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Lending projects are one of the oldest and most important sectors in the Defi field, among which a large numberlitecoin after bitcoin halving of white horse-level projects have emerged, such as Aave, Compound, and MakerDAO. Most of the early leading lending projects were born in Ethereum, but with the rapid development of various new public chains in the past six months, many lending projects deployed in new public chains and multi-chains have emerged in large numbers.In addition to the differentiation of the deployment of public chains, the business types of lending projects have also evolved from basic lending and stable currency lending to new businesses such as leveraged mining lending with targeted scenarios. In addition, credit lending mainly to institutional-level customers, risk grading agreements derived from existing lending agreements, and interest rate derivatives are also gradually growing.
Although many lending projects already have relatively mature business models and abundant cash flow income, there is still huge room for innovation in this industry, and it is still possible to give birth to new giants such as Aave. It is precisely because of this that lending projects are still one of the key directions of the DeFi entrepreneurial team.After scanning the newly born projects in the past 2 months, we selected 4 more representative lending projects for key analysis. They either exploded rapidly in business or have unique mechanism innovations. Through this research Report, we try to answer the following questions:What is the actual business situation of these projects?What are their product positioning, mechanism or token design innovations?For those fast-growing projects, what are the sources of growth and how sustainable are they?
Like the trading platform, the lending project is also the basic liquidity layer of the crypto world. It plays the role of a bank in the crypto world. Its essence is to coordinate the supply and demand of funds from multiple parties and match liquidity across periods. The business ceiling of this track will expand simultaneously with the expansion of the scale of the encryption business.On the other hand, the demand for matching funds is long-term, and there is no doubt about the sustainability of this track. Although the current funding needs for encrypted lending mainly come from investment leverage, arbitrage, and short-term capital turnover, with the progress of compliance, the channel between the traditional world and encrypted finance will eventually be opened, and the real-world collateral ( The introduction of lending platforms such as real estate and corporate credits, and issuing loans to non-crypto players through stablecoins are all things that are gradually happening, which will bring more room for development to the industry.However, the rise of emerging lending projects is also amazing. The top ten projects in TVL include Anchor on Terra (US$3.12 billion), Benqi on the avalanche agreement (US$1.23 billion), and Qubit (US$400 million) on BSC. Unlike the big three lending giants that originated in Ethereum, these fast-growing lending forces all come from Ethereum’s competitors, which is the hottest narrative at the moment-the new public chain.
What's more surprising is that in addition to the earlier launch time of Anchor (in March this year), the official launch time of the other two projects is only less than one month.In terms of the type of lending business, whether it is the number of projects or the amount of funds, basic lending projects account for a higher proportion, followed by leveraged mining lending projects, and other relatively new ones such as risk-graded interest rate products. The business volume is currently relatively small.This research report will focus on newly born lending projects in the past 1-2 months with rapid business growth (TVL has entered the top 15 lending category), and Euler, a project with many innovative combinations in mechanism.The following is a detailed analysis and analysis of each item.
In the combing and analysis part, the author will present and analyze the product positioning, project characteristics, business conditions, token model and risk control of the four projects, in order to analyze these four emerging lending projects as a whole as possible.Basic lending platform
Project StatusProduct launch time: August 24, 2021Qubit is a decentralized currency market that uses a mainstream borrowing capital pool model. Qubit's development and operation team is the team behind Pancakebunny-Mound, which was first deployed on BSC, and there are plans for multi-chain expansion in the future.Project Features
The main features of Qubit compared to other basic lending projects are:Its token QBT can increase the rate of return of deposit users after lock-up, which is called "Boost" functionQubit is part of Mound’s product matrix, and Mound’s products are highly combinableQubit does not support lightning loan function
Business conditionsBusiness data
Qubit's core business data are as follows:We can find that although Qubit's project has been online for less than a month, it currently has a considerable amount of deposits and the utilization rate of funds is relatively high. This is related to Bunny's previous accumulation of a large number of BSC users and the relatively high amount of token subsidies for the project. Currently, QBT's single-day subsidy amount is around US$190,000.
