Welcome to all our free subscribers. What will be shared today and the days ahead are free alpha from our Economics Design's researchers.
TLDR below. This is not financial advice.
Please keep these mails secret and do not share them with any one because these alphas are confidential. Enjoy your reading.
Recently the keyword “DeFi 2.0” has emerged as a phenomenon along with the rapid growth of several tokens such as Olympus DAO, Klim DAO, Abracadabra, Popsicle Finance, etc. So what is DeFi 2.0? How is it different? Why say DeFi 2.0 has the ability to change the entire DeFi today? And what will we need to prepare for the coming giant wave?
DeFi 1.0 is the straight-forward simple things like "I give you $150 worth of ETH. You give me $100 worth of crypto USD.
DeFi 2.0 is more risk understanding. Instead of $150 worth of ETH, maybe just $110 worth of ETH or $150 alt-TOKEN to get the same $100 crypto USD.
How is it different from "DeFi 1.0"? Well.... it's not so different. Similar mechanisms but with higher risk tolerance.
DeFi is a decentralised finance (or open finance), by leveraging the power of blockchain, DeFi has made it possible for anyone to access and use financial applications anywhere, anytime. not subject to the control of individuals or organisations with centralised power.
However, DeFi currently has many limitations and as the name suggests, DeFi 2.0 is an upgraded version of DeFi, helping to overcome the weaknesses and optimise the advantages of current DeFi. Thereby opening up great potential opportunities for the parties involved.
Current DeFi Limitation
To understand the problems that DeFi 2.0 solves, we must first know what the problems of DeFi are, the prominent limitations of DeFi include:
Scalability: Expensive gas fees, long waiting times greatly affect the user experience.
Liquidity: Liquidity is considered the blood of any trading market, and with DeFi, liquidity is generally low.
Centralisation: DeFi will not make sense without the word "De", although DeFi aims at decentralisation, but with many projects at the present time, the power still belongs to a small part (still remains).
Security: DeFi is a market with a lot of risks, security in DeFi has not really received much attention compared to their importance.
Oracle Attack: DeFi depends a lot on Oracle, but many projects still do not understand and underestimate the choice of Oracle to integrate. As a result, the project suffered a lot from related attacks.
Capital Efficiency: DeFi with many breakthroughs from technology has helped users use capital more effectively, but at the moment, there is a large amount of assets that are still underutilised. opens up many new development potentials for DeFi.
What Else Did You Miss?
Ability Of Extension
Centralised — DAO
Capital Efficiency And The Ability To Innovate DeFi
Get premium access to unlock more content
The above article has pointed out the problems that DeFI is facing and new projects are solving them. Effective capital is still the top priority of DeFi 2.0 today, that is, trading volume on TVL (DEX) or Outstanding Loan on Total Lending (Lending/Borrowing) must be higher.
We also have to redefine what a protocol is and how effective it is, and if it does, it will give DeFi access to more funding in the future.