Friday, October 23, 2020

DeFi blowout, public chain revival, blockchain industry ushered in a new trend

 Entering 2020, the blockchain industry will make a comeback.

With the rise of new concepts such as DeFi (decentralized finance), public chains have once again become the focus of the entire blockchain industry.

In the blockchain industry, the public chain is equivalent to the operating system in the IT industry and is the most important infrastructure in the industry chain. In 2018, the public chain once ushered in a short period of outbreak, but it has gradually fallen into silence since then.

"At that time, all public chains in the industry, including ourselves, failed to produce much actual benefits." WaykiChain co-founder and chief strategy officer Sun Yonggang told 36Kr.

However, in 2020, the rise of the DeFi concept will give the public chain a new lease of life. Starting from digital currency mortgage lending, DeFi is developing various financial applications. As the basic platform for carrying DeFi applications, the public chain has also revived with the rise of DeFi.

It is not difficult to see that at the moment, finance is still an important field for the implementation of blockchain technology. With DeFi as the foundation, the implementation of blockchain technology also has a new business path-guiding the integration and innovation of the digital economy and the real economy, allowing the blockchain to carry more digital assets.

01 DeFi blowout, public chain revival

What is the hot DeFi nowadays?

DeFi, the full name is "Decentralized Finance", that is, "Decentralized Finance". In the DeFi world, blockchain technology has replaced traditional financial institutions as the core of the financial system, realizing unmanned and automated finance.

In the traditional financial market, financial institutions such as banks occupy a leading position in the market. Take the most traditional lending business in the financial industry as an example. The traditional bank model is to establish outlets, absorb deposits, and then lend out through salespersons, and profit from the spread. In this process, it is difficult for banks to continue to reduce their costs.

The lending application in the DeFi ecosystem can directly connect both borrowers and lenders through blockchain technology to complete lending transactions. Thanks to blockchain technology, DeFi applications only need to charge users a very low fee, which greatly reduces the cost of traditional financial links.

On the basis of mortgage lending services, the DeFi ecosystem has evolved a complex financial system.

For example, on MakerDAO, a mortgage lending service provider, users can obtain DAI, a stable currency equivalent to 1 U.S. dollar, by collateralizing digital assets such as Ethereum. MakerDAO also won the title of "DeFi Central Bank". After obtaining assets such as DAI, DeFi users can continue to invest these assets on lending platforms such as Compound, or enter Uniswap to participate in transactions. These DeFi applications are like Lego blocks, supporting each other, and finally building a huge DeFi ecological building.

In 2020, overseas DeFi projects represented by MakerDAO, Compound, and Uniswap will show a spurt of growth. Data from the data platform DeFi Pulse shows that the market size of the entire DeFi ecosystem has grown from US$700 million at the beginning of this year to US$12 billion.

However, most of these DeFi applications are still built on the Ethereum platform. As the most popular public chain platform for DeFi applications, Ethereum has been "overwhelmed", with high handling fees and slow transaction confirmation issues, which have caused many DeFi practitioners and players to start looking for the next DeFi public chain platform.

02 The public chain competes with DeFi

With the help of DeFi, the public chain has ushered in a new round of golden age. The domestic public chain represented by WaykiChain has also obtained unprecedented development opportunities.

Looking back on the entire history of blockchain development, it is not difficult to see that the public chain, as the industry's underlying application platform, has experienced multiple development stages.

Blockchain technology is born out of Bitcoin's accounting mechanism. Therefore, Bitcoin is also regarded as the first-generation public chain platform. Although Bitcoin is not Turing complete and applications cannot be built directly on top of it, early blockchain developers still created a few applications based on the Bitcoin blockchain, such as Omni.

Since then, the emergence of Ethereum has brought a new concept of "world computer" to the blockchain industry. Compared with Bitcoin, the Ethereum platform has stronger performance and a more friendly development environment. Soon, Ethereum became the most popular public chain platform favored by blockchain practitioners, and the era of public chain 2.0 came.

However, the performance of Ethereum is still difficult to meet the needs of DeFi blockchain applications, and the industry's voice for public chain 3.0 is increasing day by day. Since 2018, a new generation of public chain platforms such as EOS, Cardano, and WaykiChain have gradually appeared. Compared with the old generation of public chains, they are more powerful in performance, supporting a higher number of concurrent transactions and faster transaction confirmation speed.

