Editors Note: This article comes fromCarbon chain value (ID: cc-value)Editors Note: This article comes from
Carbon chain value (ID: cc-value)
, Author: Carbon 7, Jiang Xiaoyu, reproduced by Odaily with authorization.
Liquidity mining detonated the DeFi field.
image description
DeFi lockup amount｜Source: Debank
At the same time, the total number of users in the DeFi market has also risen in a parabolic manner. According to statistics from Dune Analytics, as of August 1, the total number of DeFi users was close to 300,000, an increase of about 50,000 compared to June 15.
Total number of DeFi users｜Source: Dune Analytics
In this upsurge, the YFI series is undoubtedly the most eye-catching.
Positioned as a DeFi revenue aggregator and known as the DeFi barometer, yearn.finances lock-up amount exceeded 400 million US dollars after it went online in mid-July. Even when the mining activities ended, the lock-up amount remained It holds nearly 170 million US dollars, ranking in the top ten of DeFi Pulse, and its governance token YFI once recorded a 1,500-fold increase.
secondary title
A rare success story in the history of forks
In addition to the amazing wealth effect, what makes YFI even more famous is the fork that caused everyone in the encryption industry to watch.
Two weeks after YFI went live, due to irreconcilable differences on the YIP-8 proposal, some YFI community members (mainly the Chinese community) announced that they would fork the project. On July 27th, YFII, the brother of YFI, went online. The Chinese community dubbed YFI the big uncle and YFII the second uncle.
YFII, which was forked from YFI, also has impressive data: According to Etherscan data, as of August 10, the locked-up amount of YFII pool 1 + pool 2 was close to 100 million US dollars, and its token price once recorded 1128 high dollar. In other words, YFII also brought an amazing wealth effect.
Under the successful demonstration of YFII, YFIIs brothers soon turned out, such as YFIII, YYFI... These YFX series projects are dazzling; die. Only YFII has survived and is active today.
In the eleven-year history of cryptocurrency, there have been many forks, but 99% of the forked coins eventually went to decline. When the Chinese community forked YFII, many onlookers thought that this kind of story would inevitably happen again. It was impossible for YFII to defeat YFI, and it was impossible for it to develop. However, more than two weeks have passed, and YFII has shown strong vitality. Whether it is the activity of the community, the frequency of new gameplay and new products launched by the community, or the players participating in the lockup, nothing is left behind.
YFII is a special phenomenon in the history of forks.
A divided community naturally cannot bring any future to the project. In fact, the final fate of most forked projects is also the decline of the consensus.
However, YFII succeeded. This matter deserves our careful study: Why was YFII successfully forked? Why did the forked coins behind YFII fail so quickly? Can the experience of YFII be used for reference and copied? What is the relationship between YFII after the successful fork and the original YFI project?
Combining public information with observations and interviews with the YFI community, the author tries to clarify the motivation behind the competition and cooperation of the YFI community, the logic behind the eye-catching data, and the language behind the development of liquidity mining and DeFi. environment, how these stories happened.
secondary title
A bifurcation of nationalism: French Revolution style and exit scam style
Look down on the Chinese...to win glory for the country!
The more they suppress, the braver we are.
This is the foreign centralized DeFi gang with ulterior motives doing us, but the community did not embarrass the Chinese people!
The above speeches are from the encryption community that has always regarded itself as rich in the spirit of freedom, equality and openness. After YFII was marked as a scam by Balancer, Metamask and other overseas digital currency products, the group was outraged. I believe that the spread of similar remarks is also the main fork of YFI An opportunity for YFII to cause the industry to pay attention.
There are many reasons for the low vote rate of the YIP-8 proposal. One of the factors that cannot be ignored is that among the holders of YFI tokens, few people are willing to watch the tokens in their hands be diluted. However, the latter felt that such a game was unfair to him-especially the DeFi players in the Chinese community. Due to the gap between the Eastern and Western communities, this DeFi project, which was born purely in the West, has no place for Chinese players from the very beginning. When the belated Chinese players arrived at the scene, they found that there was almost no place for them in the game.
