In 2008, when Satoshi Nakamoto invented Bitcoin, his vision was to invent a medium of value that could enable peer-to-peer transactions. The fundamental purpose of this vision was to change the Jewish financial system and break the monetary system that exploited the lower-class working people through currency issuance. However, twelve years later, this original vision is still difficult to achieve. Although Bitcoin has achieved a ten-million-fold increase, Satoshi Nakamoto's original vision of changing the world's economic system through cryptocurrency has evolved into another new financial casino. The concept of decentralization has caused the industry to lose order and become full of desire, fraud and scams. Even DeFi, the blockchain upstart that has become popular in recent years, has slowly become a cash machine for people with ulterior motives. The full name of DeFi is Decentralized Finance, which is also called "open finance". Currently, almost all DeFi projects are carried out on the Ethereum blockchain. Ethereum is a global open source platform for decentralized applications. On Ethereum, digital assets can be managed and programs can be run by writing code without geographical restrictions. The cryptocurrency it produces is called Ether (ETH). DeFi is a series of financial applications developed based on an open decentralized platform, and the entire business process is an interactive action on the chain. Compared with traditional finance, DeFi is more open and inclusive: First, DeFi does not need to rely on any centralized entity to provide credit intermediaries or endorsements; Second, there is no access restriction, that is, anyone with an Internet connection can enter; Third, no third party can prevent or reverse any transaction. DeFi and traditional finance are two different things and cannot be compared. Traditional finance serves the real economy and is a financing process. The process is accompanied by risk transfer, resource allocation, price discovery, and deals with legal currency. DeFi has nothing to do with the real economy and is more about the cryptocurrency field. Although some financial engineering product design methods may be used, financial risks are involved, and traditional financial risk analysis methods can also be used, the service scenarios, objects, and goals are completely different, so it is a completely different concept from traditional finance. DeFi projects have exploded in 2019, with the total value locked increasing by 137.23% in 2019 alone. Now, 1 in every 37.12 ETH is locked in DeFi protocols. There are different categories of DeFi protocols, such as lending protocols, stablecoins, exchanges, security tokens, insurance platforms, etc. This is a platform that connects lenders and borrowers in a decentralized way. On one hand, it allows borrowers to borrow cryptocurrencies from the platform and pay interest, and on the other hand, it allows lenders to deposit cryptocurrencies to the platform to earn interest. DeFi lending protocols can usually offer higher interest rates than bank savings accounts.
Generally, they are divided into collateralized stablecoins and algorithmic stablecoins. The most representative collateralized stablecoin is DAI, which is issued by the MAKERDAO Foundation and issued through community collateralization of ETH. DAI can be regarded as a stablecoin backed by ETH. Algorithmic stablecoins currently have no outstanding representatives, and most of them are in the conceptual stage, which can be regarded as stablecoins that are not stablecoins.
Exchanges mainly refer to DEXs. The latest type of DEX is different from the early DEX exchanges, represented by Uniswap. Users charge the target currency and the denominated currency (usually ETH) into the Uniswap liquidity pool. Traders operate the liquidity pool through the Uniswap protocol to complete the currency exchange. The most representative one is the NXM project, which provides security deposits for target platforms through community funding of other DeFi project platforms. When the target platform encounters risks that meet the community's requirements, the NXM security deposits will be converted into ETH to pay compensation to the insured users. Users who inject security deposits can enjoy interest returns. The above is an introduction to typical projects in the current DeFi ecosystem. In addition, many project parties and investors have issued various DeFi project coins under the concept of decentralized finance, and have used decentralized exchanges to lower the threshold for cashing out chips. All of a sudden, all kinds of evil spirits swarmed out. Although the market has just picked up, this chaos is still destined to end in a mess. For example, the recently popular AMPL project attempts to freely derive a completely decentralized stablecoin by establishing a three-party contractual relationship between supply, price, and market. The supply expands and contracts in response to its price deviation from the $1 target. Deviations cause the supply of AMPL to change once every 24 hours, increasing or decreasing the number of tokens in each holder's wallet. Ampleforth is the only asset in the world with elastic supply properties, so it has counter-cyclical trading