- The opening of 2020 is very chaotic considering coronavirus broke out globally, all kinds of assets experienced significant shocks, oil price plummeted, gold prices suffered volatility, and US stocks experienced several trading curbs, etc and different kinds of epic Black swan event happened. What do you think about the influence of these unusual events towards DeFi?
I think it’s the best thing that can happen to DeFi. Because all these things help expose underlying problems, such as economic bubble, indiscriminate leverage, credit crisis, which can cause people to distrust the financial system. And DeFi is the revolution against the traditional financial system, it is a complete subversion. Paul Jones thinks that the government over issued currencies, so he needs to transit his assert to Bitcoin. Crisis means opportunity. The traditional financial system has long-existing problems. Most of the assets were made by capitalists, some in reasonable ways, while the others are simply robbery. But most of the people didn’t realize it. Henry Ford says, people don’t even know how our currencies and bank system works, which is good, since if they know, there will be a revolution before the next morning. Now all kinds of black swan events can make people aware of risks, and before the final risk comes, choose a more transparent and fair way to participate in finance.
- Since this year, more and more public chains have begun to deploy the DeFi ecosystem. DeFi ecosystem has become an important direction for public chains to explore the landing of the blockchain this year. Can you analyze why the public chain has gathered to develop the DeFi ecosystem this year?
Most public chains have explored for a long time. Last year, many people said that the public chain industry was dead, but I feel that they just didn’t find the rigid demand for landing applications. Now everyone has begun to understand that DeFi is the best way out of the public chain. WaykiChain started to develop the first product of DeFi in March last year-The stablecoin and collateral loan agreement (WaykiCDP). However, it was not popularly called as DeFi at that time. Now, what we start with is to find a rigid-demanded scenario for the blockchain landing, and shorten the user’s path to enter into ecology. In this circle, most of the people are speculators and investors who hold two big needs of borrowing and making money, and DeFi is doing this business. From another perspective, the emergence of Bitcoin has created a new currency, and the role of public chains and smart contracts is to allow the currency to circulate under certain rules. Isn’t this just finance? In other words, if blockchain can’t even do finance, then it is just a scam.
- can you explain to us the status and scale of the DeFi market nowadays?
The size of the DeFi industry can be roughly measured by the value of lock-up. Ethereum, as the largest DeFi platform at present, occupies most of the market share. Now the lock-up value on Ethereum is around USD 1 billion. Since last year, other public chains have started to have DeFi applications, including WaykiChain, cosmos, Polkadot, TRON, etc. The current DeFi scale on WaykiChain is not as good as Ethereum in terms of absolute volume, but in terms of the proportion of DeFi locks, WaykiChain definitely has the highest proportion so far, reaching the total of 17%. In terms of absolute volume, only niche players in the currency circle participate in DeFi, but DeFi has maintained market growth in the past two years, and the amount of lock-up positions has risen sharply, so the entire market still has a lot of room for each project party to explore.
- compared to Bitcoin mining, DeFi is obviously more decentralized and suitable to the public. From a broad aspect, what advantage do you think DeFi has when compared to traditional finance, and what is the meaning of it towards the finance industry?
I like this question, so I will spend more time explaining it.
I think the difference of DeFi can be shown in 3 points:
DeFi can change the role people play in the financial system. In traditional finance, as an ordinary user, your role and participation process are very limited. However, this limitation is determined by all aspects, such as the credit problem, the threshold of the number of funds, as well as the license and the threshold of power, and so on. Such limitations often make ordinary users vulnerable groups in the financial system. And under the rules of the top class, wealth will always flow to the top. For example, global currencies have been issued continuously, have we participated in the decision? No. Has it been issued to individuals? No. We can only see that the world keeps issuing money, and the money in our hands is depreciating, while there is nothing we can do. But DeFi is different. Let me give an example. WaykiChain DeFi's governance coin WGRT, the holder has both the power of governance parameters and the benefits of the interest and penalty of the entire system. This is a role you cannot play in traditional finance. In DeFi system, it is full of fairness.
DeFi can reduce financial costs. Since the beginning of the industrial era, the global financial structure has remained unchanged, relying heavily on various intermediate institutions. Central banks, investment banks, commercial banks, securities companies, etc. It can be said that any financial activity needs to have more than one intermediary profit from it. For example, in addition to the loss of the price difference of a transaction, a transaction also includes brokerage commissions, exchange transaction fees, stamp duties of regulatory authorities, etc. The price difference earned by these so-called "middlemen" makes them the richest class in the world. However, DeFi adopts an open protocol and provides low-cost financial services for everyone at low cost, which greatly reduces the cost of transactions.
