New opportunities hidden in the trillion-dollar DeFi market: Who will be the next "new favorite in mining"?

With the new wave of DeFi, centralized cryptocurrency exchanges are doing their best to launch innovative products and compete for traffic, and new coin mining is undoubtedly one of the most noteworthy products at present. The new coin mining strategy not only combines the advantages of IEO and DeFi liquidity mining, but also reduces the threshold and complexity of users' participation in DeFi, greatly simplifies the mining process, and increases the demand and value of exchange platform coins, which can be said to kill two birds with one stone.

How big can the DeFi market grow? Although it is difficult to give an accurate answer to this question, one thing is clear - it is definitely bigger than you think!

On April 28, the total locked-in amount of DeFi exceeded $100 billion for the first time; just three days later, this indicator reached $110 billion on May 2, and exceeded $120 billion a week later. On Monday, May 10, the total locked-in amount of DeFi broke through the 130 billion mark, setting a new record high.

At the time of writing, the DeFi lock-up volume has dropped slightly to $122.81 billion, with a net lock-up volume of $89.08 billion (as shown in the figure below). Of course, it seems difficult to understand this volume concept simply from the numbers, but if this number is put into traditional finance, it may be more intuitive - according to Infinite Market Cap data, the current total DeFi lock-up volume has exceeded the financial giant Goldman Sachs Group (US$120.41 billion) and China Life Insurance (US$120.23 billion), and is approaching HSBC (US$125.47 billion) and SoftBank (US$140.48 billion).

Perhaps many people don’t know that about a year ago, the total locked amount of DeFi was less than 700 million US dollars, which means that the market size has increased 100 times in one year. Frankly speaking, the huge potential of the DeFi market in a short period of time is both surprising and reasonable. As a new financial model, DeFi has strong scalability and composability, and also has the characteristics of openness, transparency, low cost, low default, high efficiency, intelligence, and automation. With these functions, we have seen that the "DeFi tentacles" have rapidly extended to lending, synthetic assets, NFT, yield farming, liquidity mining and other fields, which is also one of the main reasons for the rapid growth of the decentralized financial industry.

From the DeFi boom in 2019-2020 to the NFT boom in 2020-2021, the market seems to have started looking for the engine to trigger the next round of market growth recently, and many industry insiders have found that "new coin mining" is likely to be the spark plug to start this engine. Some people may think that NFT became popular overnight, but this is not the case. The concept of NFT actually appeared as early as 2017. After nearly four years of dormancy, it has become as popular as we see today - the same is true for "new coin mining". Some leading cryptocurrency exchanges launched this service as early as 2020, and with the rapid growth of the decentralized financial market, "new coin mining" has now become a key component of this field.

The concept of "new coin mining" is not difficult to understand. It is a new mining model that combines IEO and liquidity mining. Users only need to provide corresponding digital assets without investing too much money to grab shares. They only need to pledge the assets designated by the exchange to participate in the new coin mining project and obtain corresponding returns.

The new coin mining method is essentially the form of IEO+airdrop of new DeFi tokens. IEO is to obtain new coins in one go by mortgaging platform coins, and new coin mining is also to mortgage platform coins (or other designated tokens), but the new coins obtained are distributed slowly. In fact, although major cryptocurrency exchanges claim to be low-priced new coin in the IEO era, the pricing power is still in the hands of exchanges and project parties. Most users only have the opportunity to participate in crowdfunding but do not have the bargaining power of tokens. The "new coin mining" model has changed this situation and has become a breakthrough for exchanges to tap new users and explore new business models.

Who will be the most noteworthy "driver" in the new currency mining and wealth creation race?

In fact, leading cryptocurrency exchanges including KuCoin, Huobi, Binance and OKEx all launched the "new coin mining" business in September 2020. In fact, the decentralized financial market was in a rapid growth stage at that time, and the total locked volume of DeFi broke the $10 billion milestone for the first time in history that month. With this favorable trend, the number of cryptocurrency exchanges entering the new track of "new coin mining" has gradually increased. So who is the most noteworthy "driver" in this track?

