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On September 1, the public beta version of Arbitrum, the general expansion network of Ethereum, was officially lahow to buy dogecoin etradeunched. At the beginning of the launch, it was sought after by many DeFi blue chip applications such as Uniswap, Sushiswap, and Curve. In less than two weeks, the amount of funds locked up reached 2.2 billion. The US dollar has surpassed the public chains of Fantom, Heco, Near, etc., and is close to the current two-tier leader polygon.The launch of Arbitrum has become a milestone in the history of Layer 2 development, and it has been praised by many as "finally there is a "true second layer"." The second layer network, or Layer 2 as we often say, generally refers to the second layer of Ethereum. Their operating logic is simply: to reduce the data processing on the main chain by performing calculations or storage outside the main chain , So as to achieve the purpose of expanding performance, but still relying on the status of the main chain security.
In fact, in the early days of Bitcoin, Layer 2 was already a topic that attracted much attention. At that time, Layer 2 was mainly used to solve the payment expansion of Bitcoin. It proposed a side chain solution including state channels and Liquid, RSK, etc. plan.After entering the era of Ethereum, in addition to the sidechain and state channel solutions that have already appeared, a new expansion plan appeared-Plasma, which was the protagonist of the early Ethereum expansion plan, but later, due to the Plasma plan Security issues, as well as the emergence of the Rollup solution and the maturity of the zero-knowledge proof technology, the Plasma solution was gradually abandoned, and the research direction turned to the current mainstream Rollup solution.The so-called Rollup here refers to the collection of multiple transactions under the chain, compressed into a transaction, and then sent to the main network, so as to achieve the effect of saving transaction costs and reducing the amount of interaction. How to ensure the security and authenticity of the data under the Rollup chain, based on the different proof mechanisms, gave birth to two mainstream expansion solutions that we are familiar with-ZK Rollp (zero-knowledge proof) and Optimistic Rollup (fraud proof). Each has its own advantages and disadvantages in performance. As we will introduce later, the Arbitrum launched this time is the latter (subtle differences).Because the era of Ethereum sharding is in the foreseeable future, Layer 2 has always been regarded as the best solution to relay the Ethereum ecology. "The current L2 is approximately equivalent to the state of July to August last year." This is Shenyu's current Layer 2 Judgement of the track.At present, Layer 2 is divided from the width of the application. It can be divided into two categories, general-purpose and vertical. For example, Loopring, dYdX, Synthetix are all vertical applications, and general-purpose ones include Arbitrum, zkSync, etc. It is equivalent to the "Layer 2 public chain". If there is a Layer 2 overlord in the future, then there is a high probability that it will also come out of this field.
As a track that has just begun to rise, Layer 2 has high hopes from many people. Some people think that it will start a new round of "DeFi Summer", and some people think that it will give birth to a Layer 2 comparable to Ethereum. So who has it? This potential? What are the Layer 2 general-purpose projects worthy of our attention?At present, the zkSync network only supports the transfer function, and the supported currencies are relatively limited. It only supports dozens of mainstream currencies such as UNI, DAI, USDC, etc. As the ZK Rollup solution has relatively large technical difficulties in compatible EVM, it must be implemented Like Arbitrum's current features, it is not yet realistic. At the end of last month, the official also postponed the launch of the testnet zkSync2.0 (EVM version) and gradually opened the testnet in three phases, precisely for this reason.Core function: revenue acceleration
Up to now, the main function of QBT is to obtain qScore after lock-up. Through qScore, deposit users can accelerate their deposit income (from the increase in QBT deposit subsidies).This mechanism is similar to Curve's Locker mechanism. Curve's Locker function and economic model consolidate its original competitive advantage and increase the switching cost of liquidity providers and investors. It is a very eye-catching design. However, when the mechanism is applied to a loan agreement, will it still have a good effect? The author remains skeptical about this.First of all, the reason why some people are willing to lock up the position of Curve's token CRV for a long time after buying it is caused by Curve's strong position in the stable asset business chain and the competition for the governance power of Curve by multiple participants. Because governance power on the Curve platform means two core resources: the baton of liquidity and the accelerator of revenue.Since the issuer of stable consideration assets (stable currency, stETH and other pledge certificates and BTC cross-chain assets such as renBTC are all stable consideration assets), they have great requirements on the stability and transaction depth of their operating assets, so they choose Curve to list. Assets and attracting market-making liquidity are very rigid requirements, which creates a strong position of Curve relative to asset operators, which is determined by the business positioning of its Top1 stable asset exchange platform.