Therefore, the new community members proposed to fork the YFI project, code-named YFII, on the grounds of preventing YFI from being controlled by the giant whales in the early stage. YFII adopts the halving and additional issuance mechanism similar to Bitcoin in the YIP-8 proposal to ensure that tokens are distributed to community members. The total amount of YFII is 60,000, each of the three pools is 20,000, and the initial state of each pool is 10,000, and the output is halved every 7 days. According to the share of liquidity provided by DeFi users for each pool, the corresponding proportion of YFII is allocated. YFII will complete all distributions within the next 10 weeks. According to community information, YFII will adopt different product ideas from YFI in the future.
In the discussion of YFII in a certain community, some people think that the emergence of YFII is not a fork, but should be defined as rebellion, because it is seizing the governance rights of the yearn ecology rather than simply a fork at the product and code level. Cao Yin, managing director of the Digital Renaissance Foundation, said: This is very similar to the French Revolution. There was a three-level meeting in YFI, but the YIP-8 proposal was not passed (thus leading to the emergence of YFII).
secondary title
What do you think about forks? YFI team: from exclusion to competition
Andrea, the founder of YFI, hinted in the community at the beginning of the fork that YFII may not have a large scope of application, and the TVL (locked value) of YFII will still flow to yearn. This statement represents the views of some people in the YFI community at the beginning of the birth of YFII. They are not optimistic about the development of forked projects, and think that such behavior does not have much future.
As of writing this article, the YFII community is still building its own liquidity pool.
However, the bearishness of the YFI community did not stop the development of the YFII community. It is worth noting that the YFII community quickly established initial governance, resulting in 11 keyholders. Judging from Andrea’s Twitter, YFI and the KOL of the YFII community seem to have had a pleasant communication. Andrea began to repost YFII’s meme, and even proposed in the YFI community to distribute the income of yearn.finance to other communities including YFII Forked the currency, and stated that if the proposal is passed, YFII holders will have the same governance rights as YFI holders in the yearn.finance community.
Andreas attitude towards YFII changed, and she actively forwarded the latters meme｜Source Andrea Twitter
It has to be said that Andre himself is indeed a DeFi founder with a blockchain spirit. Although he created this project, he unreservedly distributed these tokens in the form of liquidity mining, and he did not do pre-mining. This is also a major reason why YFI can become popular in the encryption community. After the active communication between the YFII community and Andre, although his project was forked, he was still able to accept it with an open mind. If the people here were replaced by Justin Sun, there would probably be a good show to watch.
However, despite Andreas goodwill towards YFII, the Western encryption community still expressed doubts about the YFII project. Balancer initially identified YFII as a scam (fraud); after withdrawing the identification of YFII as a scam, they still retained the risk warning. According to the sharing in the YFII community, they are still communicating with Balancer.
image description
YFII’s liquidity pool on Balancer is still labeled as “risky”
YFII community KOL Dovey Wan pointed out in the community that the forked coin YFIII is an empty shell of ERC-20 without any actual content, while other forked coins YFFI and YYFI also have no community support and a high degree of control (a single address holds There are more than 90% of the tokens), and ran away after a wave of market pull. This undoubtedly adds to the doubts of the outside world about the YFI system.
However, in doubt, YFII, which completed the revolution, established the initial order of the community. They form their own global community, absorb the opinions of community members, have their own development team, and constantly update the code. Star DeFi projects like Compound and Aave also came to them for cooperation. To outsiders, they finally counted as a project rather than a scam.
From the early stage of separation, the YFI and YFII communities have formed a magical state of competition and cooperation: on the one hand, you are singing and I am on the field to wrestle with indicators such as the amount of locked positions, currency prices, and number of users, and try to separate the two parties; On the one hand, the founders/KOLs of the two parties showed their full intention to cooperate and seek common development. During the period, the Chinese community once again showed strong and absurd nationalism sentiments, but after establishing its own base, YFII began to attract international members again, trying to go international.
secondary title
Why is YFII successful? Why did YFX fail?
