Decentralized Finance DeFi...Token standards erc20, Automated Market Makers AMMs,
Non Fungibles NFTs, Decentralized Autonomous Organizations DAOs,
Layer 2 sidechains, rollups, zk, optimisim…A mouth full, and for some a foreign language...well,
let me translate for ya, cuz it’s time for Chico Crypto
So today, let’s unravel some of the mysteries of DeFi...explaining the critical
infrastructure pieces, and maybe a project or two within the specific defi sector
who is flourishing. So let’s DO IT!
Let’s begin with...the AMM, Automated Market Maker. I can just bet that there are a ton of
people watching this video, that have no idea what that is...well Uniswap
is an example of an AMM, I’m sure some of you used it, and didn’t even know that.
Uniswap was the first and is the most popular and used today.
History, of the AMM, is pretty interesting. The idea for it didn't come from Uniswap founder
Hayden Adams, he just ran with it and built it... the initial idea for the AMM, actually came from
Gnosis Founder Alan Lu...he came up with the constant product formula, balance of x time the
balance of y=constant k x*y=k..which was used in Gnosis to create their prediction markets.
Well Vitalik was blown away by the concept, he posted this on the ethereum subreddit
4 years ago, 2016... saying let's run on-chain decentralized exchanges the way we run
prediction markets...with the formulas and parameters changes he had come up with.
It was Hayden that took what Vitalik wrote and put it to code, creating the 1st iteration of Uniswap
in 2017, which the initial alpha demo idea is still up to this day…
From this idea and Hayden’s demo, Uniswap went live on the mainnet
and since 2018, it’s transformed itself into a DEX powerhouse...doing over 400 million 24 hours,
and controlling nearly 45 percent of DEX volume market share.
Now, you gotta understand...since Uniswap’s success, there has been a flurry of uniswap
forks, copycats, and plain out vampires that have launched. Be aware,
these AMMs, provide nothing of value & will eventually die out...primo example,
Sushiswap...the biggest vampire of all, large volumes out the gate with their “FARMING”,
but as time goes on it’s volume is only going to continue to dry up…
And since the team is just a copycat, they just forked uniswap, it does the exact same thing,
and the code is the same...so they are gonna have to wait for Uniswap,
to put forward any future developments...they will always be playing catchup on the ethereum chain.
I don’t know about you guys, but I’m sticking with the Swap,
who you gotta know is working behind the scenes on v3...but
Uniswap does have its limitations, and the AMM can be built to do more things,
in different ways...and those are the other AMMs I’m looking at...AMMs that provide something
different & that different is being used. And that AMM protocol is Balancer. Why is
Balancer different? Well a limitation of Uniswap is the liquidity pools
can only consist of 2 tokens...Balancer, you can have more than 2 in a liquidity pool.
For example this pool, which contains a pool weight of 30 percent KP3R, 30 percent XOR,
30 percent DMG, and 10 percent Balancer. So you may be asking yourself what’s the value in this??
Well, these multi asset pools can be transformed into something called smartpools...which is
Balancer Pools controlled by smart contracts. And these smart pools, are just getting going...and
guess who is teaming up to dominate these balancer pools? PieDAO...in October PieDAO announced they
had received a balancer grant to work on v2 of the smart pools in collaboration with balancer...well
those v2 smart pools are out...and if you look at piedao TVL, a big ole explosion in the past week…
That’s because of what was launched the BCP balanced crypto pie, a balancer smart pool..and
as we can see from the summary: “The most risk-minimised cryptocurrency portfolio...BCP
gives equal Bitcoin, Ether, and DeFi exposure in one easy to access ERC20 token. The underlying
assets in BCP are constantly taking profits and growing your holdings as it automatically
rebalances to maintain the set allocation...only possible with balancer smart pools.
And the beauty of this, it’s all powered by a DAO, a decentralized autonomous organization,
the assets in it, how fees are distributed with smart contracts and more.
Another DeFi piece, I’m sure some are confused on.
So just like how an AMM, is just a market maker powered with smart contracts,
a DAO, is just an organization, made up of distributed members...
powered by smart contracts. And DAOs, are catching fire like I assumed they would.
DeepDAO.org is the dominate tracking site as of now, and total AUM, assets under management
for DAOs has been surging, over 368 million, and as we can see over just the past months,
228 of 368 was added, or over 61 percent of the total in just a month. Ya DAOs are a
surging….and look down at the top 10 daos based on AUM, 7 out of the top 10,
70 percent are built on Aragon, including PieDAO, and the new #1 based on AUM, API3…
Now, remember I like collaboration with the DeFi ethereum space. It’s a complex world,
web 3, and no 1 team is going to get everything right. And guess who has collaborated together,
to improve DAO voting? None other than Balancer and Aragon, with Snapshot created by balancer,
bringing DAO voting to the next level by bringing off chain polling to on-chain execution!
