On January 13, 2021, Crypto Geek launched the second phase of [Polkadot Ecological Series Sharing Session]. We invited Ericsson, founder of Coinversation enthusiast community, the first synthetic asset project on Polkadot ecology, to come to the community to chat with you about the synthetic asset track on Polkadot. Crypto Geek specially organized this speech .

Here's what to share:

Hello, my name is Ericsson. Thanks to the password geek community for the invitation, I am honored to be the initiator of the Coinversation enthusiast community to chat with you about the topic of synthetic assets on Polkadot.

Synthetic assets have great potential

In the past 2020, the outside world has experienced ups and downs, and the currency circle has experienced a trough in March 2020. I believe that the performance of the entire blockchain industry last year exceeded many people's expectations. In addition to external digital feedback such as currency prices, capital volumes, and circulation pools, in fact, more benefits come from the rapid evolution of various ecologies.

DeFi is sought after, and Ethereum’s DeFi projects this year are very eye-catching, and SNX is a typical example. Then there is Polkadot. After Polkadot went online in July, the entire ecology performed very well, and many new projects were added quickly. Gavin also mentioned in his personal letter two days ago that Polkadot is the second most active DeFi ecosystem after Ethereum. The track of DeFi must be a red ocean, but there is actually a blue ocean track. Many people didn't pay much attention to it before, and it only attracted some attention after the skyrocketing of SNX - it is a synthetic asset.

What kind of track is a synthetic asset?

It is a track that can solve practical problems. It can solve the problems existing in traditional centralized exchanges, such as security, transparency... and after landing, it can quickly establish its real value, and it is reliable in terms of user demand. expected. Almost all financial products in the traditional financial world can be uploaded to the chain to achieve barrier-free transactions, so its imagination is very rich, and the reality is also accessible and achievable. Such a track is a very high-quality track. Mable, the executive director of the well-known investment institution Multicoin, also mentioned the track of synthetic assets at the end of the year. Synthetic assets include not only native on-chain assets, but also stocks that can be bought on decentralized derivatives exchanges.

And such a track will definitely blossom and bear fruit in various ecology, because there is a supply and demand relationship.

Then, it is nothing more than to see which ecology is more friendly, and which ecology’s tolerance and foundation are easier to provide development space for the track. The most typical synthetic asset project is Synthetix. Its overall performance is also good, and its market value has soared. But in fact, the problem is also very obvious, that is, the problem of gas fees. This problem is actually not a problem of the project itself, but an ecological problem. This problem is also an old problem of Ethereum. Therefore, in the end of the track of synthetic assets, which project can run out and become a star project has a decisive relationship with the underlying structure of the ecology. In this regard, Polkadot's underlying construction and cross-chain mechanism can well solve this practical problem. And this question determines how many users will come to play in the future. From this point of view, the future potential of Polkadot on the synthetic asset track is huge.

Can the synthetic asset project on Polkadot surpass SNX on Ethereum?

The reason why I initiated the Coinversation fan community is out of recognition of the Polkadot ecology and this track.

Coinversation is the first synthetic asset project in the Polkadot ecosystem. First of all, Coinversation is a synthetic asset issuance platform and a decentralized contract exchange—it can be said to be SNX on Polkadot.

From the perspective of Coinversation's economic model, first of all, it can solve many problems in traditional centralized exchanges, such as security issues and transparency issues. As we often say, if the exchange funds are stolen or the exchange runs away, investors will suffer heavy losses. At the same time, the high fee rate of the exchange is also an old pain point; it is also an old problem that the exchange misappropriates users' coins for short selling to manipulate the market. So Coinversation is a decentralized exchange to solve the core problems of traditional financial exchanges.

Secondly, Coinversation has to solve the problems of "traditional decentralized exchanges", that is, transaction speed, depth and liquidity. Through the design of the mortgage pool, the user mortgages the token CTO or Polkadot DOT to generate synthetic assets, and the user's loan accounts for a certain proportion of the debt of the entire system, and then calculates the user's profit and loss based on this ratio. In this way, you do not need to have a counterparty when trading, and you do not need to consider the depth of the transaction, you can form a transaction directly.

The profit model of Coinversation is also very clear. Coinversation's token CTO can get transaction fees. That is to say, our tokens are like the shares of the entire project, and token holders are like shareholders of a company, and can obtain dividends from the transaction fees generated by the exchange.

Therefore, Coinversation is a truly viable decentralized exchange with a clear profit model. Last month, Coinversation also announced to participate in the Polkadot slot auction, allowing more investors to participate in the Polkadot slot auction, which will be more conducive to the future open source and community building of Coinversation.

Before, many community partners came to me and asked me, isn’t the CTO benchmarking against SNX in the future?

First of all, synthetic assets are destined to be a red ocean track in the next three years, and there will not be only one or two projects. Secondly, the coexistence of projects is inevitable, and the development path of each project is different. At this stage, it is indeed benchmarking, but in the future, due to the different ecology, the path must have its own characteristics.

For example: SNX only supports players to use SNX to mortgage. In terms of the richness of collateralized assets, Coinversation is more open. Not only is it friendly to the assets on the original chain, Coinversation is still in contact with the alliance chain. In the future, off-chain assets such as bills on these alliance chains are expected to participate in the entire synthetic asset game as collateral.

Synthetic asset track, which ecology should be heavily warehoused? Polkadot or Ethereum?

