Text | Ratchet Ringer
Text | Ratchet Ringer
In 2020, DeFi has always been the number one hot spot in the currency circle.
Since June this year, liquidity mining has completely detonated the DeFi ecosystem. From Compound to YFI since then, DeFi miners have reaped a lot.
In the eyes of some people, DeFi is becoming the next ICO bubble. Some people also pointed out that there are many hidden risks in the DeFi ecology, and it is facing the test of life and death.
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DeFi plunge
In 2020, there will be hot spots in the currency circle, but the hottest one is undoubtedly DeFi.
According to data compiled by a Twitter analyst, the development of DeFi has exploded in the past few months. In May, June, July and August, the prices of DeFi digital assets rose by an average of 42.9%, 56%, 60.5% and 168.4% respectively. %. Among them, the DeFi concept currency YFII has increased by as much as 2271.36% in the past 30 days.
According to data from Dune Analytics, in August, the total trading volume of decentralized exchanges on DeFi increased by 160% compared with July, hitting a record high for the third consecutive month.
Among them, the decentralized exchange platform Uniswap increased by 283% month-on-month. On August 30, its trading volume surpassed that of the centralized exchange Coinbase for the first time.
On September 2, a data released by Zero One Think Tank showed that in August 2020, a total of 49 financing incidents occurred in the global blockchain-related industries, nearly half of which were related to DeFi.
On the same day, SUN, the official mining project of TRON, was launched, with more than 5 billion TRX locked in less than 24 hours; Pearl was launched, with more than 130 million USDT locked in 24 hours, an increase of 390% at the opening.
"The door to the new world has opened." Someone said with emotion.
But just as the DeFi wave was raging, a pot of cold water poured down——DeFi projects, especially DeFi projects that introduced "liquidity mining", the currency prices began to plummet.
On September 6, the plunge reached its peak. DeFi projects including SAL (salmon), CORN (corn), CRT (carrot), PEARL (pearl), KIMCHI (kimchi) and other currencies have collectively plummeted. Among them, the 24-hour decline of SAL was even as high as 81.41%.
"8 million went in, only 70,000 left." Some players lamented.
Some people believe that the collapse of DeFi is related to centralized exchanges.
"They take the user's coins to mine SUSHI (a popular DeFi project), and then smash it on the decentralized exchange, and then harvest leeks." said Zhang Peng, a player in the currency circle.
For this reason, DeFi players even set off a "96 Coin Withdrawal Movement", calling on everyone to lift the exchange's coins into their wallets. "Otherwise, the next step for these exchanges is to smash ETH and destroy the foundation of DeFi." Zhang Peng said.
Since September 2, the price of ETH has fallen by 28.5% in five consecutive days, while Bitcoin even fell below the $10,000 mark several times.
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“Sushi was mushy”
Among the big crashes of DeFi projects, the most notable one is Sushiswap, a decentralized exchange.
Sushiswap is the DeFi project that has received the most attention recently. It uses sushi as its brand image, and its token SUSHI also means "sushi" in Japanese. In terms of product design, it is similar to the well-known Uniswap. The only difference lies in the "liquidity mining" mechanism.
On Sushiswap, miners play the role of market makers. They can invest tokens in the token pool to provide liquidity for Sushiswap and obtain fee income. In addition, miners can also get additional SUSHI token rewards.
On September 1st, SUSHI was listed on Huobi, OKEx, and Binance. Less than a week after its launch on August 27, Sushiswap’s lock-up volume reached $1.5 billion.
Some players lamented that it was only a matter of time before Uniswap was surpassed by Sushiswap.
However, when the players frantically poured in, on September 5th, the price of SUSHI suddenly plummeted and was cut in half.
The reason for the plunge is also very simple-players found that the founder of Sushiswap cashed out and sold all the SUSHI tokens in his wallet in exchange for about 18,000 ETH, equivalent to nearly 50 million yuan.
Overnight, the Sushi player exchange group turned into a rights protection group. "The project party came out to lose money!" They said angrily.
But it is not easy to find the project party-the founder of Sushiswap calls himself "Chef Nomi", which means "Chef Nomi". His true identity is unknown.
However, the food he cooks is always burnt.
