submitted by Tokenomy to tokenomyofficial [link] [comments]
Author: Christian Hsieh, CEO of Tokenomy
This paper examines some explanations for the continual global market demand for the U.S. dollar, the rise of stablecoins, and the utility and opportunities that crypto dollars can offer to both the cryptocurrency and traditional markets.
The U.S. dollar, dominant in world trade since the establishment of the 1944 Bretton Woods System, is unequivocally the world’s most demanded reserve currency. Today, more than 61% of foreign bank reserves and nearly 40% of the entire world’s debt is denominated in U.S. dollars1.
However, there is a massive supply and demand imbalance in the U.S. dollar market. On the supply side, central banks throughout the world have implemented more than a decade-long accommodative monetary policy since the 2008 global financial crisis. The COVID-19 pandemic further exacerbated the need for central banks to provide necessary liquidity and keep staggering economies moving. While the Federal Reserve leads the effort of “money printing” and stimulus programs, the current money supply still cannot meet the constant high demand for the U.S. dollar2. Let us review some of the reasons for this constant dollar demand from a few economic fundamentals.
Demand for U.S. DollarsFirstly, most of the world’s trade is denominated in U.S. dollars. Chief Economist of the IMF, Gita Gopinath, has compiled data reflecting that the U.S. dollar’s share of invoicing was 4.7 times larger than America’s share of the value of imports, and 3.1 times its share of world exports3. The U.S. dollar is the dominant “invoicing currency” in most developing countries4.
This U.S. dollar preference also directly impacts the world’s debt. According to the Bank of International Settlements, there is over $67 trillion in U.S. dollar denominated debt globally, and borrowing outside of the U.S. accounted for $12.5 trillion in Q1 20205. There is an immense demand for U.S. dollars every year just to service these dollar debts. The annual U.S. dollar buying demand is easily over $1 trillion assuming the borrowing cost is at 1.5% (1 year LIBOR + 1%) per year, a conservative estimate.
Secondly, since the U.S. has a much stronger economy compared to its global peers, a higher return on investments draws U.S. dollar demand from everywhere in the world, to invest in companies both in the public and private markets. The U.S. hosts the largest stock markets in the world with more than $33 trillion in public market capitalization (combined both NYSE and NASDAQ)6. For the private market, North America’s total share is well over 60% of the $6.5 trillion global assets under management across private equity, real assets, and private debt investments7. The demand for higher quality investments extends to the fixed income market as well. As countries like Japan and Switzerland currently have negative-yielding interest rates8, fixed income investors’ quest for yield in the developed economies leads them back to the U.S. debt market. As of July 2020, there are $15 trillion worth of negative-yielding debt securities globally (see chart). In comparison, the positive, low-yielding U.S. debt remains a sound fixed income strategy for conservative investors in uncertain market conditions.
Last, but not least, there are many developing economies experiencing failing monetary policies, where hyperinflation has become a real national disaster. A classic example is Venezuela, where the currency Bolivar became practically worthless as the inflation rate skyrocketed to 10,000,000% in 20199. The recent Beirut port explosion in Lebanon caused a sudden economic meltdown and compounded its already troubled financial market, where inflation has soared to over 112% year on year10. For citizens living in unstable regions such as these, the only reliable store of value is the U.S. dollar. According to the Chainalysis 2020 Geography of Cryptocurrency Report, Venezuela has become one of the most active cryptocurrency trading countries11. The demand for cryptocurrency surges as a flight to safety mentality drives Venezuelans to acquire U.S. dollars to preserve savings that they might otherwise lose. The growth for cryptocurrency activities in those regions is fueled by these desperate citizens using cryptocurrencies as rails to access the U.S. dollar, on top of acquiring actual Bitcoin or other underlying crypto assets.
The Rise of Crypto DollarsDue to the highly volatile nature of cryptocurrencies, USD stablecoin, a crypto-powered blockchain token that pegs its value to the U.S. dollar, was introduced to provide stable dollar exposure in the crypto trading sphere. Tether is the first of its kind. Issued in 2014 on the bitcoin blockchain (Omni layer protocol), under the token symbol USDT, it attempts to provide crypto traders with a stable settlement currency while they trade in and out of various crypto assets. The reason behind the stablecoin creation was to address the inefficient and burdensome aspects of having to move fiat U.S. dollars between the legacy banking system and crypto exchanges. Because one USDT is theoretically backed by one U.S. dollar, traders can use USDT to trade and settle to fiat dollars. It was not until 2017 that the majority of traders seemed to realize Tether’s intended utility and started using it widely. As of April 2019, USDT trading volume started exceeding the trading volume of bitcoina12, and it now dominates the crypto trading sphere with over $50 billion average daily trading volume13.
