10,000 times YFI in 43 days: its core business tells you how to play in the second half of DeFi
Editor's Note: This article comes fromVernacular Blockchain (ID: hellobtc), Author: Five Fireball Leader, reprinted by Odaily with authorization.
Editor's Note: This article comes fromVernacular Blockchain (ID: hellobtc)
, Author: Five Fireball Leader, reprinted by Odaily with authorization.
The previous article introduced YFI's pioneering "multi-pool" liquidity mining, completed the distribution of tokens, and the attributes of price discovery.
This attribute directly triggered the imitation and pursuit of this method by many subsequent projects. For example, YAM in the YFI+AMPL model, Sushiswap in the YFI+Uniswap model, Swerve in the YFI+Curve model... It is foreseeable that there will be more well-known projects that will be forked and distributed in the form of YFI. A "fairer and decentralized" version of the community...
However, this is only half of YFI. The other half of YFI, its core business, is the core pillar that supports the price of its tokens from 30,000 times to 30,000 US dollars. Only by understanding these businesses can you know that DeFi gets this " Second half", how to play.
secondary title
The core business - Valut (machine gun pool)
The English literal translation should be called the vault, but everyone in China likes to call it the machine gun pool.
The machine gun pool is actually very vivid. Users put ammunition into it, and the machine gun will automatically find you the "target" with the highest profit to go to, and resolutely implement the strategy of digging, raising and selling without mercy.
For example, if you go to Yearn.finance now, there are more than a dozen smart gun pools below. (texture only contains part)
Each pool tells you the currency you want to store, the current average annualized income, etc. For example, the first pool is to deposit ETH directly, and the fourth pool is to provide LP proof tokens to Curve for liquidity. ...
So how does the Smart Pool make money? To put it simply, smart pools will have different strategy styles (some smart pools are mixed strategies), some provide liquidity for Uniswap, Balancer, and Curve, get commission sharing, or token rewards like CRV, and some participate in liquidity Sexual mining, such as when YFII first forked, deployed YFII’s 1-pool strategy, and the funds went to YFII to mine YFII, and then mined and sold.
Here, take the YETH machine gun pool that caused a sensation not long ago as an example, and you may understand.
YETH is very simple, users just need to deposit ETH in, and can obtain an average annualized return of 27.2%, which is much more attractive than the wealth management products provided by deposit banks and many CEXs in the currency circle. So after your ETH went in, what did YFI do with these ETHs to earn this 27.2% return?
The whole process is like this:
1. YFI deposits these ETHs into Maker to obtain the stable currency Dai;
2. Put these DAIs into the yDAI pool (yearn.finance DAI smart pool);
3. The strategy of the YDAI pool is to provide these DAIs to curve.fi/y (a liquidity pool of Curve), obtain Curve’s liquidity proof LP Token, and then obtain CRV tokens.
So the most simple and intuitive understanding, you can understand YFI’s machine gun pool as a wealth management fund on the blockchain, you just throw the “money” (token) specified by the pool into it, and then he will automatically find it for you The place with the highest yield will give you money. Subsequent forks of YFII, YFV, YFlink and other "Uncle" series are basically imitating YFI's machine gun pool strategy, but after the fork, each company has different pools and different strategies, just like Different banks have the same wealth management or fund products of different banks.
You might ask the following three questions:
1. Why do I need to use YFI’s smart pool? Can’t I do these operations myself?
sure! For advanced players, he can do all the things YFI Smart Pool does manually. But if you do it yourself, there are a few problems.
One is that the threshold is too high, and most players cannot complete the operation, and the machine gun pool perfectly solves the threshold problem;
The second is to operate by yourself. The gas cost of calling these contracts is often extremely high-every step in the YETH strategy involves 1-2 contract calls, and each cost ranges from a dozen to tens of dollars. Sometimes hundreds of dollars is also the norm. And the centralized operation of the machine gun pool with large funds is equivalent to sharing these Gas costs, which can save a lot;
The third is security issues. Many new liquidity mining, whether malicious or not, has a problem with the code, which is a risk to your deposited principal. The strategy deployed by the machine gun pool is usually code-audited, which basically ensures that the principal is worry-free. Only then will the policy pool be opened, and the security will be greatly improved.
2. Now all major trading platforms and wallets have also launched DeFi liquidity mining products, and the annual rate is not low. Why use YFI?
