DeFi is an important direction for the blockchain to land in the near future. After the development of the past few years and the explosion last year, it has become one of the most cutting-edge and hottest fields in the encryption ecosystem. However, the entire DeFi field is still in the initial stage of development, and various problems such as high handling fees, complicated projects, and security risks have raised the participation threshold for ordinary retail investors.On February 4th, the Cobo live broadcast room invited Tongtong, the host of Jinse Finance, and CYH, a Cobo engineer DeFi scientist, to explain DeFi in a simple and simple way, and lead everyone to plow the field. The following is the text of the conversation.DeFi does not need to get started, it should be kicked in.What is more important for investment is to improve awareness and be a friend of time.For small funds, the high handling fee of ETH is not friendly, and it is very likely that the on-chain handling fee paid will take a month of digging to pay back.It is better to be in awe of investment than blind self-confidence with half understanding.If the capital scale is relatively small and you don’t know enough about DeFi, it is recommended to choose some of Cobo’s DeFi smart pool mining products and come to Cobo to participate in proxy mining, which saves handling fees and is safer.——Scientist Golden Sentence
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What is DeFi
Moderator: Since it is an entry-level level, lets first ask scientists to briefly explain to us what DeFi is.
We often hear a saying: You cant make money beyond what you know, and the money you earn by luck will eventually be lost by luck. So when you are envious of others participating in DeFi and earning a lot of money, please dont be fomo first, lets get acquainted first.We know that since the birth of Bitcoin, the core application of blockchain technology has been born, that is, value transfer and value storage. For more than a decade people have been exploring what else blockchain technology can do? What else can be changed?Some have tried to make games, and some have tried to do anti-counterfeiting and traceability. If people were still confused about what they were passionate about in 2017, after four years of continuous exploration and bumping into walls, a blueprint is slowly becoming clear—the first revolution brought about by the blockchain is finance.If you are not a person in the financial industry, it is indeed difficult to understand the pain points of the current financial system:1. Inefficiency. It is hard for you to imagine that in 2021 today, in addition to paying complicated handling fees, cross-border payment and clearing will take several working days or even longer to complete.2. High barriers to entry. More than 1.7 billion people do not have bank accounts and cannot use various financial products to expand production and store wealth.3. Centralization. The financial system built by centralized nodes not only makes funds inefficient, but also often leads to collapse due to single-point defects. For example, the collapse of banks triggered the 2008 financial crisis.4. Not transparent enough. Ordinary investors cannot fully understand the operation of financial institutions, and financial institutions are often unable to overcome the weakness of human nature. Excessive concentration of power and funds is very dangerous.Now, on the basis of blockchain and smart contracts, we can easily build some financial systems, make protocols and codes open source, data and logic cannot be tampered with, so that everything can be audited and everyone can participate.DeFi is not a new concept. It is built on a smart contract platform and consists of a series of encrypted assets, financial products and services.The entrance of DeFi: Web 3.0
Moderator: Someone said, Identity on the chain is the entrance for users to enter the Web3.0 world. Can you introduce the relationship between Web3.0 and DeFi?
To use DeFi products, you first need a decentralized HD wallet. Operations on the PC side generally use Metamask, which is a browser plug-in. When you visit the DeFi product page, it is responsible for connecting you to the blockchain network; when you need to perform interactive operations, you also complete the signature through it, and finally broadcast the transaction to the network, waiting for the transaction to be uploaded to the chain.There are many Metamask usage tutorials on the Internet, so I won’t repeat them here. Mainly explain the principle, so that everyone can have a macro understanding. as the picture shows:0. A user accessing a decentralized application (Dapp) is no different from accessing an ordinary Internet application. Its just that some of the data displayed on the page comes directly from the chain, such as from the ETH node.
1. When you want to perform an operation, such as placing an order (exchange), liking and forwarding (microblogging), you need to write data to the chain.2. At this point, the page will initiate a signature request to Metamask, and Metamask will also faithfully display the details of the transaction.3. When you directly use Metamask to store the private key to complete the signature, there are actually no steps 3 and 4. But this is not safe enough for larger funds. Metamask should only be a bridge, and the role of private key custody authorization should be handed over to a more professional hardware wallet.4. The hardware wallet will display the transaction information that needs to be signed, and the user will confirm it on the hardware wallet after checking, and the signed transaction will be returned to Metamask.5. Finally, Metamask will broadcast the transaction and wait for it to be uploaded to the chain.So why do we have to interact with DeFi products through a chrome plug-in and wallet? This starts with the birth of the Internet.The initial Internet, we call it the Web 1.0 era, when surfing the Internet was basically browsing, and the resources on the Internet were provided by a group of professionals. The masterpieces are various portal news websites and yellow pages. Ordinary people cannot participate in the construction of the Internet, and the channels of voice are in the hands of a few people.
