DeFi is a concept that emerged in overseas blockchain areas. It aims to boost or even reconstruct the original financial system within a de-intermediary, transparent, open up and inclusive way. 2019 is a yr of rapid improvement for DeFi. In accordance with DeFiPulse data, the quantity of assets locked within the DeFi ecosystem exceeded $1 billion at the start of Jan 2020, which data was almost zero more than a yr ago.
The pioneers of DeFi have conducted useful explorations in stablecoins, synthetic assets, currency markets, on-chain insurance, DEx, etc. Traditional institutional capital such as for example A16Z, Drapper Funds, etc. flashed often, and DeFi has turned into a blockchain world The most obvious learning can be highly likely to be probably one of the most important future directions within the blockchain world.
It is worthy of noting that although DeFi has no shortage of great visions, fascinating narratives and brilliant data, whether it’s the massive liquidation of DeFi’s many agreement products on March 12 or even “close to bankruptcy”, or even the unfortunate People$25 mil suffered by Lendf me not long ago The incident of theft of funds (as of the article, all relevant assets have been recovered and arranged to be returned), indicating that DeFi is still at an extremely early stage, and all practitioners, investors, media and commentators have to be more cautious. Mindset to look at DeFi and assess its future.
You, OmniLAB and Zhongcai Blockchain Research Institute, on the evening of last Fri, Apr 24, invited Cao Yin, managing movie director of the Digital Renaissance Foundation, like a guest at “Omni-Zhongcai Digital Economy Forum” and shared with you Views about DeFi: Re-understand DeFi from underneath, understand its background, compare and analyze with traditional fund, where will DeFi go in the future, and what structural opportunities exist in it.
The Digital Renaissance Basis under Cao Yin is authorized in Estonia and has three workplaces: Tallinn, the administrative centre of Estonia, Helsinki, the administrative centre of Finland, and Shanghai. The primary job is to incubate and spend money on some entrepreneurial teams in the brand new digital economy.
The following is a record of Cao Yin’s shared text. OmniLAB editors have adjusted it without modifying the original purpose, Enjoy~
The general background of DeFi: The arrival of the 3rd financial revolution. Before we start, I will tell you a more interesting case. This is a case in the initial section. Everyone must have played a wager. We contact it a wager. For example, easily demonstrate this picture here, it really is a bet web page. Will human beings land on Mars in 2030?
This is actually an extremely long bet, and you may still find 10 years to visit. So I will never be able to announce the wager until 10 years later. In most cases, you can’t perform such a wager. Why? It really is problematic for you to make sure that you as well as your counterparty are credible within 10 years. Because we usually wager right now, the timeliness will be relatively short.
But there are several risks with this:
Will the dealer really give you the money, best? We contact it a third-party intermediary risk.
Second, if the dealer collects a lot of money, will he discover a way to manipulate the bet?
The bet shown here does not have this problem since it has no third party and no intermediary. You and any immediate counterparty can set up such a wager on the blockchain. So this is really similar to a decentralized wager with no dealer.
In fact, his project is called Augur, and he is actually an extremely interesting case in DeFi. Nevertheless, this is a tool that is even more game-oriented instead of monetary, and you will see more tools in the future, but the features of these equipment are the exact same, that’s, disintermediation, which is the most present in our monetary industry. These important intermediaries, such as for example banking institutions, brokerages, and sellers like this wager, are removed, and then Party A, Celebration B, sellers, customers, shorts, and longs are on the blockchain to decentralize and decentralize. Intermediary, non-trusted methods to complete transactions, issue assets, and some related monetary tasks that people see daily are known as DeFi, Decentralized fund, and decentralized fund. How come its status therefore high, since it is the 3rd monetary revolution.
The financial industry has been too much time and there is no such thing as revolution or reform. Web finance is known as a reform, nonetheless it is still essentially a product to existing monetary tools. The existing Internet finance, such as for example Alipay, is a channel. In the year before last, Alipay’s clearing and arrangement authority was withdrawn to the Central Bank and the Ministry of Finance. Now Alipay is truly a third-party collection tool, and it cannot be known as a third-party transaction at all, as the most significant clearing and arrangement is Take it back to the lender.
