In the development of blockchain, DeFi plays an important role in the implementation and promotion of technology. It connects TradFi with the decentralized crypto world, bridges the inherent defects of financial development, and brings about open, inclusive and inclusive financial services. After the prosperity of DeFi Summer in 2020 and the expansion of the ecosystem, the ceiling effect of DeFi is getting clear. The industry has been concerned that the growth and the product innovation are slowing down, and the economic model types are not rich enough. At the same time, as the representative of the next generation of the Internet, Web3 is rapidly emerging for its great potential and has attracted traditional technology enterprises and blockchain industry players. Whether the ecological rise and progress of Web3 can provide the soil for DeFi’s development and empower the the upgrade of on-chain financial business model is a question worthy of the whole industry’s attention.
On Jul 13, Blocklike held a panel roundtable themed “Web3: Leading to new DeFi” to focus on the promotion effect of the bottom layer of blockchain technology on DeFi application layer, DeFi business model innovation, market value capture and other topics. Leaders of five Web3-oriented projects A&T Capital, Crust Network, Konomi, Bit.Store, Ceres were invited to join the live. The panel was on both Binance Live and Marsbit, attracting viewers as many as 30,000. Here are some excerpts from the discussion.
Youtube: https://youtu.be/ersPdOsSomk
- Web3 and DeFi: Value Economy based on blockchain
In the last market development period, DeFi was considered the most real-demand and the most practical scenario application in the blockchain field. The financial system, built on the basis of decentralization and combines the staking and profit incentive functions of traditional finance with crypto and digital technology, can develop into a more open, efficient and permissionless financial business system. To some extent, the inner crypto-financial model, including swap, staking and liquidity mining, satisfies the public demand for trading, investment and asset management.
Web3, based on blockchain technology as well, takes exploring user’s identity value, individual rights and interests as its main task, focusing on the construction of user ownership system to realize the growth of value profits, free flow of user value and equal interaction on the chain. Although DeFi and Web3 started with different timelines, both of them leverage digital technology to change the real world, reflecting the same spirit that is allowing users to take control of their identity, value and profit rights.
Sascha Stange, Marketing Director of Bit.Store stated that DeFi has created a goldrush scenario over the years, in which the projects built like Lego have made the industry grow, rapidly but not sustainably. We shouldn’t forget to look beyond DeFi and seek for new breakthroughs in the economic modes, which is a long but promising process.
In Jayden, COO of Konomi’s opinion, there are truly some problems in the last period of DeFi’s development, which are also persistent challenges, that the user base is not steady enough, despite the fact that TVL has increased multiple times since the DeFi Summer in 2020. One of the reasons for this is the high learning cost for ordinary users to use dApp as a barrier. We can build a bond between Web3 and DeFi by creating more use cases of diverse categories, making DeFi more resilient for future crises.
- From the base to application: Web3’s expansion and innovation
The ecological explosion of Web3 lies fundamentally on DID, zero-knowledge proof, IPFS storage and other base layer. Based on this, the protocol, cross-chain, Oracle and other technologies create more space for the expansion and growth of blockchain ecology, making it possible to rebuild various connections, services and access in the digital world. With the maturity of Web3 infrastructure, more and more innovative uses will be born at the application layer.
In recent years, with the ecological construction of new public chain projects, DeFi has more and more choices of bottom layers, most of which have their advantages in capacity, speed, cost and gas fees, etc., making a significant impact on the full integration of DeFi and real assets in the future, as well as the improvement of user experience, volume escalation and ecological expansion.
Yuvia Mendoza, General Partner of Crust Network noted that in terms of the bottom layer’s influence on Web3’s potential development, the improvement of the layer stack will bring about more room for innovation, which can be reflected first in middleware including Oracle and payment protocol, and finally have an effect on the whole application layer built on it. For example, the Ethereum merge (or Ethereum 2.0 called) will lead to more Layer2 projects incubated, definitely for the ecosystem’s higher degree of decentralization and security. There is even speculation that some Layer1 projects may move to Layer2, showing the power of the blockchain bottom.
