Editors Note: This article comes fromFirst class warehouse blockchain research institute (ID: first_vip1), reprinted by Odaily with authorization.
First class warehouse blockchain research institute (ID: first_vip1)
, reprinted by Odaily with authorization.
In September, as Sushi began to directly grab liquidity, the competition among DEXs became increasingly fierce. If a project does not issue coins, the liquidity may be directly removed by mining projects with higher returns. Therefore, in the end, Uniswap, the leader of DEX, was also forced to issue its own tokens. Due to the mechanism of UNI token issuance and the foundation of DeFi in the past few months, it finally achieved the effect of participation by all the people. The gas fee of Ethereum was once as high as 900 that day, causing continuous congestion. We will look at the DEX transactions throughout September from the macro transaction data, and then elaborate on the progress of each project.
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Overview of DEX transaction data
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Note: The data is as of September 26, 2020, and the data of Sushi, Swerve and other exchanges are not counted
The figure above shows that the overall transaction volume of DEX has exceeded 20 billion US dollars in September, and the month-on-month increases in the three months of July, August and September are 175%, 160% and 83% respectively. Although the growth rate is slowing down, in terms of volume, DEX has shown its strong potential.
1) AMMs such as Uniswap and Balancer can create fund pools and add liquidity without review: this model is the key to new projects issuing tokens that can bypass centralized exchanges, and is the technical cornerstone of the current liquidity grabbing battle.
2) Liquidity mining: DeFi’s enthusiasm for mining has been ignited since Compound adopted deposit and loan to obtain COMP currency issuance model. Now it is basically no mining, no DeFi.
3) Liquidity robbery: Sushi has opened up the era of liquidity mining. Uniswap, which has not issued tokens, has become fat in the eyes of robbers. Even Curve, which has already issued tokens, is dubbed community-issued, and projects without pre-mining are directly forked. The tokens of these new projects contributed a lot of transaction volume.
The migration of tokens from centralized exchanges to DEXs caused by liquidity mining, until the subsequent liquidity wars and frequent issuance of new coins, formed the situation in which the transaction volume in the above figure exploded.
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Note: The data is as of September 26, 2020, and the data of Sushi, Swerve and other exchanges are not counted, and there may be errors in Balancers population statistics.
1) Uniswap is leading the way. Its trading volume and number of people are already far ahead of all other DEXs. In September, the trading volume reached 13.8 billion US dollars, an increase of 104.5% compared with the 6.7 billion US dollars in August. Its transaction volume in September was much higher than that of second-placed Curve at $4.85 billion. The number of trading addresses on Uniswap reached 190,000, an increase of 32.8%, far higher than the 5,000 addresses of the second-ranked Kyber.
Uniswap (UNI), #39
2) The top three exchanges are all AMMs, and each of them has outstanding features: Uniswap is the most concise, Curve stablecoin transactions have the lowest slippage, and Balancer’s liquidity pool can be set to any ratio. The most important feature of Uniswap and Balancer is the permissionless addition of liquidity pools, which are now the preferred trading venues for all new DeFi projects.
3) All the lower-ranked DEXs have seen a decline in the number of transactions (number of unique addresses), and the magnitude is large, which is in stark contrast to the growth of the top. The main reason is that the imitation market is concentrated in Uniswap and Curve, which contributes to the transaction volume and number of transactions of both, while diluting the participation of other projects.
*The project ranking selects data from the Coinmarketcap website on September 28, 2020.
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Progress in September:
In September, Uniswap did one thing, issuing UNI tokens.
Issuance plan: The total amount of UNI tokens is 1 billion, 40% to the team, VC, and consultants, with a 4-year unlocking period, and 60% to the community. After 4 years, the total amount will increase by 2% every year.
Airdrop: 150 million UNI in the community will be directly airdropped to all historical users, liquidity contributors and buyers of Uniswap socks, of which 49 million will be given to all liquidity providers, starting from the day V1 goes online; 100 million will be given to all interactions 400 UNI for each address, a total of 250,000 addresses; 220,000 for all users who have bought socks.
Mining: Four pools are currently open for liquidity mining: USDT/ETH, DAI/ETH, USDC/ETH and WBTC/ETH. In the next two months, each pool will allocate 5 million UNI.
Governance: From October 17th, community governance begins. UNI holders can vote to decide how to allocate 43% of the community treasury, including whether to increase the liquidity mining pool and the amount of allocation.
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Uniswaps token launch is a milestone event. If there was still controversy: whether a good project needs to issue tokens to cut leeks, then now, the urgent release of UNI at least shows that even the best projects need to issue their own tokens. Whether the token is really useful in the project is no longer the primary issue. It seems to be more important that it can govern, mine, and increase users stickiness to the project.