So talking about the Internet, our Internet has been more than 30 yrs, more than 40 yrs, and it has actually subverted a lot of industries. The most typical one may be the details industry. As you can see in this image, the above is called Gutenberg’s printing press, right? Gutenberg’s printing press. The Gutenberg printing press actually transformed the road of human knowledge transmission. Following the Internet happens, through Internet equipment like Facebook repeatYouTube, the road of details and knowledge dissemination will undoubtedly be decentralized.
But finance didn’t emerge from these banking financial institutions at the same time because the Gutenberg press. For example, the lender of Great britain, the world’s 1st formalized central standard bank, still works just as as it do in those days, and it is still the same as before. Work the same way, and then enter like a standard bank. For example, banking institutions like Gongnong Zhongjian, in addition to intermediary agencies like brokerage firms, are actually nevertheless working just like the original method, which is no not the same as 100 years ago or even 200 or 300 years back.
The Internet hasn’t changed the financial industry much. Yeah, I know.
You’ll be able to see what the initial financial revolution was? We contact it the emergence of a commercial bank and also a central banking system. In fact, it began from the time of the lender of England. Then your basic assets had been precious metals. We called precious metals as endorsed assets. Bank notice, we contact it banknotes, banknotes endorsed by precious metals, and then the clearing and arrangement institutions for transactions are various clearing houses, such as the London Stock Exchange in those days, or New York bill trading So, it made an appearance very early, about the same time because the Bank of Great britain.
The background is the fact that because of the great discovery of nearby hairdressing, and because of the revolution in navigation technology, it is stated that there’s been a transnational and large-scale trade from Western Europe and the Mediterranean region, Tiongkok, Asia or Southeast Asia, including India and america. Trading, it forms a large-scale blood circulation of these precious metals, but precious metals are inconvenient to pick up, heavy and easy to be stolen.
So what we say is by using the method of bills to supply endorsements for these bills using the credit of business banks. At exactly the same time, the central bank, specifically the formal banking institutions like the Standard bank of England, offers the commercial banking institutions with a cover, and then the commercial banking institutions can issue standard bank bills. So why can banknotes end up being called standard bank note-bank notes.
In fact, this is a title from that era. Most of us demand money in Chinese language. But it is not very precise. Because our contemporary finance originated from the Western financial system, the various brands of “money” in British that cannot be reflected in Chinese language cannot reveal the qualities of “money” in different eras.
Then what is the next financial revolution? We can understand it as something such as an institution just like the Federal Reserve, which uses national credit being an asset, uses national debt as bonds, and socialized debt, created by commercial banks.
Use business and personal credit (mortgage loans, auto loans, etc.) mainly because assets, and then issue such a currency. Then clearing institutions also have shaped long-term and diversified central banking institutions. SWIFT will be between commercial banking institutions and the lender for International Settlements can be between central banking institutions. Then the foreign currency issuing institutions are completely monopolized by the central bank.
In fact, it was mainly after the end of the Bretton Woods system, when Nixon announced in 1974 that america would no more directly peg the dollar to gold, and that the dollar cannot be withdrawn like a bill. The gold stored in america began. Then started to become the era of legal foreign currency with national credit and sovereign credit as assets. In fact, the characteristic of the era of legal foreign currency is the era of debt.
If you understand this foreign currency, foreign currency, and finance, you should know the foreign currency creation system of america. The issuance system is actually extremely interesting. It really is endorsed by your debt of the debtor nation. Take the Ministry of Finance, for example, after the quantitative easing epidemic that people have seen lately. After quantitative easing, the Ministry of Finance issues these unique bonds, and then the Federal Reserve buys these unique bonds to create liquidity.
Of course, it’s easy to say, but the real operation is not that basic. The formal operation involves many times. We contact it credit creation. Then it goes by some taxes, through some central bank instrumental procedures, and then the foreign currency The recovery of this is called the second monetary revolution within the era of lawful currency.