An interesting aspect of USDT is that although the claimed 1:1 backing with U.S. dollar collateral is in question, and the Tether company is in reality running fractional reserves through a loose offshore corporate structure, Tether’s trading volume and adoption continues to grow rapidly14. Perhaps in comparison to fiat U.S. dollars, which is not really backed by anything, Tether still has cash equivalents in reserves and crypto traders favor its liquidity and convenience over its lack of legitimacy. For those who are concerned about Tether’s solvency, they can now purchase credit default swaps for downside protection15. On the other hand, USDC, the more compliant contender, takes a distant second spot with total coin circulation of $1.8 billion, versus USDT at $14.5 billion (at the time of publication). It is still too early to tell who is the ultimate leader in the stablecoin arena, as more and more stablecoins are launching to offer various functions and supporting mechanisms. There are three main categories of stablecoin: fiat-backed, crypto-collateralized, and non-collateralized algorithm based stablecoins. Most of these are still at an experimental phase, and readers can learn more about them here. With the continuous innovation of stablecoin development, the utility stablecoins provide in the overall crypto market will become more apparent.
Institutional DevelopmentsIn addition to trade settlement, stablecoins can be applied in many other areas. Cross-border payments and remittances is an inefficient market that desperately needs innovation. In 2020, the average cost of sending money across the world is around 7%16, and it takes days to settle. The World Bank aims to reduce remittance fees to 3% by 2030. With the implementation of blockchain technology, this cost could be further reduced close to zero.
J.P. Morgan, the largest bank in the U.S., has created an Interbank Information Network (IIN) with 416 global Institutions to transform the speed of payment flows through its own JPM Coin, another type of crypto dollar17. Although people argue that JPM Coin is not considered a cryptocurrency as it cannot trade openly on a public blockchain, it is by far the largest scale experiment with all the institutional participants trading within the “permissioned” blockchain. It might be more accurate to refer to it as the use of distributed ledger technology (DLT) instead of “blockchain” in this context. Nevertheless, we should keep in mind that as J.P. Morgan currently moves $6 trillion U.S. dollars per day18, the scale of this experiment would create a considerable impact in the international payment and remittance market if it were successful. Potentially the day will come when regulated crypto exchanges become participants of IIN, and the link between public and private crypto assets can be instantly connected, unlocking greater possibilities in blockchain applications.
Many central banks are also in talks about developing their own central bank digital currency (CBDC). Although this idea was not new, the discussion was brought to the forefront due to Facebook’s aggressive Libra project announcement in June 2019 and the public attention that followed. As of July 2020, at least 36 central banks have published some sort of CBDC framework. While each nation has a slightly different motivation behind its currency digitization initiative, ranging from payment safety, transaction efficiency, easy monetary implementation, or financial inclusion, these central banks are committed to deploying a new digital payment infrastructure. When it comes to the technical architectures, research from BIS indicates that most of the current proofs-of-concept tend to be based upon distributed ledger technology (permissioned blockchain)19.
These institutional experiments are laying an essential foundation for an improved global payment infrastructure, where instant and frictionless cross-border settlements can take place with minimal costs. Of course, the interoperability of private DLT tokens and public blockchain stablecoins has yet to be explored, but the innovation with both public and private blockchain efforts could eventually merge. This was highlighted recently by the Governor of the Bank of England who stated that “stablecoins and CBDC could sit alongside each other20”. One thing for certain is that crypto dollars (or other fiat-linked digital currencies) are going to play a significant role in our future economy.
Future OpportunitiesThere is never a dull moment in the crypto sector. The industry narratives constantly shift as innovation continues to evolve. Twelve years since its inception, Bitcoin has evolved from an abstract subject to a familiar concept. Its role as a secured, scarce, decentralized digital store of value has continued to gain acceptance, and it is well on its way to becoming an investable asset class as a portfolio hedge against asset price inflation and fiat currency depreciation. Stablecoins have proven to be useful as proxy dollars in the crypto world, similar to how dollars are essential in the traditional world. It is only a matter of time before stablecoins or private digital tokens dominate the cross-border payments and global remittances industry.
There are no shortages of hypes and experiments that draw new participants into the crypto space, such as smart contracts, new blockchains, ICOs, tokenization of things, or the most recent trends on DeFi tokens. These projects highlight the possibilities for a much more robust digital future, but the market also needs time to test and adopt. A reliable digital payment infrastructure must be built first in order to allow these experiments to flourish.
In this paper we examined the historical background and economic reasons for the U.S. dollar’s dominance in the world, and the probable conclusion is that the demand for U.S. dollars will likely continue, especially in the middle of a global pandemic, accompanied by a worldwide economic slowdown. The current monetary system is far from perfect, but there are no better alternatives for replacement at least in the near term. Incremental improvements are being made in both the public and private sectors, and stablecoins have a definite role to play in both the traditional and the new crypto world.
