military, easy to defend and difficult to attack.
Dazhi : Assets are a constraint. Is there anything else that you think can't go? Developers? user?
Yang Mindao : Interdependence, this is all related.
Dazhi: From the perspective of usdx itself, what is the most attractive place for Ethereum? If eos or nervos want to ask you to go in the future, what do you think you are most interested in?
Yang Mindao : Infrastructure, developer community.

Q11: Just mentioned Alipay, DeFi also allows users to make money than Alipay. Will Alipay be nervous?

Yang Mindao : Alipay is not nervous when it comes to national ownership. DeFi will make all platforms including Alipay nervous.
Uncle Red Army: Further, will it make the cefi overall uncomfortable and then out of regulation?
Yang Mindao : The members of the Libra hearing are all representatives of CeFi. If simple supervision is to die, it is estimated that Bitcoin will die ten years ago. I think the probability is that the regulation will correct and adapt to the new form.
Uncle Red Army: Do you think there will be substantial progress in China’s central bank digital currency? And what is the relationship with the existing blockchain field?
Yang Mindao : The CBDC has little to do with the digital currency we are talking about. It is a state-owned version of Alipay . It feels that the benefits are so complicated that it can't be said, and there is a big correction.

Q12: Just mentioned the license of the public chain, can you mention what position the alliance chain will be?

Yang Mindao : The alliance chain will be a good tool for improving efficiency among financial companies. For example, JPM uses JPM coin to settle settlements between internal enterprises. The efficiency is several orders of magnitude higher than the current level. If there is no incentive layer, it is considered to be An inter-enterprise database .


There is a problem, I noticed that defi's derivatives and multi-layer nesting are now more and more than the sub-credit level. If there is a black swan event, will defi collapse collectively?

Yang Mindao : This problem is inevitable. Now many people are looking for a solution. For example, smart contract insurance. Defi's derivatives look at a large amount, most of them are toys. When the underlying assets are not enough, the risks are controllable. The market value of traditional financial derivatives is 10,000 times higher than that of the underlying assets. Defi insurance is the risk of agreement to resolve defi through marketization issues

Q13: If there is ETH or DAI in the hands of ordinary users, what can be done in dForce?

Yang Mindao : You can do a lot. For example, change your ETH and DAI to USDx and save to to earn 8% of current interest.
Uncle Red Army: Can DAI be directly exchanged for USDx?
Yang Mindao : Yes, imToken wallet or can be.

Han Yuanzhang: What is the essential difference between Defi and p2p?

Yang Mindao : p2p needs matching, low efficiency, and has a centralized fund pool, the funds are misappropriated to run the risk, defi decentralized lending does not have this risk. P2p funds are platform and regional, and the cost of capital is high. Defi's funds are interoperable and can arbitrage each other, resulting in lower costs.

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