In fact, the credit currencies beneath the 2nd monetary revolution were still relatively younger and had a short history. So Marx has a good stating, currency, which is not really indestructible, can actually end up being recreated and redesigned.
The third financial revolution is called the brand new era of decentralization. The foreign currency issuance mechanism, like the tranny method and management method of financial policy, will undergo fundamental and essential changes.
There is absolutely no sign that the 3rd financial revolution will advance on a large scale, so we are able to first predict it today. What are its characteristics? Currency issuance was monopolized by the central bank, and then gradually became a combined mix of central standard bank issuance in society.
Then this basic asset extends from national debt, social debt, and then to various native digital assets. What is a native digital asset? Resource creation does not come from the physical world, such as for example precious metals such as for example silver and gold, nor would it come from endorsements such as for example national credit.
It actually comes from us, such as for example data, or even the collateral generated by some related network effects. The most typical of like primitive numbers is Bitcoin. The financial value delivered by such a trustless clearing and arrangement network based on network effects forms the basis of Bitcoin foreign currency assets.
Of course, there are lots of other assets, and then the clearing and arrangement institution has changed from centralized ones such as the central bank and SWIFT to the present blockchain and the agreement on the blockchain, which can furthermore be understood as some decentralized Intelligent contracts come and go to complete the clearing and arrangement of these transactions. This is the third financial revolution.
In fact, similar to some situations like this, we are just predicting now, and we have no idea how to go in the future. But what we are able to see lies in the third monetary revolution, which is applied to the existing situation of major adjustments in creation relations and efficiency.
The initial financial revolution was the reference to transnational trade at the moment, then the industrial revolution, corporate organizations, and of course commercial banks and central banks were created accordingly;
The next financial revolution was the U.S. dollar. It was just that america was the dominant one, and then the world got into a globalization. The department of labour of enterprises was based on the country and the department of labor was formulated based on comparative advantages. The global design of big multinational corporations, This is a system that uses national credit being an endorsement and most currencies are anchored to the united states dollar.
Which are the conditions for the appearance of the 3rd financial revolution? I found that many new types of agencies have emerged, such as for example companies like Facebook. Facebook itself does not produce a vehicle, it generally does not produce a fall of oil, let alone rice crops, nonetheless it produces plenty of value.
This value comes from the network effect, it comes from the network effect brought by our participants, so we call it super sovereign. Then your new economy cannot be recognized in the original corporate form. It requires a new foreign currency system and some monetary infrastructure corresponding to the foreign currency system. This is the general background.
The core features and key applications of DeFi Defi is by using open source software and decentralized networks, mainly blockchain, to transform traditional financial products into operations that not require intermediaries and centralized operations. Clear financial agreement.
This feature is transparency, accessibility, and financial inclusion. What can you mean? All of your operations are actually on the chain, which is transparent to the contract. Needless to say, you may make related privacy preparations. For the one who initiated the transaction on both sides, you don’t have to know who it is.
But this transaction is seen. Anyone of it is possible to go to the blockchain and click on the blockchain browser, and then observe when the transaction was initiated and how many devices had been initiated, but who is on both sides of the transaction? I have no idea, it means that the transaction is the monetary user and the monetary process, this is a piece of monetary transaction structure and privacy protection, while making sure transparency.
What is accessibility? That is, as long as you have a network, you can use some of these monetary protocols. It isn’t like now. For example, if you state that you would like to utilize Visa and Mastercard right now, it’s easy to use, but if you, like a Chinese language, open up a Western european/American bank-account, it’s very challenging, let alone something like others. Developing countries; vice versa, it isn’t possible for foreigners to open up an Alipay accounts. If you don’t have a monetary accounts, you can’t really enjoy basic monetary services.
DeFi adopts a financial protocol on the blockchain that does not require review and approval, allowing any consumer, as long as you have a network, it is possible to access simple financial services. Needless to say, it also provides inclusiveness, regardless of international tolerance. Intercourse, inclusiveness.
