Huobi DeFi Lab Climax: DeFi will eventually shine into reality | 2020 New Area Summit
On August 28, the "2020 New District Potential Blockchain Technology Finance Summit" was held in Beijing.
This summit is co-hosted by Huobi Group, 36kr and Odaily, sponsored by Behelix & HBTC, strategically sponsored by ChainUP, specially sponsored by PayPal Finance, Conflux, BitUniverse, WaykiChain, XnMatrix, Hashi Co-sponsored by Technology, Mixpay, COCOS, and Shanghai Diyi.
Many authoritative experts and professors from financial institutions such as funds, securities, banks, and industry leaders gathered here to share new information on financial technology and explore the future potential of blockchain. (Link to the live broadcast of the summit:https://play.yunxi.tv/pages/27c9b4494d09487c8e9c9866e38895e8#/）
On August 28, the "2020 New District Potential Blockchain Technology Finance Summit" was held in Beijing.
This summit is co-hosted by Huobi Group, 36kr and Odaily, sponsored by Behelix & HBTC, strategically sponsored by ChainUP, specially sponsored by PayPal Finance, Conflux, BitUniverse, WaykiChain, XnMatrix, Hashi Co-sponsored by Technology, Mixpay, COCOS, and Shanghai Diyi.
Many authoritative experts and professors from financial institutions such as funds, securities, banks, and industry leaders gathered here to share new information on financial technology and explore the future potential of blockchain. (Link to the live broadcast of the summit:
At the meeting, Gao Chao, head of operation of Huobi DeFi Lab, gave a keynote speech entitled "From DeFi to Open Finance", reviewing the paradigm shift in the financial market over the past 30 years, and explaining the innovation of DeFi compared with traditional finance. A decade of finance will evolve into digital finance and open finance.
"Digital finance will be slowly built up like building blocks, but we haven't seen this process yet, but this change has actually happened in the DeFi field and in the public chain field."
The following is the full text of the speech organized by Odaily:
Perhaps, the future has come.
secondary title
The following is the full text of the speech organized by Odaily:
Today's topic is the 2020 new regional potential. What is the new regional potential? I think DeFi should be a new trend or hot spot in this industry today.
I personally come from Huobi DeFi Lab, which is a newly established laboratory focused on investment incubation and the development of the DeFi industry. Today I want to focus on the new trend of open finance with you.
I have been thinking about a question, and I believe everyone is also thinking about it, that is how DeFi will eventually transition to open finance.
Personally, I have been relatively deeply involved in the entire financial reform process. At first I did traditional finance, then I did fintech, then I did public chain, and now I do DeFi.
I will discuss from the perspective of traditional finance, the development of the past thirty years, the current development of DeFi and the development of the next 10 years.
From the perspective of traditional finance, I have experienced these three processes, and of course the third process is currently being experienced.
The first process, as we all know at the earliest, inter-bank transfers between banks takes 1-2 days, credit transfer, until the electronic process was completed from 2000 to 2010 (this increased the speed), regional The permanent bank settlement system has gradually evolved to the electronic payment system for national universal deposit and withdrawal, and then to the inter-bank payment system. I was also fortunate to be a part of this process.
The 10 years from 2010 to this year are basically 10 years of Internet finance development, and what everyone feels the most is the disappearance of domestic cash.
Whether the next 10 years can eliminate cash all over the world, I think this process needs a new thing, what is it? I think it must be blockchain-based digital currency, digital assets and digital finance.
Digital finance will be slowly built up like building blocks, but we haven’t seen this process yet, but this change has actually happened in the DeFi field and in the public chain field.
The changes have been particularly dramatic in recent months. Everyone in the circle knows that the lock-up volume of DeFi has exceeded 7-8 billion US dollars from the lowest point at the beginning of the year of 500 million US dollars, and the lock-up volume of large agreements has reached 1-2 billion US dollars.
Not to mention 1 or 2 years ago, we still thought this number was unbelievable 3 months ago. So blockchain finance, or what we call open finance/DeFi has quietly entered our lives. Just like in 2013-2014, many people could not imagine that cash would disappear from our lives, but the world changed after one or two years.
Let me share another interesting figure with you. About 4 years ago, in 2016, an authoritative magazine said that by 2025, 10% of GDP would be expressed in digital assets. I believe that by 2025, we can witness this together. Numbers should be achievable or approachable.
Why do you say that? After the implementation of projects such as DCEP and Libra, digital currencies will be used in many GDP economies in the future. Therefore, 4 years ago, when I communicated with others, what no one believed in was realized through blockchain technology. Everyone found that the new trends in 2020, and even the new trends in the next 5 or 10 years, are very, very clear. I remember Jack Ma said 3-4 years ago that he believed that the future digital economy would be driven by big data and Date, but I believe it must be based on the value expression of blockchain technology.