The image of Chef Nomi in the game
Chef Nomi's Twitter avatar is also this picture
After the collapse of Sushi, players in the currency circle also understood the real intention of Chef Nomi in naming this name-he asked players to invest real money, and what he returned to everyone was burnt and zeroed "sushi".
Some players speculated that the real identity of Chef Nomi is Sorawit Suriyakarn, the chief technology officer of the oracle machine BAND Protocol. Both Chef Nomi and Sorawit Suriyakarn later denied the rumor.
According to Forbes, a number of overseas Sushiswap players will initiate a class action lawsuit against Chef Nomi himself, but the latter seems to take it lightly.
"Just because I sold coins doesn't mean that Sushiswap is a scam. I didn't steal anyone's money. I don't know why people think I'm a liar." After cashing out, he also tweeted.
Shortly after Chef Nomi cashed out, he announced the transfer of Sushiswap management authority to SBF, the founder of digital derivatives trading platform FTX. Since then, the price of SUSHI has rebounded. However, the outside world is still not optimistic about the future of Sushiswap.
"Don't think that SUSHI is over when it falls like this. The decline of most liquid mining garbage coins is not cut in half or ankles, but 99% start." On September 5, Jiang Zhuoer, CEO of Lebit Mining Pool, said in a speech Said on Weibo.
"The person who still accepts DeFi liquidity mining garbage coins is the most stupid person with the lowest IQ in the history of the currency circle, not one of them." He said.
The next ICO?
In the eyes of many people, the current wave of DeFi is more and more like the taste of ICO back then.
In August of this year, Coindesk released a chart showing that the total value of locked assets in DeFi has exceeded the funds accumulated by ICO in the same period.
The total value of locked assets in DeFi and
Comparison of ICO accumulation fund trends over the same period Source: Coindesk
On August 14, Blockstream Chief Strategy Officer Samson Mow also tweeted that DeFi is the new ICO.
A trader summed up the similarities between DeFi and ICO: the project party is addicted to issuing coins, players trade frantically, the Ethereum network is severely congested, and handling fees are rising rapidly.
"At present, the DeFi industry must have a bubble, and it also shows similar characteristics to the ICO bubble." Sun Yuan, a blockchain researcher, said.
For example, DeFi liquidity mining projects and ICO projects have the same takeover path:
First of all, the project party launches the project (some project parties also reserve a part of the share for themselves), and they can make money without losing money.
Afterwards, big players entered the market, invested a lot of money, mined instead of buying coins, and obtained project tokens with almost zero cost.
Finally, the tokens are listed on mainstream exchanges, and small retail investors buy tokens to complete the order. Most of them can't escape the fate of being cut out.
But on the other hand, there are obvious differences between DeFi and ICO.
"Compared with ICO, DeFi is more like a popular DAPP game." Sun Yuan said.
Compared with ICO and speculation, DeFi and DAPP have higher thresholds, requiring players to master the use of digital wallets and even have certain financial knowledge.
Therefore, DAPP and DeFi must only be games for a small number of elite players.
But what is worrisome is that recently, many exchanges have launched "DeFi proxy investment" products, players can directly deposit coins to the exchange, and the exchange will invest in DeFi products on its behalf. This just illustrates the bubble of DeFi.
"Just like the ICO proxy investment back then, 9 out of 10 proxy investors were scammers," Zhang Peng said.
In addition, DeFi also has many hidden risks. One of the inherent dangers is technical loopholes.
text""Digging Sweet Potatoes" Crash Notes: Crazy Absorption of 460 Million Dollars, 36-hour Crash"）
The DeFi circle, which believes in "code is law", can hardly avoid such risks completely.
"In my opinion, 'code is the rules of the game' is fine, but 'code is the law' is too extreme." Sun Yuan said, "'code is the law' will make some developers lose their awe of the real law, and it will also make some Players blindly chase risk."
"Chef Nomi has no remorse for his behavior after cashing out." He said, "He did not steal user assets, but just sold his own tokens. These rules are written in the code. But in In the traditional financial industry, this kind of behavior will definitely be punished by law.”
"Sushi" is mushy, and "salmon" is burnt. Entering September, losing money has become a daily routine for DeFi players.
Many practitioners told Yiben Blockchain that with the failure of projects such as YAM and Sushiswap, the DeFi ecosystem has entered the first round of down cycle.
As long as it is a bubble, it will eventually burst.
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