This time the bull market cycle will be much longer than before, and the development of DeFi is accompanied by the entire bull market cycle, and the TVL of the entire DeFi market accounts for an increasing proportion of the total value of the crypto market. Where are we in the bull market now? What role has DeFi played in this cycle? In the future, in addition to liquidity mining, what other changes may DeFi have? What's next for DeFi?
On the afternoon of April 22, in order to discuss these issues with everyone, BlockArk & ArkStream Capital and Odaily co-hosted the "Bull Cycle of Long Run Ascending - ArkStream Capital Brand Launch Conference" to analyze the past and future of the encrypted digital currency industry.
At the round table "From the Age of Farming to the Age of Navigation: What's the Next Stop of DeFi", we invited a number of senior practitioners to talk about the next stop of DeFi. These five guests are: ACoconut founder Daniel Tang, InsurAce Oliver Xie, founder of Protocol, Cheng Hanwen, founder of Litentry, Suji Yan, founder of Mask, and Eric Zhang, architect of Dora Factory. The moderator of this roundtable forum is Mo Ke.
Dora Factory Architect Eric Zhang said: In the middle of last year and the beginning of this year, the market sentiment was still quite low, but a few particularly good DeFi appeared, and the market sentiment rose. Judging from this round of bull market cycle, DeFi should have played a catalytic role last year. Judging from the on-chain indicators, BTC is currently at 50% of the short-to-medium cycle in the past, which is just after the mid-term of the bull market.
Suji Yan, founder of Mask, said that Bitcoin will become like US stocks, more and more like a relatively stable asset. Compared with gold, there will be a relatively large rise and fall, but the price of Bitcoin will rise slowly, because the legal currency is It is constantly increasing. For Bitcoin, there will be no distinction between bulls and bears. Bitcoin will become a multi-cycle asset, not only a brainless cycle of halving, but also a correlation with the macro US stock cycle, currency cycle, and geopolitical cycle. become a multi-cyclical asset.
Cheng Hanwen, founder of Litentry, said that BTC will no longer undergo a roller coaster ride from mania to bubble, because more and more blockchain products appear, from the stage of blowing the bubble to the stage of application landing. At this stage, there must be a bubble in the encryption market. The current encryption market is a little crazy, but the degree of madness is still a lot of important infrastructure, applications, or blockchains after the bubble dies a little bit. project.
Oliver Xie, founder of InsurAce Protocol, said that during the wave of DeFi boom that started last summer, most people just participated in liquidity mining of various projects. From the perspective of the project side, liquidity mining is a good way to issue tokens. Secondly, for the project business, liquidity mining is a very good incentive method, which is similar to traditional Internet companies to a certain extent, and the entire business is motivated through such liquidity mining projects.
Daniel Tang, founder of ACoconut, said that so far, the most attractive and productive part of DeFi is its composability. The same thing we are doing now, how to further explore in terms of organization. In the next step, we think that some protocols will settle and stabilize. The trillion-level agreements discussed today will settle down and become infrastructure. We think these underlying protocols will be encapsulated into assets and entered into the next protocol.
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Mo Ke: We believe that the bull market cycle this time will be much longer than before, and the development of DeFi has been accompanied by the entire bull market cycle. AMM DEX, decentralized lending and other products have locked a large number of on-chain assets. The TVL of the entire DeFi market is in The proportion of the total crypto market value is also increasing. Where do you think we are in the bull market right now? What role has DeFi played in this cycle?
Oliver Xie: I think this is a very good question, and I completely agree with this point of view, at the starting point of a long-term bull market. Although we are facing some adjustments recently, from a longer-term perspective, I think this may be the starting point for the next bull. Our project is for insurance, and there are various insurance needs. Recently, I have come into contact with some institutional investors. Many traditional funds have also begun to enter the DeFi field and the cryptocurrency field. They have such needs. If the starting point of this round of bull market is that many funds entered the market to promote Bitcoin and encryption activities, I think this kind of institutional entry is still continuing, and some institutions continue to join, and I believe the bull market will continue. At the same time, because of the continuous implementation of various new projects and new ideas, and the continuous development of the team, we are still at the beginning of a long-term bull market.
