Produced by the Polkadot Ecological Research Institute, it must be a boutique (the article is very long, it is recommended to collect it first and then read it)
background
Produced by the Polkadot Ecological Research Institute, it must be a boutique (the article is very long, it is recommended to collect it first and then read it)
background
Last week, when many Polkadot ecological projects were gearing up and preparing to show their talents at the Kusama slot auction on September 1, they were suddenly robbed of the limelight by the public chain ecology such as Solana and Avalanche in the market.
According to the data from DeFillama, the locked funds of public chains such as Solana, Avalanche, Fantom, and Celo have achieved great growth in recent days, all of which have achieved an increase of more than 20%. Among them, Celo has obtained three projects 700 million U.S. dollars of locked-up funds have been raised, with an astonishing 3086% increase in 7 days.
For a while, the whole circle was discussing the big situation of these public chains, and it seemed that a new wave of public chain wave was ushered in. So, what did these public chains do right that allowed them to bring such a huge market effect in just a few days?
What is the reason why the public chains suddenly started to exert their strength?"Osprey Solana Trust"In this regard, we tried to explore the reasons for the hotness of these public chains from multiple angles, and finally found that Solana seems to have different reasons for the popularity of Avalanche, Fantom, and Celo.
The main reason for Solana is that on August 25, Osprey Funds, a wholly-owned digital asset subsidiary of trading product provider REX Shares, registered with the US Securities and Exchange Commission (SEC) under the name
Trust, which appears to be the first private SOL investment vehicle in the United States.
In addition, competitor Grayscale also signaled that its Solana fund was working the previous day. These all indicate that traditional capital is preparing to enter Solana, and two well-known overseas media platforms Coindesk and Cointelegraph have successively published news about this matter, which further expands the influence of these positive signals, followed by the development of Solana ecology The lock-up volume began to increase gradually around August 25.
But Solana is not the protagonist of this round of public chain tide. In fact, this round of rapid development of the public chain was led by another high-performance public chain, Avalanche, through the launch of the liquidity mining reward plan. Fantom and Celo took the essence of it and launched their own ecological development incentive plans. Although there are some differences in each of them, they can achieve the same purpose, and it is worth our further understanding.
At the beginning, on August 18, the Avalanche Foundation announced that it would launch Avalanche Rush, a $180 million liquidity mining reward program, to encourage more applications and assets to join the thriving Avalanche DeFi ecosystem.
In order to bring high-quality DeFi applications to Avalanche, it chooses to cooperate directly with well-known high-quality DeFi applications. Both parties provide a token corresponding to a certain amount of US dollars as an incentive to allow high-quality DeFi projects to take root in the Avalanche ecosystem. Germinate, but also use the influence of these projects to empower Avalanche. According to the Avalanche Rush plan, Avalanche will integrate Aave and Curve, two DeFi protocols with the highest total locked value.
The Avalanche Rush plan will integrate Aave and Curve, the two DeFi protocols with the highest total locked value, and provide their users with up to 3 months of AVAX (Avalanche native asset) liquidity mining rewards. The Avalanche Foundation has prepared AVAX incentives equivalent to $20 million for Aave users and $7 million for Curve users. With the launch of the second phase of the project in the next few months, the foundation will allocate more AVAX rewards.
As soon as the news came out, the smart funds in the market immediately entered the market to lay out the Avalanche ecology. BENQi, the lending market, quickly enjoyed this wave of dividends and became the first project on Avalanche to reach a lock-up volume of 1 billion US dollars. It is also logical to become one of the first projects that can receive incentives.
Followed by TraderJoe on the DEX track in the Avalanche ecosystem, its lock-up volume quickly climbed from US$2.27 to US$458 million, becoming the second largest project with the lock-up volume.
It is said that SBF, the founder of FTX, also responded to Avalanche’s incentive plan, and has allocated 170 million US dollars in Avalanche to participate in various applications, of which 86 million US dollars and 73 million US dollars have been invested in BENQI and TraderJoe respectively.
The rising amount of locked positions in Avalanche also indicates the success of this incentive plan, and these are all seen by everyone, including the project teams of Fantom and Celo. , announced their respective incentive plans.
