Find the next explosion point of defi

Fun coin 2021-09-14 15:04:51 阅读数:998

explosion point defi

In the long run , Derivatives trading could become DeFi The mainstream of the world , Even across the cryptocurrency market , Compete directly with traditional finance .

earlier , Many people think that DEX Cryptocurrency transactions are never a substitute for CEX . This simple continuous trading product (AMM) How can it replace Binance perhaps Coinbase Well ? and DEX The handling charge is so expensive , It's bound to fail , Am I right? ?

No , We think , Although at present DEX Not surpassing... In terms of transaction efficiency and cost CEX , however DEX Has successfully proved its value .DEX There may still be... In the next two years Transaction efficiency is not high The handling charge is expensive The problem of , But even so , application AMM Model DEX The total market value of the products has reached tens of billions of dollars , only Uniswap The market value has reached 150 Billion dollars .

that DEX Whether it can surpass FTX Such as centralized exchange giants ? After all, it's like FTX This kind of centralized trading platform has a perfect user experience , Efficient 、 Robust liquidity , And full position margin mechanism , And all day 24 Hourly operation , Provide inclusive services (KYC after ), The user input cost is very low .FTX etc. CEX It should be the most efficient derivatives trading place in the near future .

But does that mean DEX Need to do as FTX As efficient as to attract user transaction volume ? This time we want to avoid some wrong assumptions made by some people before , Also avoid underestimating the advantages of smart contract exchanges .

So what are the advantages of decentralized derivatives exchanges ?

De centralization & Resistance review

Except for safety , Decentralization also means transparency , Open decision making 、 Community leaders , Central institutions are prohibited from abusing their power and even reviewing differences . therefore ,DEX In addition to the cryptocurrency market, there is an overall potential market (TAM), That's it DeFi Derivative , This is more than CEX Of TAM Much more . This part will be discussed later 「 Market opportunities 」 Specific development .

lately ,Uniswap The front-end of the website blacklists some derivatives assets based on regulatory considerations . by comparison ,Liquity ( I hope to give full play to decentralization , Even set up an incentive mechanism to support decentralization ( Innovative design . in order to DEX It can fully release its potential ,DeFi Agreements can be learned Liquity How to do it .

No licensing is required

Derivative DEX It should be non licensable . Anyone can use the agreement to develop new derivatives products and put them on the market , Anyone has permission to use this product . If you want derivative products with specific functions ,DEX It should be like Uniswap That allows anyone to take advantage of  ERC-20 Wait for tokens to carry out arbitrage transactions .

No licensing is required to create a unique derivatives market . and , This is also DeFi Another prerequisite for the exchange to develop business other than cryptocurrency ( The former is decentralization ). as long as DEX Have no license at all , You can trade securities or commodities , Not just cryptocurrency transactions .

Composability :DeFi Puzzle

Although in DeFi Composability is a commonplace topic in , But composability also opens up DeFi Development opportunities beyond . before DeFi Composability in means , Applications on the chain use protocols as infrastructure . Now? , Composability means that the assets on the chain are smooth Cross chain flow .

DeFi After the asset token on the agreement , Can be used on multiple chains at the same time . Compared with a closed centralized exchange ,DeFi The network has higher capital efficiency .

for instance , you are here Maker Up deposit ETH, Casting DAI, take 50% Of DAI Switch to ETH. Use DAI and ETH by Uniswap Provide liquidity , stay Uniswap Get corresponding LP token. stay Maker Pledge LP token, Casting more DAI, stay Uniswap Get on LP token The lever of . Does that sound complicated ?(

DeFi Derivatives can also be combined , Liquidity can be obtained from other agreements . You can AMM、 Loan agreement 、 Revenue aggregators, etc LP token, As a guarantee for derivatives trading .

Besides ,NFT and DeFi Fusion ( It also expands more possibilities . We can use fragmentation NFT token As a security deposit , stay DEX Trading derivatives on . vice versa ,DEX Positions on the can also be through NFT stay DeFi Find more usage scenarios on LEGO . There is no bright one on the market 、 Derivatives focused on speculative trading DEX. therefore , Composable DeFi There's a lot of room for imagination .

Composability : Cross agreement margin mechanism

lately ,Kyle Samani Put forward , In this DEX The winner in the derivatives war will be First support cross margin (cross-margining) The agreement ,FTX The main reason for becoming the largest derivatives platform is that it has a perfect cross margin mechanism .