The rise of Wikipedia and social networks gave birth to Web2.0, everyone is a participant and a builder of the Internet. That is the era we are in now. We use the Internet every day and we are building it together. We post and write comments, likes and reposts with one click and three links.However, the extreme prosperity of information has also brought some disadvantages. Internet giants have a large amount of user privacy and data. These users own data will not only be used for profit, even users themselves cannot take away their own data and assets independently and choose a better platform. Centralized services are often subject to hacker attacks and privacy leaks, and independent commercial interests cannot efficiently break down isolated islands and exert greater value.Therefore, the concept of Web3.0 has been put forward by people. Users use digital identities to authorize login, and have ownership of their identities and data, and use encrypted assets to transfer value. All of this is built on top of the Dapp (Decentralized Application) architecture.The essence of DeFi mining?
Moderator: We just mentioned a word, DeFi farming, or what is the essence of DeFi mining?
After talking about so many basic concepts, everyone may not be able to wait, how can we mine? Do you want to buy a mining machine? Does it consume electricity?Unlike PoW public chain mining, mining in the DeFi world does not require computing power. And the term mining has never specifically referred to mining machines. The essence of mining is the original issuance of tokens, which is different from the Ethereum Token issuance in 2017. Most of the Tokens at that time were issued after the project side held all the total amount, and then carried out private placement and sold them at a certain price. , and finally find someone to take over the air in the secondary market.Todays DeFi projects advocate fair distribution without private placement and pre-mining. In addition to airdrops, mining can be roughly divided into two types:1. Issuance of incentive nature. Your funds are needed to contribute to the project, such as providing liquidity market-making on decentralized exchanges; lending platforms for deposits and borrowing; platform currency market-making (providing liquidity) required by all projects. You made a contribution, so you are rewarded with tokens of the platform, such as UNI, CRV, COMP, etc.Various components of DeFi
Moderator: Can scientists tell us what components are currently deployed in the DeFi ecosystem?
Haha, its time for the wealth password link.
just kidding. Due to limited space, it is impossible to explain every component of the DeFi world here, but only in general terms. And the top products of each track have also been widely recognized by the public, and after a round of considerable growth, the DeFi world is changing with each passing day and innovating every day, so these projects are not considered wealth codes at all. What is more important for investment is to improve awareness and be a friend of time.The AMM (Automatic Market Maker) algorithm represented by Uniswap is a major improvement and innovation of decentralized exchanges. The traditional centralized exchange is an order book model, which requires traders to place and take orders, and market makers to provide liquidity and match transactions. The automatic market maker simply relies on a formula, x*y=k, k is a fixed value, to realize the exchange of x and y currencies.Curve improves the supply and demand curve of x*y=k, so that more sufficient liquidity can be obtained when the price fluctuation range of the two currencies is not large. This has advantages for two currencies with relatively stable values, and can maximize the use of funds.
Mining in this type of DEX generally provides liquidity for the fund pool, and earns service fee rewards and platform currency rewards.
Represented by Compound and Aave. Adjust deposit lending rates according to market supply and demand, introduce oracles, and when price changes may cause insolvency, liquidator incentives are used to ensure system stability and security.The mining of lending products generally earns platform deposits and loan rewards, and essentially earns the income of deposit interest + deposit reward and loan reward-loan interest.
