DeFi has brought a lot of innovation, but innovation is not perfect. It still carries a lot of defects and “side effects”. So how did the “problematic” DeFi become popular? If you want to ask what is the use of DeFi, many people only know that DeFi can be hyped, and they can’t say clearly what practical effect it has.
OKEx CEO JayHao and aelf COO and co-founder ZhuLing discuss these issues together…
Q1: When did you and your team really start paying attention to DeFi? Why did you pay attention to it at that time?
Jay Hao: I paid attention to DeFi last year. In May of this year, I did a lot of research and preparation with the team. For this hot year, OKEx’s launch of COMP at the end of June should be considered a beginning.
At that time, a netizen asked me how DeFi will develop in the future. At that time, I thought that DeFi projects similar to Compound were actually very useful. This is also an important reason why I pay attention to DeFi. However, the current pledged loan business in the traditional financial market always faces some risks, such as signing a pledge contract without actually delivering it, and the risk of the exercise of the pledge; if we use smart contracts to achieve automatic lock-up, the whole process is open and transparent, these risks will be Can be solved well.
Three months passed, and the facts proved that my prediction was accurate. As a leading company, OKEx Exchange has been committed to promoting the development of DeFi through the development of cryptocurrency, mining products and public chain. I personally also held “Jaylen DeFi Class”, “DeFi Roundtable Conference” and so on on Weibo. Column, hope to convey DeFi-related knowledge and insights to more users.
Zhuling: Actually, we started paying attention to it last year, because I know that the demand for DeFi is real and huge, and many people need non-centralized hosting mechanisms and so on. In the ecological construction of aelf, we have also laid out various applications of DeFi to prepare for the future.
Q2: Can you talk about the utility of DeFi in combination with your current platform, some products or solutions of the project?
Jay Hao: Traditional centralized finance involves a large number of intermediaries such as banks, trading platforms, brokerage firms, accountants, and lawyers. The transaction process is complicated, costly, and slow. The emergence of DeFi allows more people to participate and enjoy all types on an equal footing. Financial services do not need to rely on various intermediaries, which can be regarded as the greatest utility of DeFi.
However, what we should see is that the current DeFi applications are mainly built on Ethereum, facing a series of pain points such as cumbersome operation, network congestion, and high gas costs. In fact, most users are blocked from the door and reduced to a few “scientists.” “The game not only limits the use of DeFi, but also deviates from the original intention of DeFi.
In response to these pain points, on the one hand, OKEx took the lead in listing high-quality DeFi currencies that are highly popular in the market, and on the other hand, it has innovatively launched a variety of products, such as DeFi liquidity mining, OKB pledge mining, etc. These products have reduced participation In terms of threshold, increased flexibility, etc., truly build a mass-level DeFi entry.
Taking liquid mining as an example, OKEx has not only successively accessed DeFi protocols such as Compound, Curve, YFII, Uniswap, etc., it is also the world’s first platform to access LP aggregate mining. In the traditional liquidity mining model, users must not only be familiar with wallets and various transfer methods, but also keep in mind private keys and mnemonics, and learn to use Metamask and other auxiliary tools to connect to the wallet. The operation process is very complicated and has to be undertaken. High gas costs and asset losses due to operational errors. On the OKEx platform, users can participate in DeFi liquidity mining with one click, deposit and withdraw at any time, and do not have to bear additional gas fees. This is actually through the combination of CeFi and DeFi, allowing more people to enjoy the dividends of DeFi development at the asset level.
Zhuling: Like the Sashimi project we developed for the community, in addition to providing liquid mining and AMM, the biggest advantage is to use the money invested by people to invest in other DeFi protocols, such as borrowing and this fully valuable function, which promotes economic development , And to ensure the maximum benefits of users, our agreement is a sophisticated design of economic systems and governance methods, so that people have the motivation to maintain the healthy operation of the entire agreement, so as to create value for more people.
Sashimi innovatively completed Sashimi Investment, allowing locked-in liquidity to be used as a risk-free loan to generate interest income. For example, there are 2 billion US dollars of liquidity on Uniswap, but this liquidity is only used for AMM in transactions. Sashimi Investment can use 90% of its liquidity for risk-free borrowing while guaranteeing the same liquidity. Assuming a 10% annualized return on the borrower, Sashimi can generate an annualized profit of US$180 million more than Uniswap under the same liquidity conditions.
Q3: DeFi is hot, but will it be the hottest now? Can this “fire” continue? What do you think?
Jay Hao: DeFi is now showing a slight decline. Starting from the liquidity mining of Compound at the end of June, the total amount of DeFi locked up has soared. During this period, there have been mining of Compound, YFI, SushiSwap, UniSwap, DeFi+NFT series projects. Mine, what they have in common is the early high returns, in the final analysis, the wealth effect. Whether the follow-up DeFi continues to be popular depends on whether a new project takes over the high-yield baton of liquid mining to trigger a market carnival.
Zhuling: After a period of explosive development, DeFi is slowly returning to rationality. The emergence of any concept is blindly pursued and hyped at the beginning, and chaos grows, and then as innovators continue to produce new products and more and more participants, the market will slowly reshuffle, and it will It will slowly return to its true value, and now DeFi is in a period of returning to its true value. Its true value has actually been mentioned just now. On the one hand, it is to perform the traditional financial function of decentralization, which undoubtedly promotes economic development. On the other hand, it is the value flow between blockchains within the blockchain, which makes the industry ecology more enriched. . So the question shouldn’t be whether it will “fire”, but DeFi will continue to develop healthily in an indispensable role.