DeFi looks very much like 2008
Editor's Note: This article comes fromEditor's Note: This article comes from, by Roy Li, published with permission.
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0x00 Free ETH
In 2020, the 3.12 currency is difficult, and various media are madly spreading the news of the 2 billion dollar liquidation of the entire network. However, in a tepid corner of the currency circle, MakerDAO has ushered in its most difficult moment.
MakerDAO is a legendary thing that everyone is familiar with, but leeks have never played with. Not only MakerDAO, Compound has long been considered a toy, a conceptual product, and has no advantages compared with centralized finance. What's more terrible is that the plunge of the currency price once again challenged Defi's ability to resist risks and liquidate, and this time, something happened to MakerDAO.
Since lending is a rigid redemption behavior, the assets in the ecology have been severely damaged, and the price of MKR has been hit hard, and even now it has not slowed down. As of today, the price of ETH is 4 at 3.12 times, while MKR is less than 3 times. However, this loss also caused the price of DAI to rise and became the first domino to be toppled.
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0x01 Overtaking of flash loans
Aave used to be ETHLEND, an old project. Once upon a time, everyone thought it was just a white paper plus a demo, but after two years of development, it has actually landed, and this time it is aimed at flash loans. With the ability to merge transactions and low fees, the experience of borrowing and lending in Defi has been greatly improved. But if such optimization is not due to a special event, it is not surprising. It is just like the TPS of the public chain. No matter how good your performance is, it is useless if I don’t feel it.
The MakerDAO incident is a great benefit to Aave. No one wants their coins to be put into a non-performing asset that can be zeroed out. Flash loans are naturally used to avoid risks and prevent liquidation. Aave, the third largest lending platform that is good at flash loans, has since been favored by people, and in the following month, it entered the state of being open again.
In April, uniswap and lenf.me were hacked and lost more than 20 million U.S. dollars in assets. It is still a small news that people don't take it seriously, but what is interesting is that the hackers actually deposited the assets in Aave after mixing and laundering. At this time, LEND The surge is only a matter of time.
It is unknown whether the oracle's rise is related to 3.12, and I have not been able to make such a judgment. Having written so much, let’s make an irresponsible judgment: referring to an orthodox financial bubble development process, the next step for flash loans should be CDS (derivatives on default of swap), or insurance is also fine. To counter the MakerDAO incident from another angle, and such a product may be the next hot spot.
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0x02 DEX is born for nesting dolls
No risk and no finance, more than "I bought a lot", that is, I bought a lot of BAL. Anyone who knows me well knows my love for Balancer. The amount of locked positions in the Balancer pool has always been superior to others. Uniswap does not issue coins, and the curve is still a lot worse in all aspects. DEX has high risks, but its returns must be high, and its explosive power must be far stronger than that of the Gangdui platform. This wave of Defi bull market is also driven by DEX's AMM.
The risk of DEX is mainly impermanent loss, but this can be avoided as much as possible with the depth of the pool. At this time, DEX is particularly friendly to large investors. You want to exchange 100,000 links for ETH on the centralized exchange , Manual operation takes a long time to take orders, but it is only a matter of one click on DEX.
But LP (liquidity provider) is in the open after all, arbitrageurs are in the dark, and the risk is always on the side of the light. Like other contracts, Balancer has also been maliciously attacked. The attacker flash loan WETH repeatedly traded STA and STONK, causing the pool to be almost drained (much like using the contract to play Soros’ leveraged currency speculation), and then Balancer decided to pay the full amount $500,000 in damages.
Any product that aggregates liquidity mining (that is, a certain food family) must share impermanent losses with DEX. Perhaps in the future there will be strategies such as infinite grids to make up for impermanent losses and other new products, but the sharp rise and fall under the mechanism of AMM will eventually have a huge impact, but don’t people who trade just expect skyrocketing and plummeting? is an inner loop.
At the end of this chapter, let’s talk about the biggest benefit of playing Balancer. I often use it to persuade everyone to learn more: learn to play curve and balancer early, and you will most likely not miss YFI.
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0x03 Classical Defi is over before it becomes popular
Why do I define YFI as a dividing line? Because the mechanism of YFI is to match the depth of your Defi to the pool that suits you. Starting from pool 2, if you don’t know the corresponding operations, you can’t mine without thinking. Only pool 1 can deposit pure stablecoins and then sleep. The operation of pool 3 makes many people discouraged after seeing it.
YFI emphasizes that the value is 0, and even the founder himself recently said that it is only worth $3. When I dug, the market price was more than $1,000. This price is already very high for those who mine on the curve. I won’t talk about it later. The economic value of DeFi has long been separated from the valuation model, which also brought the stud school back, and patted the classic Defi school that knows how to play on the beach.
Like all digital currencies, those who mine YFI do not earn as much and fast as those who speculate on YFI. It reminds me that when MakerDAO was in crisis, the official wanted to come up with a plan to save MKR, but in the end it was found that any plan only needs a positive line, and the problem can not only be solved, but also forgotten.
From YFII to Sushi and today’s series of new tricks, the gameplay of the new Defi circle is already very simple. Make a game without pre-digging and matryoshka mining lock-in, connect with various existing deep pools, and make tokens The circulation in the early stage becomes extremely small, and then a positive line allows users to continue to cut each other. What if you lose money? You can put the tokens back and lock them up to continue mining.