In terms of the expansion of asset lending scenarios, the demand from asset operators is far less strong, which has led to a large number of less demanders of Qubit governance rights, and the overall lock-up willingness is difficult to reach the level of Curve.In addition to the revenue acceleration function, QBT currently has no other functional scenarios. The Qubit platform's loan interest spread income does not have QBT's repurchase or dividend mechanism.
On the whole, QBT tokens are currently weak in capturing the overall economic value of the platform.risk controlQubit does not have a very special design for risk control. It basically uses a method similar to the mainstream lending agreement Aave. Each mortgageable asset has two types: LTV (Loan-to-Value) and liquidation threshold (Liquidation Threshold). The main parameters, the former determines the upper limit ratio of funds that can be lent for a fixed-value collateral, and the latter determines when the debt/collateral comes to the ratio, the liquidation window will be opened.However, the current borrowing ratio of all Qubit assets is the same as the liquidation line, instead of Aave's method of using the liquidation line to be higher than the borrowing ratio.
At present, the borrowing rate of most assets on Qubit is 60%, which is slightly higher than the initial 50%. While this reduces the risk, it also reduces the pledger's capital utilization efficiency to some extent, especially the mortgage rate of all stablecoin assets is only 60%. There is still a lot of room for optimization of the overall parameters.In terms of contract security, Qubit only received an audit report from the Peckshield family before it went live in August, which was slightly thin, and the oracle used Chainlink.The total deposits and TVL growth rate of Qubit was very fast since the launch of Qubit. The product's data board function is complete, the product interaction is smooth, and the interface is more beautiful, but overall there are not many innovations. As the currency price continues to fall and subsidies are diluted by funds, the current TVL decline of the project is also very obvious. It is worth noting that, compared to other lending project tokens whose core value source is to capture the cash flow of the agreement, Qubit's tokens are not currently linked to the project's profit. The only function is to increase the deposit of tokens through lock-up. Subsidies, which also caused the intrinsic value of project tokens to weaken, and the high inflation of tokens further aggravated the selling pressure of tokens.Product launch time: not online
Euler is a license-free lending agreement developed on Ethereum founded by Michael Bentley, a researcher at Oxford University. The development company is Euler XYZ. Euler XYZ won the Encode Club’s “Spark” college hackathon in 2020, and subsequently won a $800,000 seed round led by Lemniscap. Other participating funds include LAUNCHub Ventures, CMT Digital, Difference Ventures, Block0 and Cluster. And Luke Youngblood, an influential Coinbase angel investor. On August 25, 2021, the project announced that it has received a new round of investment of 8 million US dollars led by Paradigm. Other investors include Lemniscap and individual investor Anthony Sassano (The Daily Gwei), and Bankless founder Ryan Sean Adams With David Hoffman, Synthetix founder Kain Warwick, Hasu (Uncommon Core podcast).Project Features
In response to the many shortcomings of existing lending projects, Euler has carried out quite a wealth of product mechanism innovations. Due to space limitations, only the key parts are introduced:License-free listing mechanism: Provide a lending platform for long-tail assets
Compared with the current licensing system adopted by mainstream lending platforms, the introduction of assets on the Euler platform does not require a license, as long as the asset has a WETH trading pair on Uniswap V3. Of course, in order to protect users from low liquidity and the risk of violent fluctuations in long-tail assets, Euler divides assets into three categories based on the risk of assets:Isolation layer assets: Users can deposit or lend assets, but they cannot use the isolation layer assets as collateral. In addition, if you want to borrow different isolation layer assets, users need to use different accounts on Euler to isolate different assets Between the risks.Cross-layer assets: It can be used for ordinary lending and cannot be used as collateral, but it is possible to borrow multiple cross-layer assets with one account.Mortgage layer assets: The assets of this layer are similar to those of most mainstream lending platforms. They can be used for ordinary lending, cross-borrowing, or as collateral. Cross-borrowing means that users mortgage assets in one account to borrow multiple mortgage-level assets.By isolating assets with different risk levels, Euler attempts to increase the supported asset classes on the one hand, and on the other hand to ensure that high-risk assets do not affect the security of mainstream assets.Adopt dynamic interest rate model: improve the sensitivity and accuracy of interest rate pricing