However , stay DeFi in , Cross margin may become another Money Lego( There will be a middleware / The aggregation layer protocol is specifically for DEX To provide such services ), In the future DEX The business does not necessarily need to develop its own cross margin function .DeFi Money Lego It provides the possibility for the operation of cross agreement cross margin mechanism .

This aggregation layer in addition to cross agreement margin , It can also play the role of aggregator in a broader sense , Help users optimize the price slide 、 Pay capital interest rate, etc . therefore , It can support unprecedented market depth , Let more than one DeFi DEX Twist into a rope with CEX Compete . Besides , It should solve different problems DEX Pricing differences between , And finally promote the transfer of most trading volume to the market with the best liquidity .

DeFi The positive impact of derivatives

Derivatives markets essentially need external information . As shown above , Powerful Oracle It is very important for the development of this direction . therefore , The Oracle service provider will be in the implementation stage DeFi Derivatives are in a good position to monetize growth .

Besides ,DeFi Derivatives offer the possibility of a range of products that were previously impossible . for example ,Lemma ( Aimed at using derivatives DEX To create a decentralized synthetic stable currency anchored to the dollar . Although there are some defects in the design , But its The mortgage rate is reduced to 100%, It still has an advantage over other agreements .

The growth of derivatives on the chain provides opportunities for integration with revenue aggregation agreements , These agreements can arbitrage the difference in capital interest rate , And generate another source of income .

Besides , Derivatives on the chain can increase AMM Liquidity on the platform . Up to now , The role of on chain liquidity solutions in hedging against volatile risks is still very limited . Recent research shows that (  src=””   >

Source: IOSG Ventures; Data Source: Coingecko API

A large trading volume does not mean that derivatives have greater market opportunities . because Virtual exposure and Leveraged trading Why , The pricing power of derivatives exchanges will be weaker than that of spot exchanges . for example ,Coinbase、Binance、Huobi or Kraken Wait until the spot exchange charges 0.1% to 0.5% Between , And futures trading fees will be as low as 0.04%. therefore , From the perspective of the exchange , Derivatives market 1 Dollar trading volume is not like that of the spot market 1 Dollar trading volume is so valuable .

A similar situation applies to DEX. for example ,Sushiswap The pledgor can get a of the total trading volume in the form of dividends 0.05%, and MCDEX DAO and PERP The pledgor will receive Mai v3 and Perpetual Protocol About of the total trading volume in the 0.015%.

We expect , Even in the case of converting the volume of derivatives transactions , Medium and long-term derivatives will also grow into a market several times larger than the spot market . In the medium term , The institutionalization of the industry will increase the trading volume of the derivatives market .

In the long run , The amount of decentralized derivatives , Based on its characteristics of no review and no license , It is possible to surpass the cryptocurrency market , Solve the problems of the global derivatives market .

Simply speaking , Derivative DEX The ultimate development goal is not FTX It's the Chicago Mercantile Exchange . It means in the end DEX It can be extended to more traditional stock market derivatives , Such as agricultural products ( Wheat 、 Live cattle ), And energy derivatives ( Crude oil ) And metal ( Gold and copper ). All these are geographical , in other words DEX It can meet the global hedging demand .

Besides ,DeFi Can bring liquidity to various industries . For example, let traditional finance trade from Monday to Friday , Become a 24-hour transaction , Or monetize illiquid real estate , To increase its liquidity .

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At present, derivatives DEX Industry map

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DeFi Projects in the derivatives market

option (Options)

Most projects are building encryption options , among Opyn、Pods、Hegic、Siren、Primitive Waiting to create ordinary options on the chain ,Thales and Divergence Issued Binary Options ,Ribbon and UMA Combined with their respective option returns to build financial products ,Volmex The implied volatility of encrypted assets is derived from option data ,Shield and Deri Perpetual options have also been issued .

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Options agreement ; Classification according to transaction mechanism  

Interest rate derivatives (Interest Rate Derivatives)

The interest rate swap program is creating interest rate based derivatives , These derivatives allow users to DeFi Bet on the direction of yield or hedge against volatility . Even in the new DeFi field , This direction is also at an early stage , But there are already competitive players , among Swivel Rely on the order book mechanism to promote interest rate swaps ,Pendle and Element Have a unique AMM Design , and Sense use Uniswap v3 As the executive layer .

DeFi Interest rate derivatives

Perpetual contract (Perpetual Swaps)

Last , The biggest market in derivatives is perpetual contracts / Futures exchange . according to The data of ,2020 In, the trading volume of cryptocurrency futures and options reached... Respectively 12 Trillion dollars and 772 Billion dollars , It is the of cryptocurrency option market 150 Many times .