Next, let us compare the new coin mining business of several major cryptocurrency exchanges, perhaps we can find some highlights from them.

From the comparison of the new coin mining business of the above-mentioned leading cryptocurrency exchanges, the most unique gameplay is KuCoin platform. First of all, compared with the new coin mining mode of other trading platforms, "lock up one day and issue one day of mining rewards", KuCoin's BurningDrop rewards will issue most of the new coin rewards on the day of starting lockup (most project rewards are issued at one time on the day of starting lockup), which is equivalent to the difference between paying the entire month's salary on the first day of work and daily wages. Participating in KuCoin's new coin mining in advance can get more benefits. Another thing worth noting about KuCoin's new coin mining is that they have added a burning acceleration link, that is, after staking assets, you can increase your mining computing power coefficient (acceleration coefficient) by burning another encrypted asset, so as to obtain more new coins. Therefore, KuCoin's BurningDrop is usually divided into two stages: the staking period and the burning acceleration period. After locking assets during the staking period, you can obtain an initial computing power. In the burning accelerator, you can increase your computing power coefficient by burning a certain specified token, and finally distribute new tokens according to the final computing power coefficient. If you want to know the specific burning rules of KuCoin, you can go to the KuCoin official website to learn more.

The entry of "new coin mining" triggers the next wealth-creating effect

From liquidity mining to new coin mining, there is no doubt that the entry of cryptocurrency exchanges has opened windows for more ordinary users to explore the world of decentralized finance.

In fact, ordinary users still encounter many problems when they want to profit from liquidity mining in the DeFi field. First, the expensive gas fees and congested networks discourage many retail investors; second, the transaction operations are too cumbersome and prone to errors, and the unfriendly user interface makes transfer transactions unsafe. With the entry of leading cryptocurrency exchanges such as KuCoin, Binance and Huobi, it has played a positive role in promoting ordinary users, new coin projects, and the entire DeFi market. In terms of security, when users mine new coins, almost all operations can be completed within the trading platform, and there is no need to perform too many on-chain operations, so they can get sufficient protection.

Moreover, in the past DeFi market, many liquidity mining projects often ran away or the founders of the projects disappeared, which made it easy for investors to lose their funds. In contrast, new coin mining projects launched on cryptocurrency exchanges are basically screened by the platform, and with the "endorsement" of the exchange, many new coin mining projects are of relatively high quality. For example, the IDO projects launched by BurningDrop recently are all on DAO Maker. Each project has good development potential. Among them, HORD opened with a 25-fold increase, TCP opened with a 24-fold increase, and LOCG opened with a 18-fold increase, with obvious wealth-creating effects.

"New coin mining" helps exchange platform coins rise

From the previous analysis, we can see that if you want to mine new coins in the leading cryptocurrency exchanges, the pledged assets that users can choose are mostly the exchange platform coins (Carbon Chain Value Note: KuCoin has relatively more pledged assets to choose from, including USDT, Bitcoin and Ethereum). This means that users who want to participate in new coin mining need to hold platform coins, which in turn indirectly boosts the value of exchange platform coins.

We compare the platform coins of the "four major" leading exchanges (as shown in the table below, data source: Coingecko, data extraction time May 9, 2021), and perhaps we can get a clue from it:

Summarize

With the wave of DeFi craze, centralized cryptocurrency exchanges are doing their best to launch innovative products and compete for traffic, and new coin mining is undoubtedly one of the most noteworthy products at present. The new coin mining strategy not only combines the advantages of IEO and DeFi liquidity mining, but also reduces the threshold and complexity of users' participation in DeFi, greatly simplifies the mining process, and increases the demand and value of exchange platform coins, which can be said to kill two birds with one stone.

As the new coin mining business gradually matures, more and more users will inevitably participate in the DeFi market through cryptocurrency exchanges. At present, mainstream exchanges including KuCoin, Binance, Huobi, etc. are ready for the next wave of craze. Who can become the trend-setter in this field? Let us wait and see.