This model is similar to the "dynamic interest rate model" designed by Delphi Digital for the Mars Protocol, the lending agreement of the Terra ecology. On the one hand, it improves the sensitivity and accuracy of interest rate pricing, and at the same time, it can obtain higher interest income for depositors and the agreement itself.To put it simply, the interest rate model is adjusted on the basis of mainstream lending agreements such as Aave. By adjusting the fund utilization formula, the interest rate can be more sensitively adapted to the real capital supply and demand situation of the market in real time, instead of the existing mainstream interest rate. The linear method of the model increases the interest rate. This can prevent the occurrence of a loan agreement that can only watch users use low-cost borrowing on their own platform and then deposit to other platforms to obtain high mining revenues for arbitrage. This will cause borrowers to have no incentive to provide loans, and lenders are unwilling The situation of repayment as soon as possible eventually led to the exhaustion of the liquidity of the loan agreement. The dynamic interest rate model is dedicated to solving such problems.
For details of the Euler interest rate dynamic model, please refer to "Introducing Euler" in the reference material.A large number of improvements in the liquidation mechanism: optimization of the liquidation threshold, anti-MEV, internal multi-collateral pool
1. Combine mortgage rate and borrowing rate to customize the threshold of asset liquidationLike mainstream lending agreements, Euler requires users to ensure over-collateralization, that is, the value of assets is greater than the value of liabilities. When the value of liabilities exceeds a certain ratio of the collateral, it will allow the liquidator to liquidate the mortgagor's assets and repay the debt. But in the calculation of debt value, Euler also introduced the concept of borrowing factor. The liquidation threshold of each borrower is tailored to the specific risk profile associated with the assets they borrow and use as collateral. In other words, when the value of the borrower's risk-adjusted liabilities exceeds the value of the collateral, it may be liquidated. Specifically, compared to the original lending mechanism, Euler's mechanism also adds a multi-dimensional risk assessment of liabilities, which further improves the safety margin of liquidation.
At present, the main liquidation incentive model adopted by mainstream lending agreements such as Compound is: the liquidator can purchase the mortgagor's assets with a fixed percentage discount. Under this mechanism, all liquidators face the same liquidation opportunity, and their potential profit percentages are the same, so they can only compete for liquidation opportunities by increasing Gas, where the high MEV value (Gas cost) becomes the liquidator’s The additional cost also increases the risk of the system. On the other hand, for mortgagors, the fixed asset discount auction ratio also allows them to lose the opportunity to lose a lower liquidation penalty.In response to this problem, Euler’s plan is to use Dutch auctions in liquidation, which can ease the joint bid of liquidators and may also obtain lower asset liquidation losses for mortgagors. At the same time, Euler also provides a discount acceleration mechanism for the collateral provider, so that he is eligible to conduct self-liquidation before the liquidator conducts the Dutch auction and reduce the mortgagor's loss. The above two measures are to restrict miners from grabbing excessive MEV fees in the liquidation, so as to improve the overall security of the system in the liquidation storm.In order to further reduce the transaction cost of liquidators in liquidation, Euler also borrowed the stable pool model pioneered by the Liquity protocol and expanded it into a multi-collateral stable pool form, allowing lenders to provide liquidity to the stable pool of each loan market. Support liquidation.Liquidity providers in the stable pool earn liquidation collateral rewards by depositing eToken (a deposit certificate of the Euler protocol, similar to Compound's cToken). When the liquidation is in progress, the liquidator directly uses the liquidity from the stable pool to repay the debts of the borrower, and will proportionally reward the liquidation collateral obtained to the stable pool, that is, the lender can eventually replace it during the liquidation period. Passive exchange of currency into liquidation mortgage assets.