Then there is another characteristic that’s de-intermediation and decentralization. The decentralization at our degree is actually to remove intermediaries. For example, the recent Bank or investment company of China incident is truly a extremely bad typical case. Bank of Tiongkok acts as an average intermediary and markets futures products to the normal people. Nevertheless, the financial center itself does not have extremely good financial knowledge, let alone whether they have started. With regards to due diligence, they have caused plenty of deficits (I heard that it’s tens of vast amounts of yuan).
This is only a typical, and you can find way too many typicals. For example, before, there was furthermore a futures company, a futures company, along with a company that sold software. The specific title is not described. Anyway, this company specializes in providing a transaction matching system for various futures companies.
It was later on discovered that it was secretly using other’s information to kind transactions. After he recognized everyone’s transactions and everyone’s roles, he maliciously sorted the transactions, and then used the data including transaction sorting and data control to perform ( In fact, it is) cutting leeks to let some individuals liquidate their roles first, some individuals liquidate their roles later, and then make this money by themselves. This is all time for financial institutions.
Therefore, the features of traditional financial institutions are actually intermediary and centralization, and then the issues that arise are the high cost and opacity of executives. Celebration A and Celebration B desire to borrow money in the borrower and the lender. Now you need to borrow funds through the lender. The state does not allow you to make use of these private loans or requires extremely strict control. They are able to only supply the money to the lender, and the lender will bring it to anyone. individuals.
The bank makes a lot of money simply by earning the spread. Whether he should make this spread, we shall not talk about it today, but this may increase plenty of needless intermediary costs, let alone whether he really uses the money in the proper place. Proceed, I have no idea this.
The proper execution of DeFi actually replaces the intermediary agency with an agreement contract. Then, no license is necessary, and there is no threshold. Anyone can join. As long as you have a certification and you possess access to the Internet, you can use your This is known as the contract tackle. Go to the accounts address to straight connect to the contract.
In this way, there is no cost if there is simply no intermediary, and there is no such intermediary cost. At exactly the same time, because of automation and full transparency, you don’t need to worry about your transactions being manipulated, and you don’t have to worry about your put your trust in organization betraying your put your trust in. It’s all straight using the agreement. For interaction, as the code of the protocol is open resource, you can ensure that the logic of the transaction is credible.
Because the code is executed based on the transaction logic, and the code is transparent, it guarantees the trustlessness and disintermediation of fund. Now its fund is what we contact dataization, internetization, and protocolization. You can see that this is a normal structure of the Internet. I won’t get into it today because it will be more of the Internet technologies, but what must i tell you?
The Internet has already been richer now. The apps that are transported or loaded onto it, such as Search engines and other apps, are actually at the top of what we should contact the Xi-level software layer.
Then the first little bit of these protocols is actually the same as these applications. It really is above the transportation layer and hardware layer of our whole Internet network. It is possible to treat it being an software. Its essence is a series of protocols.
The existing main blockchain of Ethereum is actually these protocols. The bottom layer of all decentralized financial protocols is actually underneath layer of clearing and arrangement and the reasonable operation of smart contracts.
In fact, you can view how the scene in the initial row is actually very rich. Here are just some software directions, it isn’t all. Just like the most common transaction, the transaction is actually the earliest bitcoin used. In fact, you can respect it like a decentralized transaction, the first response. Of course, no one will actually go on it now, and very few people will use Bitcoin like a transaction tool and Bitcoin being an investment product.
Now there have been plenty of what we should call digital dollars as a transaction tool, utilizing the US dollar being an endorsement asset, and then issuing 1:1 on the chain. What we call Stablecoin within the blockchain is a stable coin, which is actually equal to the original Place the gold in the lender and then take out the same gold bill, which is actually a digital bill folks dollars. Anyone can actually take the electronic bills in US dollars and trade them for all of us dollars within the issuance of digitalized and US dollar institutions. This means that the buying power of the bill is always there.
