Produced | Odaily (ID: o-daily)
Produced | Odaily (ID: o-daily)
On September 4th, mainstream currencies such as Bitcoin and Ethereum drove the DeFi sector to plummet across the board. The total assets locked in DeFi have shrunk by nearly 50% directly due to the impact of currency prices, and the decline of ETH has also led to large-scale liquidation of multiple DeFi lending platforms. For a while, DeFi changed from the "antidote" of the currency circle to the "poison" of the currency circle, and the voices of "DeFi collapsed" and "DeFi is cool" followed.
But objectively speaking, there is no problem with the underlying logic of DeFi, but there are too many bubbles in the current DeFi, which are exploited and amplified by swarming speculators. Fortunately, the early collapse of individual projects has promoted the process of DeFi "de-bubble".
So besides the liquidity mining confined to the currency circle, where will the next explosive point of DeFi be?
Odaily believes that DeFi projects should take the initiative to open up the connection between data on the chain and real-world assets, implement the concept of "inclusive finance", and let DeFi tokens have fundamentals, not just a "matryoshka game" of blind incentives.
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"Privacy protection" has become a major constraint for DeFi to introduce real assets
Since its birth, DeFi has been labeled as "decentralized", "open and transparent on the chain", and "no KYC threshold". This transparency is both an asset and a burden. Because "no secrets" is scary for real-world users.
Lily Chao, executive chairman of the Findora Foundation, believes that any transaction in the real world requires privacy protection. Financial applications without privacy cannot be scaled up, and user transactions will be analyzed maliciously. The DeFi ecology on Ethereum is happening frequently.
Findora is positioned on a decentralized financial Internet with a native privacy layer, aiming to protect users' data sovereignty and information security, as well as business secrets and transaction fairness.
"According to our prediction, the next generation of DeFi applications must have the function of privacy protection, and what Findora created is a completely decentralized, non-threshold, inclusive finance with privacy protection. Findora is perfectly customized for DeFi and DAO Decentralized financial infrastructure with high scalability, barrier-free cross-chain assets, and privacy protection for transactions." Lily Chao said.
At the level of technical implementation, Findora's privacy protection technology is applied to two new zero-knowledge proof systems: Bulletproofs (bulletproof proof) and Supersonic.
Bulletproofs were co-invented by Benedikt Bünz, co-founder and director of research at Findora, and Jonathan Bootle. As a type of zero-knowledge proof technology, Bulletproofs technology enables selective disclosure. Users can prove the correctness and compliance of financial transactions without disclosing sensitive information, so it can meet the dual needs of financial institutions for compliance and privacy protection.
Before the emergence of Bulletproofs, zero-knowledge proof technology was computationally intensive and time-consuming. For example, Zcash uses a zero-knowledge proof solution—zk-SNARKs, but the calculation speed of zk-SNARKs is slow, and it is difficult to meet the computing needs of large-scale multi-party. Bulletproofs can reduce the size of encrypted transactions, which can be used for data confidentiality and auditability, so as to ensure that the privacy of consumers and financial service providers is not violated. In October 2018, Monero's hard fork upgrade also used Bulletproofs technology, reducing the size of its confidential transactions by about 80%.
Supersonic, jointly proposed by Benedikt Bünz and Ben Fisch (Findora co-founder and CTO), is a simple, practical and verifiable zero-knowledge proof method. Supersonic's verification proof data is less than 10 KB, and it only takes 7 milliseconds to verify a statement of 100,000 logic gates (a confidential transaction statement requires about 4,000 logic gates, and a completely anonymous transaction statement requires 100,000 logic gates ).
Supersonic and Bulletproofs apply to different statements.
In general, the transaction privacy provided by confidential transactions that are applicable to bulletproof proofs is sufficient to meet the privacy needed in daily life, and can be combined with other blockchain privacy tools to increase privacy (such as combining multiple transactions together) CoinJoin tool). But in cases where users must keep all information completely confidential, transactions can be constructed using Supersonic to deal with more complex statements without loss in speed and time.
Privacy protection is only one aspect of the new infrastructure of DeFi. During the hot period of liquidity mining, the sky-high gas fees and network congestion problems of Ethereum caused headaches for many investors. This has also become a major obstacle restricting the long-term development of DeFi applications.
In terms of scalability of the underlying performance, Findora has also made some progress.
According to Lily Chao, the Findora testnet Forge has been in internal testing for more than 6 months and is running in a good and stable state. After several iterations and upgrades, Forge was officially launched for testing in late August. Now dozens of nodes have participated in the testing of the test network, and the TPS reached 5000+ under general hardware testing conditions.
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Polychain bets on privacy computing, heavily positions Findora
On August 19, Findora Foundation officially announced that it has completed a new round of financing of tens of millions of dollars, led by Polychain Capital, with participation from investment institutions such as PowerScale Capital, family offices and ultra-high-net-worth individuals.
