In the case of a weak market, tokens with the concept of DeFi 3.0, which have just debuted, have experienced a surge in the past half month. Among them, REFI and ECC have increased by about 968% and 744% respectively in the past half month , driving the entire DeFi 3.0 sector to heat up. Others The tokens of the DeFi 3.0 concept have achieved an increase of more than 40% in the past half month .
This article will introduce the concepts, characteristics and related representative projects of DeFi 3.0 in detail .
Concept and Features of DeFi 3.0
DeFi 2.0 (protocol to control liquidity) represented by Olympus ( OHM ) mainly solves the capital efficiency problem of DeFi 1.0 , while DeFi 3.0 professionalizes the business of Yield Farming (liquidity mining) , and the protocol formulates corresponding Farming strategies to obtain benefits , and return the profits to token holders, that is, “Farming as a service”, which aims to lower the threshold for ordinary investors to participate and increase the income of Farming.
The threshold for DeFi is relatively high and it is not friendly to ordinary users. Farming in DeFi requires setting the slippage coefficient, forming LPs, staking, understanding free losses, etc., and in order to obtain high APY returns, it takes a lot of time to research and find new liquidity pools, and at the same time face many potential risks, such as large investors The resulting ” mining accident ” , the project party running away and other problems, as well as the high risk factor of on-chain operations.
The DeFi 3.0 protocol uses Farming as a service to formulate specialized and cross-chain diversified Farming strategies. Compared with ordinary investors operating by themselves, the DeFi 3.0 protocol helps investors obtain higher returns. Investors do not need to spend time researching and selecting safe and high APY mining pools, nor do they need to transfer assets in different liquidity pools, and at the same time avoid the risk of on-chain operations, and only need to hold the Token of the protocol to share The profit earned by the agreement Farming. DeFi 3.0 lowers the threshold for users to enter DeFi and increases their returns, especially for ordinary users.
The DeFi 3.0 protocol sets a certain percentage of transaction fees (buy/sell), some of which flow into the protocol’s fund pool, and the protocol farms the funds according to the established strategy. The profits obtained are used to repurchase tokens, reduce the supply to maintain the token price, or reward a portion of the repurchased tokens to token holders in the form of airdrops. In addition, token holders can also get a certain percentage of fee rewards from each transaction.
The income aggregator Yearn Finance also helps users select high APY liquidity pools through protocols to improve their income. However, it only farms on the corresponding deployed public chain, and often the APY of the same Token on different chains is quite different. For example, the APY difference of USDC on Ethereum and Fantom is more than three times.
USDC yield in Yearn Finance on Ethereum
USDC Yield in Yearn Finance on Fantom
In order to obtain higher returns, users have to transfer funds in Yearn Finance from Ethereum to Fantom. The protocol cannot automatically transfer funds to liquidity pools with higher APY on other chains, requiring users to operate by themselves, which will cause users to miss higher-yielding pools on other chains.
Different from Yearn Finance, the DeFi 3.0 protocol implements cross-chain diversified Farming, and optimizes the Farming solution according to the APY conditions provided by the protocols on different public chains.
APY on different public chains is often very different, especially in order to attract developers and users, new public chains will launch reward schemes and generate higher APY. For example, after Avalanch and Fantom launched incentive schemes of hundreds of millions of dollars, their TVL and The ecology has ushered in rapid growth, and the APY of the two ecological agreements is generally higher than that of other public chains.
The cross-chain Farming implemented by the DeFi 3.0 protocol can continuously track the APY levels of different on-chain protocols, improve safe and high APY Farming funds, and obtain higher returns. For example, the TVL of Fantom has continued to grow recently. The APY of the on-chain protocol is higher than that of Ethereum, BSC and Avalanch. Almost all DeFi 3.0 protocols have invested more in Farming on Fantom than other public chains. Such as the distribution of funds in the Multi-Chain Capital ($MCC) protocol.
Multi-Chain Capital Fund Distribution
To sum up, due to the high threshold of Farming in DeFi, it is relatively unfriendly to ordinary investors. The DeFi 3.0 protocol provides Farming as a service to users, utilizes specialized and cross-chain diversified Farming strategies to obtain higher returns, and returns profits to token holders, helping ordinary investors to obtain more benefits in the DeFi ecosystem. good earnings.
Like DeFi 1.0 and 2.0, various mainstream public chains have launched original DeFi 3.0 protocols. The following will introduce several representative projects .
Multi-Chain Capital ($MCC) : The token increase in the past half month is about 52%, the number of holding addresses is 21125, and the number of Twitter followers is 29.4k. It is the pioneer of the concept of DeFi 3.0, and has been audited by Certik and Solidity Finance.
At present, the public chains involved in Farming include Fantom, Avalanch, BSC, Polygon and Etherum. Its main investment strategies are:
- Stablecoin Farming . In order to ensure the security of funds, stable coins account for a large proportion. The protocol chooses stable coins with high liquidity and sufficient collateral, mainly USDC, USDT and DAI, and the APY obtained is about 7% to 24%.
- Farming with the lowest possible free loss . In order to reduce free losses, the protocol will select tokens with high correlation to form LPs, and conduct Farming with the lowest possible free losses. According to the official 21-year annual report, the representative LP is FTM-TOMB, the price of TOMB is linked to FTM, the relative price of the two remains relatively stable, the LP has a small unpaid loss, and the APY is about 155%.
