Crypto Exchange Crypto Exchange
Ctrl+D Crypto Exchange
Home > BTC > Info

First Release | Taihe Observation: Exploration of Liquidity Stablecoin Hierarchical Clearing Mechanism



This article was originally created by Taihe Observation and authorized by Jinse Finance to publish. The following article mainly talks about a stable coin issuance project with lower collateral ratio and robust liquidity scheme acting as challenger of current dominant project MakerDao With the continuous growth of cryptocurrencies, the indispensability of stable coins as an important infrastructure has become increasingly prominent . As shown in the figure below, USDT and USDC already occupy more than half of the stablecoin track, and the proportion of decentralized stablecoin issuance led by Dai has also risen from 1% a year ago to 7% today. Rapid development over the past year. With the detonation of liquidity mining and countless innovative and capable teams, the circulation of Dai ranks fourth, but the number of active-zce addresses and transfer volume are expected to challenge USDT and USDC. Data source: Debank The stablecoin track can be roughly divided into three categories: stablecoins collateralized by fiat currency such as: USDT, USDC, BUSDLBANK Blue Shell launched DORA at 18:00 on March 22, and opened USDT transactions: According to the official announcement, March At 18:00 on the 22nd, LBANK Blue Shell launched DORA (Dora Factory), opened USDT transactions, and is now open for recharge. According to the data, Dora Factory is a Polkadot-based DAO-as-a-service infrastructure, an open and programmable on-chain governance protocol platform based on Substrate, and provides quadratic voting, curve auctions, and Bounty for a new generation of decentralized organizations and developers. Pluggable governance functions such as incentives and cross-chain asset management. At the same time, developers can submit new governance modules to this DAO-as-a-service platform and receive continuous incentives. [2021/3/22 19:07:06] Cryptocurrency-collateralized stablecoins such as: Dai algorithm stablecoins such as: Base, Fei, AMPL, ESD Among them, USDT, which is second to none, has not published an audit report since 18 years. Few people question whether it has enough assets to endorse the issuance of USDT. As shown in the figure below, Tether released a Moore Cayman audit report on February 28, 2021. 28 At that time Tether held the following assets, the asset classes of which were not noted in the report. Data source: Moore Cayman As for the ETH-Defi stablecoin represented by Dai, as shown in the figure below, except for Dai minted with USDC as collateral, most of its collateral ratios need to be maintained at 150% or above. In order to avoid being liquidated, Maker’s official website shows that the average Dai collateralization ratio is about 313%. "Elf Master 3D" officially launched on the Cocos-BCX main network: According to official news, recently, "Elf Master 3D", which was developed by ecological partner DAPPX, was officially launched on the Cocos-BCX main network of the game public chain. "Elf Master 3D" is a pet-catching game based on the theme of Pokémon. The game art is made in full 3D. Users can log in to the COCOS main network account through CocosWallet, DAPPX or IMCOCOS to experience it. Up to now, the Cocos-BCX main network has launched "Encryption Knights", "The Dragon Must Die", "XPEX Monster World", "Go Block", "Cocos Winning Coins", "Panda Games" and other interesting chain games with various gameplays. The game public chain ecology is gradually growing and improving. [2020/8/20] Data source: Maker's final algorithm for the stablecoin track. Personally, I think it is extremely inappropriate to put it in the stablecoin track. Why is an unstable stablecoin called a stablecoin? Most algorithmic stablecoin projects do not require collateral, and are more suitable for speculation. By controlling the supply, they can be stabilized by rebase or reweight. As of 2021.4.12, the price of Fei is 0.79, while those ESD, Base, DSD, etc. How it ended must be clear to everyone. Liquity is a stablecoin issuance project built on the Ethereum ecosystem. Similar to Maker's mortgaged cryptocurrency minting Dai, Liquity can mortgage ETH to mint the project's stablecoin LUSD. Let me talk about the conclusion first. The Liquity project was placed in 2017, and there may be no such thing as Maker. As Maker's most direct challenger, Liquity benefits from the following features: First release | "Congress of the People's Republic of China" was held in Beijing on December 20. Liu Yao, head of Baidu Smart Cloud blockchain products, gave a speech on the theme of "Enterprise Blockchain Empowers Industrial Innovation Landing". He pointed out that 2020 will be the first year for blockchain enterprises to land. With the implementation of the blockchain industry, Baidu has upgraded the blockchain to a platform-based strategy, and launched the Tianlian platform relying on Baidu Smart Cloud, which is to empower 360's on-chain business innovation. [2019/12/20] Instant liquidation supplemented by a stable triple liquidation scheme, low mortgage rate, no stability fee, decentralized front-end. Regarding its extremely low mortgage rate, I believe many people will question whether its liquidation risk is too high, but the fact is that Let’s imagine that if the mortgage rate is 110%, the maximum liquidation loss is 10%. Compared with Maker’s 13% liquidation penalty and 150% over-collateralization, Liquity’s capital efficiency has improved by more than one level. The second thing I have to mention is Liquity's triple liquidation scheme sorted by priority: Stable pool debt redistribution Recovery Mode (system recovery mode) First, the stable pool has the highest priority, that is, users who mortgage loans need to open Trove to provide more than 110 % collateral can issue 100% LUSD. Once the user’s collateral ETH value is lower than 110%, liquidation will be triggered. At this time, the stable pool filled with LUSD will play a role. The stable pool will destroy the corresponding amount of LUSD to obtain the corresponding collateral ETH, because as long as it is lower than 110% will be liquidated and 110% > 100%, which is equivalent to 10% discounted ETH for the stable pool. First release | Antminer S17 real machine map first exposure Adopting dual-tube fan and all-in-one machine design: Following the official announcement of spot sales on April 9, Bitmain’s new Antminer S17, which is about to be released, has new developments. It is reported that the real machine map of the Antminer S17 was first exposed on the Internet today. Judging from the exposed pictures, the Antminer S17 continues the double-barrel fan design of the previous generation product S15, and adopts the body design of an all-in-one machine. Some people in the industry believe that the double-barrel design can effectively shorten the wind range, the temperature difference between the inlet and outlet of the mining machine will be smaller, and the performance of the machine will be greatly improved. Previously, the person