Although the concept of perpetual contract dates back to 90 It was put forward in the 1970s (, But it can also be seen as an innovation in the encryption industry . Because this concept was first implemented in 2016 year ,BitMex Decided to launch permanent futures on its exchange . thereafter , Perpetual contract has become the most popular financial product in the field of encryption , And the trading volume of large centralized exchanges has been increasing .

Considering the obvious market opportunities , Many teams are DeFi Perpetuate the attraction of this track and create new solutions here , Among them, we compared several interesting designs .

 seek DeFi The next explosion point of

Source: IOSG Ventures

Up to now , Only Perpetual Protocol v1 and dYdX Already running on the main network , and Perpetual Protocol v2、MCDEX Mai v3 and Futureswap v3 Waiting for Arbitrum Publish on (  notes :Arbitrum Has been in 9 month 1 The public beta version of the main network launched on the day ,MCDEX V3 It has also been launched for the first time Arbitrum Main network ),SynFutures They are also testing their v1.

Until recently  dYdX Before opening a mining transaction ,Perpetual Protocol Has always been the number one in the growth of trading volume . therefore , We will explore Perpetual The root cause of such a large market share , And understand its development potential .

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Source: IOSG Ventures; Data Source: Coingecko API

Perpetual Protocol Growth analysis

As shown in the figure below , An average user will generate more than 25 A daily trading volume of $million , The peak is close to 300 Thousands of dollars . The highest daily turnover was recorded by 0x1a48776f436bcdaa16845a378666cf4ba131eb0f keep , The account number is in 2021 year 5 month 24 Nissan produced more than 12,000 transaction , Trading volume exceeds 1 Billion dollars .

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Source: IOSG Ventures;

The emergence of users with such a large transaction volume shows that Perpetual It's basically robot trading . To further explore this hypothesis , We can classify the transaction volume according to the transaction frequency , Suppose that if the address trades more than... Every day 100 Time , It's probably a robot .

We divide traders into three categories :

  • The number of daily transactions is less than 10 Time —— Low frequency traders . Generally speaking , This is what they most want to trade users , That is, retail random traffic .

  • The number of daily transactions is 10-100 Time —— Intermediate frequency traders . This is the middle category , Lower than that is the random trading volume , Higher than that is arbitrage bot.

  • The number of daily transactions is 100 Time —— High frequency traders .

As shown in the figure below , High frequency traders account for about... Of the total number of agreements 80%-90%

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Source: IOSG Ventures;

Perpetual Robot trading on

If Perpetual There is no way to minimize the use of Oracle , So such a large volume of machine trading / Quantitative trading is impossible .

vAMM Use the Oracle only once an hour , The Oracle allows the robot to correct Perpetual And other agreements . lately ,Perpetual Protocol Published an article ( And code , Help users run their robots on the platform .

first ,Perpetual Most of the trading volume is contributed by only a few traders .0x1a48776f436bcdaa16845a378666cf4ba131eb0f From the first day, always make sure vAMM The price is accurate .Perpetual On-line Ten days ago , The address continues to generate about 90% Trading volume of .

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Source: IOSG Ventures;

However , Trading is a zero sum game , If there is no other party to trade , What is the transaction motivation of this address ? therefore , This address may be one used only to pull up Perpetual Data and proof vAMM Internal address of the concept .

However , Recent agreement on 0x1a48776f436bcdaa16845a378666cf4ba131eb0f Is much less dependent on , Generally speaking , The contribution of this address does not exceed... Of the total 15%. The number of robots has also increased significantly , Especially in 3 Month and Hummingbot After integration , At present, there are many people every day 50 Multiple Robots compete regularly .

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Source: IOSG Ventures;

Minimize the use of Oracle machines and large robot transactions Perpetual Become DEX The biggest competitor of derivatives . However , The most worrying thing is that they can't attract a larger user base . At present, there is no DEX Derivatives can attract a large number of users , So this track still has a chance to compete .

Perpetual Moving forward from the original design , And get ready for Arbitrum Publish on v2 And use Uniswap v3 As the executive layer . Compared with the original version ,Perpetual The biggest upgrade is DEX License free features Cross margin engine , And become Uniswap v3 The ecological system Part of the benefits , Capital efficiency and a larger retail base are the most important changes .

DeFi The reason why derivatives haven't erupted yet

stay Uniswap Others, such as AMM Under the leadership of mechanism, etc , The spot market has become very prosperous . and DEX The agreements have yet to find the key to opening the derivatives market . At its peak ,DeFi The spot trading volume of the agreement can reach... Of the trading volume of the largest centralized trading market 40%. This is a considerable number , Especially a year ago DeFi Without much attention in the whole industry .