The smart contract platform Fantom announced that it will invest 370 million FTMs to better adjust the incentives between users, builders and the network. With Avalanches jewels in front of it, Fantom didnt want to copy its mechanism, so it started from scratch and designed a new incentive mechanism. Unlike Avalanche, which directly cooperates with well-known DeFi projects, it has designed a set of general standards, that is, any protocol team can keep its lockup at a time-weighted average of $5 million or $100 million for a long time Above, you can apply for rewards from the Fantom Foundation, and you can apply for 1 to 5 million FTMs in its first iteration. Currently, the best performers are Sushi and another DEX project, SpookySwap.
On the same day, Celo, a decentralized financial platform, also made a similar move, but Celos starting point is not very clear that it wants to develop the ecology, but hopes to bring DeFi to the worlds 6 billion smartphone users.
Celo first united founding partners including Aave, Curve, Sushiswap, PoolTogether, 0x, UMA, Valora, Ubeswap, Moola Market, as well as educational promotion and infrastructure partners including Chainlink, RabbitHole, The Graph and Wrapped.com Formed a coalition that will then collectively launch the “DeFi for the People” initiative, a new initiative that will offer over $100 million in educational programs, grants, and incentives.
The Celo Foundation and partner foundations will each provide half of the funding for the incentive project, aiming to realize the use of DeFi on the mobile side. Subsequently, incentive pools containing Aave, Curve, Sushi, and other DeFi projects will launch in the coming weeks.
Judging from the current performance of the three, they have achieved good performance. Some of them directly cooperate with existing mature DeFi projects to participate in their own public chains to push corresponding incentives, and some of them directly reward those who have achieved Standard projects; some projects use tokens as incentives, while others use dollars as incentives, but in any case, these small differences do not affect the final success.
Of course, this kind of success is not accidental. Careful friends must have discovered that Avalanche has announced the launch of an incentive plan. It will take some time for the actual implementation, but at the beginning of the announcement, funds have already entered the market quickly. Why do these funds dare to do so? Are you sure that this incentive opportunity will be successful?
In fact, this is because there have been successful cases long before Avalanche. On April 14 this year, the Ethereum sidechain expansion program Polygon announced that it would provide liquidity mining rewards for the lending agreement Aave, and the rewards will be 1% of the reserved total supply of MATIC (about 40 million US dollars). Then Polygon started to start, and the locked amount gradually increased. The successful implementation of the incentive scheme allowed Polygon to give it a go, and then provided liquidity mining rewards for well-known DeFi projects such as Sushiswap and Curve. Polygons lock-up volume quickly exceeded 5 billion US dollars in just over a month, an increase of more than 30 times.
With the success of Polygon, there are Avalanche, Fantom, and Celo today. From these successful cases, we can also summarize a feasible path for how to quickly start a public chain.
①In these successful cases, all projects with the highest locked positions are DEX and loan types. Therefore, if you want to quickly start the ecology, you need this public chain to have a mature DEX or loan type DeFi application.
②There is only one automated market maker (AMM) type decentralized exchange named Mento on Celo, which is the only protocol included in the calculation of locked positions. It can be seen that the quick start of the public chain does not require many applications to start, even if there is only one project, it can be started quickly.
③ From the point of view that whether the incentive funds are Token or US dollars, they have finally achieved success. The rapid start of the public chain has nothing to do with the form of funds. Therefore, to quickly start a public chain, it is necessary for the public chain to have at least one mature DEX or loan-type DeFi application, and have sufficient funds or tokens as support. It is best to introduce well-known DeFi projects into the ecology for the best results.
Which Polkadot parachain projects are eligible for fast start?
DeFi has advantages that traditional finance cannot match in terms of composability, flexibility, decentralization, accessibility, innovation, interconnection, borderlessness, transparency, business process automation, and finality. big market. The most representative classic demand in DeFi is lending and trading. The strong demand determines the supply, so all public chains are working together on the DeFi track.
Karura
The idea of Polkadot is that the future must be multi-chain, including a general-purpose public chain and an application chain for certain directions. According to the conditions we sorted out in the first point, a public chain can start quickly, lets take a look at which ones in the current Polkadot ecosystem meet these conditions.
The five projects that won the last round of Kusama parachain slot auction are getting ready to go online. We might as well take a look at their situation and judge whether they can start quickly.
Karura is a one-stop DeFi hub with scalability and EVM compatibility, focusing on bringing a series of financial applications to users. Including but not limited to pledged asset derivatives (LKSM), stable currency based on cross-chain multi-asset guarantee (kUSD), and an automatic market maker mechanism (AMM) DEX. Provide users with DeFi services that require extremely low Gas fees.