The bull market is here, and everyone is actively investing, eager to try everything. Recently, many investors have come to ask these Red Sea tracks, which ecology should I invest in? Who will be the winner between Polkadot and Ethereum?

First, let's compare the two ecology. This is the value flow map of DeFi ecological tokens in Ethereum.

Vertically, user rights and interests are tokenized layer by layer from the underlying assets, and the rights and interests are displayed through different tokens, and finally reserved to the top layer to meet the various transaction needs of users. Horizontally, decentralized exchanges and language machines run through the basic application modules of all projects. Decentralized exchanges provide token exchanges, and oracles provide price mechanisms for each DeFi protocol. It can be said to be an ecology with rich dimensions.

Just looking at the fields of mortgage, lending, trading and synthetic assets, a large number of star projects have emerged on Ethereum: mortgage project MakerDAO, lending projects Aave, Compound, DEX project 0X, asset synthesis Synthetix, the market value has grown rapidly, Especially SNX can be said to be crazy. The market value of the oracle project LINK has also ranked 10th, and it is also on the express train of DeFi. LINK, MakerDAO, Kyber and 0X have been launched in 2017. They are the foundation of DeFi. Therefore, the reason why the DeFi track is so hot is not that it broke out for no reason, but that it is based on the construction of track infrastructure in the past 3-5 years.

Let’s look at Polkadot again. The picture above is an overview of Polkadot’s ecology.

imToken, Cobo Wallet, etc. are all included, but these projects basically exist in the ecology of each public chain, and are not exclusive to Polkadot. In terms of ecological development maturity, there is a considerable gap between Polkadot and Ethereum. But this is a matter of time difference, Polkadot has only been online for half a year.

Polkadot is such an excellent public chain, both in terms of technical framework details and implementation ideas. I even think that Polkadot's technical implementation framework can surpass Ethereum. It realizes the expansion of the blockchain by bridging heterogeneous blockchains and communicating with other blockchains through parallel chains. If you look at it from the perspective of Web 3.0, this is a unified idea. In terms of technical implementation details, review Gavin Wood's past experience. For example, after repeatedly pulling Ethereum out of deep pits, it can be predicted that Polkadot’s technical implementation details are likely to be better than Ethereum’s.

Looking at Gavin's persistence and pursuit of decentralization, there is a high probability that the foundation of this ecology is very solid. The concept of Web3.0 is that the next-generation Internet must be an Internet based on decentralized protocols. At the same time, the Polkadot team is conducting a large number of on-chain governance explorations. For example, in order to solve the problem that the number of voting results may not be 100%, the setting of adaptive voter bias is adopted; the time-locked voting mechanism is introduced to allow token holders to increase the voting weight of some of their proposals; there is also a mechanism we are familiar with council mechanism, etc. These are Polkadot's bold innovations in governance mechanisms. It reflects Polkadot's absolute insistence on the underlying logic of decentralization.

It can be said that the pursuit and understanding of decentralization is the core of the development of the public chain, which determines what framework the public chain adopts, what technology is implemented, and what kind of ecology is shaped. The technology of many teams is very good, but due to the deviation of the team's understanding of decentralization, the project deviates. For example, EOS is typical.

Therefore, looking at the entire public chain field, the current competitor of Ethereum is basically only Polkadot. And who will lead the way in the future? It also depends on the implementation progress of Ethereum 2.0, which will become the biggest challenge for Polkadot in the future. Only by running fast enough do you not need to chase or look back at your opponent. The underlying foundation of Polkadot's ecology is good, but because of the late start, many underlying infrastructure applications need to be built quickly in order to lay a good foundation for projects on various tracks in the later stage. For the Polkadot ecosystem, the infrastructure construction in the next 3-5 years is very important. On the one hand, it is necessary to quickly develop good technology; on the other hand, it is necessary to attract more projects to settle in the ecology, and jointly build a foundation for future projects to do the underlying construction.

At this stage, although Web2.0 looks like a big mountain, from the perspective of the overall ecological layout, governance mechanism and overall development, Polkadot is still very promising in the next three years.

So from my logic, ecology is not a game of choosing one or the other, but choosing a valuable track based on value. So you ask me whether to vote Polkadot or Ethereum? Then I want to say, vote for both. These are two big ecosystems. In the ecology, we should focus on the track. I only vote for the track with real value.

This is why I personally started the community of Coinversation enthusiasts. First of all, I am optimistic about the Polkadot ecosystem, and at the same time believe that the track of synthetic assets is a foreseeable future. So I am very optimistic about the Coinversation project, and I also hope that more people will join in and become a member of the community.

As for many small partners asking me which ecology will become an oligarch-it depends on the core issues of each ecology and the growth rate of the project. But there is no doubt about the unlimited potential of the track of synthetic assets.

The event was sponsored by Crypto Geek, co-hosted by TokenClub and Coinversation, with media support including Jinse Finance, Carbon Chain Value, Mars Finance, Deep Chain Finance, , Bolian Finance, Blue Fox Notes, Chain Catcher, Land-Based Research Society, etc.

In addition, Bihu, Chainnode, Encryption Pavilion, Lichang, polkadot.club, and blockchain Jingwei Tribe have provided us with community support; Patract, CANDAQ, CRUST, DARWINIA, Bandot, Stafi, Equilibrium, Zenlink, Manta, BiKi, CHAIN ​​CAPITAL, Whale Exchange, HOTBIT, Crypdot Capital, SATOSHI'S ANGELS, DADA, Peer-to-Peer Technology, Map and other institutions also provided strong support for this event.