So, as you can tell, Balancer is contributing not only to the AMM model, but also the DAO model,
on multiple fronts, smart pools, snapshot & more. Out of all the AMMs out there,
do you see any of them doing stuff like this...contributing to things outside their
ecosystem? Which makes me think, there may be a bigger plan behind balancer than meets the eye.
Now it’s time for a short sponsored segment of this video, supported by the team over at Wing
Finance, and like always the full details of our agreement can be found in the description.
So what is Wing Finance? Well Wing, is a cross chain DeFi platform,
which has a very very respectable over 60 million TVL, total value locked up
and it launched only a couple of months ago.
Cross chain, in that its provides DeFi options for Ontology,
NEO & Ethereum which is seen from the assets within the Flash pool,
their first product to hit the cross chain DeFi scene which has helped them gain that TVL.
Users can supply collateral to this pool, and earn interest...but also they earn WING tokens
as incentives. They can also borrow assets by supplying collateral, earning wing tokens
too...but the uniqueness in their lending and borrowing product comes from the insurance
pool... which helps in minimizing the risk of borrowers liquidation, which also earns WING.
But things are going to get much more interesting for WING, as they are moving towards their newest
DeFi offering, the Inclusive Pool which is going to offer some things, I’m super excited about,
and have talked on in the past, on multiple occasions, under collateralized loans.
The Inclusive Pool is a borrowing and lending pool, but it allows
people to borrow much more than before, with undercollaterlization. How is this accomplished?
Well, through some Ontology tech, called the OScore. This gives insight to a DeFi users,
credit liability...it's basically a decentralized credit score. It shows
how trustworthy a specific crypto address is, and WING has integrated this into the inclusive pool
maximizing a user’s borrowing limits with less collateral, granted they have a good OScore.
At launch...the Inclusive Pool will include a supply pool, a collateral pool & a borrow pool
as well as an insurance pool to protect suppliers and initially it will run with 3 supported assets,
USDC, DAI and USDT in all pools. A stable inclusive pool to begin…
And what’s awesome, is this pool was voted on to move forward with by the WINGDAO, aka token
holders of WING..back in mid november, through the more than slick governance dashboard….So,
the inclusive pool Launch just might be around the corner...a
first in the DeFi space, which means, a big ole boost in TVL…
Now let’s get back to the AMM concept...as there lies opportunities, if you can
expand upon them, make them better, unique to just a fork of Uniswap.
So the history of unique AMMs, goes like this Uniswap 2018, Cuve unique in that it was optimized
for stablecoin baskets, 2019...2020 balancer, customizable weights and more tokens. Bancor V2
this year 2020 as well, allowing liquidity pool providers to supply to only 1 side of the pool.
And that is where innovation stopped in 2020...but 2021 is right around
the corner so let’s dive into some very unique AMMs getting ready to GO BANG!
First Blackhole, which is actually already on the mainnet, but in a limited BETA version. So what
does Blackhole do? Well it’s the first AMM that can process transactions exceeding pool liquidity.
What? How the heck does it do that?
Well the protocol taps into excess supplies on lending platforms like compound,
AAVE & Others...So blackhole, it's a Beta, it’s not fully live….and
as we can see from the beta, liquidity mining isn’t activated yet for blackhole swap.
That means a token. So what is it? Well it’s from Hakka Finance, and blackhole swap is just one of
their products, they have built multiple for the DeFi space...but Blackhole will be their bread
and butter, once it goes live, as it’s a curve finance, but on blackhole steroids and curve
has a much, much higher market cap. And look at the TVL from defi llama, its been growing
and growing from Hakka..well if you go back to blackhole, and the deposit section for the pool,
you can see from the currency reserves a majority of that is coming from the HOLE.
Now, the final AMM, I'm getting absolutely excited about is bringing another revolution in 2021.
Virtual AMMs and these are from the Perpetual Protocol. What is a virtual AMM?
Well it’s that algorithm the automated market maker, x*y=equals k, held outside of the assets,
the collateral assets are held in a smart contract vault. Perpetual uses the vAMM for price
discovery, acting as an independent settlement market...but not for the actual spot trading.
So what does this do? Well it enables decentralized AMM powered perpetual contracts,
for the very 1st time. You get their name? And the beauty is the perpetual AMM, it doesn’t need
liquidity providers to work, as the traders are providing liquidity with each of their
orders...and isn’t this a quinkidinky? Balancer and Perpetual collaborated to get the PERP
token launched...through an LBP, liquidity bootstrapping pool, a balancer smart pool AMM.
So, if you can’t tell, I look for the DeFi collaborations,
I look for the fundamentals. What’s providing something new, and exciting...because eventually
they will shine, while the copycats go to the wayside. Cheers I’ll see you next time!