Karura successfully won the Kusama parachain slot auction and was connected to the entire Kusama ecological network. Currently, Karura has launched the KAR/KSM trading pair on Karura Swap through the bootstrap program, and enabled the kUSD stablecoin minting mechanism with KSM as collateral. And the Karura running time has been upgraded, KSM can be used to pay transaction fees, exchange stable coins and purchase NFT. Also completed the sending of the first general message from Karura to Kusama. $200 million in decentralized transaction volume was completed in the past seven days.
Moonriver
In the future, Karura will be deeply involved in the DeFi track, adding more functions and upgrading. At the end of 2021, the activation of Liquid KSM (LKSM), BTC cross-chain bridge, ETH cross-chain bridge, the addition of more trading pairs, and the activation of Acala EVM will be realized. DeFi is a relatively large track and concept. Only by constantly polishing its existing functions and adding new functions required by the ecology in a timely manner can it keep up with the pace of development.
Therefore, judging from the current progress of Karura, it is launching its trading application—Karura Swap, and promoting the casting of the stablecoin kUSD. From a functional point of view, once Karura Swap can run smoothly, it will already have There is a basic condition for a mature DEX or lending-type DeFi application. The rest is to consider the issue of funding, and the Acala team has already obtained US$8.5 million in financing after two rounds of financing in 2020. From the perspective of funding, even if Karura took out a considerable amount of KAR as an incentive due to the slot auction, it would still Dont worry about not having money for ecological incentives. Therefore, Karura has the basic conditions for a quick start. Of course, it would be better if Karura could introduce some well-known DeFi project parties into Karura.
As a smart contract platform compatible with Ethereum, Moonriver can help developers build interoperable applications based on the Substrate framework better and faster. We can compare Moonriver to Platform Nine and Three Quarters, which perfectly communicates the barriers between the Polkadot ecosystem and the Ethereum ecosystem. Let developers and users enjoy compatible smart contracts at a very small cost. This provides a good foundation for multi-chain compatibility of DeFi projects.
Currently, Moonriver has completed at least six upgrades on Kusama, removed Sudo, enabled community governance, balance transfer, and EVM functions, and Moonriver has been fully up and running on Kusama.
Shiden
In the future, Moonriver will also take advantage of Moonrivers built-in and fork-free upgradeability provided by Substrate to improve a number of performances, support EIP1559, and perform cross-chain upgrades for KSM, Kusd and other assets and relay chain functions. This means that in the future, Moonriver will integrate a large number of projects and assets not on Kusama, and become a bridge for transferring assets across chains. From the perspective of DeFi, this undoubtedly expands the capacity of related tracks and increases the availability and liquidity of assets.
Judging from the current situation, the progress of Moonriver is slightly slower than that of Karura. The EVM function has just been launched, and a relatively mature DeFi application is needed as the starting basis. However, it has only been more than a month since the last round of slot auction was successful, so it is understandable that Moonriver did not get ready so quickly. I hope that applications similar to lending or DEX will be launched as soon as possible in order to quickly start the ecology. be prepared.
Shiden brings most of the functionality of Ethereum to Kusama. As we all know, Kusama itself does not have the function of smart contracts, and smart contracts are the basis for the ecological development of the blockchain, both in terms of functions and network scalability. And Shiden provides Kusama with smart contracts, supporting solutions such as Ethereum Virtual Machine, WebAssembly and Layer2, with good scalability and diversity.
At present, Shiden has upgraded the collator runtime to be compatible with the latest version of Kusama, adjusted the transaction fee of the attribution token and enabled the batch usage module. And distributed Kusama crowd loan rewards. In addition to this, a PoS consensus mechanism is implemented.
Khala
At the end of September, Shiden will support EVM, WASM, dApp mortgage and Ethereum bridge at the same time. Some XCMP use cases will also be completed later. In other words, Shiden will have the function of cross-chain transfer, which provides a good foundation for DeFi projects in terms of scalability and functional diversity.
Judging from the current situation, Shiden is still in the stage of preparing for the support of smart contracts such as EVM and WASM. As a smart contract platform similar to Moonriver, it needs to make persistent efforts.
DeFi not only requires smart contracts and cross-chain transmission, but also requires privacy protection. Khala is a private computing parallel chain based on the trusted execution environment TEE. Able to provide a strong secure and scalable trustless computing infrastructure.
