Written by | Banach
Produced | NEST fans (nestfans.com) authorized by the author to publish
Produced | NEST fans (nestfans.com) authorized by the author to publish
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Question 1: Linear operators have no value, but nonlinear operators have value?Linear operators are also valuable, but linear operators cannot precipitate a decentralized asset, that is, they cannot be securitized.Non-linear operators can form self-reinforcing properties (the larger the size, the higher the value)
, if this attribute is represented by token, it represents a decentralized asset. If it is linear, it cannot correspond to this token. Our purpose is to generate a new native asset based on an operator, rather than to complete the value transfer.DeFi is looking for non-linear operators. The premise of this is that non-linear operators can deposit a decentralized native asset. In order to make linear operators securitize or capitalize (the same below), we have specially built a compression mechanism (NEST1.0), but there are certain flaws in the logic, that is, it is impossible to make linear operators GAME. There is a contradiction in logic.; Otherwise, there is no difference between choosing a small scale and a large scale. The meaning of linearity is precisely that there is no difference between choosing a small scale and a large scale. Therefore, we cannot deliberately GAME based on linear operators. The result of this GAME is FCoin.
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Question 2: The mortgage operator is linear, so why does Compound still have a scale advantage?The non-linear operator links the price and scale, thus forming the GAME attribute and depositing decentralized assets。
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Question 3: If Maker doesnt have a stability fee, cant it capture value?If liquidation risks are not considered, MKR may also capture value without a stability fee. This value is the consensus of DAI (that is, a liquidity premium is formed). But if the market is complete, that is, without considering the so-called psychological dependence (without considering these subjective things such as consistent beliefs and consistent expectations), then MKR cannot capture value. The network effect of stablecoins is determined by the value of use, or other things, such as contract lock: there is an update cost when using stablecoins, but the intrinsic value is the same whether it is DAI1 or DAI2。
(DAI1 and DAI2 refer to the stable coins mortgaged by two identical contracts that are completely copied according to the exact same parameters)If liquidation risk is considered, it is possible to capture value, which isparallel assets
The significance of the insurance fund. The larger the insurance fund, the larger the scale, because the stability fee may be related to this, and the stability fee rate does not have an interest rate oracle. The use value is actually determined by the cost of updating the agreement. If the agreement is automatically updated, the agreement with DAI1 or DAI2 is the same, so the two contracts are equivalent (regardless of liquidation risk). Only one stablecoin has the lowest update cost for the entire network. This is due to the difficulty of detecting contracts. If everyone implements the same development paradigm or structure, there may be no update cost. Write a general factory contract that generates DAI1 and DAI2, and the downstream accepts this standard, then there will be no update cost, and the development paradigm is more open, so this thing does not exist; as long as the mortgage is the same, the generated one will be the same of. If liquidation risk is not considered and the development paradigm is changed, MKR is a simple mortgage operator and has no value.Original assets are the basic securities formed by decentralization on the chain, such as NEST, COFI,parallel assetsIt can be closed-loop without token, so no currency will be issued for the time being. Compound and Maker do not use oracle machines. The essence is their collateral assets. Guaranteed assets are actually a kind of basic securities, but they are not decentralized assets, nor are they native assets as I said. It is equivalent to introducing credit on the chain. Ilast class
Having said that, in principle, loans and stablecoins rely on insurance to guarantee value, rather than relying on non-linear interest rate oracles to form GAME. In principle, interest rates are also subject to transaction pricing, and frequent and large transactions are required. However, since the interest rate fluctuations are not so large, in many cases, it is reasonable to simply set it artificially or by a simple algorithm. Specifically, treasury bonds are traded, but real estate interest rates may not change for a long time. The interest rate market is still too early, so there is no big problem with Compound now, because interest rate arbitrage is too difficult at present.
The current demand for mortgage lending on the chain is not enough to generate perfect pricing demand. Therefore, I think the fixed interest rate algorithm is currently available, reflected in the stable currency or parallel assets, that is, the interest rate operator and the insurance fund. I think that all mortgage operators must be used in conjunction with the insurance fund to be completely closed-loop. This is parallel Assets Improvements to Maker.Trading operators (including interest rate operators), mortgage operators, option operators, trigger operators (specificity of smart contracts), random operators, recursive operators, insurance operators, interest rate oracles, etc. DeFi is the basis of these A combination of operators.
NEST has also been so many years, from the Internet to the blockchain, a completely original software engineering design that is rarely seen in China.Let’s look at the core risk of the mortgage operator. Because it is decentralized and involves two processes of mortgage and liquidation, the mortgage rate and liquidation line, which is the C and K we use, constitute two major risks of the mortgage operator: downtime risk and liquidation risk.The so-called downtime refers to the length of time from the start of mortgage to the triggering of liquidation; liquidation risk refers to whether assets that are not lower than the mortgage rate can be normally liquidated
. It is assumed here that the price trend is generally effective in the long term, and there may be jumps in the short term, resulting in liquidation not necessarily being completed. A shutdown is triggered when the price reaches the liquidation line.
Lets make an assumption that a person mortgages a loan, and the given interest rate is r, but once the loan is shut down, the interest income from the start of the loan to the downtime is obtained, and thereafter only risk-free income can be obtained. Assuming that the risk-free return is 0, then in the case of a given r, different mortgage rates will give the lender different returns. This is the risk structure of the mortgage operator, which is probably this graph, which is also a unique term structure.
Next, let’s talk about liquidation risk. Whether the collateral can be quickly traded within a clearing time will be affected by three factors: 1) volatility, 2) asset liquidity, and 3) the scale of liquidation (the liquidation method will not be discussed for the time being). Therefore, in principle, the relationship between K and C is best to be dynamic, following the volatility. But once it is dynamic, the product design may affect the user experience: users cannot remember the closing line, because the fluctuation rate may change greatly. So in principle, design a fixed ratio between K and C, such as a difference of 10%~20%. Then the liquidation may succeed or fail, such as poor liquidity, may fail to cause the so-called liquidation; it may also be impossible to liquidate due to the large scale of the entire liquidation. Therefore, the insurance fund is here to solve the liquidation risk.
Part of the stability fee is determined by the mortgage rate, and part is determined by the total mortgage ratio (that is, the ratio of the total amount of ETH collateral to the total amount of circulation, taking into account liquidity and liquidation scale), of course, volatility can also be considered (preferably used for K and C). In this way, the insurance fund can obtain a very high interest rate according to the scale, and naturally balance it. Here, the non-linear operator of the interest rate is still used. If the interest rate oracle is used, then the insurance fund does not care about the pool (the size of the pool is not used for parallel assets. Any difference, and assets cannot be deposited), without an interest rate oracle, a scale effect will be formed.In fact, this kind of interest rate operator is the operator of the insurance fund. The pure interest rate calculation (such as how to determine the interest rate when borrowing) is not the same as the insurance calculation of the insurance fund. The insurance fund cannot hedge, and it may lose money if it bears the incomplete market risk.Regardless of Compound or Maker, an insurance fund is required to form self-reinforcement.