Cheng Hanwen: Many people have been asking us what stage the bull market has reached. Everyone always thinks about this issue based on the transition from the bull market to the bear market in 2017-2018. The process from fanaticism to bubble is due to the emergence of more and more blockchain products, from the stage of blowing the bubble to the stage of application landing. At this stage, there must be a bubble, and the market is a little crazy now, but the degree of madness is still a lot of important infrastructure, applications, or blockchain projects after the bubble dies down a bit. Therefore, I judge that it is not a process of rapid bubble bursting, but a process of slowly climbing, reaching a high point, and gradually returning to value. According to the current market, I think it is far from reaching the apex of the bubble. As the guest just said, there are still many project parties emerging, and many funds are pouring in. It is not an exaggeration to say that this is the beginning of a long-term bull market, or the rising stage of a long-term bull market.
Suji Yan: We now feel that it is difficult to say what it is like. I think it will become like the US stock market, more and more like a relatively stable asset. Compared with gold, there will be a relatively large increase and decrease. The price of BTC will slowly go up. Go up, because the legal currency is still increasing. There will be more new gains in the future, which are mainly concentrated on Ethereum, so there is no distinction between bulls and bears for Bitcoin. BTC will eventually become a multi-cycle asset, not just a brainless cycle of halving. It will form a correlation with the macro US stock cycle, currency cycle, and geopolitical cycle, and become a multi-cyclical asset. Ethereum and the so-called EVM-compatible chain can represent the operating status of a company, or the index currency of the new Internet Web3.0 industry chain will become a high-quality asset target, and there will be a big increase through the bubble. Here During the period, there will be many long-short games with different opinions, but for Bitcoin, this matter is over, and there will be no more bear markets. This is my personal opinion.
Whether it is for entrepreneurs, investment institutions that have just successfully raised funds, or traditional institutions with extra money to enter, they may need to pay more attention to how Ethereum is doing, or how the various EVM chains that Ethereum is entering. Very interesting indicator. We observe that Bitcoin has reached this goal, and it is unlikely that there will be a so-called bear market in the future. This is my personal feeling.
Daniel Tang: I quite agree with Suji. The definition of a bull market and a bear market should still be the capital pricing cycle under a fiat currency economic system, because it is affected by the macroeconomics of the fiat currency and will produce this cycle, which is the most fundamental bottom layer. There is a big difference between the current market and the previous wave of bull market and bear market cycle. Now more and more assets are not priced by fiat currency, so to analyze the bull market and bear market, you must really look at which economy you are in, and For this economy, does the underlying asset or currency have a bull-bear effect? The BTC and Ethereum mentioned by Suji just now, if you look at them as the underlying assets at the same level, I think they have their own independent economic model. As for how this economic model should go, everyone has different opinions.
Back to this topic, it still depends on how many assets there are in the entire encrypted market, and ultimately it has to be priced by fiat currency. We have also seen that when we say that the market is crazy today, more investments in fiat currency are pouring in, and they will definitely withdraw due to the impact of the economic cycle of fiat currency, bringing this bull-bear effect, so this analysis It should be done in more detail, instead of simply speaking, all are affected by the legal currency cycle. This is my general opinion.
Eric Zhang: In fact, in the middle and beginning of last year, everyone’s mood was quite low, but a few particularly good DeFi appeared, and the market sentiment rose at that time. Judging from this round of cycle, last year’s DeFi is like a catalyst, a bit like the ERC20 Token in the cycle of 2017 and 2018. Everyone can issue a token, which has a lot of inspiration and can design various gameplays. Judging from the indicators on the chain itself, BTC is in the middle of the short-to-medium cycle in the past, or just after the middle of the bull market.
Macroscopically speaking, after the end of Q1, the 1.8 trillion U.S. dollar economic stimulus plan in the United States will usually have a radiation cycle of about one year. The impact of this round of Q1 will last for a relatively long time. If there are no major macro events, the mid-term Should still be no problem. In the long run, the new generation of young people will no longer like gold, and the value preservation of Bitcoin is more attractive to young people. For Ethereum, there are many applications that can be done. Therefore, the entire bull market will be very long and will be a big bull market.
poet：Next, I would like to ask everyone, for most users, liquidity mining is their entrance to participate in DeFi, and it is also their main understanding of DeFi. I would like to ask everyone, what does liquidity mining mean to the project party? Is there any possibility of more expansion and changes in liquidity mining?