Then there is financing, just like the issuance of varied projects, which actually counts mainly because your purchase. You take real money, just bitcoin, ether or those digitized dollars, to take part in some capital. There’s also borrowings. Needless to say, borrowing is the same as lending. It is possible to cut costs or borrow, and you may also borrow. As long as the security is sufficient, it is possible to borrow.
Some applications will undoubtedly be introduced later on. There’s also transactions. You’re decentralized and have no exchanges, and there is no centralized clearing and arrangement institution. Gleam wager on whether human beings can table Mars in 2030. This is a typical bet. .
Then there is asset management. You can buy some asset portfolios in the initial edition, and then it is possible to follow some so-called expense managers, and then purchase their portfolios, and then it is possible to synthesize your personal portfolios and let others go purchase. All this will be open and transparent, and you can find no gray places. Then he provides insurance. Insurance is actually similar to gambling. It is nothing more than buying an odds, buying an odds for a particular event, along with other things.
Then there are a lot of protocols about Ethereum. I believe that I’ve noticed from my buddies who have heard about Ethereum today, therefore i won’t talk about them anymore.
Let me demonstrate that the complete first row of ecological Ethereum has already been very active. The bottom layer of liquidity and transactions in it may be the bottom level product that delivers liquidity. The most important thing is called Uniswap, which is us. It really is known as a decentralized trade. If you are inside, it is possible to business with others lacking any intermediary. In fact, this is really incredible in traditional design. In the event that you imagine, you are in this currency markets. , Its not necessary an intermediary, an trade, or a broker how to business?
You can certainly do it in DeFi on the blockchain. It is possible to trade with customers and sellers straight in the contract. In addition, there are a lot of liquidity agreements such as this, or there are many transaction agreements. And then at the top there are, for example, Compound loans, and then asset management, insurance coverage, stable coins, just mentioned these stable coins-digital dollars, and securities can be issued onto it. Some countries, such as electronic securities registered in america or Malta.
There’s also predictions. I just mentioned that you as well as your challenger can wager on something like a bet. There’s also some actual assets. What can you mean? For example, like gold, it is possible to deposit things such as gold within the custodian of the agreement.
The agreement custodian can help you register within a centralized way, and then puts the corresponding asset data on the chain, and then means that a bill, or a token, corresponds to the next official asset.
So are there actually many of these financial apps that are called convergent apps. He puts the next elements, such as for example predictions or bets, and then makes a bundle with lending, and then makes a bundle using the agreement, and then becomes The brand new protocol combination can be used straight in these apps.
It is equal to some sort of financial anatomist. And now there are lots of ways to play with the combination of the main protocols of these protocols. You can see the bottom layer below. Let’s say it hierarchically. The bottom layer is Ethereum. Zero is listed in the initial reaction, and then Maker DAO can be used as the schedule. Of course, you can find already many other applications.
The aforementioned are some transaction protocols Liquid, and then there are even more application companies. For these things, we visually contact them DeFi building blocks. Exactly like Lego bricks, it is possible to mix each DeFi protocol into a credit card applicatoin.
But there is actually a risk in this. Time ago, a comparatively large project celebration was stolen 25 million US dollars, because hackers got advantage of the combined loopholes within the DeFi protocol, just like you eat cephalosporin. , Ale is fine if you beverage it, but you’ll die if you beverage beer and consume your hair. The hacker got advantage of a loophole of incompatibility caused by the combination of the protocol, and then stole 25 million U.S. dollars, but after more than 50 hrs with the initiatives of the complete neighborhood, he chased the stolen money without the difference. Back, that is also a miracle.
Nevertheless, this incident furthermore reminds all local communities that this is a extremely early industry, that is an immature tool, and customers may not always know the risks inside. So this incident reminded all of our nearby developers that this composability will be good. It really is indeed extremely convenient to make a lot of equipment, but it will also result in some issues that we have no idea. Know this risk.
Therefore, this incident has taken the DeFi industry’s understanding of risk and protection to several steps, which is extremely meaningful, not merely to recover the money, but also to instruct everyone a session, which is extremely meaningful.