For example: Euler provides a stable pool for the USDT that lends assets. The lender who is willing to participate in the stable pool can deposit their own USDT deposit certificate eUSDT into the stable pool as the counterparty of the liquidator, so that the liquidator is auctioning After obtaining the mortgaged assets, the mortgaged assets are exchanged to the deposit users of the stable pool at a discounted price (after deducting their own income), which is equivalent to that the users of the stable pool purchase the collateral at a discounted price.Compared with Liquity which only supports the LUSD stable pool, Euler's multi-token stable pool contains specific types of tokens that have not been disclosed, but it is believed that it will still be based on stable currencies or mainstream currencies.
The advantage of adopting this mechanism is that the agreement believes that when the borrower reaches the liquidation threshold, the liquidator can use the internal liquidity source to immediately liquidate, without the need to exchange assets from a third-party trading platform, which greatly eases the liquidator When the market fluctuates sharply, the internal clearing price is inconsistent with the external platform price, and the high transaction slippage causes the liquidator to lose or fail.In addition, Euler does not intend to use an external oracle, but uses the time-weighted average price (TWAP) of assets on Uni V3 and WETH to measure the ratio of assets to liabilities.
In the information that Euler has released, it has not disclosed the total amount of its governance token Euler, the distribution method, and the unlocking time. But it has made a preliminary outline of the functions and scenarios of its tokens. Euler will follow Compound's governance paradigm, and its governance functions include the ability to determine the level of assets, important parameters of the agreement, and the framework of governance itself. In addition, Euler also has a Vault mechanism, which can ensure the security of the agreement through staking.Since the product has not yet been launched, the risk parameters of project assets and other information have not yet been disclosed. In terms of contracts, Euler has officially disclosed three contract security partners, including Certora, Halborn, Solidified, and ZK Labs (the two collaborated to issue reports), and they have obtained two contract audit reports. Since Euler has introduced more innovative mechanisms, the amount of native code is also large. The issue of contract security is the top priority, and the team still attaches great importance to it.
Euler is committed to becoming a Uniswap in the lending field, providing lending liquidity and composability for more long-tail assets, and has a strong investor background. The agreement has introduced many innovative mechanisms to address the shortcomings of the current lending agreement, but since the agreement has not yet been launched, the practical effects of these innovations remain to be seen. There is still no clear timetable for the launch of the project, but the administrator of the Chinese community Chris (Mr. the well-known encrypted KOL block) said that more news may be disclosed in September.Product launch time: August 17, 2021Beta Finance is a decentralized permissionless lending platform incubated by Alpha Finance. Its feature is that users can spontaneously establish currency asset pools, focus on the long-tail asset market, and focus on scenarios where assets are short-selling.Beta Finance received a strategic investment in July this year. Investors include Spartan Group, ParaFi Capital, Multicoin Capital, DeFiance Capital and Delphi Digital. Generally speaking, the investors have a pretty good background.
1. Unlicensed money marketLike Euler, Beta Finance also pays attention to the long-tail lending market outside of mainstream assets and regards it as the main target market. Users can freely create asset classes that Beta Finance does not currently have to lend out their own crypto assets, but this feature has not yet been opened.
2. Provide a convenient asset shorting experienceThrough Beta Finance, users can short an asset with one click by borrowing. Although users can also lend assets short on other lending platforms, they currently face two problems:
The operation is relatively cumbersome, requiring mortgage assets, lending short assets, and selling short assets to DEX. The cost of time and contract costs are relatively high.Mainstream lending platforms only support mainstream assets, the range of options is small, and the price fluctuations of mainstream assets are small, and the potential for short-selling is insufficient