Fundamental Insights Weekly

DeFi：

For a long time, most participants in the crypto community take decentralization as the most important thing in blockchain industry. Any project with apparent feature of centralization would be regarded as a cult. However, in fact, we all understand that decentralization is not a binary question. Bitcoin has the problem of mining centralization. Ethereum has the problem of governance centralization. As the two most successful projects in blockchain industry, Bitcoin and Ethereum are both centralized to some extent. We have to say that as long as people are involved into the game, it would not be decentralized perfectly.

In spite of centralization in governance, there are still many advantages for DeFi protocols compared to traditional financial products. For example, in credit lending sector the blockchain brings Maple finance with great transparency. Users are able to access all the business information in the product, such as money deposited, lending rate, summary of borrowers, introduction of capital admins, etc. This information would be totally obscure in traditional finance world such as banks or P2P companies.

With the feature of transparency and excellent capital efficiency, Maple finance got sustainable growth since its launch. We do not mean that Maple finance would be sure to go successful, but we suppose the credit lending sector may have large potential in DeFi area.

Infrastructure: Layer2 Rollups

Matter Labs launched UniSync a port of UniSwap V2 on zkEVM.Its Solidity-first approach is much convenient for applications to take advantage of scaling, security of zero-knowledge proofs, no programming language switch is needed. Most dApps on Ethereum are tightly coupled: they build on some third-party Libraries /Frameworks or have dApps built on them. By keeping Solidity, it leaves the composability stack intact. And will make dApps be deployed onto L2 much smoothly.

StarkNet Alpha is launching on Mainnet Ethereum in November. StartNet’s standalone scaling solution StarkEX has been launched for dydx, DeversiFi, Immutable and Soare already. With the launching of StartNet Alpha, we may expect more dApps to go to StarkNet ecosystem.

Optimism will launch the latest version of OVM2.0 which is fully compatible with EVM. The fully EVM-compatible rollup is a big challenge but is a must for mass adoption. With full compatibility,dApps are able to deploy without modifying any code. Tools that run on Ethereum will be able to run on Optimistic Ethereum as well, this will bring much convenience for dApp developers and subsequently, it could boost the ecosystem of Optimistic Ethereum.

Layer1:Solana will be the most dangerous ETH killer?

Solana has witnessed massive growth over the past few weeks and currently has a market capitalization of US$64 billion, according to Coingecko.com. SOL has surged over 10952% since Oct last year and is currently holding the 6th position in the crypto market. Solana claims to be the world’s fastest cryptocurrency, with an average transaction cost of $0.00025.

SOL is an open-source project that is specifically designed to host decentralized applications. It has gained popularity by providing something to the crypto traders that the Ethereum blockchain has been unable to offer so far- faster operations and lower transaction fees. Unlike Ethereum, SOL works on the proof-of-stake (POS) algorithm, making it more sustainable for the environment.

Ethereum currently works on PoW consensus which needs to communicate with each other to figure out how to order the blocks. Solana has solved this problem with a system of cryptographic time-stamping that can accommodate 65,000 transactions per second. In essence, Solana gains advantage over Ethereum from the standpoint of technical infrastructure.

Solana’s De-fi projects have crossed over US$13.6 billion at this moment, while Ethereum still holds the maximum number of DeFi and NFT projects with US$162.49 billion and 272 protocols,

We can see Solana is right bench-marking with Etherum’s success story and building each separate area. Will Solana be the real “ETH Killer”? But obviously, one of Ethereum’s biggest rivals is Solana now.