DeFi Trust Empire? Multiple projects led by AC in "M&A" have seen sharp increases

What is the hottest event in the entire blockchain world in the past two weeks?

If you have been following the latest developments in the industry, you must know that in the past two weeks, no one can compete with AC (Andre cronje) for the limelight.

In just over ten days, Yearn (YFI) announced the "acquisition" of five well-known projects in the industry. People were surprised to find that the "merger and acquisition" events that occurred in the traditional world actually appeared in the DeFi world - is there such an operation? !

That’s right, this is the operation, and unlike the traditional financial world, AC basically did not spend a penny . It was just a "cooperation" at the business and developer level, but its effect on boosting the coin price was quite obvious. The coin price of each "cooperated" project had a significant increase, and YFI itself returned to the 30,000 US dollar mark today.

If you take a long-term view, you will probably realize that this acquisition by AC is likely to have a far-reaching impact on the future blockchain world that is far beyond the imagination of most people.

01Five merged projects

Source: COIN98

Before we talk about these impacts, let us first briefly introduce the five "acquired" projects:

1. Pickle

Pickle was once very popular when liquidity mining was booming. It was originally a project for stablecoin regulation and was slightly praised by Vitalik Buterin. Later, it gradually evolved into a revenue aggregator similar to the YFI machine gun pool . However, it was attacked some time ago and lost 20 million Dai, which was almost a disaster.

AC's acquisition directly merged the two machine gun pools, and the developers worked together, but the brand remained independent, and a new coin CORNICHON was issued to the victims of Pickle's previous loss of DAI, which is equivalent to a cucumber IOU. As for how to compensate in the future and whether to give this new coin other value capture, it depends on the proposals and votes of Pickle's DAO. At present, CORNICHON's market value is only over 1 million (CORNICHON's theoretical maximum market value should be equal to the hacked 20 million US dollars).

2. Cream

In the entire DeFi Lego building block, lending is definitely the most important part , and it is indispensable for building a DeFi trust empire.

Cream is a fork project of Compound, but it has cooperation with Compound Labs and can be regarded as a community version of Compound.

In addition to providing lending services in its own trust empire, the main reason why YFI absorbed Cream should be to create Stable Credit, which aims to provide a protocol for decentralized lending, AMM and stablecoins, so Cream will play a key role in this.

3. Cover

How could the financial world be without insurance business ? Andre directly brought in Cover, of whom he served as a consultant.

Cover's way of doing insurance is completely different from the current leader NXM. Simply put, Cover is more like a prediction or betting market. In theory, Cover allows anyone to buy insurance for anything.

Simply put, users use the pledged DAI to mint two tokens, Claim and No Claim, and set an expiration date. If a claim occurs before that date, 1 Claim = 1 collateral, and No Claim returns to zero. If no claim occurs, the price ratio between Claim and No Claim is automatically realized through AMM, which also reflects the market's confidence in this insurance policy (predicting the market feel).

In this way, the YFI ecosystem and machine gun pool (vault) have their own protection system, risks are hedged, and security is directly raised to a higher level.

4. Akropolis

AKRO is a DeFi project on Polkadot. The previous project positioning was to build a user savings and pension system based on Polkadot. In short, it wanted to be a commercial bank in the DeFi world .

Through the merger, AKRO will become the front-end institutional service provider for Yean's machine gun pool and lending agreement. It will also give YFI the opportunity to reach AKRO's institutional clients, and the investment strategies of both sides will also be better cooperated and expanded.

5. Sushiswap

I believe everyone knows Sushiswap, the “community version” of Uniswap, or it is not an exaggeration to say it is the “vampire version” of Uniswap.

Sushiswap may be the most important part of this merger, because it involves almost all the core businesses of the entire AC Trust . For example, Sushiswap will launch the decentralized aggregation trading platform Deriswap (AC's next project will combine options, loans and swaps into one contract to provide more centralized liquidity), the YFI strategy will use Sushiswap, Sushibar V2 integrates Keep3R, Keep3R provides Sushiswap with chain limit orders + Metawallet gas-free exchange services, and Cream reserves provide liquidity for Bento Box...

Judging from these cooperation terms, Sushiswap has the biggest piece of the AC DeFi Trust puzzle.

Of course, don’t forget the extremely important piece of this puzzle - Keep3R.

The price of Keep3R also skyrocketed after its cooperation with Chainlink. As an infrastructure plug-in for the entire DeFi world, Keep3R will surely gradually demonstrate its increasing value and status in the AC Trust Empire.

02
Impact on DeFi and the blockchain world

1. A new species brought by innovative monopoly - DeFi Trust

Generally speaking, in the traditional business world, innovative monopolies need to meet the following four conditions:

a) Achieving a breakthrough - YFI itself is a big breakthrough and innovation in terms of design and technology, and this merger is a breakthrough in the business and ecology of the DeFi world;

b) Network effect - Needless to say, whether it is YFI, Kp3R, or the five acquired projects, they all have a large number of users in the DeFi circle. This merger is equivalent to amplifying the network effect;

c) Economies of scale - we will talk more about this later. This merger is of great significance to the improvement of capital efficiency;

d) Brand advantage : AC itself is now the golden signboard in the DeFi world...