On the other hand , Compared with centralized derivatives trading, decentralized derivatives trading cannot compete , The trading volume of the former only accounts for... Of the trading volume of the latter 0.2%.

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Source: IOSG Ventures; Data Source: Coingecko API 

The decentralized derivatives market is still in its infancy , Most protocols are currently under development , Or just recently launched , Such as dYdX Of Starkware edition . The development process is relatively slow because derivatives are traded more slowly than the spot market or simple tokens swap It's a lot more complicated , This involves a series of risk management , Margin trading , Clearing mechanism and stable price feeding mechanism .

such as ,Synthetix Although early in 2017 It went online in , But it's only later this year that we're going to Optimisim Layer 2 Start futures trading on .Synthetix The founder recently wrote an article -《 Frontrunning Synthetix: A History》( It is a good summary of the challenges that may be encountered in developing a leveraged trading platform .

stay Synthetix Of front 50 An improvement proposal in ,25% Are solving the problem of preemption . stay 2019 In the year , The rush almost made Synthetix from DeFi Disappear from the world , One of the robots had a chance to extract from the failure of feeding 110 One hundred million sETH! not so bad Synthetix The team found and frozen the agreement in time , Avoided worse results . The runner will observe Ethereum Mempool And judge the updated Oracle price of the next block , Then they will use this information to submit a higher gas Transaction costs .

Considering that derivatives trading is a leveraged trading , And derivatives agreements will rely heavily on Oracle , So at this stage , Risk management is almost a difficult thing for many agreements .

The future development of derivatives

Some solutions include reducing the dependence on Oracle when designing protocols , Adapt to current technical constraints or wait for infrastructure upgrading .

Most agreements choose the latter . therefore ,dYdX I chose Starkware,Synthetix I chose Optimism ,MCDEX Wait for the Arbitrum go online ,Perpetual stay xDAI Run it on v1 edition , And prepare for Arbitrum Run it on v2 edition , There are also many protocols in the public chain with low delay, such as Solana Go public .

The main risks

Considering that most derivatives agreements use flow pools and counterparty trading mechanisms , So restrictions In Ethereum   Layer1 Upper The risk of running away Become critical .

Because of its higher throughput ,Layer 2 Low latency of Oracle can be realized , So it's possible to stop the rush . meanwhile Layer 2 It can also support Synthetix and MCDEX The operation of more complex decentralized leveraged trading agreements . Of course , Due to leverage, the Oracle risk of these agreements has also been amplified , Any small mistake or any complex arbitrager playing with the system can cause great losses .

Even if Perpetual v2 Choose active liquidity providers instead of Oracle to improve capital utilization , There is still a risk of loss from arbitrage .

The difference is , stay Synthetix perhaps MCDEX in , The risk is systematic and may affect the whole pool , But in Perpetual in , The risk is limited to individual liquidity providers .Perpetual To what extent can this problem be alleviated , Much depends on what remains to be developed LP Strategy quality . 


The progress of infrastructure and the continuous development of innovative design give us confidence , In the near future , Decentralized derivatives exchanges will slowly catch up with centralized derivatives exchanges , And take its rightful market share .

All in all , In the long run , Derivatives trading could become DeFi The mainstream of the world , Even across the cryptocurrency market , Compete directly with traditional finance . However , We are still at the beginning of the marathon . Although arbitrage is positive for the development of the track , Because they ensure price efficiency and serve AMM Agreements create real numbers , But the final victory is the project that can get the largest user group (, It may be ordinary retail investors 、 whale , It may also be institutional investors seeking to hedge or speculate on different assets .

In order to achieve large-scale application , Composability of ecosystems , And unlicensed listing driven by the community 、 Collateral flexibility, etc , Will play a key role . The consideration of liquidity or capital utilization may be followed by the demand for products . In other words, in the early stage of product development , Derivative agreements should focus more on meeting the needs of the community than on how to maximize BTC Liquidity of transactions . Of course , These factors may become key differentiation features in the later stages of the derivatives competition , It is also the reason to attract institutional capital .

writing :Momir Amidzic,Senior [email protected] Ventures 

thank :

thank Xinshu Dong (IOSG)、Yenwen Feng (Perpetual Protocol)、Liu Jie (MCDEX) as well as SynFutures Valuable advice from the team .

Disclosure :

IOSG Yes Synthetix、Liquity、MCDEX、UMA、SynFutures、dTrade、Thales and Volmex The investment of .

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