Odaily recently interviewed Polychain Capital founder Olaf Carlson-Wee. Olaf believes that privacy protection will become another popular track in the currency circle after DeFi.
"In the near future we will see more real-world assets transferred to the chain, and privacy protection is an integral part of this process. In 99% of commercial transactions, both parties to the transaction will require the transaction to have Certain confidentiality, without the premise of privacy protection, it is impossible to expect blockchain technology to be used in financial transactions. Findora is a good example, they are the first to realize that effective privacy protection is in the underlying network of blockchain importance." Olaf told Odaily.
From Polychain's investment strategy at this stage, we can see that privacy computing is the track that Polychain has held heavily in the past two years and even for a long time in the future. In Polychain's portfolio, there are a total of 5 privacy projects, NuCypher, StarkWare, Oasis Labs, Origo Network and Findora. Of the five privacy projects, only Findora is a decentralized finance and infrastructure platform with a native privacy layer.
Olaf also introduced to Odaily in detail the investment logic of Polychain’s heavy position in Findora, mainly in two aspects:
First of all, Polychain values the academic background of Findora. The two co-founders of Findora mentioned above, Ben Fisch and Benedikt Bünz, are both academicians of the American Academy of Engineering. Professor Dan Boneh is a member of the Department of Applied Cryptography at Stanford University. They proposed Zero-knowledge proof technologies Bulletproofs and Supersonic.
Secondly, Olaf believes that Findora's network architecture and marketing strategy are moving towards areas that other public chain projects have not focused on so far, such as trustless financial or commercial activities in the Chinese market.
Olaf further explained that by applying privacy technology, Findora hosts commercial activities that require privacy protection, such as direct asset transactions or fund management/investment.
"We believe that Findora will play a greater role in the Chinese market in the future. In China's financial market, many investors lack trust in fund management companies, which greatly hinders the inflow of capital and funds. Findora can provide these fund management companies with 'Proof of solvency', 'auditability' and other features, so that investors can put their money in the hands of these fund management companies with confidence, and the way these funds are managed will become more transparent." Olaf analyzed.
Speaking of the liquidity mining that has been popular in the currency circle recently, Olaf told Odaily that liquidity mining is just an open source social experiment, which will help some early DeFi projects to complete the cold start. However, Olaf believes that in the long run, only by truly motivating those token holders to participate in the ecological governance of the project for a long time can the long-term value of the ecology and the market popularity of the project be maintained.
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Real-world trials of decentralized finance
After the official launch of the testnet Forge, Findora began the social experiment of decentralized finance in the real world.
According to Lily Chao, executive chairman of the Findora Foundation, Findora is currently exploring privacy custody services, automatic market-making foreign exchange transactions, lending, and private equity issuance management systems.
An example application supported by the Findora platform is the Smart Investment Fund (SF), a smart contract-based fund. The fund manager is responsible for managing the fund and deciding where the funds should go, and the flow of all assets is recorded in this distributed network. Using only dedicated zero-knowledge proofs and multi-party computation, the platform's privacy tools enable regulators and investors to ensure fund compliance while guaranteeing the confidentiality of fund participants.
Developers can also create supply chain financial products or DeFi applications on Findora, and introduce as many liquidity providers, leading companies, and suppliers at all levels as possible without any threshold to create a tokenized market. Coupled with Findora's privacy protection technology, each participant does not need to worry about the contract content (such as price and quantity, etc.) as the core business secret being leaked on the blockchain network.
"A large amount of financial data is leaked due to lack of privacy calculations, sensitive information such as personal identity information is stolen and sold, commercial, financial, medical, government, and credit reporting agencies cannot share data calculation results in compliance due to privacy protection regulations... Findora Its core competitiveness is to provide a native and efficient privacy operating system for Web3.0, so as to realize data sovereignty and privacy computing functions on a transparent peer-to-peer network, and empower a new data business model. This is a trillion-level market .” Lily Chao told Odaily.
In addition to the above explorations, Findora is also trying to implement DeFi infrastructure on the platform:
Confidential cross-chain liquidity bridging, in the near future, liquid assets such as Bitcoin and Ethereum can be introduced into Findora for confidential transactions;
Dark Pool Decentralized Exchange (Dark Pool DEX);
Privacy stablecoins;
Private securities issuance platform (confidential transaction);
Automatic market-making liquidity pool and derivatives (swap) engine.
Different from Ethereum and other public chains, Findora has been trying to develop DeFi applications in the direction of commercialization. "Findora's vision for DeFi is to become an e-commerce platform similar to Shopify to release DeFi applications with one click." Lily Chao said.
To sum up, if DeFi wants to get out of the circle and introduce physical assets in the real world, it must first have a privacy protection function. A decentralized financial infrastructure with a native privacy layer like Findora will become one of the best places to incubate the development of various DeFi applications.
