Golden Observation 丨 Can DeFi become the mainstream after all that has been said?

Golden Finance Blockchain, September 9th Decentralized Finance (DeFi) has shown explosive growth in 2020, from liquidity pools to automated market makers, from lending to insurance, from new protocols to different protocols All of these things can be built in the field of decentralized finance.

2020 is a dramatic and explosive year for the entire cryptocurrency industry: the Federal Reserve has adjusted its monetary policy substantially, Bitcoin has crashed and recovered, more and more new users have poured into the encryption industry, etc., let us see many unusual things things. From another perspective, this also shows that cryptocurrencies are becoming more and more attractive to the global public, while people's faith in traditional monetary systems has been shaken. Coupled with the huge impact of the new crown virus epidemic on the global economy and the subsequent changes in monetary policies in various countries, people are eager to find other ways to protect their savings. In 2020, decentralized finance, a rising star in the entire encryption industry, is an unavoidable topic.

Analysis | Golden Disk: Negative news of ETH/USD continues to lead to a sharp drop in market value: Comprehensive analysis of the golden disk: ETH/USD has been negative news recently. Although V God has spoken out many times, the market does not buy it. Sluggish sentiment and lack of confidence in the overall market are the key, not ETH's individual problems. Through the market performance, we can see that ETH is running in a downward channel and temporarily lacks technical support. Investors may have enough tolerance to face a long-term price drop. [2018/8/24]

You know, the concept of "decentralized finance" did not exist at all two years ago, or it was just an idea of "building a financial ecology" based on a platform and system based on smart contracts. The price of tokens related to various decentralized financial protocols has skyrocketed, and the price has soared to an eye-popping level, making headlines in major media.

So what exactly is driving such an astounding pace of innovation in decentralized finance? One of the important milestones is that the total value locked in the decentralized financial market will reach 1 billion US dollars in early 2020. Since then, some decentralized financial projects have begun to solve the core pain points of the global traditional financial industry, including: optimizing payment channels, improving credit and financial transparency, etc., and then stimulating explosive growth in this field. What follows is that more and more people are interested in decentralized finance. The uncertainty of global finance has prompted people to start looking for alternative solutions, and people hope to seek more transparent and effective value storage solutions. This may also be one of the reasons why decentralized finance has been magnified in a short period of time. From this point of view, decentralized finance has the potential to completely reshape the global financial system, blending traditional economic scale and familiarity with the security, efficiency and transparency of public chains.

Analysis | Golden disk: ETC/USDT fluctuates at a low level, obviously pay attention to the breakout of the range: Comprehensive analysis of the golden disk: ETC/USDT trading volume has dropped sharply, and the short-term is oscillating between 15.30-14.50, pay attention to the breakout of the range. [2018/8/10]

Decentralized finance is so popular, of course, the reason is not simple

In addition to continuing traditional financial services, the decentralized financial ecosystem has also begun to explore how to provide users with innovative revenue opportunities. Yield Farming has become a phenomenal event in 2020, and cryptocurrency traders can get more ROI from it. Users can mint their own tokens and pool these tokens with some underlying tokens on Uniswap to create a secondary market, and then simply put these tokens into the liquidity pool to earn protocol governance tokens . Throughout the process, some yield farming farmers can achieve annual yields in excess of 100%. Seeing Ethereum’s massive success in the decentralized finance space, other blockchain networks have also begun to incentivize users to invest directly in their networks.

Golden Relativity丨Lin Nianlong: It is inappropriate to kill PoW with a stick: In the discussion of this issue of Golden Relativity, Lin Nianlong, the co-founder of Honeycomb, believes that PoS and DPoS are not perfect. Bribery of votes is very serious, and the security is not as high as PoW. It is wrong to kill PoW. In fact, PoW is a relatively fair mechanism for issuing virtual currency. Regarding the view on the waste of PoW mining resources, Lin Nianlong said: I really want to ask those who question PoW, when there is no better way, don’t make sharp accusations. It is inappropriate to just talk about the problem without talking about the solution. At the same time, it also stated that the currency of PoW is not suitable as a means of daily payment for users, and is more like the nature of gold as a reserve currency. [2018/6/27]

Not only that, because decentralized financial technology allows users to own their own banks and use their own assets for collateral, so as to obtain a full user experience, and can also be used to store credit points, so users do not have to hand over money to banks or funds Managers, themselves have control over where the money is kept and how it is spent. In addition, decentralized finance can also be used to transfer credit. Users can use traditional payment tools, such as Visa, or use public blockchains to exchange funds around the world in real time. What's more, decentralized finance is used to invest in some assets that are not used by consumers at all under the current situation, such as world-famous artworks, or traditional investment tools reserved only for institutional investors in the past, such as certain types of investment funds and trading contracts.