The picture above shows the lock-up volume of Uniswap. At present, the lock-up volume of USD 2.21 billion occupies the top spot of all DeFi projects, which is higher than the USD 1.97 billion of the second-ranked Maker. The figure shows that Uniswap’s lock-up volume increased rapidly, fell back, and increased again around September. The corresponding events were Sushi token issuance, Sushi liquidity migration, and UNI token issuance. So, is Sushi really a robbery? In fact, it is not the case. After Sushi migrated liquidity in the figure, the amount of locked positions in Uniswap is still more than before the launch of the Sushi project. Sushi actually accelerated the process of Uniswap embracing the current DeFi liquidity mining boom.
Sushiswap (SUSHI), #67
Another interesting phenomenon is that the Uniswap airdrop has basically been received three days before, with nearly 180,000 addresses. It is foreseeable that nearly 70,000 of the 250,000 airdrop addresses, most of them, maybe 80%, may not be recovered for various reasons. Based on the calculation of 5 US dollars per UNI, nearly 112 million US dollars are lost .
October plan:
The Uniswap team started recruiting personnel for v3 development a few months ago. Recently, the main creator Hayden announced some features of Uniswap in the direction of the Ethereum 2 layer: 1) It can be compatible with the existing Ethereum infrastructure; 2) Large-scale Scalability; 3) Compatibility with other 2-tier DApps, etc.
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Progress in September:
It has only been a month since the establishment of the Sushiswap project on August 25, but the waves caused by the project can be described as magnificent. Let’s sort out the whole event from the timeline:
Issuance of tokens: There is no upper limit on the total amount of SUSHI tokens at the beginning. In the first two weeks, 1,000 SUSHI will be produced per block. After two weeks, the output rate will decrease by 10 times, that is, 100 SUSHI per block. 10% of the produced SUSHI will be directly given to the developer ChefNomi. Of the 0.3% of Sushiswap’s handling fees in the future, 0.25% will be given to liquidity providers and 0.05% will be given to SUSHI holders, that is, pledge SUSHI to hold xSUSHI.
Founder’s sell-off: The anonymous founder of Sushi sold all of his 2.56 million SUSHI tokens on September 5 for 18,000 ETH (approximately $6 million), which caused strong dissatisfaction in the community. On September 6, ChefNomi handed over control to FTX founder Sam Bankman-Friend (SBF).
Migration: On September 10, nearly 1 billion US dollars followed Sushiswap to complete the migration. The SBF transfers power to nine community-voted multi-signatures. On September 11, SBF distributed 2 million SUSHI and airdropped them to liquidity providers who supported the migration.
Founders Return Tokens: On Sept. 11, ChefNomi returned 38,000 ETH worth $14 million to the project. The funds were voted by the community, and SUSHI tokens were repurchased in the SUSHI/ETH pool on September 15th.
Community Governance: On September 9th, the community voted to reduce SUSHI production and lock 2/3 of the newly minted SUSHI for one year. On September 18, the community suggested adding a rotating incentive pool to increase the liquidity of the pool and attract new users. The incentive pool is selected by the community. There are 10 fund pools in one batch, and the next batch will be replaced after 7 days of operation.
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Sushiswap is a very controversial and dramatic project.
In essence, only the liquidity migration code of Sushi was written by the founder ChefNomi, and its transaction fee distribution scheme is the same as that of Uniswap, except that it allocates 0.05% of Uniswap’s future left to its own team to SUSHI holders Some, and the founder of Sushiswap took 10% of SUSHI. This distribution method seems fair, but it is also the fundamental reason why ChefNomi can stage a sell-off.
The picture above shows the liquidity of Sushi. It can be seen that after USD 1 billion was migrated on September 9, Sushiswap experienced a short-term growth, reaching a peak of USD 1.46 billion. After Sushi’s liquidity mining decreased, the liquidity decreased rapidly, and it is currently only stable at around 430 million US dollars. Comparing the liquidity diagram of Uniswap, it can be found that the liquidity part of Sushi returned to Uniswap after the migration. There are two main reasons for this: 1) Liquidity providers are profit-seeking. When Sushi cannot provide enough income, the liquidity Providers will migrate; 2) Project stickiness, the preferred platform for most new DeFi mining projects to issue their own tokens is still Uniswap. This can also be seen from the number of new coins in the top 20 by trading volume. Among the tokens issued in the past two months, Sushiswap has only two tokens except SUSHI, while Uniswap has 8 tokens.
