The “POW’ER 2020 DEFI Innovator Conference”, hosted by Mars Blockchain and co-hosted by TRON, was held in Shenzhen on 29th Sep.
The topics of the conference covered 10 major subdivisions in the field of DeFi. DeFi innovation leaders, industry leaders, and first-line investment and research institutions at home and abroad were widely invited to an in-depth discussion about a variety of topics such as the challenges and opportunities in DeFi, investment strategies in primary and secondary markets, DeFi, and NFT encrypted art auctions.
In the morning session, Bytom’s CEO Lang Yu commented that the essence of DeFi has four key points.
These points can be summarized as follows:
1. Unlicensed application services, with the focus shifting from “individual” to “digital assets”;
2. No privacy issues, no data leakage;
3. AMM is a scene that is naturally suitable for blockchain, from “chasing price ups and downs” to “practical applications”;
4. Educating users to truly understand the blockchain, from exchanges to personal wallets, is of great significance.
Here is the a of Langyu’s speech (some contents were omitted):
Lang Yu: Good morning, everyone! Today’s theme is the exploration of the integration of public chains and DeFi. Bytom has been exploring the DeFi field for nearly a year and we continue to make significant progress.
The topic I will talk about today is “The Tao of MOV’s DeFi”. MOV is a DeFi platform based on Bytom’s Layer 2 solution. The Tao of DeFi is more about the explorations, experiences, and lessons we have made in this field.
The first is our understanding of DeFi, and the products in the MOV quadrant that we have proposed. The second is the adoption of products that we have specifically explored, and the third is the wisdom of liquidity mining.
We have recently been exploring liquidity mining and have gained significant experience and insight in the process.
We want to share these experiences and lessons with you, in the hope of opening a discussion and ascertaining how you would like things to evolve into future. People bring inspiration.
The essence of DeFi can be categorized into four main points:
The first is unlicensed application services. DeFi is primarily concerned with the properties of assets. For us, we can know that the wallets only require a private key, not a mobile phone number, or any information about the user that registered it.
The second point brought about by such a situation is that there is no privacy problem. All that is recorded are activities with private keys and there is no use of any personal information. This means that our applications, including our plug-ins and wallets, can avoid privacy issues, particularly in the European and American markets. These kinds of privacy vulnerabilities can be avoided very easily, which is a big consideration in the DeFi field.
Third, AMM is a scenario that is naturally suitable for blockchains. Many people think that Uniswap is the biggest innovation in this regard. However, in my opinion, I think stablecoin trading is the biggest innovation in DeFi. This is because stablecoin trading is a use case that has taken blockchains away from the mere pursuit of price ups and downs. The process has legitimate real-world utility and we will use this scenario when there is a real need for stablecoin exchange, instead of only speculation. This is a big innovation.
Fourth, DeFi has allowed users to understand the blockchain. From exchanges to personal wallets, this evolution in broader market understanding is very significant.
We have proposed a MOV quadrant. We live in a three-dimensional world. We also have a three-dimensional quadrant for the DeFi world. We can see a path for loans, a path for trading, and a path for derivatives. All the coordinate points of the three paths constitute the DeFi ecosystem.
If you want to innovate or build applications in the DeFi ecosystem, you should identify your points within this coordinate field. Furthermore, all applications can fit somewhere within this system so one need only find the corresponding point. If you find that your application has two coordinate points in this coordinate system, then your application is likely to be arbitrage or the business logic in the middle will fail. This is a very valuable lesson that we learned. If you want to innovate and start a business in this field, please have regard to this important insight.
The next point I’d like to talk about is our exploration down the three aforementioned paths. Up until now, we have completed three key developments.
MagnEx is a low slippage order book trading protocol, and SuperTx is an AMM trading protocol. Unlike Uniswap and Curve, we use CFMM (constant function market maker for AMM). There is also a FlashSwap, which is similar to the zero-difference agreement exchange. In the future, we will move further down the paths of stablecoins and contracts. Of course, we will also cooperate with key partners in each field.
- MagnEx, an orderbook trading protocol, matches orders through consensus nodes with all pending orders on the chain — this is our biggest innovation.
- FlashSwap is a supplement to the magnetic exchange. Users can Swap their tokens with market makers quickly and easily.
- SuperTx is our core product. It is an AMM protocol. It now exists as SuperTx V1, which realizes a stable currency. V2 realizes a homogenous asset and V3 we will consider reducing the impermanent loss of AMM. This will make SuperTx an automated model for fund managers to carry out unlimited grid trading strategies on-chain and is the primary direction in which we would like to move towards in the future.
SUP is the governance token and liquidity mining incentive token for SuperTx. On September 17, we carried out corresponding liquidity mining for SUP. The entire asset lock-up in SUP liquidity mining is more than 100 million U.S. dollars. This includes all mainstream assets such as BTC, ETH, BTM, USDT, etc. These assets are all using our cross-chain solution, because MOV is a cross-chain ecosystem. Therefore, assets such as BTC, LTC, etc, can all be crossed into the MOV platform.
Whilst researching liquidity mining, we found the key advantage of AMMs to be obvious — i.e. passive trading. Users can provide liquidity without having to execute additional pending and canceling actions. However, its shortcomings are also obvious. For example, serial transactions are not possible. As a result, there are likely to be some spikes in the beginning, with the number of concurrent transactions potentially reaching tens of thousands.
In terms of the trading experience, the amount of our initial asset injection is critical. If the initial injection is too small, its slippage will become too large and most users’ transactions will fail.
Another key point to mention is that our fees are very low. UTXO’s handling fees need to be competitive so that the user experience is better, the chain is faster, and the governance model should also increase user experience.