The 2020 DeFi bubble has reached and surpassed the trend of 1CO fanaticism in 2017. According to the latest data of debank, as of August 19, the total lock up value of defi has exceeded $7 billion, and there have been three projects with lock up value of more than $1 billion in the whole market. Among them, maker lock up is worth $1.41 billion, AAVE's is worth $1.13 billion, and curve's is worth $1.03 billion.
The full name of defi is decentralized finance, which is usually translated into decentralized finance in Chinese. This concept was proposed around 2018 and has been unknown before. Until June 15, 2020, compound, the DFI lending platform on Ethereum, launched the "killer" product of "liquidity mining". Through liquidity mining, users can deposit and loan digital assets on compound, and then get comp token rewards in proportion.
With such an operation mode, it is easy to think of the "trading and mining" mode represented by fcoin exchange, which was once popular for a time in 2018. However, different from fcoin's need to constantly provide real gold and silver for dividends, comp is just a so-called "community governance token", without any "ownership value", and the project side of compound does not need to provide any dividend for comp token.
It seems that such a model made out of nothing can not make much waves. However, the virtual currency market, which has been quiet for three years, really needs a heavyweight "story". On June 17, coinbase, the head exchange, announced the launch of comp, which made the price of comp soar to more than $300, and the annualized yield of compound instantly exceeded 200%.
It is worth noting that in theory, as long as there is no hacker attack, the mining income of liquidity mining is an absolute "capital guaranteed income". The funds involved in "mining" are really in the hands of users in the form of smart contracts, and users can choose to withdraw funds at any time.
The 200% annual breakeven income is definitely the most reliable business on the earth, which is not one of them. As a result, it also attracted a large number of high net worth users to rush into compound to make mining profits. With the crazy growth of lock up funds, it further stimulated the price rise of comp, thus forming a "Davis double-click" with the annualized yield, making its lock up volume soar 10 times in two weeks, more than 1 billion US dollars. The market value and lock up volume both surpassed the old king maker Dao and became the most beautiful boy in the defi circle at that time.
With the opening of the "Pandora's box" of liquidity mining, the market's defi projects have followed suit, and opened the "mutual mining" mode, making the entire defi market expand more than 10 times in a short period of time.
The "wealth code" to sum up this round of DFI boom is actually three words: digging, selling. First of all, we should invest money to deposit or borrow money to "mine". After obtaining the corresponding token, we can quickly withdraw the currency and sell it to realize it, so as to obtain the "principal guaranteed income" with ultra-high annualized rate.