Balancer (BAL), #95
The picture above shows the trading volume of Sushiswap. After the migration, the trading volume has been declining. According to preliminary estimates, Sushiswap had a trading volume of nearly US$2.07 billion in September, ranking third among all DEXs. But the key question is that according to this trend of declining trading volume, it is obviously difficult for Sushiswap to compete with Uniswap in October.
October plan:
Sushis latest proposal, BentoBox, is to use trading pairs as a lending pool, put in two coins, one more, and the other empty. The feature is that one-step revolving lending is directly in place, the leverage is fully used, and each trading pair is independent, avoiding systemic risks. The success of the project requires the community to pay a total of 100,000 SUSHI as compensation for code development.
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Progress in September:
FeeFactor and ratioFator: Still the same as before.
WrapFactor: The soft anchor is reduced from 0.7 to 0.2, and the hard anchor is still 0.1.
BALFactor: cancel the original calculation formula of 1.5 times of BAL, but take out 31% of the 145,000 BAL distributed every week, that is, 45,000 BAL, to BAL/WETH, BAL/DAI, BAL/USDC and BAL/ WBTC.
CapFactor: Divide the original cap into five standards, cap1 to cap5, which are 1 million US dollars, 3 million US dollars, 10 million US dollars, 30 million US dollars and 100 million US dollars. The original tokens on the white list are cap3 by default. That is, 10 million US dollars, and the tokens that enter the whitelist after that are all initially cap1, which is 1 million US dollars. All adjustments to the token cap level must be voted by the community. The proposals that have been voted on so far include: raising MKR from cap3 to cap4, removing DZAR from the whitelist, lowering RPL from cap3 to cap2, and raising UNI and PERP from cap1 to cap2.
Whitelist: Balancer will only guarantee the basic smart contract compatibility between the token and the protocol, and the risk of the project will be judged by the liquidity provider.
Multi-path order routing: Balancer has updated the order matching function across multiple pools, which means that even if there is no direct trading pair, the transaction of two tokens can be completed in one order.
Balancer has also increased the distribution ratio of its own token BAL when other war zones are hot. This shows to a certain extent that Balancer has felt the pressure from the market and is focusing on increasing peoples motivation to hold BAL. On the other hand, the fine-tuning of various factors will be a daily event accompanied by BAL distribution, which shows that the team still pays attention to the fairness of its BAL distribution, because after all, fairness is a basis for the long-term survival of the project.
Curve (CRV), #126
The cross-pool transaction function should be a standard configuration of AMM, and Balancer has finally been updated.
October plan:
The team sponsored the upcoming ETHOnline hackathon and put forward some ideas for the future development of Balancer: dynamic fee pool; curve and UI of self-starting liquidity pool; exchange of BPT and underlying assets; loyalty pool: early LPs can Get more BPT, and exit later LPs can get more tokens for each BPT.
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Progress in September:
Curves energies are focused on operations and governance.
Operation: American exchanges Gemini and Kraken have launched CRV; BitMax will soon list CRV; reached a partnership with Curve fork project S.Finance.
Governance: Through governance, Curve has added 2 new trading pools. The first pool is hBTC/wBTC trading pool, with a liquidity of 16,778,491 USD and a mining yield of 21.90%. The second pool is 3Pool, and the trading pairs are DAI/USDC/USDT, the liquidity is 296,831,084 USD, and the mining yield is 49.35%.
Now each trading pool starts to charge a management fee, that is, 50% of the transaction fee is taken as a management fee. The current consensus is to use the management fee to repurchase CRV tokens, and then distribute these repurchased CRV tokens to VeCRV holding people. The specific distribution method and distribution share need to be decided through DAOs second vote.
The Curve Emergency Management Committee (Curve Emergency DAO) was established with a total of 9 members. The community can increase/change/reduce CED members through Curve DAO.
Swerve fork event: The Curve imitation disk that appeared in early September, with a total of 33 million tokens, was released through liquidity mining. 9 million pieces will be released in the first 2 weeks, 9 million pieces will be released in the following year, and 3 million pieces will be released every year from the second to the sixth year. Therefore, in the first two weeks of Swerve’s liquidity mining, part of Curve’s liquidity was attracted to Swerve, and at the lowest point, Curve’s liquidity decreased by about $300 million. Two weeks later, the mining yield of Swerve decreased, and the liquidity of Curve gradually recovered. Serve liquidity robbery failed.
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October plan:
Summarize
Governance remains Curves primary mission. The current governance solutions discussed by the community include: rewarding liquidity providers for ETH/CRV trading pairs on Uniswap; adding stablecoins with poor liquidity such as GUSD, HUSD, and USDK to 3Pool; and changing transaction pool parameters and adding transaction pools, etc.