Oliver Xie: The earliest participation in DeFi was to participate in the liquidity mining of various projects. From the perspective of the project side, I think liquidity mining is a good way to distribute tokens. In addition to regular distribution, liquidity mining users can Make some project contributions, first of all it is a good way to distribute tokens. Secondly, it is a very good incentive method for business system incentives, which is similar to traditional Internet companies to a certain extent, and the entire business is motivated through such liquidity mining projects. However, user participation is often only the pursuit of short-term benefits; so for the project side, how to do liquidity mining in a long-term, healthy and sustainable manner, while operating and motivating the entire business, and capturing long-term value, This is where liquidity mining needs attention. For the future situation, because the specific business of each project is different, it still needs to be combined with the business direction of your own project.
Cheng Hanwen: Liquidity mining is an entrance in DeFi, and a lot of traffic is introduced from centralized exchanges to decentralized contracts and applications. This has brought about a result that more and more people directly trade with these contracts directly through their wallets, skipping some centralized exchanges, and generate a large amount of data on the chain. The generation of these chain data is very valuable, not only for users, but also for applications, and for those who have provided liquidity in a certain pool in the future, in another pool, there will be more People attract users from Uniswap, which will bring direct competition. In the future, it is possible to airdrop these addresses by directly anchoring directly participating addresses to achieve such competitive behavior. This is just an example.
In the future, through the huge user data on the chain, there may be some on-chain applications that are "according to user behavior". This is a very large value brought by liquidity mining and DeFi, which greatly expands the scope of decentralized applications The scope of application brings a large amount of user data, this is our opinion.
Daniel Tang: I feel now that we are in a relatively good state. First of all, you still need to figure out to what extent your project is suitable for community fair launch, because community fair launch is not a 100% thing, and it is difficult to have a development budget if all tokens are given to the community. What is the vision of the project? How, you have to figure it out for yourself.
Second, what we thought before was to actively identify users, but in the end we found that this was not effective enough, because this is also a relatively centralized method, so what we are doing now is to introduce games between users. It is quite easy to solve the game on the chain by algorithms, which means that we do not participate in it, but only optimize the algorithm. So we now have a very important indicator, the amount of our tokens locked due to the game relationship, which is 2-3 times higher than the amount dug out by mining for a period of time. For our project, I think It is a relatively healthy state, but each project has to find its own position, which is quite interesting. To sum up, liquidity mining is definitely a standard configuration for DeFi projects, it just depends on how you use it well. We often want to learn from other people's practices, but when we find that it doesn't work in our projects, we have to adjust, so we are "forced" to be professional.
Suji Yan: I remember that there were several articles at that time about liquidity mining and personal tokens. A free-form development is a good company. In the wave of 2017, we saw a large number of bubble states, and there were various projects. This kind of project consumes a lot of money. It is obviously a stock that everyone can buy equally. As a result, it was cut off, which promoted the state of capitalism. Looking at today's liquidity mining a step further, to improve the fact that it was easy to take money away at that time, through a series of smart contract rules and transactions on the DEX we did, in other words, it is to carry your own shoe bag. I personally agree with it, but there must be many problems. We support all outpost companies that can bring capitalism to the next state.
Recently, we have paid more attention to what will happen if individuals want to issue tokens in the future. We are currently looking at several such projects. My understanding is that once we look at it from this perspective, these seemingly impetuous and noisy signals are actually very clear, and we will feel that this is bullshit, and this is the road to new capitalism. So I think more and more projects whose founders have disappeared will be reborn. I personally hope that a project like our Mask is a project that the founders of the last cycle have to go outside to talk about it. Maybe in the next round, the founders don’t have to go out and talk about it. As long as they invest, mining can go up. This is the new This is my personal opinion.