Key DeFi Methods & Apps The building block protocols of DeFi just mentioned, I’ll right now introduce some crucial protocols. This is MakerDAO, which is what we contact a decentralized protocol, a stable decentralized protocol. The system of a stable currency is actually like a pawnshop.
What does which means that? In fact, you pledge your precious Ethereum digital foreign currency into the Machine DAO agreement, and then the MakerDAO agreement will give you a standardized asset similar to a bond in accordance with a percentage. The loan is truly a bond, but your bond can actually be used. I bought things elsewhere.
This mechanism is very similar to the treasury bills we used in the 1980s. You buy the country’s treasury bonds and the united states gives you the treasury bills. This treasury bill means that you understand the country’s debt to you, and you may go to the nation using the treasury bills. Claim it back, or you may get the national interest, and the main after the expiration of the original in the future, and then the united states will problem a treasury bill. After you get it, you can go shopping.
In fact, we recognize that this is really a central bank agreement. In this way, everyone can problem their own assets and issue their very own currency, nonetheless it will be 1:1 with the united states dollar. It uses algorithmic mechanisms and Monetary plan to guarantee the peg between the cost of the dollar, we contact it peg.
Then the next cornerstone agreement, known as Compound, is truly a currency market, nonetheless it can also be liked by many people. Most people like to contact it a lending, but it is truly a foreign currency market in essence.
What is this? In fact, the user provides over-collateralized electronic assets, various types and multiple forms of electronic assets, and then enters the substance smart contract pool, and then will take out based on the proportion. In modern times, other styles of electronic assets are launched, and then the assets you down payment in, you In fact, the interest can be obtained. The annualized attention can now achieve about 4%, which is not bad, and it is a bit greater than Yu’e Bao.
Not to mention that many other countries, such as the United States or Japan, have zero or even negative interest rates. Therefore, this kind of positive interest rate is fully open up at the same time, and there is no threshold. This technique of depositing attention on deposits is still very popular. So what is it essentially? It is a kind of products, some sort of currency market.
Where does the source and demand interest come from? Interest on loans and deposits really comes from loan attention. You borrow assets from it, and when you repay the assets, you have to repay the main and interest, and you have to pay off the interest collectively. So this way makes this down payment have interest, this way.
The third basic agreement is called Uniswap, which we call exchange/transaction. In fact, the trading system may be more difficult unless you understand the initial reaction, nonetheless it is actually very simple. It really creates a contract pool that has two assets tied together at the same time.
Then these two assets set up a currency curve, you are the merchandise of both assets of the currency curve, it is constant. You’re equal to 2⊙3=61⊙6 which is also add up to 6. You only need to insight 1 and 3 or abdominal on both sides as an asset, and then the other side changes accordingly;
Then because there is a currency difference in it, additionally, it has an arbitrage, therefore some people will provide work services in it to make sure that you can find two assets here, that is, the value between the two assets of the transaction. Constant and constant value in the market, and then complete decentralization. This transaction sounds more difficult, but if you have used it once, you know that its consumer experience is still good.
The DeFi ecosystem has actually surpassed the restrictions of traditional Web finance. It adopts a decentralized monetary approach, allowing normal people or customers to interact straight with protocols instead of with people. For example, the agreements I just mentioned, instead of getting together with your counterparty through an intermediary.
What are its benefits? The algorithm will be these interest rates. The price tag on the currency is transparent. Then there is no need to worry about making the difference in it. Somebody makes some distinction that must not be produced. Don’t worry. Then there is no need for continuous guarantees, and there is no centralized opponent. At exactly the same time, it is problematic for you to stop it.
This avoids, for example, the sanctions imposed by america or other reasons that make financial services unavailable. Therefore, it is more powerful and proof to censorship than what we should call, and you may rely on some unpredictable push majeure events.