After telling the story of YFI and its forked coins, an important question arises before our eyes: why can the fork of YFII be successful? And the forked currency after YFII went to failure?
1. The explosive dual drive wheels of the YFI series: siphon effect + quantity restraint
Before summarizing the successful experience of YFII, let’s take a look at why the YFI series of products can explode—in fact, why YFI exploded.
For most users, how to adapt to the Uniswap AMM (Automatic Market Maker) mechanism, how to inject liquidity into Sythetix, Balancer, Curve, etc. to obtain their tokens or commission sharing, how to obtain loan income through Aave, Compound, etc. ..none of this is easy.
yearn.finance simplifies the above-mentioned complex liquidity mining mechanism. Users obtain YFI tokens by providing assets to the protocol, and the protocol will help users capture YFI tokens between different protocols such as Aave and Compound through pre-designed algorithms. Value, earn income.
For yearn.finance, it can suck blood on several DeFi giants without much effort, and users can enjoy the convenience of one-stop investment (compared to the previous liquidity mining mechanism). The author believes that this is the key factor for the outstanding performance of the YFI system in terms of lock-up amount and token price.
image description
The steep user growth curve proves the uniqueness and effectiveness of this model. According to the statistics of blockchain data service provider Nansen.ai, the independent addresses of YFI and its main fork coin YFII showed an overall continuous upward trend. As of August 6, the number of independent addresses of YFI reached 4214, and the independent addresses of YFII were 2000, already about 1/5 and 1/10 of the same index of Compound respectively.
On the basis that yearn.finance is able to capture the value of many DeFi products and protocols, its token YFI is scarce in amount and its characteristics of controlling additional issuance also provide support for the rise of its price, lock-up amount and other indicators.
According to the block browser Etherscan, the number of YFI tokens is 30,000. The YFI community also rejected the proposal to issue additional tokens (YIP 30) with a 61.26% opposition rate on August 2; The amount is also 30,000. According to the audit report of Ambi Labs, YFII’s main forked token, YFII, has also added a regular automatic halving mechanism.
image description
In addition to the hard numerical indicators, the project concept and personal reputation of the founder Andre also provided blessings for the success of the YFI system to a certain extent. Unlike the liquidity mining launched by peers, which is generally pre-mined by investment institutions, the distribution of YFI tokens follows the principle of 0 pre-mining/pre-sale, and users provide liquidity for the agreement/the secondary market is enough to buy to get tokens. This relatively fair design has won YFI an initial reputation in the encryption community. In addition, because Andre himself was an early member of the encryption community, some early members of the Bitcoin community cheered for him, which laid the foundation for the success of the project.
2. Reasons for the success of the YFII fork
We have already mentioned the word nationalism above. Yes, different from YFII, YFIIs strong Chinese color is the unique driving force for its growth.
image description
The 11 key holders of the YFII project generally have a distinct Chinese background｜Source: gov.yfii.finance
Blockchain developer Tina Zhen told the encryption industry media Decrypt that not long after YFII went online, Chinese practitioners who had previously worked in CeFi (exchanges, mining pools, and even digital currency hedge funds) rushed into the project. Decrypt believes that the Chinese-friendly design of the project has broken the language barrier for many local Chinese investors and helped them enter the DeFi field.
In fact, the Chinese players who support the YFII project are likely to be friends in one or two WeChat groups.
But if people remember the history of Bitcoin and Ethereum, this phenomenon should be very strange. Nowadays, if someone proposes to fork a Chinese community’s Bitcoin, or a Chinese community’s Ethereum, they will only be considered liars. However, why does this story make sense for YFII? Or, why didnt the Chinese fork other successful DeFi projects, such as Compound, Uniswap?