Eric Zhang: First of all, everyone can choose their own way to issue tokens with various types to improve the status of the project itself. When promoting users in every era, we need a certain method. For example, in the Internet age, VC subsidies may be used. Liquidity mining is the way everyone subsidizes users in the encryption era. Before the emergence of DeFi, the last round and the previous bull market had similar concepts, but after the emergence of DeFi, TVL became a very standardized indicator, a bit like the growth of users of various Internet products through subsidies in 2010, and I I also think this is a very good way. For the project side, it is first necessary to consider which method is better. If everyone else uses the method, the effect may not be so good when you use it again. The more you use it in subsequent projects, the less effective this method will be. Definitely.
But on the other hand, there are various models of nesting dolls or infinite nesting dolls. Based on different DeFi forms, we can design various innovative ways. The first project to design innovative dolls, We should get the biggest dividend of innovation. Now we see that most of the project parties’ liquidity mining refers to Sushi’s approach to some extent. We are looking forward to the emergence of a new liquidity mining model in the next market. .
For us, we pay more attention to the fundraising issues of open source projects and the primary market, and we also have a series of products to do this. For example, in DeFi in the primary market and DeFi in the secondary market, the liquidity mining methods are different. Generally speaking, we are optimistic about liquidity mining, but I think innovation is still very important.
Mo Ke: AMM DEX and decentralized lending have attracted a lot of attention in the market in the past year, but the development of DeFi is far more than that. There are still many new tracks in the market that deserve attention, such as decentralized derivatives, decentralized Centralized insurance, algorithmic stable currency, etc. What other new DeFi sectors do you think may have huge growth potential in the future?
Oliver Xie: Derivatives, insurance, algorithmic stablecoins, etc. are mentioned here. I think the DeFi track has great growth potential in general, especially derivatives and insurance. To some extent, on the one hand, who provides this asset , the other is the asset trading function, and the other is risk management. Since our project is mainly about insurance, we will focus on our views on insurance. Generally speaking, the growth potential of insurance is huge. At present, the opportunities of DeFi have been growing, but the share that can be covered by insurance is very low, less than 2%. People have also talked about it, and they think that 10% being covered is a figure to be expected. There is a huge space in it, and with the continuous influx of large funds, it will continue to grow.
Second, let’s take a look at the traditional market. Banks and insurance are equal, but exchanges will be smaller. Now in DeFi, DEX and lending may be the two largest tracks, and insurance is the smallest. At present, the combined market value of all insurance projects is not as good as the valuation of a top DEX, so in the long run, I think it will always come back of. Because insurance is more on the track of risk management, it has a characteristic of late development, which is a long-term cycle, unlike many projects that can explode in the short term, so overall, the growth potential of insurance is still very large.
Cheng Hanwen: In fact, we are more optimistic about some subdivided financial services, and we are interested in financial services related to insurance and DAO. Regarding insurance, I also agree with Oliver's point of view. Insurance has its own late-commitment characteristics, which are related to the reward and punishment mechanism. With the emergence of some more complex reward and punishment mechanisms in the blockchain in the future, such as some evil mechanisms, or the introduction of compensation mechanisms related to credit lending, more application scenarios and gameplay will be brought. In insurance, for users with different credits, the investment and compensation ratio will be different. We think this is a more promising direction in the future.
Regarding DAO, let me briefly introduce it here. Because DAO is getting more and more popular now, this is a point we have considered very early. After forming some small groups, these groups have some offline relationships with each other, or previously collaborated in the same application. Relationships, they will bring more on-chain lending, such as the experience of using DeFi. If in a small group, everyone forms a relatively close cooperative relationship, and can even carry out lower-cost loans between this small group and DAO, we think this will be more linked to user behavior and user credit in the future part, so we are more optimistic about insurance and DAO.
Daniel Tang: Now I personally think that if we look at the process of traditional financial business, there is a characteristic that professional users and general users are very clearly separated. Secondly, there are many business layers. The entire currency circulation system is distributed layer by layer. Basically, which layer you are in is the position or function of that layer.