- Farming focused on compound interest . When the opportunity for compounding or staking earned tokens for additional rewards arises, the protocol increases the Farming position in that direction. For example, when earning BOO on the SpookySwap protocol, the BOO will be used to earn additional $FTM reinvestment, and obtain about 49.5% of APY reinvestment income.
Tokens repurchased by the protocol with investment income are used for two purposes:
- Direct destruction reduces supply;
- Add to the pool of MCC/BNB or MCC/ETH to provide liquidity.
As the protocol uses the proceeds to buy back its tokens, the tokens will gradually transition from inflation to deflation.
Reimagined Finance($REFI) : It has increased by about 968% in the past half month. The number of currency holding addresses is 2832, and the number of Twitter followers is 10.8k. It has been audited by Certik. The Farming strategy of this DeFi 3.0 protocol is similar to that of Multi-Chain Capital, and will not be repeated here.
The profits obtained by the agreement will be returned to holders with more than 10,000 REFI in the form of airdrops of ETH or REFI. The agreement will charge a 12% handling fee for each transaction. The specific uses are as follows:
- 6% of the funds flowing into the protocol are used for Farming;
- 5% flows into token holders, rewarded in the form of ETH;
- 1% is used to repurchase tokens to provide LP liquidity.
One strategy of the protocol in a weak market is shown below:
BSC : Binance Smart chain
Cross Chain Farming($CCF) : The increase is about 54% in the past half month, the number of currency holding addresses is 5784, the number of Twitter followers is 16.2K, and it has passed the Hashex audit. The Farming strategy of this DeFi 3.0 protocol is similar to that of Multi-Chain Capital, and will not be repeated here.
In addition to the same Yield Farming as the aforementioned DeFi 3.0 protocol, Cross Chain Farming will build a portfolio and the benefits will be airdropped to token holders in the form of BNB . In addition, the protocol will establish its own Launchpad to analyze and audit the online projects to ensure user safety, and token holders will have the opportunity to participate.
The specific purposes of the transaction fee charged by the agreement are as follows:
- 3% is used to repurchase tokens, 2% is used for destruction, and 1% is used to replenish liquidity pools;
- 3% is automatically rewarded to token holders;
- 3% will be donated to DAO for Farming or investment, of which Farming income is used to repurchase tokens, and investment income is rewarded to token holders in the form of BNB;
- 3% flows into the protocol’s marketing wallet, which is used to build Launchpad.
Empire Capital Token($ECC) : The increase in the past half month is about 744%, the number of token holders is 2493, the number of Twitter followers is 1.8k, and it has passed the Certik audit. The Farming strategy of this DeFi 3.0 protocol is similar to that of Multi-Chain Capital, and will not be repeated here.
The agreement charges a 10% handling fee for each transaction, and the specific uses are as follows:
- 9% of Buy is rewarded to token holders;
- 1% of Buy’s repurchase tokens are burned and destroyed;
- 2% of Sell provides BNB-ECC liquidity;
- 8% of Sell will flow into the protocol treasury or repurchase tokens.
In addition to Farming, the agreement will invest in start-up Cefi companies, putting money into the IPO through a New Zealand-registered company.
Cross Chain Capital ($CCC) : The increase in the past half month is about 141%, the number of currency holding addresses is 4341, the number of Twitter followers is 8.7k, and it has not passed the security audit. The Farming strategy of this DeFi 3.0 protocol is similar to that of Multi-Chain Capital, and will not be repeated here.
Cross Chain Capital charges a 10% handling fee for each transaction. The specific uses are as follows:
- 10% of Buy is rewarded to token holders;
- 10% of Sell is donated to the protocol’s treasury.
According to the official roadmap, the agreement will deploy Game Fi and Metaverse related projects in the future.
Scary Chain Capital($SCC) : The increase is about 44% in the past 7 days, the number of holding addresses is 1814, the number of Twitter followers is 2.9k, and it has been audited by Solidity Finance. The Farming strategy of this DeFi 3.0 protocol is similar to that of Multi-Chain Capital, and will not be repeated here.
Scary Chain Capital charges a 10% handling fee for each transaction. The specific uses are as follows:
- 5% is used to reward token holders;
- 5% goes to the Ministry of Finance of the agreement;
According to the official roadmap, the protocol will build its own Launchpad in the future .
DeFi 3.0 increases the income of ordinary investors Farming, which has certain value. The threshold for DeFi is high, especially if you want to gain income through Farming, it is relatively unfriendly to ordinary users. The DeFi 3.0 protocol launched “Farming as a service”, which uses the protocol to formulate diversified cross-chain Farming strategies and returns profits to token holders. To a certain extent, DeFi 3.0 lowers the threshold for ordinary investors to enter the DeFi ecosystem for profit, which has practical significance.
At the same time, it should be noted that DeFi 3.0 has accumulated great risks at present. DeFi 3.0 is in a very early stage, and the projects in the entire sector have been launched for a short time, less than two months, and have not been verified by the market for a long time. Secondly, the market does not pay much attention to DeFi 3.0. Except for the concept creator Multi-Chain Capital, the number of currency holding addresses and Twitter followers of other projects are relatively low. Finally, many tokens ushered in a large increase in a short period of time. For example, REFI and ECC have increased by about 968% and 744% respectively in the past half month, and there is a certain bubble.
The projects that have passed the security audit so far include Multi-Chain Capital, Reimagined Finance, Cross Chain Farming, Empire Capital Token and Scary Chain Capital, and the one that failed is Cross Chain Capital.