[AMA Review] Higer, founder of the Blockchain Research Institute: DeFi is the most important piece of the puzzle lost in the public chain
On the evening of August 13th, 2020, the Cocos-BCX Chinese community launched a discussion event on the topic of “Cocos-BCX Hot AMA: DeFi Rhapsody”. The Cocos-BCX global community contributor Alvin shared the wonderful experience with guests during a 1.5 hours hosting . In the end, the event finished very successfully. The purpose of this community sharing event is to allow Cocos-BCX ecological Builders&Angels to chat with the community about recent market hot spots, DeFi, and make the community understand the industry knowledge and hot spots better. Also we hope that everyone can get closer to the frontier world of blockchain.
This “Cocos-BCX Hot AMA DeFi Rhapsody” theme event was very successful. The content shared by the guests was full of essential ideas, and the effect far exceeded our expectations. I would also like to thank the guests who took the time to participate in the sharing: Blockchain Research Institute founder Higer, DAPPX CEO Minghui Cai,Cocos-BCX global technical contributor Reed, and the representative of the observation group Gyro Finance Editor-in-Chief Blake, DAppChaser Erica and wonderful questions from three excellent IMCOCOS representatives.
Since the content of this ecological conference is relatively rich and exciting, in order to present the content to everyone in a complete way, we divided the content into multiple sections for sharing. This article will mainly share the theme of “DeFi is the most important piece of puzzle lost in the public chain” by Higer, the founder of Blockchain Research Institute.
Blockchain Research Institute Founder – Higer
Higer ，the founder of the Blockchain Research Institute, DeFi is the most important piece of the puzzle lost in the public chain
1. Brief history of public chain development
The appearance of the public chain in the entire history of blockchain development is actually a change in the way of thinking. Just as the European Renaissance gave birth to the germination of capitalism, the idea of the public chain has made people realize that the idea of freedom and decentralization can be programmed. The method can be applied to a wider world.
As the infrastructure of the blockchain world, the public chain can become the infrastructure for the operation of digital assets. When assets operate in a network economy with sufficiently low friction, people may jump out of the boundary constraints of past material world wealth and equity wealth. So as to realize the breakthrough development of wealth.
The appearance of Bitcoin allows people to own an Internet-based asset for the first time, without any third-party certification and endorsement. Ethereum hopes to expand the use of the blockchain by extending it and proposing a turing-complete smart contract method to establish the rich blockchain world today, although it is still very imperfect.
Let’s look at the layered protocol diagram of a blockchain:
2. Dilemma of public chain development
The proposal of the public chain idea can be said to outline a very beautiful picture for us. With the underlying public chain as the infrastructure, the upper-level decentralized application (we call DApp) realizes various rich applications, so we seem to be able to continue to build a decentralized building for the entire blockchain world.
Therefore, the development of blockchain in the past two years is mainly in two directions: 1) To make the public chain more usable, such as various expansion plans of Bitcoin, EOS with the emergence of a new consensus mechanism DPOS and known as one million TPS, two. The emergence of layered networks and cross-chain technology; 2) Make applications more abundant, such as the emergence of DApps, and the emergence of various whimsical white papers. The rise of gambling applications on EOS is the most typical.
The biggest problem here is that the performance of the public chain has not been improved for a long time, and the problem of the impossible triangle has not been effectively solved. It is almost impossible to achieve high performance in a multi-node distributed network. For DApp exploration, apart from the fact that gambling is in a gray area, the application space is quite limited, which is not enough to realize the value of the public chain. More than 90% of DApps are almost air, and the only value is to satisfy speculative demand in the secondary market.
Even though the public chain looks really fancy on the surface, but it has experienced painful years of development. A large number of projects died, the team disbanded and the project was irresponsibly returned to the community.
3. DeFi is the last hope of the public chain
The paradigm of DApp is the decentralization of various Internet applications. Digital currency acts as a medium of exchange in the DApp system and is generally used as a payment scenario. The biggest problem with this paradigm is that there is no essential difference between DApp and App. Because digital currency does not have much value support, it does not seem to be much different from points.
And because DApps are limited by the performance bottleneck of the underlying public chain, they cannot achieve large-scale development. A substantial increase in public chain performance is not possible in the short term. Because of the lack of a closed-loop business model, the ecological development foundation of DApps is quite weak. The predicament of the past two years fully illustrates this point.
Although DeFi is also counted as a category of DApp, the paradigm of DeFi is completely different. DeFi products focus on the various needs derived from assets. Thinking from the perspective of blockchain as an infrastructure of the Internet of Value, it is really a good chance to figure out the bottom . Therefore, the introduction of the DeFi concept is actually the second leap in the cognitive development of blockchain .
The market value of DeFi’s locked-up position has risen from 700 million US dollars in April to more than 5 billion US dollars, and the locked-up volume has increased by 7 times in more than 3 months:
The market value of DeFi tokens has risen from 1 billion U.S. dollars in April to nearly 10 billion U.S. dollars now, achieving a 10 times increase in market value in more than three months:
DEX trading volume has gone from an average of less than 13 million U.S. dollars a day in April to an average of over 400 million U.S. dollars per day, and the transaction volume has increased by 30 times in more than three months:
Financial applications require more security than performance. Therefore, when performance cannot achieve a breakthrough in the short term, the public chain is actively carrying out infrastructure construction in the DeFi field and the investment layout of application products. It is the only hope whether the public chain can win in the future
Similar to the development trajectory of the Internet, when a DeFi product has achieved a large market share, if it is not possible to provide a useful DeFi product among the existing users of the public chain, the user will slowly leave sooner or later.
4. the DeFi ecological development ideas of the public chain
First of all, let’s take a look at the DeFi ecological map of Ethereum:
The troika of DeFi is: stable currency, lending, and trading. The remaining product directions include: anchor currency, synthetic assets, leveraged trading, options, insurance, and oracles.
Although DeFi’s financial building currently has a certain scale, it still has a lot of room for development, and various products are still emerging.
For the second-tier public chain, how to make good use of this opportunity to revitalize the entire ecology is worth thinking about. Although we have a reference to the development model of Ethereum’s DeFi, it is unrealistic to completely copy it in terms of time, community, and funding.
The most worthwhile thing in the public chain is lending and trading. The stablecoin has reached a broad consensus. Just use this consensus on Ethereum. The oracle is a common component of the blockchain industry, and it can generally be done in the form of cooperation. Synthetic assets, leveraged trading, options, insurance, etc., before the ecosystem is not strong enough, are still too small.
Borrowing can fully revitalize public chain assets, and transactions are to fully meet the rapid transaction needs of various applications in the internal ecology. With the improvement of these two components, the ecology will gradually develop and achieve rapid catch-up.
Thank you ，everyone, my sharing here is done.
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