pressure and is not correlated with other digital assets such as Bitcoin. The vision of this project is very beautiful, but it accidentally uses the evil mechanism of compound interest. According to its design, when the price rises and the supply of tokens increases, it will naturally stimulate the community's desire to sell. But the fact is that compound interest will bring out the greedy devil in the hearts of coin holders. Faced with the temptation of 10% daily compound interest, they will completely lose their minds and fearlessly invest their labor income. In the end, the beautiful vision of stablecoins will be led by compound interest to the crooked path of Ponzi schemes. Therefore, even if the original intention of the project party is admirable, the DeFi project based on the Western economic system, that is, the Jewish economic system, is destined to be influenced by the design concept of interest and ultimately lead to the only destination of failure. So where should the real way out for decentralized finance be? Simply put, whether centralized or decentralized, their essence is still finance, so the key to unlocking the dilemma still lies in the financial system. Islamic finance may be a good direction to consider. The essential difference between Islamic finance and Jewish finance is that Islamic finance has ethical rules. If the crypto-financial system based on pure mathematical rules has been proven to be unable to benefit the world, what will happen if it is integrated with Islamic finance with ethical rules? The birth of Islamic finance originated from the Quran, Hadith and Islamic law. The most prominent point is the prohibition of interest. In early Christianity, interest was also prohibited. When the Prophet Jesus first climbed the Temple Mount in Palestine, he first overturned the money box of the Jewish usurer. The Prophet Muhammad witnessed the suffering and social injustice brought to people by hoarding, speculation and usury. He spread the human transaction ethics set by God to people - prohibiting usury. What sparks might Islamic finance and Qitmeer’s DeFi create? First of all, Islamic finance prohibits interest, which will naturally prompt financial practitioners or DeFi project owners to change the economic model design of Tokens to contribute to entities and generate social value. Here are a few simple examples: 1. Favorable transactions. If the borrower needs to purchase a set of equipment, the DeFi project can pledge the equipment to the Qitmeer contract according to its value, exchange it for Meer, share the ownership of the equipment in the form of a community, and rent it to the borrower. The borrower can distribute the profits generated by the equipment to the community members according to the proportion of Meer held by them. This financing method has a lower threshold for entities and a simpler and more flexible financing channel. 2. Joint investment. Assume that a DeFi project based on the Qitmeer public chain is preparing to invest in a project with its partners, which will be managed by one or both parties, and the profits and losses will be distributed according to the proportion agreed in advance. However, due to the long-term participation of the DeFi project party, the funds will lose liquidity. Therefore, the project's holdings can be used as collateral to exchange Meer and establish a debt position contract, issue tokens, and raise funds from the community, thereby activating the liquidity of the DeFi project party's funds. 3. Installment loan investment. DeFi project owners initiate installment financing, and community participants can voluntarily provide funds to the project owners in installments. The project owners use the equity of the investment target as collateral, issue tokens, and distribute them to community investors. As fundraisers, the project owners and community investors have the right to delegate and review investment projects, vote, and share profits. 4. Zakat. There is an important activity in the Muslim financial world called Zakat. Zakat is the Chinese translation of the Arabic word Zakat. According to Islamic law, every Muslim family with legal income must take 2.5% of the family's annual net income to help the poor or those in need, also known as the "poor tax". Through the Qitmeer public chain, Zakat activities can achieve the ideal conditions of the lowest threshold, the widest coverage and the most equitable distribution. In short, the DeFi basic public chain established through Islamic financial thinking will establish application models with the design vision of improving the real economy, thereby truly realizing the original wish of the blockchain when it was first born. — END —
Follow Qitmeer Community, learn the latest official news
Official website: https:// www.qitmeer.io
You can follow us on Weibo: Qitmeer Official Blog https://weibo.com/u/6927472999
Facebook users can directly access: https://www.facebook.com/QitmeerPublicChain/
Qitmeer Global Community:
https://t.me/qitmeernetwork
Follow @Qitmeer Network on Twitter
BeeChat: https://t.beechat.io/b6fea4fa0835477f8118d517ff96a208 Instagram: @Qitmeer Youtube: @Qitmeer
To learn more, please join the Qitmeer community Scan QR code Enter the official community |
