August 13, 11:00 am (UTC). Bytom and 8BTC founder Changjia joined the Bitkan community AMA. Chang Jia shared his opinions on how to improve the current Defi ecosystem and the future plans of MOV’s DeFi ecosystem (especially the SuperTx V2 protocol).
SuperTx V2 is a revolutionary protocol for DeFi.
Q1, Is it possible for the scale of DEX to approach or even surpass centralized exchanges (CEX)?
The scale of DEX may never exceed CEX, which is determined by transaction efficiency and cost. The recent surge in scale is closely related to the incentive of liquidity mining. Once the incentive is over, the popularity and transaction volume may decline rapidly. There is a misunderstanding in the industry that DEX will replace CEX, but I personally think that they are more of a complementary relationship than a competitive relationship. For example, some DEXs, such as BancorV2, have launched an oracle-based AMM to avoid impermanent losses. The oracle requires the external price of CEX or other exchanges. Similarly, CEX also needs DEX, such as CEX contract products. If the external price of DEX is used in CEX, then the data is verifiable, and there will be not so many criticisms about the centralized black box.
Q2, What is the current user base of MOV? What is the level in the market?
Currently, MOV’s daily active users are about 1,000, which is certainly not worth mentioning compared to CEX, but it ranks quite well in DEX, ranking among the top five https://www.qkl123.com/ranking/defi. We are confident that the number of users will be the top three in the DEX in the next few months, because of the efficiency advantages of Layer2, and with the improvement of the MOV cross-chain experience, the federal node has completed the deployment of cold wallets, and the scale of cross-chain assets has expanded, especially recently We have launched a web version so that users who don’t like to download wallets can easily cross-chain and use MOV through Metamask.
Q3, You said before that DeFi will switch to “off-chain expansion” solution sooner or later. Why does it say that will be the main battlefield of DEX? MOV is a next-generation decentralized cross-chain Layer 2 value exchange protocol based on the Main Chain + Side Chain architecture of Bytom. What are the unique advantages of this MOV?
Now cross-chain is a hot spot, and many public chains will do cross-chain. MOV certainly has its own unique advantage The first is the integration of crosschain between mainchain and sidechain . We started with a cross-chain in a top-level design. It can be said that cross-chain is a native application of Bytom. So the cross-chain is very smooth, and third-party wallets can easily support MOV cross-chain. Secondly, our side chain is the DPoS+BBFT consensus mechanism, with a limit of TPS of more than 20,000, which can fully meet the performance requirements of DeFi. At the same time, our consensus node is integrated with the oracle node. In the future, we will promote the oracle model that integrates off-chain data aggregation and on-chain governance. After adopting the method of off-chain data aggregation, the use of the oracle will be limited by the performance of the chain, which can reduce costs and improve efficiency. In addition, the on-chain governance method of the oracle machine is used to solve the problem of liability, that is, once an error occurs, it can give a perfect liability and compensation. Finally, MOV is designed in a unified manner for the DeFi protocol and standardizes the three track protocols of trading, lending, and synthetic assets to avoid conflicts between protocols and inconsistent standards.
Q4, Recently, Bytom MOV will launch SuperTx V2（Superconducting Transaction）. What changes will this bring to MOV, and what is its significance for MOV?
SuperTx V1 is aimed at stable currency exchange scenarios, while SuperTx V2 extends the CFMM (Constant Function Market Maker) idea to the exchange between other mainstream coins, innovative coins and stable coins, with broader application scenarios. In particular, V2 introduces the infinite grid strategy into CFMM, making it possible for liquidity providers (LP) to avoid gratuitous losses due to the success of the strategy, and even obtain alpha gains due to asset portfolio appreciation.
In a bull-bear cycle, the SuperTx V2 enables Liquidity Provider (LP) to “cash-out” more BTC in the bull market, and after the bear transfer, it can keep the value-added income of the residence “cash-out”. Similarly, in the bear market, LP can “buy BTC on the bottom”, and can hold these low price BTCs after turning to bull market and wait for the higher Price to “cash-out” again to gain asset appreciation. As shown in the figure, superTx V2 and Uniswap each can help LP obtain the total wealth value at the end of each phase. V2 is at a disadvantage in the first few phases. In the later phases, based on the accurate judgment of the bull-bear cycle, the total value of V2 exceeds Uniswap by a large margin, and LP obtains excess income in addition to handling fees.
I think that the industry’s understanding of AMM (programmed market maker) or CFMM (constant function market maker) will go through three stages. The first stage, (1) price discovery, the constant product market maker project represented by Uniswap, applies the newly issued emerging token. (2) Use money (trading wear and tear) to buy time (liquidity), represented by the Bancor V2 model. Traders exchange service fees for liquidity, while LPs receive service fees. At the same time, the liquidity pool assets are kept consistent with external prices through the oracle to avoid impermanence losses. However, due to the uncertainty of the oracle, the Bancor V2 model has not yet been verified by the market. (3) Asset portfolio, represented by MOV Superconducting V2, treats the liquidity pool as an asset portfolio, and at the same time, the asset portfolio has different trading strategies at different stages in the market (in V2, it is expressed as a piecewise function) LP is equivalent to the investor of the asset portfolio. If the strategy is successful, LP will not only get a return on transaction fees, not only will there be no impermanence loss, but will also get the excess return brought by the appreciation of the investment portfolio. Of course, the failure of strategy will also bring impermanence losses.
