Can’t catch up with “liquidity mining”? Why not study where the next DeFi is?

These two weeks have once again proven that “one day in the cryptocurrency world is like one year in the real world.”

DeFi was surging at an extremely fast speed. Just when the “classical leeks” could no longer hold back and were ready to rush into the market to take over for the “new leeks”, YAM suddenly collapsed, killing all the DeFi tokens.

Old investors are hesitating whether to enter the market at a low price, while also trying to study the "next opportunity". And investors who are already on the DeFi train are somewhat skeptical about where this train will go.

“The construction of DeFi is not a matter of one or two days. There will be bottlenecks to a certain extent, and the trends in the encryption field will also change cyclically.”

“It’s a stock game at the moment, and the DeFi market is coming to an end.”

...There are endless voices like this. As a result, the market analysis of "Where will the next DeFi be?" has become more and more popular, and the concept sectors of "Amway" include DAO, NFT, decentralized derivatives platform, DeFi cross-chain protocol, etc.

The price of the currency has not changed, so we need to Photoshop first

With the hype, the leading coin of DAO has increased by 1-3 times in the past week, and the NFT concept coin has increased by nearly 1 times, and has been "strongly recommended" by exchanges such as Binance.

So, what are the stories behind these emerging sectors? What coins are involved? What risks should you be aware of before buying? This article will analyze them one by one.

Is there any future for the “metaphysical” DAO?

DAO (Distributed Autonomous Organization), translated into Chinese as distributed autonomous organization, is something a bit "metaphysical".

If the birth of Bitcoin is to transform the monetary system, then DAO aims to optimize the organizational system.

From families, enterprises, institutions to government agencies, they are all organizations. So what can decentralization bring?

In short, DAO operates through smart contracts, members can join and exit freely, organizational rules can be customized, the code is public and enforced, human manipulation is eliminated, there is no legal entity, and no one can interfere.

This is simply a "utopia" in the 21st century. Because of this, in 2016, the pioneering "The DAO" was able to rave about $160 million with "decentralized VC" and became the largest 1CO in history at that time.

Although “The DAO” failed before it could accomplish its mission, for real organizational systems, DAO is still full of potential for change.

Before that, with the construction of the on-chain world over the past four years, DAO has become an indispensable part of many projects.

For example, public chains such as Nervos, IoTeX, and aelf have set up DAOs in the community for locking, destroying, and managing foundations. DApps such as LexDAO, a labor matching market based on Ethereum, and decentralized VC PieDAO, as well as DeFi projects such as MakerDAO, KyberDAO, Synthetix, Aave, and CurveDAO, are all using DAOs to complete daily operations and deliberations. Even the detonation point of this DeFi is the issuance of an incentive governance token by Compound.

Therefore, some optimistic DAO believers believe that as the DeFi governance token issuance continues, it will give rise to a large demand for governance tool platforms, and the popularity of DAO is only a matter of time.

So for investors (xin jiu cai), among the thousands of DAOs, which coins should they pay attention to?

DAO projects on the market are mainly divided into two categories:

One is the general-purpose DAO platform, with major players including Aragon (ANT), DaoStack (GEN) and Kleros (PNK);

The other type is dedicated DAOs, such as the DAOs embedded in projects such as MakerDAO, KyberDAO, Synthetix, and Yearn.finance. They are all designed to achieve their own specific functions. Their price fluctuations may not follow the DAO "concept sector", but more follow their main business, such as lending, payment, etc., or whether they launch "powerful stimulants" such as liquidity mining. I will not go into details here.

Next, let’s take a look at the three original DAO platforms.

In general, the three major platforms were established earlier, and the highest increase to date is 23 times (PNK), and the lowest increase is GEN (-31%), which is still below the issue price. The market value of both is more than 20 million US dollars. The market value of Aragon (ANT), the leader of DAO, is more than ten times that of Aragon (ANT). The increase since its issuance is not too high (6.9 times), with an increase of 86% in the past 24 hours and a 410% increase in the past month.