Next, I would like to tell you about the specific changes brought about by the blockchain through several typical paradigm shifts in the financial industry.
You can take a look at this picture, which is used by people to compare financial facilities. You can see that this is a particularly complicated device, which is indeed somewhat similar to traditional finance.
There is a reason for this complexity, because when it comes to risk control, in essence, from the perspective of the banking industry, the three core risks must be well controlled, namely credit risk, operational risk and liquidity risk. I think these risks are very important in traditional finance, but in open finance, you will find that risks can be subtly eliminated, or uncertain risks are gradually eliminated. In the past few years, I have been exploring personally and communicating with others. Many people, including myself, can't imagine that it develops so fast, nor can it imagine its form.
Let me talk about a few specific scenarios below, how open finance can eliminate these risks and turn complex finance into simple finance.
DeFi has done a good job of lending now, what is the difference between it and traditional finance?
First, at the level of interest, traditional financial interest calculation is very complicated. Calculating the interest of a current account is particularly complicated. In traditional financial interest calculations, we call it a product, and it needs to be accumulated day by day. But it is very simple in DeFi. For example, Compound’s interest-earning agreement can calculate the interest with a single formula. It does not need to calculate the daily interest of each person, but only needs to share all the interest with the holders.
Looking at the deposit again, it is an electronic accounting voucher in the bank account, and you cannot transfer the balance to others. After DeFi tokenizes it, you will find that the balance can flow, can be transferred to anyone, and can be traded in the entire market, instead of going to the bank to cash the money, which is a very big subversion.
In the past, loans required a very complicated process and approval. Now in the DeFi field, you can use any collateral asset to obtain a loan. There is no approval, no intermediary agency, and no bank.
This is especially true for interest rates. It turns out that interest rate pricing is very complicated, and it has a set of risk models, which are also very complicated. But in DeFi, it can be done very simply. It is realized based on the utilization rate. The higher the utilization rate, the higher the interest rate, and the lower the utilization rate, the lower the interest rate, and there is no risk pricing. The risk is addressed through the mortgage rate.
Let’s talk about risk control. In the past, risk control was very complicated. The most important department of the bank was the risk control department, because it had to grasp the risks of all assets. In DeFi, contracts can be used to automatically complete risk control, and it can auction off assets for liquidation.
The second thing is to talk about the mortgage bond market. Makerdao can be said to be the crown in the DeFi field. This system was probably launched in December 2017. At that time, many people thought that this thing could not be developed, but today we can see its power, the scale is very large, and more than 1 billion US dollars of assets have been mortgaged. In fact, it is essentially very similar to mortgage bonds in our traditional finance.
Speaking of the traditional financial field, the largest market is the bond market. But the issuance in the bond market is actually not very transparent. It needs various ratings, divided into A, B, and C. Mortgage bonds also require a third-party trustee to hold its assets. But in DeFi, it is actually very simple. You mortgage in, and you can get bonds at any time without considering the approval and permission of any institution or anyone, and it can naturally be traded in the financial market, and it does not exist independently like traditional finance. Bond Market.
Everyone knows that the World Bank has also issued bonds on the Ethereum consortium chain. In the future, once cars, houses, and food and drink are digitized, one can imagine how big such a bond market will be, and it must be trillions. market.
The third is to share with you the paradigm shift of man-machine trading.
This year's very fast-growing DeFi project-the Uniswap project. In the recent month, the daily transaction volume has exceeded 200 million U.S. dollars. This figure is very scary. In fact, in 2017, there was already a similar project Bancor, which solved the integration of dual needs. What is this for?
When you buy something in the market, someone must be selling it at the same time; if no one is selling it when you go to buy it, you will not be able to buy it, but you can trade it. This is the greatest value of the exchange. But liquidity is very difficult in the assets that are just starting, so the human-computer trading model provides you with a possibility. There is no need for people in the DeFi world. People are the most uncertain factor in this world, and traditional finance is also good. Whether in real life or in real life, if people are involved in all aspects, there will be uncertainty, and there will be financial credit risks and operational risks, and huge costs will be paid for this. But in the world of Uniswap, you can trade without anyone. It uses a very simple formula xy=k to solve the paradigm shift of human-to-human transactions for thousands of years, which is a huge change.
In the DeFi field you will find a lot of innovation, and there are other consensus and paradigm shifts. You will find that it is revolutionary, just like the development of AI, it eliminates human uncertainty.
After reading these typical cases of DeFi, think back to 5 years ago, maybe no one can imagine what the blockchain can do, it is as simple as email 20 years ago, but it has shown very, very amazing potential today . Can this change drive open finance, that is to say, outside of public chains such as Ethereum, can we also learn from the DeFi model and enter open finance, so that our currency can also bring the entire financial paradigm like DeFi? transfer.