Some users may have some questions, I have talked about so many advantages of MOV, but why the growth of active users is not obvious, most of DeFi users are still on Ethereum. In fact, in addition to the cross-chain resistance mentioned earlier, MOV needs to improve more links to achieve the three infrastructures: “water”, “electricity”, and “ventilation”.
“Water” is to expand the number and scale of cross-chain assets. Now the scale of cross-chain assets on MOV is still tens of millions, and there are not many types of tokens supported. Next, we may support mainstream tokens such as Litecoin and BCH, as well as emerging coins such as Polkadot. In addition, as our federal nodes complete the deployment of the threshold multi-signature solution, the scale of cross-chain assets should rise by an order of magnitude.
“Electricity” is to introduce more stablecoin assets. With the increase in the scale of SuperTx V1 transactions, we have gradually become the top four DEXs of DAI, USDT, and USDC. We may cooperate with the issuer of stablecoin to issue native assets on the Bytom blockchain.
“Ventilation” is to reduce the transaction fee on the chain to a minimum. At present, the transaction fee on the Ethereum has accounted for half of the income of the miners. The average gas price of the Ethereum network has risen to 275 Gwei, and the transaction fee for an ERC 20 token transaction has been More than 13 US dollars (https://www.qkl123.com/data/avg_fee/eth), and complex transactions even cost a lot more. As mentioned earlier, the GAS fee on MOV is almost zero, and all DeFi project parties and users can enjoy the dividends brought about by the reduction in transaction costs.
Q5, DEX based on Ethereum generally faces the problem of higher gas. How does MOV solve the problem of high fees?
MOV runs on Layer 2, and the Layer 2 consensus incentive is paid by Bytom foundation to all consensus nodes every quarter, which is equivalent to the foundation paying the gas fee for the side chain, so the transaction cost is almost zero. I believe that as long as users overcome cross-chain resistance, the trading experience on MOV will have a very large competitive advantage.
Q6, Apart from continuing its efforts on MOV, Bytom will have other actions and plans next?
Since we are a mainchain sidechain and cross-chain integrated architecture, DeFi may be a one-dimensional thing for other chains, but it is a three-dimensional thing for us. (1) Sidechain. At present, the protocol innovation on MOV is mainly based on the Layer 2 side chain. The next step is of course to continue to improve our protocol cluster. With the launch of SuperTx（Superconducting Transaction）V2, our on-chain transaction-related protocols have basically been completed, but related agreements such as lending have yet to be completed. (2) Mainchain. In fact, the DeFi innovation of our main chain is also proceeding simultaneously. The side chain is responsible for asset trading, and the main chain is responsible for asset issuance. This means that our main chain DeFi protocol is mainly for asset issuance and synthesis. We plan to integrate asset issuance (IDO) and asset synthesis (minting) into applications so that external developers do not need to write complex smart contracts, but only need to choose the corresponding issuance curve (AMM, CFMM or joint Curve), and set the corresponding parameters to complete the asset issuance. (3) Cross-chain, we will soon complete the deployment of federal nodes and support the cross-chain of more mainstream coins. In the next step, we will support cross-chain and map and issue assets supported by OFMF (Bytom Decentralized cross-chain Gateway) on Ethereum. This means that Bytom and Ethereum will share part of the economic bandwidth.
Q7, How do you see the next evolution and development direction of the DeFi track, and which sectors of the DeFi track are you optimistic about?
In the three DeFi tracks, transactions, lending, and assets are actually developing in parallel, and they all have broad prospects. It’s just that because of liquidity mining, the two tracks of trading and lending are more eye-catching, and the track of assets is relatively calm. In fact, asset issuance and synthesis are quite a potential DeFi track, because transactions and lending are more decentralized than centralized products, and there is no major product-level innovation. But asset issuance and synthesis are the killer applications of blockchain, because it means assets on the chain, which is the ultimate solution for the future blockchain landing. The first is the asset issuance IDO (Initial DEX Offering), which can be the current popular AMM model, which solves the problems of liquidity and price capture. In addition, there will be a joint curve model, as well as an auction model represented by mesa. Compared with the past ICO, there will be leapfrog innovation. The second is synthetic assets. The first relatively successful synthetic asset is DAI. More and more synthetic assets will emerge in the future: synthetic gold, synthetic stocks, etc., and even ETF assets that integrate AMM and synthetic assets, namely, On the one hand, the liquidity pool provides liquidity for transactions. On the other hand, the liquidity pool itself is an asset portfolio ETF, which uses contracts to realize the automatic rebalancing of funds without the active intervention of fund managers.
Q8, ChangJia has been preaching on Bitcoin since 2011. It has been up and down in the crypto market for many years and has undergone many rounds of industry bull-bear conversion. Can you give you some investment tips and suggestions?
You will get what you believe. Don’t blindly chase the hot spot. If you see it right and take the shot, you just need to wait, because if you are right, time is the referee and he is on your side.
Q9, The last question is that the market has recently picked up, and there have been many ten times crypto coins and one hundred times currency. What do you think of this round of market and the next trend?
To be honest, I don’t pay much attention to this wave of liquidity mining projects, and I am not optimistic. Liquidity mining is like taking drugs. After the drug is over, there will be much chaos. Relatively speaking, I am more optimistic about long-term projects like MakerDAO. Of course, liquidity mining also has its enlightening significance, which is to deeply bind the token and DAO to achieve value capture. It’s just that I don’t agree with the current economic model of liquidity mining, because it just overdrafts the future and satisfies the speculative nature immediately. The fundamental problems of on-chain governance and on-chain value distribution are not really solved. Maybe there are better ways to capture value, such as joint curve issuance, coin burn mechanism, etc.