In this issue of PolkaWorlds exclusive interview series, DFG, an encryption investment institution, was invited and shared the following content. DFG is a leading investment institution in the encryption industry and one of the co-sponsors of the Substrate Entrepreneurship Camp.
The current wave of bull market in the encryption market is institutional bull
Grayscale, known as the driving force of the bull market, is very hot this year. We have cooperated very early.
Some analysts believe that these Polkadot capabilities pose a credible threat to Ethereum’s dominance
At this stage, we are focusing on the Polkadot public chain ecology, from which we will select some parachain heads and innovative projects
We will participate in the PLO of the Polkadot parachain
Projects that started earlier in the Polkadot ecosystem, cross-chain asset exchange, transfer bridges, and some tools will grow first
One of the development trends in 2021 is the implementation of DeFi in the second layer network
What do you think of the encryption market in 2021? (BTC has broken through 4w USD)
The current bull market in the encryption market is institutional bulls. Large international companies and institutional investors have turned to Bitcoin and the encryption field one after another. Grayscale and other large institutions holding and building positions in large quantities of Bitcoin will help stabilize the price of BTC and boost The encryption market is hot and out of the circle.
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Which encrypted tracks does DFG pay attention to for a long time? Why?
DFGs long-term focus includes the underlying public chain, DeFi applications and compliance business.
First of all, the underlying public chain is a platform for all native encryption and innovation. Once the infrastructure is successful, it will be accompanied by a large number of upper-level ecological community developers and derivative assets. Bitcoin, Ethereum, and Polkadot are the core focus of the underlying public chain sector. In addition, we have also invested in innovative public chains such as Near and Solana.
Secondly, the success of DeFi applications is obvious to all, and it also allows the entire industry to see the explosive potential of blockchain + finance. Starting from the second half of 2020, with the help of the Yield Farming model of the top lending platform Compound, decentralized exchanges (DEX), stablecoins, derivatives, aggregation platforms, etc. have launched similar models, driving The entire DeFi market has developed by leaps and bounds. At present, we mainly focus on popular DeFi tracks such as staking, liquidity mining, insurance, lending, DEX, and aggregation.
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Recently, I saw that DFG has invested in many Polkadot ecological projects. What kind of judgment do you base on when you decide to invest in a project?
First of all, the project itself has commercial application prospects, an excellent business model, and its own direction is conducive to the Polkadot ecosystem, and the business logic behind it can be self-consistent.
For example, the decentralized bridge chain Darwinia (Darwin), created a Darwinia-Ethereum two-way Bridge and integrated EVM, and can run smart contracts at the same time to realize various applications; the Polkadot ecological DeFi protocol bifrost solves the problem of staking liquidity, allowing While obtaining Staking income, users can also participate in DeFi mortgages to obtain double benefits.
Then, there is potential investment value in business, and relevant institutional funds have already entered, and the value judgment is mainly considered from valuation and future expectations.
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What do you think is the biggest advantage of Polkadot? Has Polkadot brought innovation to the industry?
Polkadot’s greatest strength is that it solves one of the most pressing problems facing blockchains — interoperability. Each blockchain is an independent island of data, making little use of information held by other networks. Polkadot eliminates these concerns by integrating various proprietary technologies to transfer information, data, and value between different blockchains.
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DFG, as a robust crypto investment institution, what do you think is the biggest barrier in the crypto investment industry?
Take the lead in finding innovation and tipping points in the primary market. That is to say, if you find a project that can solve the pain points of the market and put it into action to solve the problem, you can seize the opportunity, and a large number of investment institutions will follow in the investment, pushing up the value of the project.
In addition to professional investment, more focus is required. Investment institutions should not be limited to financial investment, but should be more like a capital institution with entrepreneurial incubation and industry integration, especially in the face of emerging business areas such as DeFi. Unlike traditional investment, not only need to participate in the traditional way DeFi project investment may also need to participate in mining, be a node, and participate in the design and implementation of various incentive mechanisms for project parties.
At the same time, it provides financial support and value-added services to the project party. In addition to purely providing financial support, it is also necessary to have more in-depth business exchanges with project parties to assist their project growth and business promotion, because most new blockchain projects are small teams and start-up companies, which require more More resources and support to help it grow and mature.
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Which projects are you focusing on recently?
At this stage, we are focusing on the Polkadot public chain ecology, from which we will select some leading parachains and innovative projects, as well as some relatively powerful blockchain application projects. In addition, we will also take into account Ethereum ecological projects and the vertical industry of DeFi innovative applications in the field.
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Will DFG participate in Polkadot Parachain PLO? How to empower the Polkadot ecological project?
At present, the details of the specific participation process of PLO are still uncertain, but we have many points where we can participate. First of all, we are strong holders and supporters of Polkadot (DOT), so parachains will definitely participate. We are also continuing to pay attention to the progress and updates in this area. At present, many details have not been determined, and we will continue to pay attention.
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What kind of unicorn project do you think will come out first after the parachain goes online?
We expect the Polkadot parachain to go online in Q1-Q2 of 2021, after which projects that have the potential to become unicorns may fall into the following categories:
First of all, projects in the Polkadot ecosystem that started earlier, have a strong first-mover advantage, and have a high community popularity, such as Acala, Darwinia, Bifrost, ChainX, Crust, Phala, etc., have a high probability of becoming unicorn projects.
Secondly, projects that do cross-chain asset exchange or transfer bridges may also rapidly develop into unicorn projects. They can guide a large number of assets to Polkadot, and introduce the traffic resources of the Ethereum ecology into the Polkadot ecology with better performance and scalability. Polkadot-based cross-chain DEX, staking, lending and other applications may recreate DeFi prosperity.
In addition, some tools-focused projects may also grow in this process, and their role is to help a large number of developers deploy their business to the Polkadot ecosystem faster.
Can you predict what major events will happen in the encryption industry in 2021?
First of all, investment in the cryptocurrency market will gradually become larger, more professional, and more compliant. Institutional funds will continue to enter the market, and more traditional institutions will join this track. In the second half of last year, many overseas institutions have announced that they will start holding a small amount of Bitcoin. There should be more and more, the ratio may be higher and higher, and the overall size of the encryption industry will continue to grow.
Secondly, the application side will continue to explode, and there will be more combined innovations in products and applications in the DeFi field, including DEX, lending, insurance, NFT and derivatives, etc. Moving to the blockchain one after another, more traditional financial products will be gradually blockchainized and new business models will be born.
Again, cross-ecological applications may usher in a boom. Soon Polkadot will launch a parallel chain slot auction. The progress of cross-chain technology will further promote the development of applications such as DeFi. Previous blockchain applications mainly run on a single chain, and all functional module combinations are also on the Realized on a single chain, it is expected to achieve cross-ecological integration next.
In addition, another development trend is the implementation of DeFi in the second layer network. The improvement of the infrastructure will boost the entire DeFi ecosystem. At present, many DEX and other applications are built based on the second-layer expansion solution. This is also a good way out for the performance-limited DeFi applications of the Ethereum ecosystem. , there may be more DeFi applications implemented on the second-tier network in the future.
