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Golden Observation丨Can DeFi's "currency Lego" attribute continue to promote innovation?



Jinjin Finance Blockchain, August 27th We know that the traditional financial system has the characteristics of permission, high entry threshold, and additional legal costs, so it is relatively limited in terms of composability. All financial services built on top of traditional centralized financial services require legally binding financial contracts between the two parties, which not only increases market entry barriers, but also makes it difficult for developers to create fully automated or impartial financial applications , as continued access may be revoked at any time. In addition, third-party developers do not get the assurance of certainty that they expect because a centralized entity can control critical parts of the application. Secondly, we found that traditional financial services are often affected by opacity or information asymmetry, because the public has very little understanding of the back-end infrastructure, which in turn creates unknown risks and increases the risk management costs of a small number of regulatory agencies. For example, financial composability can create “mortgage-backed securities” by combining the collateral of existing consumers. This diversified business model seems to be good, especially internationally renowned ratings such as Moody’s, S&P and Fitch. The agency gave a AAA rating, but when the time came to 2008, many securities actually relied on the "toxic" subprime debt endorsement, and as a result, the crisis broke out and led to the global financial crisis. Therefore, providing high levels of transparency and visibility to a wider audience can prevent such "implosion" events from occurring. Then, we can also see that if traditional financial entities want to provide their financial services or products to citizens of a certain country or region, these entities are usually required to meet the regulatory compliance of that country or region, such as "know you customers” and “anti-money laundering” and other laws and regulations. Although regulatory standards may improve the market in some cases, achieving them can also lead to high compliance costs, such as expensive legal advice, and increase the difficulty of market entry, which means that in the end it is likely that only a few It takes a few well-connected and well-capitalized companies to compete and survive in the market, especially when operating in many different jurisdictions. Additionally, compliance often involves more human involvement in the process, hindering the development of multi-party process automation. Golden Morning | List of important overnight news on October 30: 21:00-7:00 Keywords: Binance, Bitcoin transaction fees, EIF, USDT 1. Bitcoin transaction fees rose to a 28-month high. 2. Forbes: The FBI and IRS may be investigating Binance. 3. The EU-affiliated fund EIF invested 800 million US dollars in the field of blockchain and AI. 4. The governance proposal of Uniswap's plan to add airdrop addresses has sparked controversy. 5. The October contract of CME Bitcoin futures closed up 2.5%. 6. The three major U.S. stock indexes all closed up, and blockchain concept stocks rose more and fell less. 7. In the past six months, 97.9% of the newly minted USDT was directly transferred from Tether's official account to the exchange. 8. Bitcoin continued to rise, with a daily low of $13,388.89 and a highest of $13,635. [2020/10/30] The unique advantages of DeFi You should know that one of the unique features of decentralized finance is that developers can combine any DeFi protocol for use without any special permissions. When these DeFi applications are connected in series, they are like "currency Lego", and then can create many previously unimaginable financial use cases and products, thus opening up a frictionless innovation cycle. Very different from what we have seen in the traditional financial industry, decentralized finance can essentially change the status quo in a permissionless way, which in turn supports the creation of a more open financial foundation from which any developer can gain Real-time access to highly tamper-proof and reliable financial infrastructure. In this case, a truly impartial and deterministic application can run according to the coded rules, and no one person or centralized entity can shut it down. Using a decentralized financial infrastructure also requires no original developer approval, allowing for seamless innovation without any centralized bottlenecks. Golden hot search-ethexc list: ANT is at the top of the list: According to the data of Golden Finance and Economics ranking list, in the past 24 hours, ANT ranked first in terms of search-ethexc volume. The specific top five list is as follows: ANT, TRX, MOF, XRP, LTC. [2020/6/25] Secondly, in terms of transparency, decentralized finance is also different from traditional finance. Its transparency is quite high, because many projects are not only built on the basis of open source technology, but every transaction and interaction between users and DApp is recorded in an open and non-tamperable