in charge of Bitmain’s product said in an interview with the media that compared with the previous generation of products, the new product S17 has greatly improved in terms of energy efficiency ratio and computing power per unit volume. [2019/4/3] The second stage of debt redistribution can be understood as Plan B when the stability pool LUSD is insufficient. If the amount of LUSD in the stable pool is not enough to cover system debts, debt redistribution will be triggered. Simply put, it is to distribute the liquidated debts to Trove holders with sufficient mortgage ratios. As shown in the figure below: At this time, the mortgage rate of Trove D is 108% to trigger liquidation. Due to the lack of LUSD in the stable pool, the collateral of 4.3 ETH and corresponding debts will be distributed to other Trove heads, and the net loss of Trove D is about 7% (600/8600=7%). The more sufficient the mortgage rate is, the more collateral and LUSD will be allocated. Trove C was allocated the most collateral (7 ETH) and the most debt (4480 LUSD). Its mortgage rate was reduced from 233% to 180%, and its net income was $336. Announcement | Huobi Global World Premiere of Project PAI at 16:00 on June 29: Huobi Global will launch Project PAI (PAI) deposit service at 16:00 on June 29, Singapore time. At 16:00 on July 2, PAI/BTC, PAI/ETH transactions will be opened in the Innovation Zone. PAI withdrawal service will be opened at 16:00 on July 6. [2018/6/29] Data source: The third stage of Liquity docs is called Recovery Mode. There is a key mortgage rate in the system = 150%. When the total mortgage rate of the system is less than 150%, Recovery Mode will be triggered. At this time , the system will go from low to high according to the mortgage rate, no matter whether your mortgage rate is greater than 110%, as long as it is lower than 150%, it may be liquidated until the total system mortgage rate is 150%. For Trove, there will be no additional losses, that is to say, if your mortgage rate is 140% and the liquidation is triggered, your Trove will be closed, 110% of the collateral will be liquidated, and 30% of the collateral will still be Claimable. Therefore, the net loss of this Trove is already 10%, but it reduces a lot of risky Troves for the system and thus increases the total mortgage rate of the system. As can be seen from the above figure, currently the largest Defi stablecoin project, or Maker of the Defi central bank, has a stable fee rate, which is the interest fee accumulated based on the debt generated by the treasury Dai. However, users of Liquity only need to pay a one-time casting fee and redemption fee when casting the stable currency LUSD when opening Trove and redeeming collateral, and the issuance fee and redemption fee will be based on the time period and redemption of each redemption. Simply put, the redemption fee will decrease if no one in the system redeems, and the fee will increase accordingly if the redemption amount increases. Its purpose is to suppress large-scale redemption behavior with higher redemption fees and suppress large-scale borrowing (issue) after large-scale redemption through higher issuance fees, and ensure the long-term stability of the system through a cooling-off period and resist systemic risks. Data source: Liquity Based on the original intention of decentralization and anti-censorship, Liquity's Frontend will not be designed by the team, but is equivalent to outsourcing to a third party. There are many Frontends currently available, and different Frontends have different UIs and Kickback Rates. The builder will get a rebate for this, and the rebate rate ranges from 0.1% to 10%. The front-end income is the more LUSD deposited into the stable pool through the front-end, the more rewards the front-end will receive. I believe that many people have already been convinced by the violent price fluctuations of the algorithmic "stable" currency. Liquity's collateral can be redeemed, and 1 LUSD can always be redeemed for ETH worth 1 US dollar. This is called 'hard anchoring' (hard anchoring can be understood as having a direct exchange collateral mechanism). If LUSD is at a premium, it is almost impossible for LUSD>1.1 to happen, because if it is higher than 1.1, due to the mortgage rate of 110%, arbitrageurs Instant arbitrage. If it is higher than 1 US dollar, since the casting cost is 1 US dollar, LUSD with a cost of 1 US dollar can be minted and sold at a price higher than 1 US dollar, and the discount is the same. For soft anchoring, you can refer to the long paper written by Liquity founder Rober Lauko (former Defiinity researcher): Simply put, soft anchoring It is based on the long-term vision of LUSD stable at 1USD based on hard anchoring, so as to influence people's expectations for the future price trend of LUSD (1LUSD=1U Schelling point), that is to say, less than 1 US dollar will motivate people to return Loans above US$1 will encourage borrowing to achieve arbitrage. Since it depends on users' expectations of future prices, it is also called soft anchoring. To briefly summarize why Liquity is capable of challenging Maker: Mortgage rate: The current total system mortgage rate of Liquity is 186%, compared with Maker's system total mortgage rate of 313%, and the capital utilization rate has almost doubled. Considering that leveraged lending with higher risks is like last year's liquidity mining, the maximum leverage ratio of Liquity is 11 times, while the maximum leverage ratio of Maker is 3 times according to the following formula. Instant liquidation: Recalling 312, Maker liquidation is divided into collateral auction and debt auction, and the auction parameters are as follows: At that time, 312 was short of liquidators + the bidding market was 10 minutes at that time + Ethereum network congestion, many people obtained it with 0Dai auction As a result, the debt of the Maker system has increased sharply. Now the bidding time has been changed to 6 hours, but it also means that the auction process is quite long, which means that there will be more uncertainty in price fluctuations. It is faster for Liquity to go to the stable pool first. Regarding governance, Liquity has chosen no governance, the system operation is driven by algorithms, and no one has the dominance to control the system. Compared with Maker, which has a lower degree of participation in governance, liquidity can be regarded as adopting a brand-new non-governance currency model. LQTY holders can pledge to obtain issuance and redemption fees, and can also obtain returns from project growth. Of course, it does not mean that the Liquity project is perfect. The key to the development of any stablecoin project lies in the practicability of the stablecoin, more adoption, and more ecological interactions with other projects, making it like Dai for Defi. Speaking of status, it becomes the infrastructure of Defi Lego building blocks. Therefore, there is still a long way to go for LUSD, whether it is time or going through training like Maker, I look forward to Liquity becoming an indispensable and important part of the future Defi ecology.