Golden Finance exclusive analysis Tianjin Municipal People’s Government has cooperated with Baidu, 360 and other companies to promote the application of blockchain technology in smart cities: Golden Finance exclusive analysis, a few days ago, Baidu and Tianjin Municipal People’s Government reached a strategic cooperation. Baidu will comprehensively use artificial intelligence, cloud computing, Internet of Things, blockchain and other technical capabilities to help Tianjin Binhai New Area and Sino-Singapore Eco-city Dongli District smart city construction. Previously, the Tianjin Municipal People's Government and 360 Technology Co., Ltd. signed a strategic cooperation agreement. On the basis of protecting the network security of the country, enterprises and users, they will give full play to their own technologies in network security, artificial intelligence, big data, blockchain, etc. The core advantages in the field provide a systematic solution for the construction of Tianjin's smart city security system. Recently, the Tianjin Municipal Government has continued to cooperate with Internet companies such as Baidu. It can be seen that the Tianjin Municipal Government is determined to promote the application of blockchain technology. This will also accelerate the speed of Tianjin's construction of a smart city and promote the development of Tianjin's smart city. [2018/5/21]

So, is such a rapidly developing decentralized finance ready for the “mainstream” world?

You must know that not everything is so good in the decentralized financial industry. Risks and benefits coexist. There have been many "negative" events this year: In March 2020, the price of Ethereum tokens plummeted on "Black Thursday". A large number of loans fell below the mortgage threshold, triggering liquidation procedures; in April 2020, the dForce ecosystem protocol Lendf.me was hacked, but after communication, the hacker returned 99.95% of the funds; in June 2020, Balancer liquidity The pool suffered a flash loan attack and lost $500,000, and the liquidity of the two token pools of STA and STONK that suffered losses has been exhausted.

Therefore, the current incomplete decentralized financial ecosystem cannot allow users to operate their own funds with full trust, especially those users who do not have enough "spare money". The fact is that this market is being controlled by "Ethereum whales", who account for 90-95% of all decentralized financial protocol transactions. Therefore, in order for decentralized finance to become mainstream, the scale of the user base must be improved. Everyone involved in the decentralized financial industry must find it interesting, hope to understand the meaning of digital currency loans, and make use of these assets. Come up with a business idea.

The tough problems must be solved first

Of course, there are other issues that need to be addressed before the decentralized finance industry can become “mainstream”, such as: the problem of high rents and the need to re-evaluate the usability of the Ethereum blockchain.

Just last week, the Ethereum gas fee soared to 479gwei for a short time, and the average gas fee also reached 436gwei. Gas fees are like block rents, and the rent is really too high now. This is very worrying for decentralized application developers and projects. You will find yourself waiting longer and longer behind a large number of transactions, and the reason for this is the latest explosion of decentralized finance, and it is only because decentralized financial applications attract more than ordinary applications. The program has many more users, and these users represent a completely different market.

The current Ethereum 1.0 has insufficient capacity and poor scalability, and decentralized financial applications have to spend more than $500,000 in transaction fees per hour to process transactions. If Ethereum 1.0 does not reduce gas fees in the next few weeks, and releases enough gas to bring the price back to reality, there may be a network paralysis event that occurred in late 2017 (the popular game on the Ethereum blockchain The rapid popularity of CryptoKitties almost paralyzed the network, and some non-CryptoKitties transactions took minutes, hours, or even days to complete).

All in all, decentralized finance applications on Ethereum and other blockchains can only be ready for the wider world and become mainstream only if they can deal with more growth problems.

Part of this article is compiled from Yahoo Finance

Tags：

SAND