ledger distributed around the world. Once a centralized cryptocurrency exchange goes bankrupt, it often takes months or even years to complete debt settlement, but the solvency and operational health of decentralized finance have always been collectively "monitored" and analyzed by the open source community. Potential fraud and systemic risks can be pointed out. In terms of regulatory and legal obstacles, decentralized finance adopts a different compliance approach than traditional finance, which can make it compatible with the laws and regulations of jurisdictions without sacrificing innovation. The blockchain infrastructure is open source and decentralized in nature, meaning it is not owned by any for-profit company, and every transaction can be verified and audited on the blockchain. More importantly, the composability of decentralized financial agreements means that each agreement does not need to have built-in compliance tools. As long as the terms of the agreement are followed, any user or enterprise using the agreement is fully compliant. When a public ledger is combined with pluggable and modular compliance support, it can effectively ensure that end users meet regulatory standards without stifling innovation. Through the above comparison, we can see that the traditional financial industry always tries to improve efficiency and solve problems such as poor operation through stricter control of the infrastructure, while DeFi hopes to improve market efficiency through an open source code framework. Under this framework, license-free innovation can naturally solve the problem of inefficiency. Jinse Finance mining data broadcast | BTC’s network computing power rose by 2.35% today: Jinse Finance reported that according to the data from the spider mining pool: ETH’s total network computing power is 179.999TH/s, mining difficulty is 2285.36T, and the current block height is 9880483. The theoretical income is 0.00777063/100MH/day. The computing power of the BTC network is 119.827EH/s, the mining difficulty is 14.72T, the current block height is 626191, and the theoretical income is 0.00001708/T/day. The BSV network computing power is 1.513EH/s, the mining difficulty is 0.23T, the current block height is 630810, and the theoretical income is 0.00059485/T/day. The computing power of the BCH network is 2.200EH/s, the mining difficulty is 0.29T, the current block height is 631008, and the theoretical income is 0.00040906/T/day. [2020/4/16] "Currency Lego" is actually very powerful. At this stage, some decentralized infrastructures that support decentralized financial applications mainly include: blockchain (Ethereum) that supports smart contracts, tamper-proof oracle network (Chainlink), persistent data storage/web hosting (IPFS), censorship-resistant domain names (ENS), and reliable data querying and indexing (The Graph). Since developers know very well that the core business logic they develop can access key infrastructure without any permission, the modular composability of the DeFi ecosystem allows them to focus on building core business logic. When developers use the decentralized financial infrastructure to create new tokens, they don't need to build their own exchanges, and they don't have to pay expensive listing fees for listing on some proprietary platforms. They only need to focus on creating transactions and providing liquidity. support. Not only that, they can list their tokens on a decentralized exchange (DEX) that has been thoroughly vetted and includes an existing user base, which in turn gives token holders immediate access to liquidity and different financial use cases, greatly Extended token utility. Jinse Finance Statement: The listing of EXN on Huobi is fake news and no relevant reports have been made: On March 7, in response to the content-ethexc of "Exchange Neural (EXN) Launching on Huobi Global Station" circulated on the Internet by Jinse Finance, we hereby declare that the content-ethexc is forged , Jinse Finance has never made any reports on the "EXN" project, and after verification with Huobi officials, "EXN launched on Huobi Global" is fake news. Users are requested to pay attention to screening and prevent and control project risks. [2020/3/7] If you can expand this structure by connecting new decentralized financial applications to existing decentralized financial applications, it feels like building Lego blocks, which is why DeFi Composability is also called "currency Lego" for a reason. Now, some "currency Lego" scenarios in the decentralized financial industry include: decentralized exchanges, automated market makers, DeFi aggregators, stablecoins, etc., all of which support various combinations of connections to create services larger than their own Some of the many building blocks of functionality. Under interoperability, anyone can build products and provide a new user experience by combining two protocols (such as Aave and Synthetix). If this product is good, then liquidity will also benefit from interoperability, and then can quickly gain network effects, which is obviously much stronger than the traditional financial system. In addition, another key feature of the composability of decentralized