The centralized issuance of USDT has always been criticized by people, and users need to trust that Tethers US dollar reserves are fully mortgaged and do exist. As the infrastructure of DeFi, we urgently need a decentralized stable currency.MakerDAO is a well-established project on Ethereum that issues stablecoins based on over-collateralization. From SAI, which only supports ETH single collateral issuance in 18 years, to the current multi-collateral DAI, DAI has performed relatively well. But it still has its disadvantages. One is the risk from the collateral. The centralized stablecoin is also introduced into the collateral. Peoples trust in it comes from the recognition of the value of the collateral and the trust in the liquidation mechanism; the second is the over-pledged funds The utilization rate is not high. We need a purer stablecoin built on algorithms and consensus.Ampleforth tries to solve it by rebase of monetary aggregates. When the price is too high above 1$, everyones balance will increase proportionally, and people tend to sell; when it is too low below 1$, everyones balance will gradually decrease, and people tend to hoard coins. But the biggest problem with this type of elastic stable currency is that it will cause changes in address balances during the process of expansion and deflation, which is contrary to peoples usual cognitive habits. Not only that, but it also makes it difficult to interface with other DeFi products and centralized financial products, which is very unfavorable for integration into the DeFi ecosystem.So basis.cash and other algorithmic stablecoins have made further exploration and innovation, and moved the operation of a simplified version of the Federal Reserve to the chain. bac (Cash), as the main stable currency, will expand when the currency price is too high compared to 1$, and the newly issued tokens will be distributed to bas (Share) holders, and when the currency price is too low below 1$, it can Destroy bac to buy bab (Bond) at a very low price, so that this part of the debt can be repaid when the currency price returns to the expansion stage.The mining of such algorithmic stable coins is basically to provide liquidity for the issued project tokens to participate in the issuance of Share coins.# Revenue aggregator (smart pool)Having talked about so many mines that can be mined, you may ask: Is there a product that can be like a backgammon point reader, where the profit is high and where it is hit. To capture high-yield and safe mines in the entire network, I directly hand over the funds to it, and it helps me dig.Yes, income aggregators are also commonly called smart pools. Among the products on the chain, there are more representative ones such as: Yearn, Harvest, and Pickle.Of course, while it helps you mine and collect vegetables, there may also be great risks. For example, Harvest and Pickle were once attacked by hackers due to contract design flaws and loopholes, and more than 20 million US dollars were stolen respectively. Although the project has issued debt and is slowly repaying the debt, it is an anonymous and decentralized organization after all, and users who were damaged in hacking attacks generally have no confidence in the repayment of debts.Of course, there are also centralized smart pools, such as Cobo’s DeFi mining smart pool products.Safety
Moderator: Next, let’s talk about security. Security is the most important issue we need to consider when we participate in any investment. Please let scientists popularize the security knowledge of DeFi for us.
The first is the security of the private key. For small funds, the high handling fee of ETH is not friendly. It is likely that the on-chain handling fee paid will need to be mined for a month to pay back, so it is basically tens of thousands of dollars or more to mine. Mine is more cost-effective.If you have a large amount of money to mine, you must use a hardware wallet. At the same time, do your homework, really understand the role of mnemonics, private keys, and signatures, and understand the risks and consequences of each step of operation.On December 14, 2020, the founder of the NexusMutual insurance project was phished and nearly 40,000 XNM were stolen, even though he used a hardware wallet.It is not recommended for novices to go to the soil mine and the punch mine. The contracts of these projects may have backdoors and loopholes. Unless you have studied contract development in depth, even so, you may be mistaken because you don’t understand the economic mechanism or miss some details. Not to mention that Xiaobai, who doesnt understand the code, can do contract auditing.If you want to participate in DeFi mining, you can choose the top-ranked top DeFi projects on the debank to participate. And it is best to dedicate one address to one project to prevent the risk of over-authorization (sometimes there may be multiple addresses receiving airdrop surprises).In short, it is better to be in awe of investment than blind self-confidence with half understanding.Moderator: There is a saying that is good, the money earned by luck will be lost by strength, and everyone should do what they can.The way to participate in DeFi with low threshold
Moderator: Now that the gas fee of Ethereum is so high, many retail investors simply cannot afford to buy food. Is there any more convenient and low-threshold way to participate in DeFi?
The DeFi world is very exciting, but at the same time there are various risks hidden. If you are an explorer with a higher risk appetite and more funds, it is highly recommended to give it a try.If the capital scale is relatively small and you don’t know enough about DeFi, it is recommended to choose some of Cobo’s DeFi smart pool mining products and come to Cobo to participate in proxy mining, which saves handling fees and is safer, because for a transaction on the chain, 1 The gas fee for U is $10, and the gas fee for 1 million U is also $10. We have a professional team to ensure the safety of mining, but also earn a higher rate of return 