Product UIUXQubit's product UI style is simple and clear, the interaction is smooth, the display of key data is reasonable and detailed, and the overall user experience is better.Qubit product main interface, https://qbt.fi/appMoreover, the current business data and risk parameters of Qubit's specific assets are very detailed, and graphically processed, and there are some historical data available for checking, which is worthy of recognition.Token modelTotal and supply
The total amount of QBT is 1 billion, of which 57% is used for liquid mining rewards, and the remaining 43% is controlled by the team. The specific distribution ratio is as follows:QBT distribution ratio, source: Qubit project document
The total amount of 1 billion QBT will be distributed within one year, so QBT will face very high inflationary pressure in the next 12 months. The specific token unlocking rhythm is as follows:In my opinion, there are two core problems in the supply and release mechanism of Qubit tokens:
The proportion of team control is relatively high, and most of them have not set strict token unlocking conditions, and the long-term binding of team interests and projects is insufficientThe tokens of the liquid mining part are released too fast, which may cause the project to lack sufficient subsidy budget after one year, which is not conducive to the long-term development of the project
Token value captureCore function: revenue accelerationUp to now, the main function of QBT is to obtain qScore after lock-up. Through qScore, deposit users can accelerate their deposit income (from the increase in QBT deposit subsidies).This mechanism is similar to Curve's Locker mechanism. Curve's Locker function and economic model consolidate its original competitive advantage and increase the switching cost of liquidity providers and investors. It is a very eye-catching design. However, when the mechanism is applied to a loan agreement, will it still have a good effect? The author remains skeptical about this.
First of all, the reason why some people are willing to lock up the position of Curve's token CRV for a long time after buying it is caused by Curve's strong position in the stable asset business chain and the competition for the governance power of Curve by multiple participants. Because governance power on the Curve platform means two core resources: the baton of liquidity and the accelerator of revenue.Since the issuer of stable consideration assets (stable currency, stETH and other pledge certificates and BTC cross-chain assets such as renBTC are all stable consideration assets), they have great requirements on the stability and transaction depth of their operating assets, so they choose Curve to list. Assets and attracting market-making liquidity are very rigid requirements, which creates a strong position of Curve relative to asset operators, which is determined by the business positioning of its Top1 stable asset exchange platform.
In terms of the expansion of asset lending scenarios, the demand from asset operators is far less strong, which has led to a large number of less demanders of Qubit governance rights, and the overall lock-up willingness is difficult to reach the level of Curve.In addition to the revenue acceleration function, QBT currently has no other functional scenarios. The Qubit platform's loan interest spread income does not have QBT's repurchase or dividend mechanism.
On the whole, QBT tokens are currently weak in capturing the overall economic value of the platform.risk control
Qubit does not have a very special design for risk control. It basically uses a method similar to the mainstream lending agreement Aave. Each mortgageable asset has two types: LTV (Loan-to-Value) and liquidation threshold (Liquidation Threshold). The main parameters, the former determines the upper limit ratio of funds that can be lent for a fixed-value collateral, and the latter determines when the debt/collateral comes to the ratio, the liquidation window will be opened.However, the current borrowing ratio of all Qubit assets is the same as the liquidation line, instead of Aave's method of using the liquidation line to be higher than the borrowing ratio.At present, the borrowing rate of most assets on Qubit is 60%, which is slightly higher than the initial 50%. While this reduces the risk, it also reduces the pledger's capital utilization efficiency to some extent, especially the mortgage rate of all stablecoin assets is only 60%. There is still a lot of room for optimization of the overall parameters.In terms of contract security, Qubit only received an audit report from the Peckshield family before it went live in August, which was slightly thin, and the oracle used Chainlink.
The total deposits and TVL growth rate of Qubit was very fast since the launch of Qubit. The product's data board function is complete, the product interaction is smooth, and the interface is more beautiful, but overall there are not many innovations. As the currency price continues to fall and subsidies are diluted by funds, the current TVL decline of the project is also very obvious. It is worth noting that, compared to other lending project tokens whose core value source is to capture the cash flow of the agreement, Qubit's tokens are not currently linked to the project's profit. The only function is to increase the deposit of tokens through lock-up. Subsidies, which also caused the intrinsic value of project tokens to weaken, and the high inflation of tokens further aggravated the selling pressure of tokens.Product launch time: not online
Euler is a license-free lending agreement developed on Ethereum founded by Michael Bentley, a researcher at Oxford University. The development company is Euler XYZ. Euler XYZ won the Encode Club’s “Spark” college hackathon in 2020, and subsequently won a $800,000 seed round led by Lemniscap. Other participating funds include LAUNCHub Ventures, CMT Digital, Difference Ventures, Block0 and Cluster. And Luke Youngblood, an influential Coinbase angel investor. On August 25, 2021, the project announced that it has received a new round of investment of 8 million US dollars led by Paradigm. Other investors include Lemniscap and individual investor Anthony Sassano (The Daily Gwei), and Bankless founder Ryan Sean Adams With David Hoffman, Synthetix founder Kain Warwick, Hasu (Uncommon Core podcast).Project Features
In response to the many shortcomings of existing lending projects, Euler has carried out quite a wealth of product mechanism innovations. Due to space limitations, only the key parts are introduced:License-free listing mechanism: Provide a lending platform for long-tail assets