The crux of the problem lies in the four characters benefit distribution.
The so-called ethnic sentiment conceals the issue of benefit distribution. Although Bitcoin was initiated by some English-speaking foreigners, one of the biggest profit groups is Chinese miners. In addition, Chinese geeks are also one of the first groups to explore and spread Bitcoin. Many Chinese people have changed their destiny because of Bitcoin, and even realized the freedom of wealth. Therefore, no one cares whether Bitcoin is a Chinese project, and more people think about defending their own interests.
Although in 2017, the big blockchain activists headed by Wu Jihan (many of them located in China) chose to fork Bitcoin, however, no one will support Wu Jihan just because he is a Chinese. More members of the Chinese community believed that Wu Jihans fork had infringed on their own interests, so they chose to defect to Core. And there are almost no Chinese in the Core organization.
Similarly, if the YFI community has Chinese participation from the very beginning, and a group of Chinese people benefit from it, this hard fork will probably not succeed. Even if there is no Chinese participation at the beginning, if the original YFI community agrees to issue additional shares when the Chinese community wants to participate, to take care of the interests of latecomers, then the hard fork will still be aborted. It is precisely because the those who got rich first did not take care of the interests of the latecomers, so the latecomers did not regard this group of people as members of a community, but instead forked the code and formed their own community.
If we look at it further abstractly, rather than saying that YFII’s “local-friendly” design has attracted many YFI users in the Chinese community, it is better to say that it has established its own portal for the Chinese DeFi elite community, forked YFI with collective will and boosted it. success.
The successful cases of YFII have given us inspiration from both positive and negative aspects:
From a positive perspective, what kind of fork can be successful? For a project that is not internationalized enough, where vested interests cannot take care of the interests of latecomers, but has achieved rapid success, it is most likely to succeed in forking such a project. The so-called insufficient internationalization does not mean that the distribution of project party members is not internationalized enough, or that community members are not internationalized enough, but that the distribution of benefits is not internationalized enough. The distribution of Bitcoin benefits is very international. Whether in North America or Europe, whether in China or Russia, geeks all over the world have participated in the early mining and dissemination of Bitcoin. In this way, there can be no bitcoins in a certain country - which in itself is a very ridiculous concept.
It is easy to understand that the so-called quick success projects are easily forked. If a project is not successful, there is no need to fork; if a project is going to be successful step by step, it is difficult to control when to fork it, and its community members are very stable, so it is even more difficult fork. Only projects that achieve quick success, whose community is unstable, forking it profitable and prone to FOMO, are therefore suitable for forking.
Last but not least: if the token distribution mechanism of a project party cannot resolve the conflict of interest between vested interests and latecomers, it will easily lead to forks. Latecomers are fully motivated to create a brand new project by using open source code and organizing their own community. It will be even worse when this distribution of benefits is linked to the country. Due to the language barrier between countries, a project that is purely operated by people from a certain country is obviously closer to the experience of the people of that country, so it is more likely to be popular.
On the contrary, as a successful project party, if you want to avoid forks, you should design the token distribution rules in advance to avoid the formation of vested interests in the community in a short period of time. Just like YFI this time, the total number of tokens is 30,000, but in less than 20 days, more than 20% of the tokens were distributed. Such an easily formed vested interest group is bound to hinder the further development of the community.
3. Reasons for token failure after YFII
After the YFII token, why did other series of tokens fail?
In fact, this can still be explained by the word interest.
After the fork, Chinas elite DeFi players basically participated in the YFII project. Thanks to the blessings of these elites, YFII was able to gain thousands of addresses in about a week, passed the contract security audit, and the locked-up amount once surpassed YFI and other outstanding achievements. Naturally, those who dominated the fork movement reaped handsome rewards. This has further stimulated the entry of successors - evidenced by the enthusiasm of YFIIs five WeChat communities that are close to pyramid marketing every day.