2. DeFi Lego VS AC Trust

What people talked about most before DeFi was probably the convenience and infinite possibilities brought by composability.

However, the formation of the AC Trust empire may change this.

Imagine that many years ago, when people went shopping, there was only one commercial street like Xiushui Street. You walked from one end of the street to the other. There were all kinds of shops and all kinds of goods. When you were tired and hungry, there were also various roadside snacks. It was very convenient.

However, what people like to go to now may be the super shopping malls like Oriental Plaza that integrate shopping, dining and entertainment. After all, you can find everything you need in it. The environment is better than that of the commercial street, the variety is more complete than that of the commercial street, and you can also drink Starbucks or watch movies...

AC previously tweeted that he was obsessed with capital efficiency, but the liquidity of the current DeFi market is fragmented , and liquidity is scattered in DEXs such as Uni, Sushi, and Bancor, lending products such as AAVE and Compound, and derivatives markets such as Hegic and OPYN. This prompted him to develop Deriswap, which combines swaps, options, and lending into a single contract with high capital efficiency, allowing swaps, options, and lending interactions between two assets.

Through these mergers and acquisitions, and the reconfiguration and combination of resources, the AC Trust Empire is forming a comprehensive DeFi solution that integrates transactions, lending, derivatives, aggregators, and insurance. Moreover, there is currently no sign of this type of merger and acquisition being terminated. The next direction of merger and acquisition may be stablecoins?

Imagine a single-protocol product in the DeFi market in the future, whether it is an old project or a new project, unless there is innovation at the protocol level, how can you compete with such a trust alliance with super high technical talent and capital efficiency? At present, the only ones that can be seen to check and balance it are AAVE and Uniswap. I remember that I often saw people joking about whether AAVE would get involved in the Swap business first or Uniswap would get involved in the borrowing business first. Now, it seems that the merger of the two companies in the future to fight against AC Trust is a better solution...

03
DAO: Community and Governance

Although in these rounds of mergers and acquisitions, the token prices of both YFI itself and the acquired projects have increased to varying degrees, investors and the community are theoretically very happy, but it is not all harmonious.

Take the first Pickle acquisition for example. Before AC announced the acquisition, there was no community vote on the merger, or any consultation with the community. Both communities became "one family" almost without knowing it.

Isn’t Yearn a DAO? Isn’t a DAO supposed to be decentralized? Shouldn’t everyone vote on everything? For such a big thing as a merger, you AC and Banteg (the current leader of Yearn) just decided on it without a vote or prior notice?! Before centralized corporate mergers and acquisitions, they still need the approval of the board of directors. How can our DAO be more centralized than centralized?

Someone mocked this with a comment Banteg made on Discord, where he said, "The community is a group of passive holders who just dictate what developers do and think that snapshot voting entitles them to any rights."

I believe that these mergers and acquisitions will inevitably give people more thoughts and explorations on topics such as DAO, community, and governance.

04
Layer 2’s voice

What is the current core of blockchain - the underlying public chain;

What is the current core of the underlying public chain - ETH;

What is the current core of ETH - DeFi;

The current core of DeFi is - ?

See? Whoever can become the core of DeFi can be said to be the core of the entire blockchain world!

The current DeFi core is "divided" by various projects, including various lending products, SWAP, derivatives, aggregators, stablecoins... It is precisely because of this that Layer2 solutions on ETH are emerging in an endless stream. There are five or six major directions alone, and there are many projects competing in each direction.

Fortunately, Vitalik has finally set the tone. ETH2.0 will be built with Rollup as the core , but even if we only look at Rollup, it is divided into ZkRollup and Optimistic Rollup, and several project teams are developing it.

The reason for this chaos is that Layer2 will break the fascinating composability of DeFi Layer1 , unless all DeFi Legos use the same set of Layer 2 technology and protocols. However, in the current world, this is obviously impossible. Each Layer 2 project is independent and no one is willing to submit to the other. A number of DeFi projects dare not easily adopt a certain Layer 2 to give up the ability to combine with other projects.

The emergence of AC Trust makes this kind of "unification" possible. The internal projects of the Trust Empire are united, and everyone can discuss everything. Find a set of universal Layer2 standards that can be used by various projects to transform all internal projects. When the DeFi Lego outside is still at Layer1 TPS15, the AC Trust Empire will provide one-stop services from transactions to borrowing to derivatives, with TPS of several thousand. What do you think users will choose? This may even force the Layer 2 projects to take sides. At that time, AC Trust will have a decisive voice in the "unification" of Layer 2.

From this perspective, the sooner the unification of Layer 2 comes, the more beneficial it will be for the entire industry. After all, we cannot keep tolerating 15 TPS and gas fees of more than 10 or 20 US dollars during congestion.