DeFi can improve the efficiency of finance. Blockchain enables financial transactions to achieve transaction settlement. It has gone beyond the traditional settlement system of financial institutions. When it comes to cross-border transactions. In terms of the transfer, a cross-border transfer can sometimes take several days, but in the blockchain system or DeFi system, the actual ownership of assets has changed when the transaction occurs.
There’s one more point that I want to mention that is DeFi can derive something that traditional finance doesn’t have. For example, the constant product market maker is an innovative product in the field of DeFi. We believe that DeFi can not only improve and improve the original traditional finance but also have more innovations to be discovered. The CTO of our team wrote such a sentence in the introduction of WaykiChain code: “the only limitation of the blockchain is our imagination.”
- At present, there is a strange situation in the industry. When asked DeFi, many people said they know it. But when it comes to the question of who invest it, everyone said they didn’t. What do you think is the reason for this situation? Where are the potential users of DeFi?
There should still be some people who have invested in the DeFi project. This year's link, knc, and mkr are all DeFi concepts, and they all have good market performance, including WaykiChain is also a DeFi concept, and our community is not small. It's just that few people are using DeFi products. In fact, not only a few people use DeFi products, but also fewer people who put coins in wallets to play any application in addition to the use of exchanges to speculate coins in the currency circle. For example, I got data before that showed only 14,000 people on Ethereum participate in DeFi. DeFi currently lacks a popular hit, like Dapp's ethernet cat, fomo3D, which can mobilize the market's passion at once. WaykiChain will release a DeFi product called Wayki-X in the second half of this year. Concerning synthetic asset transactions, we are confident that this product will become a hot issue.
The first-level potential users of DeFi are users of public chain tokens, especially for collateral-type DeFi applications. For example, users who hold ETH are potential users of DeFi on Ethereum. Only if I look high on ETH, I will collateral ETH for various other financial activities. The same is true for WaykiChain. So if most of the non-DeFi public chains are removed, and most Bitcoin holders, this first-level potential user is still very limited. The second-level potential users are DeFi participants, such as participating in DEX transactions, or using other assets to purchase DeFi stable coins for investment and so on. The third-level potential users are some users outside the circle. They will take advantage of income opportunities, such as wealth management and other applications to come in contact with DeFi. This most extensive market has not been well developed.
Ethereum already has an integrated DeFi ecosystem, and there are plenty of branches on it, plus a lot of public chains have poured into the DeFi track this year. However, the current scale of DeFi users is still small, and many people are worried that so many public chains are pouring into the DeFi track, but the market can’t digest so many DeFi products, thus they may finally be of varying quality. Are you worried about this problem?
I am not worried. First of all, the advantage of Ethereum is not that great. The DeFi ecosystem on Ethereum can be said to be in full bloom, but it is not integrated. In addition, Ethereum now establishes DeFi in a savage way of development. I feel that it is just a child who plays on the beach and cannot build a skyscraper. The financial system needs to be framed, at least the asset standards should be unified, the pricing unit should be unified, and the liquidity measurement standards should be unified. DeFi on Ethereum does not have all these uniformities above, so many problems have arisen this year. Although the single-module product looks fine, once it comes to the “interoperability” that DeFi on Ethereum is proud of, three particularly serious security incidents occurred. Another thing is that if users want to use DeFi on Ethereum completely, they have to cross many products, and each time they exchange currency, they must bear the loss of the price difference, which will disperse the liquidity of DeFi.
WaykiChain’s thinking is different from that of Ethereum. What WaykiChain wants to do is an integrated DeFi public chain, which means that we will unify the currency, unify the standard of asset release, unify the valuation unit, and unify the liquidity. Based on those preconditions, then smart contracts use imagination to build more products, and ultimately provide users with a one-stop DeFi experience. The market covered by DeFi is huge, so we don’t worry about competition. If you introduce 1% of Bitcoin’s market value to any public chain, it is enough to support a very large DeFi project, not to mention the introduction of traditional assets in the future.
- How do you view DeFi’s development prospects and future market scale? Where do you think the ceiling for DeFi development is?