The emergence of DeFi has not changed the fundamental model of the public chain industry, but has only accelerated the iterative upgrade of the public chain. Taking WaykiChain as an example, WaykiChain v3.0 has achieved an average TPS of 4500+ and a peak value of 7800+. In the v4.0 version of the introduction of sharding technology, WaykiChain’s performance is expected to be further improved.

In addition to performance, in order to cater to the needs of DeFi developers, public chain platforms have also begun to improve their application ecology. For example, since the transformation of the DeFi ecosystem in 2019, WaykiChain has successively launched DeFi functional modules such as stablecoins and lending. After the launch of the stable currency WUSD and the governance token WGRT, WaykiChain’s own governance model has also been upgraded from a single token model to a three token model.

At the same time, in order to reduce the development difficulty of developers, WaykiChain v3.0 also introduces WASM (Web Assembly) virtual machine engine technology, which allows developers to efficiently develop safe, reliable and powerful advanced smart contract applications. This virtual machine supports multi-language development, which greatly improves development friendliness.

In addition, WaykiChain has also implemented cross-chain functions, supporting the mapping of digital assets on other public chain platforms such as Ethereum to WaykiChain, allowing users to open up their own digital assets.

Today, DeFi has become an arena for public chain competition. Domestic public chains are rising strongly. In the future, with the joint efforts of public chains and application developers, the DeFi ecosystem will also be radiated with more vitality.

03 A long way to go in the future

Starting from the digital currency mortgage lending business, DeFi has formed a new financial ecology covering all scenarios.

It can be said that with the exception of a few physical businesses that rely more on real-world information, such as credit, DeFi has achieved a full chain migration of traditional financial businesses. Most of the business models that exist in the traditional financial industry have already run through on DeFi. In the future, DeFi is expected to further "out of the circle" and empower the real economy.

The combination of DeFi and the real economy is not easy. How to bind physical assets off the chain to the chain has always been a big problem for blockchain practitioners. Sun Yonggang believes that the current DeFi "out of the circle" problem requires both technological development and institutional exploration.

Technically, DeFi must be combined with new technologies such as cross-chain, oracles, decentralized identities, and the Internet of Things, and mutually influence each other in order to map off-chain assets to the chain. In terms of system, only the guidance of laws and regulations can allow traditional financial institutions and government regulatory agencies to join this market.

In the future, as long as the technical and institutional problems are resolved, blockchain technology can confirm the rights of more physical assets off the chain, and map them to the chain, and circulate on the chain in the form of digital assets.

In fact, at the policy level, the government has begun to gradually and orderly guide and promote the digitalization of assets. For example, in May this year, the Hainan Provincial Department of Industry and Information Technology issued "Several Policies and Measures on Accelerating the Development of the Blockchain Industry in Hainan Province". The "Measures" pointed out that it supports enterprises to explore standards and technical models in terms of asset digitization, digital asset confirmation and protection, digital asset global flow, and digital asset trading.

And Sun Yonggang said to 36 krypton that enabling DeFi to empower the physical industry can significantly reduce costs and increase efficiency in the financial industry: "Whether it is cross-border payment, global trade, supply chain finance or credit investigation, blockchain can be integrated Data flow, information flow, capital flow, transparent transmission process, prevent risks, simplify the transaction process of reconciliation, approval, right confirmation, clearing and settlement, and sharing."

For ordinary individual users, DeFi can also change their financial life. For example, people can get more types of financial services at lower costs.

In Sun Yonggang's view, blockchain has a wide range of financial empowerment. After breaking through the core points, it can quickly penetrate upstream and downstream. In this process, the public chain is more like a channel, which can connect the asset side and the capital side to reach users; at the same time, the specific business scenarios of the financial industry can also operate transparently and credibly on the blockchain stand up. At present, blockchain technology is more suitable for landing in scenarios where the value chain is long, the communication links are complicated, and there are game behaviors between nodes.

Obviously, the combination of DeFi and the real economy still has a long way to go. On October 25, WaykiChain will jointly hold the "2020 DeFi Global Ecological Summit" in Shanghai with 36 krypton, inviting traditional financial institutions, ecological partners, industry leaders, developers, technology enthusiasts, and senior users to discuss together Blockchain decentralized finance hotspots and cutting-edge topics, gain insight into the future development and opportunities of blockchain technology and decentralized financial commerce.

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