What is the strength of this leader? Odaily Planet Daily once detailed in the article "Do you still say that governance projects are not sexy? This DAO has attracted $7 million in half a year since its launch" that Aragon is positioned as a DAO "manufacturing factory", where you can create and operate a DAO in a few minutes and a few dollars (if the gas fee does not skyrocket).

As a project of the same period as The DAO, Aragon raised $25 million through 1CO and launched its mainnet at the end of 2019. As of the end of May this year, more than 5,700 addresses have created/participated in about 1,400 Aragon DAOs, managing digital assets of $7 million. The above-mentioned Aave, CurveDAO, Synthetix, etc. are all created based on Aragon.

In Silicon Valley, Aragon, a highly available innovative project, also has many supporters including Silicon Valley venture capital godfather Tim Draper, New York venture capital fund Placeholder, CoinFund and Silicon Valley venture capital firm BoostVC.

Last October, Aragon suddenly announced that it would develop a dedicated sidechain based on Cosmos, which caused quite a stir in the Ethereum community. However, this decision was mainly to avoid the risk of a single platform and reduce user costs. With Ethereum Gas skyrocketing, Aragon’s choice is not unwise.

DAODaoStack (GEN) is similar to Aragon, and is also positioned as a framework and platform for building DAOs. Kleros (PNK) focuses on the single function of the on-chain arbitration machine. Currently, there are more than 200 jurors on the Kleros Court platform, and more than 150 disputes have been handled in total.

There is no doubt that these tools are cutting-edge and have application scenarios, but in the eyes of most people, complete autonomy is as extreme as absolute centralization, and it is very difficult to implement.

At the same time, DAO platforms such as Aragon have also encountered bottlenecks. For example, a DAO with liquidity mining can easily attract hundreds of millions of dollars, but an unverified DAO is undoubtedly risky.

Will the niche “chain game” driven by NFT explode?

On the afternoon of August 13, Binance opened subscription for a new round of IEO, and the online project was the NFT token Sand.

In the current "new coin bull market", many investors are also looking forward to the NFT sector. As a result, Sand's 7-day trading volume soared by 150%, and the price of MANA, the "leading" old NFT project, rose by 87% in a week.

NFT (Non-Fungible Token), a non-fungible token, each token is unique, indivisible and inexchangeable. It is mainly used in games, artworks, domain names, collectibles, real asset tokenization (STO) and other fields, especially artworks and games.

“CryptoKitties” is one of the most successful practices. As of today, 2.8 million CryptoKitties have been sold, with a total transaction volume of more than 37 million US dollars.

So, how to play NFT, and who will be the next MANA or CryptoKitties?

You may have noticed this problem. Since each one is unique, how can it be traded? In fact, most NFT tokens are not listed on popular exchanges such as Binance. Unique tokens are bound to involve selection and bidding, and many are even traded in the form of auctions.

Therefore, only a small number of special games with ERC-20 token gameplay can be listed on popular exchanges, such as the three top-ranked tokens to be launched next, ENJ, MANA and FFF.

ENJ (Enjin Coin) is based on Enjin, a world-class online game creation platform. The platform was launched in 2009 and has been in operation for many years. It has 250,000 game community guilds, e-sports teams, game communities, game tribes, role-playing groups, fan websites, etc., 18.7 million registered users, 600,000 monthly UVs, and the game asset store in the community has monthly sales of millions of dollars.

As a common ERC-20 token, ENJ can be used to mint unique game assets on the platform, and these assets can be converted into ENJ at any time. Therefore, the role of ENJ is similar to that of NFT.

ENJ was officially launched in 2017. Its circulating market value has reached over 100 million US dollars so far, and the price of the currency has increased by 6.2 times. The increase in the past month has been relatively low, at only 20%.

MANA is the circulating token of Decentraland, the on-chain version of Minecraft. MANA can be exchanged with LAND, the NFT token in the game, thereby achieving anchoring with special assets and attracting funds from the market to strengthen the project.