So far, I think the most attractive and productive part of DeFi is its composability. The same thing we are doing now, how to further explore in composability? My personal optimism is that it will not be said that all agreements have been unstable. In the future of DeFi as I understand it, some things will be stabilized, and the things that are stabilized will definitely settle and not necessarily disappear, but they will become the underlying things. Not all protocols end up on the same layer. This is our view. For example, insurance, we are also very interested in insurance. For example, we are combining other agreements. In fact, we also really need insurance in it, but we hope that this insurance can be directly combined with our existing agreements, because our agreement itself contains part of the business, and users can directly Check "Insurance" and you're done.
I have been in finance for so many years, and I am not very involved in derivatives. Personally, I think the threshold is quite high, because I think there are many professional things. However, insurance and identity can be combined in assets. In the future, I think there will be more layers of domains, just like burritos, where all innovations will be rolled in and combined with users, and the product itself will be "eaten" in the end, without picking a certain part of it. For users, using Token is the easiest method of operation. This is our vision for the future, and it is the same as what we are doing now.
Suji Yan: I think more than 50% of European and American users will own some digital assets between this cycle and the next cycle, not necessarily digital currency. It may be that they have created their own decentralized accounts with masks, which contain their own social ID, it is likely that this round will be completed, we have been working on this. In addition, we have been preaching and telling everyone that no matter whether you are in the File ecology, Polkadot ecology, Ethereum ecology or which ecology, everyone should not fight, it is meaningless, and you should continuously obtain value from the Internet.
Eric Zhang: Looking at the long-term cycle, I think DeFi has just started, and the traditional cycle is so big, DeFi is still very small. Every track in DeFi has many opportunities. If we see that it is already a track, it means that the competition on this track is already very fierce, and the main growth potential, first of all, all tracks must exist. Among the tracks we have seen, the most The important thing is to find the next 4.0/5.0 product on the track, which is more important.
On the other hand, we need to see some things outside the track, part of which is related to going out of the circle, and on the other hand, it is related to new technologies, because new technologies can create things that we have not thought of before. I think this is very interesting .
From the perspective of the overall development of DeFi, the secondary market is the first, because the volume of the secondary market is very large, but DeFi in the primary market is also very important. We are very concerned about DeFi in the primary market, but we are not a DeFi project. We want to help all open source projects, because open source projects and open source developers are the cornerstone of the entire industry or technology entrepreneurship in the future. Should be open source, or both rely heavily on open source. From this perspective, we can develop various products and tools to serve this group. So I think that DeFi in the primary market is worthy of attention, some update directions, and the next-generation products of 2.0, 3.0 and 4.0 in each track are worthy of attention.
Mo Ke: With the emergence of more and more excellent products, the graphics of Web3.0 are becoming clearer in our minds. Identity on the chain is an important module of Web3.0. May I ask Suji and Hanwen, what is the significance of digital identity for DeFi? How does your project promote the arrival of Web3.0?
Cheng Hanwen:It may start with our application of Web3.0. What was digital identity like in Web 2.0 in the past? All of our identities are on WeChat and Alipay. We can log in to different platforms with such identities, but in the end these identities are stored in centralized servers, in these monopolistic giants. But in Web3.0, we see many wallets appearing as an entrance, but this is not the ideal appearance of Web3.0 in the future. The wallet should not be an entrance. Its role is limited to saving its own passwords with different security levels. key, but the information related to your identity should be stored in other places, and it should not be in the wallet. It does not mean that all of them have to access various DeFi applications, DeFi products and governance products through this wallet. We are still on the way The traditional Web2.0 giant platform road. As we understand Web3.0 and identity, there are different wallets, but the account information in each wallet is related to a certain identity. This identity can be stored locally, such as protected by ZK, or part of the information can be stored on the chain, through Privacy protection and multi-party computing methods record real information through devices and protect user identity information on the hash chain.
Suji Yan：I very much agree with what I just said, the wallet is not an entrance. I think wallets are like infrastructure. Browsers and social networks also have them. The barriers are relatively thin. What is really important, from our point of view, is the integration of blockchain public keys and Twitter accounts. , we also conducted an airdrop to people who bound Twitter at the beginning. This data is very surprising. BNS has been supported by Ethereum for many years, but only 600 people are bound. We now think that there are several things that are promising: one is browsers. We are also talking with mainstream browser manufacturers in detail, and everyone will see something later. In addition, regarding the standard of the Web, it is not the standard of Web3.0, but the standard of the traditional Web. This cryptography needs to be integrated into the traditional Internet. Everyone must have something similar to cryptography, rather than everyone installing one. The wallet or plug-in will eventually enter this state, and the front is just going slowly step by step. This is our idea.