SIL Finance: DeFi-based intelligent financial management platform

"Red and Black" Author: Stendhal Literary Genre: Novel Red and Black is one of the top ten famous novels in the world. It is a representative work of French writer Stendhal.

Multiple Ethereum ETFs are issued together, and the encryption market is becoming more and more institutionalized?

Canada’s Ontario Securities Commission (OSC) has approved three Ethereum exchange-traded funds (ETFs) to launch on April 20.

Bloomberg: Why is Bitcoin plummeting? What are the prospects?

Bitcoin’s roller coaster ride has started to go downhill again. Last Sunday (April 18), BTC fell by 15%, and prices such as ETH and XRP also fell sharply.Last Wednesday (April 14).

First Release | Taihe Observation: Exploration of Liquidity Stablecoin Hierarchical Clearing Mechanism

This article was originally created by Taihe Observation and authorized by Jinse Finance to publish.

4.14 morning market: Bitcoin and US stocks both rose, creating a good atmosphere for the listing of Coinbase

According to OKEx data, the current BTC/USDT spot price is $63,303, a 24-hour increase of 4.4%.After Bitcoin broke through a new high yesterday, the price continued to extend upwards, and finally broke through 63.

Algorand's latest governance mechanism and follow-up trend analysis

We call all rewarded 3.2 billion Algo Algorand Ecological Resource Pool (AERP).The new governance system will be deployed in two phases.Initial Phase: Starting in Q4 2021.

One of the culprits of high fees: How MEV affects transactions on the Ethereum chain

Since DEFI became popular last year, the transaction fees on the Ethereum blockchain have also risen, and a large number of DEFI projects have overflowed to BSC and HECO for a while.