At present, Khala has launched Ethereum-Khala’s PHA one-way bridge, which has completed the first milestone event of the cross-chain bridge, and is the first decentralization in the Polkadot ecosystem that can transfer ERC-20 PHA to K-PHA Official Parachain. At the same time, Khala started the Inner mining test, further feedback to the community.
Bifrost
In the future, Khala will remove Sudo and start community governance. At the same time, it will protect the privacy of the PhaSe wallet and complete the two-way bridge between Ethereum and Khala. Also add Acala, Astar and Statemint tokens to the PhaSe wallet. There is no doubt that Khala will become one of the important privacy protection cross-chain wallet providers in the Polkadot ecosystem.
Khala is the only project that is quite special among the five successful slot auction projects, because it belongs to the infrastructure category. Although the confidential smart contracts that Khalas trusted computing can provide are a great demand for DeFi, Khala has a pre-stage, that is, its priority goal should be to build a trusted computing network composed of many hardware devices . Therefore, the development direction or growth path of Khala is different from other projects, at least at this stage, the current quick start method is not used.
Bifrost, also known as Rainbow Bridge, is one of the important DeFi protocols at the bottom of the Polkadot ecosystem. It is committed to providing liquidity for pledged assets and completing the risk hedging of pledged assets.
After obtaining the parachain slot, Bifrost upgraded the collator to v0.9.8 and successfully completed the parachain launch. Solved the competitive relationship between Staking and DeFi on Kusama.
In the future, Bifrost will delete Sudo and complete the upgrade plan including enabling governance, SALP and native token BNC. The complete upgrade contains nine tasks, and also includes enabling vsKSM and vsBond, SALP Bancor, Swap module and liquidity mining, vsBond market, etc. Bifrost will also carry out derivative loan business and realize cross-chain transfer with Statemine.
Based on this, the projects that won the first round of Kusama parachain slot auction are all polishing DeFi functions, or providing infrastructure for DeFi projects. However, there is still a certain distance from becoming a complete DeFi project, and it will take time to sharpen. Judging from the current situation, Bifrost was originally a chain of partial applications, so its application completion is still very high, and the types of applications are relatively rich. However, since it is the latest project to obtain slots, it still needs to Only by further upgrading can all the applications be implemented quickly, and the most profitable loan and DEX-oriented applications can be run as soon as possible before a quick start can be considered.
Prospects for the New Round of Parachain Slot Auctions
The Kusama parachain slot auction has started its second round. There are currently 16 projects in Crowdloan, and the competition is in full swing. In addition to the last round of slot winners who are already implementing various functions and upgrading step by step, some projects in the new round of parachain slot auctions still have some parachain projects that can use DeFi to start quickly.
To be precise, first look at the direction of these projects, whether they can support DeFi lending or DEX direction, which can be either a DeFi-focused chain or a more general chain that supports smart contracts. Secondly, just to judge whether it can be supported depends on whether these projects have sufficient financial strength. Finally, it depends on the comprehensive strength of the project, whether there are well-known DeFi projects willing to join the ecology.
postscript
On the whole, among these 16 projects, more than half of them are related to DeFi, which shows the importance and popularity of the DeFi track.
postscript
With the emergence of smart contracts, DeFi has become an important part of blockchain applications that cannot be ignored. Large institutions and outstanding investors have never stopped discussing DeFi. Where is the future of DeFi and where is the future of public chains? ? It has become the focus of many peoples attention, so some Polkadot parachain projects have also made corresponding preparations.
Kusamas second round of parachain slot auctions has begun. Let us pay attention and look forward to how it will change the world of Kusama in the end.
*The information provided by the Polkadot Ecological Research Institute does not represent any investment hints. The published articles only represent personal opinions and are for reference only. Since there are no policies and regulations related to digital assets in China, users in mainland China are requested to pay close attention to the development of Crypto.
In view of the endless emergence of Polkadot ecological projects, but the inferior projects and scam projects are full of them, it is worthy of vigilance. On the other hand, it is difficult for groups only on the Polkadot project side to understand the whole picture of the entire ecological development of Polkadot, and miss many opportunities. Therefore, we decided to establish a Polkadot ecological group, which can openly discuss all Polkadot ecological projects. Everyone can objectively share their views on each project, understand the development of each Polkadot project, and exchange information to seize opportunities together.