finance is the ability to "chain" together a chain of decentralized applications, which can reduce the friction cost to almost Zero and no permits required, thus improving capital efficiency. Not only that, decentralized financial composability can also promote accelerated growth of network effects, and each decentralized financial application in the "combination" can make other decentralized financial applications in the "combination" stronger, more usable. Exclusive | Jinse Finance’s mining revenue data broadcast on February 10: Jinse Finance reported that according to Inbit data, based on the BTC reference price of 69,000 yuan and the electricity price of 0.38 yuan/kWh, the current market price and return rate of mainstream BTC mining machines are currently on sale. This cycle is: Whatsminer M20S-68T (used mobile phone 11560 yuan, 244 days return), Innosilicon T3-57T (new spot 9300 yuan, 269 days return), Avalon 1066-50T (new spot 6300 yuan, 229 days to pay back), Ant T17e-50T (quasi-spot 7100 yuan, 225 days to pay back). [2020/2/10] The above operations already exist in the field of decentralized finance, and the "combinations" involved include Ethereum, MakerDAO, Compound, Chainlink, and PoolTogether. Create entirely new decentralized applications through tokens without having to mint stablecoins yourself, or figure out how to bootstrap a money market protocol, or figure out how to get a verifiable on-chain source of randomness. Users can also "merge" their own interest-bearing stablecoins together, thus creating a permission-free and loss-free savings portfolio, further extending this composability. Use cases of DeFi composability 1. Decentralized currency market: One application that utilizes DeFi composability is the decentralized currency market Aave, a decentralized financial protocol that can achieve asset "super-liquidity" through flash loans, thereby Improve capital efficiency and return on deposits. Additionally, Aave has introduced support for unique types of collateral that leverage tokens generated by other decentralized finance applications. This model provides high capital efficiency for automated market makers, because they can earn transaction fees from colleagues who provide liquidity on Uniswap, and can also borrow funds in the agreement. Not only that, they can even re-deposit these borrowed funds into Uniswap as liquidity, thereby creating long-term leveraged exposure to Uniswap transaction fees and assets in the asset pool. 2. Flash loan: Flash loan is similar to a temporary, unsecured loan, but the repayment must be completed in the same transaction. If the flash loan borrower cannot or cannot repay his loan immediately, the entire transaction will be revoked. This protects the agreement and its lenders from any default. At the same time, flash loans can also be used for arbitrage between decentralized exchanges, seamless lending, swapping collateral or debt in loan transactions, and many other use cases, and these complex operations can be completed in a single transaction . 3. Aggregation service providers, another decentralized financial application that makes heavy use of composability is It can bring a better experience to DeFi users, because users do not need to check or compare token exchange rates of different decentralized exchanges every time, and can navigate all information and access all information on Ethereum in one application. Liquidity, avoiding cumbersome processing operations. Among them, 1inch plays the role of a decentralized exchange aggregation provider, which can obtain liquidity from all decentralized exchanges on Ethereum and help users avoid slippage as much as possible when exchanging tokens. Not only that, 1inch can also split large-scale transactions into multiple orders, and even realize cross-exchange settlement in one transaction, so as to provide users with decentralized financial products with the best yield. Be wary of the risk of "currency Lego" However, although the combinability of decentralized finance is very powerful, risks also coexist with it. As far as we know, the risks of DeFi composability mainly fall into the following categories: First, when multiple smart contracts are combined, the attack surface will expand, increasing the scope of the "attack surface", which in turn will bring more extreme In some cases, even extreme measures are required to ensure that the combined application runs smoothly. This composability risk could exploit vulnerabilities in potentially lower-standard DeFi applications, meaning that collateral tokens in combined applications are only as secure as the weakest collateral tokens. Second, some users may not know much about decentralized finance and the applications they use, and this risk may be more serious than we realize. Therefore, we need to educate users that risk transparency is critical to ensuring the healthy functioning of the decentralized financial ecosystem. DeFi composability can quickly become very complex, so each step in the composition process needs to be broken down to a security level so that users can always know how their funds are invested.


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