At present, a lot of the DeFi is because of Lending, interest, especially many people have more interest about deposits, such as myself, I’ve saved a lot of money in it. It had been stolen time ago. Everyone was very nervous. When I got up and found that the money was gone, it was stolen. Then I caused the developers locally to figure out a solution. His collective power to get all the money back was very exciting and thrilling. , It is rather interesting, because many people are actually just like me.
Then there are quite a lot of loans. Although you can find fewer debtors than us, there are quite a few people. They lent the money to buy other more assets, which is equal to escalating leverage to make investments. You can see that this data is relatively big now. In per year, almost 190,000 customers borrowed from various DeFi agreements.
Then the lent money is more than the amount. There are actually a lot of interfaces, which we contact wallets. They are able to allow ordinary visitors to down payment funds directly, make use of RMB, U.S. dollars and Japanese yen to down payment funds. Right now, like some companies in america, you can down payment US dollars straight, and then lay down and earn attention. The annualization is almost 2-3 to five percent. It really is volatile and depends on the source and demand of the currency curve.
In fact, it is already a big financial experimentation floor with many new agreements. It mixes these financial companies through the combination of what we should just said to provide people with financial products similar to financial engineering.
For example, in MakerDAO, there are a lot of these protocols derived now. It builds plenty of new protocols based on the root DAI. Then, like Instadapp, they include those different protocols, such as for example MakerDAO and Compound. Liquidity, or decentralization of transactions, is combined by companies that are trading. What ordinary individuals buy or investors buy is truly a combination of these agreements, and then supply users with such a service through a unified interface.
Now the common annual growth level of the DeFi marketplace has been large. Generally, as before year, the regular user growth can go beyond 30 or 40%. This amount is very scary.
We predict that in 2020, the asset size of the complete DeFi marketplace will exceed 5 billion U.S. dollars. You have to know that there is no big company functioning, however, many entrepreneurial projects. This is a very impressive shape. The first response in the future, he may totally subvert and modification the financial industry we traditionally understand.
Evaluation of DeFi software and traditional fund The left pyramid may be the traditional financial industry. You can see in it that it’s really an oppressive one. The very best one is comparable to financial institutions just like the central standard bank. Below the central bank are banking institutions and commercial banking institutions. Below are various financial clients, and then below are the businesses and various companies that want to utilize these financial client services, and then at the bottom are consumers.
Your consumer really wants to use these services. For example, if your consumer wants to purchase assets in the game and buy props in the game, you need the authorization of the game. If you open up an account, if the game needs to end up being compensated, he must obtain The agreement of transaction service providers such as for example Visa, Mastercard or Apple company Pay.
Then, these service providers do not have the authority to very clear and settle, also to have the authority to very clear and settle, they need to obtain those banking institutions that custodial balances. Like JP Morgan, local workers and peasants Tiongkok Communications Construction, and then these banks desire to start financial business, they need to obtain the central bank’s authorization, the central bank allows you to do it, the central bank does not let you open up, and the lender cannot do it. This is so-called oppressive.
Anything that used to be the people must have the final say from the user, but now it really is layers of oppression. However the decentralized monitoring upon this blockchain differs, it really is completely open. Rather, the clearing and arrangement layer is at underneath. And the top layer is truly a variety of software layers, such as for example video games, auctions in this market, social real estate, and donation lottery growth. This is the top layer, therefore below this is a layer-by-layer agreement.
It really is the reverse is user first, the user may be the most significant, everything is allowed by the user under the agreement, what agreement can be done, not otherwise the financial institution is a lender, let you do what you can do , Is like this.
DeFi is truly a big industry numerous applications. Then there are lots of opportunities for entrepreneurship and expense. If you are just an ordinary user, actually, there are lots of opportunities to borrow and acquire attention, or cross-border transaction can offer you numerous functions of traditional financial services.
FAQQ: Will Instructor Cao still make use of Lendf me?
A: I will still be able to utilize it. Because to begin with, I know the team nicely, and this group is still a responsible group. This problem made an appearance before due to the fact they paid an excessive amount of attention to company, and there was indeed a little delay in this technical aspect. So it leads to technical insensitivity.