In the near term, although DeFi’s volume has developed rapidly, it is still very small. The current market value of the digital currency is about more than 270 billion US dollars, but the collateral in the DeFi agreement is only 1 billion US dollars. I think it will reach 20 billion US dollars in two years. It can be seen that the future market is still very broad. In addition to the need to compete for the Bitcoin market, mature public chains are also a development idea for DeFi empowerment of other public chains. For the ceiling of DeFi development, it is not yet seen now, but the first bottleneck that may be encountered is how to release off-chain assets to the blockchain to expand the overall DeFi market cap.
- WGRT has set a strict risk control mechanism in terms of safety, convenience, and risk reserve. Such a professional and rigorous team believes that in the near future, it will present a different DeFi ecosystem to everyone. According to some latest data, there are more than 4,000 bitcoins locked in the DeFi ecosystem. What do you think is the reason that BTC has poured into the DeFi battlefield in large numbers? Will this set off a new round of DeFi boom?
The BTC market is the most attractive part of DeFi. Let me explain a few things.
1.For BTC currency holders, these people are optimistic about BTC for a long time, but when they lack liquidity at hand, they need a loan agreement to help them get some cash. However, the centralized financial platform has various security risks, such as asset theft, asset misappropriation, or platform running. Some money holders who pay special attention to security will choose the DeFi protocol.
- In terms of DeFi projects, the market value and volume of BTC is the largest, so whoever can occupy the BTC market will become a giant.
For the DeFi market, BTC itself does not have programmability, so any other public chain needs to do a cross-chain protocol to introduce BTC, so the largest market provides the most fair competition environment. WaykiChain introduced a decentralized cross-chain mechanism in the upcoming public chain version 3.0. After going online, users can collateral BTC or ETH to generate stablecoin. At the same time, the interest paid by users, as well as the penalties that are cleared in the middle, are also to be repurchased for the destruction of WGRT.
- WaykiChain's DeFi lockup volume actually reached 17% of the total, and it is expected to break new highs next. Gordon, what form and changes do you think the DeFi market will develop in the future? How should WaykiChain seize market opportunities?
First, the form of products will be more diversified, and many innovative products will appear.
Second, the product will be more professional and have a better experience, while providing one-stop financial services. This is the direction that WaykiChain is currently doing.
Third, the DeFi on the public chain will expand through cross-chain. For example, as mentioned earlier, the DeFi on the public chain will compete for the Bitcoin market. However, in addition to competing for the Bitcoin market, the market for more small currencies cannot be ignored. We will also try to use the WaykiChain DeFi system to empower other small currencies or public chains. So that their currency users can also enjoy the financial services brought by DeFi. This market has not yet been explored.
- What plans does WGRT follow?
We want to build the world's first integrated DeFi public chain.
The development of WGRT is inseparable from the promotion and use of stablecoin WUSD. Therefore, our follow-up plan is mainly to build more products around the stable currency system to empower WUSD.
At the end of July this year and early August, we will launch a new product called WaykiX, which is a synthetic asset trading platform that can trade almost all types of assets in the world.
After that, we will also launch WUSD financial management, so that the currency holders can enjoy a fixed income. At the same time, we will also develop asset securitization business, and publish some high-quality asset targets on WaykiChain, such as Vietnam real estate, European and American government bonds, etc., while expanding the volume of DeFi assets on WaykiChain, to the community more Investment opportunities.
- Is there any plan after WGRT listed on OKEx?
Yes, I will answer in terms of two levels, the first level is the ecological level, and the second level is the level of the entire coin itself.
From an ecological perspective, the quality of WGRT depends on the entire stablecoin system, and whether more people can use it. The stablecoin WUSD develops well, so the whole WGRT becomes the biggest beneficiary. In fact, the series of DeFi products we created later are all based on the stablecoin WUSD, such as the Wayki-X synthetic asset trading platform. After the Wayki-X synthetic asset trading platform is launched at the end of July and early August, the market will have a lot of demand for WICC. We will also use this platform as a fist product of this year to promote, so as to ensure the benefit of the entire WGRT. In addition, the real estate in Vietnam and the national debt in Europe are based on financial products issued by WUSD, and they will also promote the development of WGRT.
The WGRT coin will be launched on OKEx, and then some high-quality second-tier exchanges will be listed to enhance its liquidity. When the liquidity is sufficient, we will also impact other first-tier exchanges, including domestic first-tier and international first-tier exchanges.
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