Stephen, CMO of Ceres thought that Web3 is still early in its maturation, partly because there are still quite a room for the UI interface experience and the unified account system to improve, and DID can do a favor to make a difference. KYC or decentralized credit system on-chain to improve. It’s known to all that DID in the future can play a role in access to the management of traffic, facilitating the Web2 users’ migration to Web3 with a decentralized credit system and identity value network.
- Rooted in Web3: Practice of DeFi’s value capture
Web3 has shown strong ecological flexibility in the early stage of application layer. DeFi, as one of the representatives of dApps, together with other areas such as GameFi, NFT, SocialFi and e-commerce and payment application, reflects the vitality of the combination of Web3 and Web2 scenarios. In order to realize the next-level explosion of Web3 and to be accepted by the public, we still need to do better in market value capturing, economic model, product optimization and user experience improvement, etc. In this process, the ecology of application layer will be closer to users, and the accumulation and transformation of traffic will be more efficient.
Compared to Web2, the diversified image on the media and the inclusive characteristic of Web3 may help the finance on-chain break the existing routine, step onto a new development cycle and realize the escalation of user amounts. It is imaginable that in the Web3.0 era, DeFi will no longer be a sector with single financial nature, but with multiple features that fit into a wider range of application fields to combine with real assets to promote a new paradigm of DeFi application and open up new business forms.
Yuvia Mendoza holds the belief that Web3 and metaverse represent a broader horizon of development that the projects in the bloockchain never imagined, DeFi included. Against the background of Web3, the user demand and market value of DeFi can be different.
Sascha Stange highlights the importance of Web3 data ownership, explains that there are naturally a large amout of service scenarios that can be exploited in the Web3 data field, as the blockchain is an open, permissionless and distributed database in itself, better than what Web2 does to the data. At present, Web3 concepts, including NFT as an value storage medium and DAO as an interactive channel of user value have emerged and fall in the extensive practice of implementation, creating new impetus to the development of new DeFi.
- Crypto narratives: Web3, DeFi and liquidity in the future
In the era of Web3.0, the trend of more rapid data interaction, cross-chain and multi-chain will largely increase the interoperability and ecological synergy, and the value of users on the chain can be fully reflected with the further innovation of technology based on smart contract. It is a perspective study to explore the innovation path of DeFi sector in Web3.
DeFi has both opportunities and risks, and has enjoyed the possible benefits of the popularization process of the industry during several round of market fluctuation which is full of speculation and profit-seeking. When the market is optimistic, traffic grows to prompt the prosperity of the industry. While in the cooling-off period of the market, DeFi liquidity is hard to replenish. At present, there are still many deficiencies in the DeFi ecosystem’s prototype, especially the lack of innovation in the application layer. The whole thing needs new inner power to solve the obstacle and bottleneck to explore the path of sustainable development.
As Yuvia Mendoza puts it, the real DeFi can be should be absolutely decentralized, which means there are no true DeFi project existing for now. We’ve seen negative cases of CeFi platforms locking down the accounts from withdrawal, and that’s what DeFi must solve in the coming future — ensure users have control over their own data and digitalized assets. DeFi can also be combined with another field, the Metaverse, to build decentralized financial systems in the future, which is more close to the real world.
In Jayden’s perspective, the industry as a whole should find more ways to ensure sustainable liquidity and meanwhile find the real-world use case to develop socially innovative DeFi solutions. As for the concrete process, stablecoin, inclusive finance and other professional stuff that make the DeFi a “leapfrog product” can be leveraged to make financial services dramatically more efficient, secure, and reliable, so as to promote the user onboarding to Web3.
Host:
Julie Chen, PR Director of A&T Capital
Speakers:
Yuvia Mendoza, General Partner of Crust Network
Jayden, COO of Konomi
Sascha Stange, Marketing Director of Bit.Store
Stephen, CMO of Ceres