In 2017 and 2018, there were actually quite a few blockchain projects that told stories about anchoring the virtual world and real assets, but only a few have survived to this day, and MANA is the pioneer among them.

MANA was launched in 2017. As one of the largest "chain games", the circulating market value of its tokens exceeds 100 million, with a cumulative increase of more than 3 times, and the highest increase in the past 7 days reached 80%.

FFF is a new NFT that went online this year. It is positioned as a car racing platform, where unique digital assets such as car parts can be purchased through FFF.

FFF’s current market value is relatively small, at only US$1.4 million, but it has increased 6.2 times compared to its issue price, and its trading market is quite concentrated (MXC and Hobbit).

In addition to these ERC-20 tokens that can be purchased directly on exchanges, investors can also purchase real NFT tokens on specific markets (such as the trading platform OpenSea).

On the website Nonfungible.com, you can find the latest and "high-yield" NFT tokens. As shown in the figure below, it provides investors with data such as the 7-day total sales and transaction ranking of NFT tokens.

As can be seen from the above figure, the art creation and trading platform SuperRare, the on-chain version of "Minecraft" Decentraland, the star card game Sorare, the sandbox game The Sandbox, and the Ethereum Name Service that provides unique domain name services for wallet addresses have the highest 7-day transaction volume.

Among them, Decentraland and The Sandbox have been popular in the secondary market, with transaction volumes increasing by 50% and 150% in the past seven days, and the transaction volume of Ethereum Name Service has also increased by 170%.

Overall, only CryptoKitties ($37 million) and Decentraland ($24 million) have NFTs with a total transaction volume of tens of millions of dollars. Nearly 5 million NFTs have been sold in the entire market, with a total transaction volume of more than $100 million.

Judging from the monthly transaction volume, the NFT market has only US$710,000 in capital flow each month, which is a very small market. However, looking at the average price of NFT, the historical average transaction price is US$21. In the past 7 days and 24 hours, it has soared, with an increase of 4.5 times and 5.9 times, which seems to be a sign of a substantial asset premium.

Another imaginative reason for the emergence of NFT is its linkage with DeFi.

Let’s take a real use case. This year, a lending platform called Rocker NFT appeared on the market, allowing users to pledge NFT to borrow DAI.

People's imagination about NFT is that game platforms with NFT assets can also launch governance tokens, allowing game players to plan platform functions and control the rules of the game, which seems to be much more fun than governing a purely financial project.

Of course, in addition to bold imagination, we should also pay attention to risks.

NFT token transfers and transaction volumes, data from: dappradar

As can be seen from the above figure, the transaction volume and transaction amount of the NFT market are arranged in a "comb line". If a currency is arranged in this way, it usually means that the liquidity is not very good, the market price jumps greatly, and the risk increases accordingly.

postscript

The sudden rise of DeFi has led many teams and investors who want to take advantage of the popularity to start working on "concepts", and the market has become home to many mixed speculative teams.

Including the concepts and projects we mentioned above, there are many people who want to hype them up. For example, the two people below used the "DAO concept" to make orders in the group, so please be cautious when entering the market.

Some investors have seen through everything. "To be honest, the current market sentiment is that the exchange will speculate on whatever it wants..."

Perhaps, the “collapse” of YAM comes at the right time. It is a reminder to investors and practitioners to never abandon the support point of the product itself.

References:

After DeFi, can NFT, DAO, and oracle trigger the next bull market? , Blocklike;

Another new hot spot after DeFi, this time the imagination space is much greater? , Vernacular blockchain;

DeFi is hot, and the DAO project has increased 7 times in March. Will it be the next hot spot? 、Little Nezha with his hands in his pockets;

NFT exchanges similar to Taobao, with a transaction volume of 300 million, have initially taken shape and scaled blockchain;

Do you remember the world of CryptoKitties NFT? It can also be combined with DeFi and run finance;