3. The machine gun pool is so powerful, what does it have to do with YFI tokens? Isn’t this a governance token?
EARN & ZAP
That being said, however, the YFI smart pool is profitable, and the fee charged to investors is 0.5% of the principal and 5% of the income. Income is sent directly to the multisig treasury. The portion above $500,000 is directed and allocated in the form of rewards to YFI staked in the governance pool.
secondary title
Insurance
Earn is like a "lending fund". Users deposit various stable coins or wbtc here, and the smart contract will search and research the best protocol to search for the highest rate of return in DeFi protocols such as Aave, Compound, and dYdX, and lend to the protocol.
Zaps are streamlined protocols for converting between different DeFi assets. It can be simply understood as a YFI-like Uniswap, except that the trading pairs only have those assets in YFI, and ZAP is here to do those asset swaps (BUSD, DAI, usdt.curve.fi, y.curve.fi etc).secondary titleInsurance
This may be a key project of YFI in the next stage. It has been testing some time ago, and it has been officially launched in the past few days.
Among the popular DeFi projects some time ago, NXM must be one of them. As for finance, everyone knows that except for borrowing and derivatives,
The biggest business should be insurance
. As the finance on the blockchain——DeFi, after transactions and lending gradually took shape, people's attention finally turned to insurance.
Because it was too early, NXM insurance was almost the only seedling, which caused the price of tokens to soar after everyone realized the importance of insurance. However, NXM has a little "no blockchain" in that it has KYC It is extremely strict, and the token NXM is only circulated internally. Currently, WNXM on all trading platforms is just a mapping token of NXM.
I won’t go into too much detail about the relationship between specific insurance rules here. Those who are interested can search by themselves. Here is one of the most amazing things about Yinsure, that is—the insurance policy is tokenized in the form of NFT!
This also means that after you have insurance, you can transfer, sell, your NFT policy, and you can buy it back later, or even buy a "basket of policies".
RARI, as a platform for carrying NFT tokens with insurance functions, has seen its direct currency price skyrocket these days.
Some people also said that this will form a direct competition with NXM? In fact, the launch of Yinsure just complements NXM. In the future, it is very likely to become a relationship between you and me, and me in you. In the traditional financial circle, there is a word called "mutual insurance", maybe we will see it on the blockchain soon.
secondary titleCredit entrustment, liquidation, VC...Yliquidate is a liquidation tool for YFI products. You can use flash loans to automatically liquidate. However, this rather advanced tool is not a product for users. If you have no liquidation experience, you should not use it.
VC - this one doesn't exist. But many people speculate that in the near future, if YFI releases a yVCVault to fund some of the best or most promising projects in the DeFi field, they will not be surprised.
After all, YFI is essentially a DAO
, as long as someone makes a proposal, everyone votes for it, and the development can be done, this thing will exist. So don't be surprised if you see yVCVault one day, or something more wildly creative.
secondary title
The second half of DeFi
The first half of DeFi actually started last year, but it just kicked off this year and ushered in a climax.
This first half was dominated by trading and borrowing. Uniswap and AAVE were undoubtedly the two most dazzling pearls in the first half.
As for YFI, it can be said that it has pushed DeFi to the second half with its own efforts.
In the second half, liquidity, governance, aggregation, and gamification will be several frequently-occurring keywords.
1. Liquidity mining is currently booming;2. There are many imitations of the YFI governance and smart pool fund aggregation model-now there are aggregation projects about governance tokens, which is very interesting. In order to avoid the suspicion of advertising, I will not mention the name;3. Some of the new batch of DeFi projects have begun to make the process of token distribution into a process similar to game tasks. Even the founder of YFI, Andre Cronje, has proposed the concept of Gamefi on Twitter in the past two days, saying that the future DeFi monetary policy may be More gamified, users' funds will become equipment used in DeFi games. At the same time, the industry is still "tradefi around transactions" so far, and may enter Gamefi, which is biased towards gamification in the future.Layer2It can only be said that in the second half of DeFi, the requirements for investors are getting higher and higher, whether it is time or knowledge reserve. In the first half of the public chain, you probably knew the basic concepts of PoW, DPoS, and TPS. Now in the second half of the public chain, you have to understand channels, side chains, Rollup, parachains, sharding, cross-chains, and various emerging New Consensus Mechanism…
Similarly, in the first half of DeFi, you know DEX, decentralized transactions, and borrowing is almost the same. In the second half, you have to understand mobility,
AMM formula
, derivatives design, stablecoin design, liquidation, aggregation... combined with the knowledge of the second half of the public chain, because many new DeFi products will soon be launched in ETH