Mo Ke: In 2018, many project parties returned their projects to the community. A token holder has become a conflicting party, and the community complained that this is not as good as centralized governance. What do you think of the value of DAO governance? Or if you think DAO governance is valuable, how did your project transition from centralized governance to DAO governance?
Oliver Xie: For some earlier projects, everyone started with a relatively centralized operation model, but recently some new projects have followed the DAO model from the beginning, from the DAO model to building teams, to financing, to operations . For these new projects, it will be easier to go to this structure from the beginning. On the contrary, I think the current burden is on the earlier projects, which are relatively centralized operations. It will take a long time for these projects to finally land on DAO, so if you want to govern this project completely according to DAO, there may be some problems, resulting in relatively low decision-making efficiency, more noise, and sometimes some development work cannot be carried out normally, so it is necessary to There is a process, a gradual transition to DAO, which cannot be done overnight. I think DAO is a very suitable tool. The biggest advantage is that it is relatively transparent, and it can also prevent corruption and malicious behaviors. However, not all scenarios need to use DAO, especially high-speed decision-making scenarios. Sometimes it is necessary to achieve some balance ,This is my opinion.
Daniel Tang: Take ourselves as an example to analyze. The history of our team, we were a company in 2019, and then turned into a DAO, is related to the changes in our own team. In the beginning, we were a centralized team with some personnel in Beijing. Later, due to various reasons, we became a global team in 2019, with core development in California. In this case, some very important development partners are needed, such as security partners. They have other identities, but they are actually your core members. In addition to our stable core team, other people will also join. It is a long-term optimistic decision, and the best way is to use DAO to motivate them. We are still figuring this out, just like corporate governance, there are many things, we have not fully grasped this law, but we have been a formal DAO since 2019, but there are many practical governance issues, through DAO Unable to resolve.
Second, there are two reasons why we have not introduced it to the market, and we will push it in the future. So far we have not established this DAO. I think this has something to do with our initial investment. At the beginning, there are core people who need to be responsible for decision-making, including that we are not an anonymous team. If you have any questions, you can directly feedback to On our side, we make decisions quickly. But in my heart, including the core team, we are very demanding when we can launch the governance of DAO. At this time, it means that your entire agreement is much more maintenance-free. This is something we have been promoting.
Eric Zhang：First of all, I think DAO is a concept, not a very specific thing. Now the DAO we mentioned is not limited to DAO. For example, in all DeFi projects, DAO governance is required, which involves many tools, and you can deploy it on different chains. If we are talking about a public chain developer community or an open source developer community, it is naturally a DAO. We can understand that behind every github is a DAO, and behind every project is a DAO. We will develop many tools to help you do various things. Such things may involve collaboration and financing of projects, which is a large part of DAO, and we think this is the biggest market in the future, because all projects are initially open source code libraries or collaborative organizations. DAO is more of a concept so far, but when we enter each field, we will see different forms, so for Doraemon, we will eventually provide a facility for developers to openly provide various Various modules, instead of many modules provided by us, although many modules were provided by us at the beginning. These modules can serve DAO organizations in various fields, allowing them to use according to their needs.
Going back to the issue of DAO governance of the project party, we will now see different types of project parties in the market. There are many projects doing infrastructure, which is very important from the perspective of the team. If it becomes a DAO from the beginning, there will be many Noise, there is no way to be developed, whether it is Ethereum or Polkadot, there is a strong voice, and this voice will guide the overall development of the infrastructure. For a relatively large project party, especially if the project party has raised a relatively large amount of money, or the project party is doing large-scale infrastructure, I think it should not be completely in the form of DAO, but should be decentralized combined with centralization.
Generally speaking, the initial team is relatively centralized, while the later team is relatively decentralized. If we now look at the spectrum of projects in the entire market, we think DeFi projects with dedicated functions should be governed by a completely decentralized DAO. If it is an infrastructure project, it should be a combination of centralization and decentralization.
