If you ask what surprises happened in 2020, the birth of DeFi definitely ranks first. The automatic market making platform (AMM) and liquidity mining allow users to experience the advantages of decentralized transactions: transactions without matching, Super high annualized returns and more. Countless new and old leeks plunged into the wave of DeFi.
There are more and more DeFi users, more and more locked assets, and more and more innovation and speculative bubbles. What new projects and trends may the DeFi boom breed? Beep News held an online roundtable series called DeFi Talk on the afternoon of September 10.
In the second session, we invited Peng Song, the core development engineer of the CAA Technology Zone, Mr. Shi, Coin CMO, and He Taiji, a well-known financial blogger, to discuss how to play DeFi investment. The following is the live broadcast record:
Elsa: I don’t know how everyone deploys DeFi investment?
Peng Song:In the layout of DeFi, I value three aspects: the first is the background, whether it has private placement, I don’t like to participate in DeFi products with private placement, and the second is that there is no pre-mining, because in fact, a good DeFi project, if there is pre-mining, Later, it will harm the interests of most users and affect community governance and passion. Third, what is the governance of this project. The operation of Defi projects is actually very difficult. There may be many small centralized groups in Defi projects. How do these groups operate Defi, such as YFI and YFII.
I am currently working on a DeFi project with underlying assets. The entry of underlying assets is the most important thing for DeFi, such as decentralized stablecoin aggregation. Curve’s user experience is not good now, and there should be projects like Sushi in the future. .
I am also more optimistic about DEX. DEX is the most important place where DeFi assets gather. The gameplay and content asset innovation of DEX have a relatively large imagination.
Uncle Shi:My participation in DeFi is divided into two parts. I invested in YFI in the secondary market and SRM Bella in the primary market. The reason why I chose YFI was mainly because I bought some after hearing recommendations from American friends.
DeFi started from overseas, and companies like COMP and CRV have community foundations. The second half is platform coin mining and public chain mining. Exchanges like Golf, Binance, etc. will mine and list coins immediately. If you are buying a domestic project, it depends on whether the team has a strong technical background.
He Taiji:DeFi is no longer the original gameplay. To make an analogy, one is the Internet and the other is the financial gameplay. As before, the founder of the project is very important, he is the core, and it is impossible to hand over the entire team to the community. The current DeFi gameplay, one is gaming and the other is financial. Many people just participate in a game, mining, selling and raising.
Elsa: What kind of DeFi is worth investing in?
Peng Song:Let me share my experience of the past three months. We tried some DeFi projects in May and June, and did some liquidity and transaction rewards on Uniswap, but because the pool was too small, the death cycle of the project was about half a month. Later, YFI came out, and some people shouted that one YFI is equal to one BTC. At that time, it may be a problem of cognition, so I didn’t hold it.
Now many projects refer to YFIs distribution mechanism. I think YFI can participate in this project. It actually solves the problem of fair distribution. I think there may be many projects that rob liquidity in the future. Another direction I focus on is LP. The most profitable thing in the exchange is the contract. In fact, the contract can also be placed in the DEX, which can be split. One part is stable currency and the other part is unstable currency. The stable currency bears the risk, and the unstable currency bears the profit. The cross-chain direction is also good.
Uncle Shi:Investing in projects depends on the profits of the projects. If retail investors or practitioners do not understand DeFi, they can follow top overseas investment institutions to buy some projects.
He Taiji:The simplest suggestion for DeFi investment is to look at the data of the past few years, which is not bad for a long time. At present, DeFi is still very early, with a total of more than 200,000 users, and it is still very early to leave the circle. Many projects propose ideas that solve future fictional problems rather than real problems. DeF imagines to subvert the world, first play through in the pure digital field, and then consider the application in the physical financial field.
Elsa: What do you think of the current liquidity mining? How long will the liquidity mining craze last? Which mining coins are valuable?
Peng Song:Liquidity mining will always survive, because liquidity is the lifeblood of DEX, low liquidity, high slippage, and everyone will go to platforms with low slippage, so liquidity mining must be persistent. What we can participate in is the liquidity mining of DEX. The risk of the first mine is very high. I usually choose a liquidity project that has been developed for 1-2 weeks to dig, because there is a relatively good community foundation, etc., the risk is relatively small, and there are benefits. Liquidity mining of aggregation and DEX will have a long life cycle.
He Taiji:Liquidity mining is a very continuous thing, but high-return profiteering projects may decrease. I have a mining fund myself and participate in the mining of stable coins. The income may be low, but the risk is also low. At the same time, I will also invest in some high-return mines, such as SunShi before. The entire mining cycle will become longer and longer, which itself is a way to stimulate liquidity and will exist for a long time. Have an expectation of your own income, and then choose the mine to dig.
Stablecoins are certainly a big market. In the entire market this year, two very innovative projects have emerged, one is Elastic Finance and the other is YFI. Many subsequent projects are derived from these two projects. The problem for many people is that they cant hold the currency, they cant hold it even when it rises, and they cant hold it even when it falls. Brother Liu recommends long-term holding. Only by creating some new ways of playing and doing what traditional finance can’t do, can DeFi develop and grow; in areas where traditional finance has already done well, don’t fight hard.
Uncle Shi:Projects with relatively strong vitality and domestic top mine projects can choose to dig. If there is a lack of community foundation and mining is only for mining, then the life cycle of this project is relatively short.
Elsa: Which direction do you think DeFi will take in the future? Share a few DeFi codes and why?
Peng Song:One is non-destructive mining, using stable coins to mine. Now that Curve is doing it, platforms like sushi may also issue their own decentralized stable coins in the future. The second is the cross-chain of mainstream currencies. Litecoin, Dogecoin and other currencies have not yet participated in DeFi. In fact, mapping BTC for mortgage lending is harmful to BTC because the assets are not flowing. It can be seen that the demand for cross-chain conversion between TRON and EOS USDT is very large, and cross-chain can be carried out in a semi-decentralized manner. The third track is DEX. DEX will always be the place with the largest trading volume, and its future development will be diversified, including options, contracts, equity, synthetic assets, etc. The fourth is on DAO, and there is no good product yet. You can focus on these directions, but there are still relatively few products and no code to share, so share these tracks.
He Taiji:In the early days, in order to solve the problem of small currencies, the traditional Internet concept should be split first. It is difficult for the public chain to support high-frequency transactions, and the pending order mode is larger than the capital pool mode.
Uncle Shi:I am more optimistic about DEX. Whether it is CEX or DEX, as the industry leader, it is the most profitable model. The code I shared is SRM. I hope more people can participate in DEX, and DEX can have a stronger siphon effect.
Elsa: Finally, there is a small question. The community is asking, do you prefer the form of order book or AMM?
Peng Song:I haven’t been on a centralized exchange for more than half a year. Most of my operations are on DEX, because I think assets can get more benefits and combinations. This way of fund pool can make my funds safer, and I am more I still do spot goods, and I don’t play much in contracts. The AMM method may be more suitable for me.
Uncle Shi:I prefer order books, and I hope DEXs can also have order books.
