DEFI

【Dapp Pocket】DeFi Weekly Report - Week 2 of June

2020/6/10

Dear DeFi enthusiasts, as the protests continue in the United States, several big names have come out in support, with Brian Armstrong mentioning how cryptocurrency can help. This week, MakerDAO has begun plans to allow real-world assets as collateral for Dai, and has added additional collateral pools for TUSD and USDC-B. tBTC started its staking airdrop yesterday (6/8), where users can stake Ether to mint tBTC and receive KEEP tokens as airdrops within six months. Synthetic asset platform Synthetix has also completed upgrades for Altair and Halite, making progress on both the interface and protocol ends. This week, we had the pleasure of hosting Jeff Zhang, the community lead of dForce, to share the story of dForce.

DeFi (Decentralized Finance) refers to decentralized financial services. In simple terms, it operates similarly to traditional financial services but in a decentralized manner, addressing issues such as slow transaction speeds, high costs, vulnerability to hacks, and potential misuse by governments or organizations in the traditional financial industry. The current DeFi ecosystem can provide interest-bearing loans, shorting assets, high leverage operations, and even unique flash loan services.

Table of Contents

1. Our Perspective | Bridging Blockchain with Real-World Assets? Tokenizing Real-World Assets

Looking at the voting situation of MKR holders, Maker will soon open up Real-World Assets (RWA) as collateral. The two companies about to collaborate with Maker are supply chain finance platform ConsoleFrieght and creator platform Paperchain. The latter can provide royalties for musicians on Spotify. By collateralizing RWA, Maker can obtain significant liquidity from real-world assets, undoubtedly an important connection between DeFi and the real world.

However, collateralizing RWA in the DeFi market will also face new challenges. If a defaulter occurs, since the collateral is not a cryptocurrency, the lender (or platform) cannot directly liquidate the collateral assets through smart contracts. Therefore, asset issuers and custodians are crucial to ensure that the collateral assets are properly stored and can be retrieved by token holders. This area requires further technological enhancement and more experimentation.

Even though bringing the real world into DeFi means new risks, from the perspective of DeFi's popularization, the connection between real-world assets and blockchain is undoubtedly a necessary step forward. It is believed that in the future, we may see anyone being able to use DeFi just like using banking services, such as collateralizing real estate, cars for borrowing stablecoins for daily use; and the entire DeFi ecosystem will undoubtedly benefit from the huge liquidity that these tokenized real-world assets can provide.

2. Highlights of the Week

MakerDAO Considers Accepting Real-World Assets as Collateral

Recently, MakerDAO is voting on whether to diversify its accepted loan collateral further, not limited to cryptocurrencies and tokens, but also including Real-World Assets (RWAs). Specifically, Maker will allow supply chain invoices and future music royalties as collateral for borrowing Dai, these assets will be represented on the Ethereum blockchain in the form of NFTs. Small businesses and artists can convert the borrowed Dai into cash through cryptocurrency exchanges like Coinbase. If approved, this protocol will mark the first application of DeFi to address real-world business beyond the crypto field.

Synthetic Asset Platform Synthetix Upgrades Altair, Halite, Including SNX Liquidation Mechanism, etc.

Leading derivatives protocol Synthetix released a series of upgrades including Altair, Halite last Friday. The updates include many front-end improvements such as Synth Overviews, Debt Trackers, and easy viewing of weekly inflation allocations to liquidity incentives on Mintr. On the protocol side, the Altair upgrade includes SIP 15, 56, 57, affecting liquidation mechanisms, fee differentials mechanisms, and a permanent read-only proxy for the AddressResolver.

Borrow Interest-Free and Quick Loans! MakerDAO Adds USDC-B, TUSD as Loan Collateral

MakerDAO announced on its official blog last Thursday that the community's proposal for adding new collateral has been officially approved, with TUSD (TrueUSD) and USDC-B becoming the latest collateral assets. The variant of USDC, USDC-B, serves as an emergency credit mechanism when liquidity is scarce, such as during large liquidation periods or when liquidating a large amount of collateral, so unless there are serious liquidity issues in the Dai market, USDC-B collateral should remain unused. As of now, Maker Protocol includes six collateral assets, including USDC-B, TUSD, WBTC, ETH, BAT, USDC, etc.

Asset Cross-Chain Solution tBTC Starts "Stakedrop" Event on Monday

Cross-chain asset project tBTC went live on Monday and launched its work token KEEP's "Stakedrop" event. The event will last approximately 6 to 12 months, with a total of 20% of KEEP tokens. During this period, all ETH holders can become validators for tBTC by staking ETH, providing decentralized custody services for asset cross-chain, and after the event, only KEEP token holders will have the opportunity to become tBTC validators.

Band Protocol Partners with Celo Camp to Support DeFi Startups Built on Celo Network

Oracle service provider Band Protocol announced a partnership with Celo Camp, an eight-week training camp designed to help startups better develop their products. Band Protocol will also provide guidance to startups at Celo Camp, helping them contribute to open finance alongside a16z, Polychain, Winklevoss Capital, CLabs, etc.

Other Highlights

3. Data Indicators

The data for this week is from 2020/06/02 to 06/08, with prices extracted around 6:00 PM. TVL refers to Total Value Locked, which indicates how much value is locked on that platform. Data Source: DeFi Pulse.

DeFi Lending Platform Scale

DEX Scale

4. Expert Views

Ryan Sean Adams: Ether is Money, Not Oil

Mythos founder Ryan Sean Adams shared his opinion on Twitter regarding the meme comparing Ether to oil. He stated that ETH is never oil, but money that can be used to buy oil. The storage space of the ETH blockchain is more like oil; Gas is akin to barrels of oil, but ETH is money. "Let memes introduce cryptocurrencies to the world, let's end the meme of oil, that's wrong."

Brian Armstrong: Cryptocurrencies Can't Solve Everything, But Can Bring Economic Freedom to Everyone, Including Black People

Regarding the current hot issue of "Black Lives Matter" in the US, Coinbase founder Brian Armstrong expressed his support and opinion on Twitter. He mentioned that he doesn't believe cryptocurrencies can solve all the world's problems, but one thing they can do is bring economic freedom to everyone, including black people. "Black Americans still face inequality in financial services." he said.

Vitalik Buterin: Cryptocurrencies Can Still Help with Very Important Things

Ethereum founder Vitalik Buterin responded to a tweet from Emin on Twitter. Emin mentioned that blockchain cannot solve the crises of 2020, which contradicted Vitalik's previous tweets. Vitalik pointed out that while Emin agreed that the recent crisis is not financial in nature, he does not think cryptocurrencies can solve these 2020-specific problems. Vitalik then highlighted that beyond the things currently in the news cycle, there are still important things that cryptocurrencies can help with.

vitalik.eth @VitalikButerin

An interesting partial counterpoint to my thread earlier. Agreeing that the recent crisis isn’t financial in nature, but arguing that maybe crypto can’t help with 2020-specific problems, but problems outside the current news cycle where crypto *can* help are still important.

Emin Gün Sirer @el33th4xor

I was recently asked for my views on the economy, recent political events, and whether blockchain has a role to play in social change. This nice piece captures my predictions. Emin Gün Sirer: Blockchain won’t fix this via @decryptmedia https://t.co/rjmQmXPMiE

5. Expert Visit

We are pleased to invite Jeff, the community leader of dForce. dForce is a DeFi company in China, with a total virtual asset of up to $25 million on its platform lendf.me. After its smart contracts were hacked, the hacker returned the stolen assets. Many may not yet understand this company, and believe they have learned a lot from these experiences, so today we invite Jeff to share with us.

Introduce Yourself and dForce Founder Yang Mindao

Jeff: After graduating from the Economics department of National Taiwan University, I traveled around the world and decided to work in Shanghai. After reading the book "Mastering Bitcoin," I became fascinated and decided not to work in traditional finance but to directly enter the cryptocurrency industry. I have worked on cryptocurrency wallets, Staking business, and later joined dForce, where I am currently in operations. dForce's founder Yang Mindao has been involved in cryptocurrency investment, mining, and arbitrage trading since 2013. In 2014, he participated in Ethereum's ICO and subsequent private investments in multiple projects, starting dForce at the end of 2018. Before this, Mindao worked at Standard Chartered and Horizon Ventures, with over ten years of experience in private equity, alternative investments, and venture capital.

Can you explain the Three-Horse Carriage Strategy mentioned in the previous live stream?

Jeff: In building a house in the DeFi ecosystem, the most important thing is laying the foundation (having enough assets); on top of the assets are the basic applications (lending and trading). Assets, lending, and trading are the three horses of the carriage. dForce hopes to establish its own ecosystem in the macro DeFi ecosystem, forming a closed-loop ecosystem among applications, and each application can interact with other protocols in the DeFi ecosystem when split out individually, creating a stronger moat than individual protocols like Compound, Uniswap.

Introduce Asset and Trading Protocols

Starting from developing the asset protocol USDx, USDx is an index-based stablecoin, collateralized synthetically with 35% USDC, 35% PAXO, and 30% TUSD as "component coins" on-chain. The USDx Savings Rate is similar to MakerDAO's DSR, by releasing the liquidity of the component coins behind USDx, increasing the currency multiplier of USDx, individuals looking to borrow can lend out component coins by over-collateralizing; the interest from lending goes to USDx holders, this is the stablecoin deposit mechanism of USR. For detailed explanation on USR, please refer to dForce Improvement Proposal DIP001. Additionally, users willing to take on a bit more risk can utilize Token Market, following the lead of Set Protocol, by tokenizing quantitative strategy tokens through smart contracts, with trades executed on centralized exchanges.

Lastly