 How the US dollar became the world’s reserve currency, Investopedia
 The dollar is in high demand, prone to dangerous appreciation, The Economist
 Dollar dominance in trade and finance, Gita Gopinath
 Global trades dependence on dollars, The Economist & IMF working papers
 Total credit to non-bank borrowers by currency of denomination, BIS
 Biggest stock exchanges in the world, Business Insider
 McKinsey Global Private Market Review 2020, McKinsey & Company
 Central banks current interest rates, Global Rates
 Venezuela hyperinflation hits 10 million percent, CNBC
 Lebanon inflation crisis, Reuters
 Venezuela cryptocurrency market, Chainalysis
 The most used cryptocurrency isn’t Bitcoin, Bloomberg
 Trading volume of all crypto assets, coinmarketcap.com
 Tether US dollar peg is no longer credible, Forbes
 New crypto derivatives let you bet on (or against) Tether’s solvency, Coindesk
 Remittance Price Worldwide, The World Bank
 Interbank Information Network, J.P. Morgan
 Jamie Dimon interview, CBS News
 Rise of the central bank digital currency, BIS
 Speech by Andrew Bailey, 3 September 2020, Bank of England
A whirlwind tour of Defi, paying close attention to protocols that we’re leveraging at Genesis Block.submitted by mickhagen to genesisblockhq [link] [comments]
This is the third post of Crypto-Powered — a new series that examines what it means for Genesis Block to be a digital bank that’s powered by crypto, blockchain, and decentralized protocols.
Last week we explored how building on legacy finance is a fool’s errand. The future of money belongs to those who build with crypto and blockchain at their core. We also started down the crypto rabbit hole, introducing Bitcoin, Ethereum, and DeFi (decentralized finance). That post is required reading if you hope to glean any value from the rest of this series.
97% of all activity on Ethereum in the last quarter has been DeFi-related. The total value sitting inside DeFi protocols is roughly $2B — double what it was a month ago. The explosive growth cannot be ignored. All signs suggest that Ethereum & DeFi are a Match Made in Heaven, and both on their way to finding strong product/market fit.
So in this post, we’re doing a whirlwind tour of DeFi. We look at specific examples and use-cases already in the wild and seeing strong growth. And we pay close attention to protocols that Genesis Block is integrating with. Alright, let’s dive in.
StablecoinsStablecoins are exactly what they sound like: cryptocurrencies that are stable. They are not meant to be volatile (like Bitcoin). These assets attempt to peg their price to some external reference (eg. USD or Gold). A non-volatile crypto asset can be incredibly useful for things like merchant payments, cross-border transfers, or storing wealth — becoming your own bank but without the stress of constant price volatility.
There are major governments and central banks that are experimenting with or soon launching their own stablecoins like China with their digital yuan and the US Federal Reserve with their digital dollar. There are also major corporations working in this area like JP Morgan with their JPM Coin, and of course Facebook with their Libra Project.
Stablecoin activity has grown 800% in the last year, with $290B of transaction volume (funds moving on-chain).The most popular USD-pegged stablecoins include:
tablecoins are playing an increasingly important role in the world of DeFi. In a way, they serve as common pipes & bridges between the various protocols.https://preview.redd.it/v9ki2qro12b51.png?width=700&format=png&auto=webp&s=dbf591b122fc4b3d83b381389145b88e2505b51d
Lending & BorrowingThree of the top five DeFi protocols relate to lending & borrowing. These popular lending protocols look very similar to traditional money markets. Users who want to earn interest/yield can deposit (lend) their funds into a pool of liquidity. Because it behaves similarly to traditional money markets, their funds are not locked, they can withdraw at any time. It’s highly liquid.
Borrowers can tap into this pool of liquidity and take out loans. Interest rates depend on the utilization rate of the pool — how much of the deposits in the pool have already been borrowed. Supply & demand. Thus, interest rates are variable and borrowers can pay their loans back at any time.
So, who decides how much a borrower can take? What’s the process like? Are there credit checks? How is credit-worthiness determined?These protocols are decentralized, borderless, permissionless. The people participating in these markets are from all over the world. There is no simple way to verify identity or check credit history. So none of that happens.
Credit-worthiness is determined simply by how much crypto collateral the borrower puts into the protocol. For example, if a user wants to borrow $5k of USDC, then they’ll need to deposit $10k of BTC or ETH. The exact amount of collateral depends on the rules of the protocol — usually the more liquid the collateral asset, the more borrowing power the user can receive.
The most prominent lending protocols include Compound, Aave, Maker, and Atomic Loans. Recently, Compound has seen meteoric growth with the introduction of their COMP token — a token used to incentivize and reward participants of the protocol. There’s almost $1B in outstanding debt in the Compound protocol. Mainframe is also working on an exciting protocol in this area and the latest iteration of their white paper should be coming out soon.
There is very little economic risk to these protocols because all loans are overcollateralized.I repeat, all loans are overcollateralized. If the value of the collateral depreciates significantly due to price volatility, there are sophisticated liquidation systems to ensure the loan always gets paid back.
InvestmentsBuying, selling, and trading crypto assets is certainly one form of investing (though not for the faint of heart). But there are now DeFi protocols to facilitate making and managing traditional-style investments.
Through DeFi, you can invest in Gold. You can invest in stocks like Amazon and Apple. You can short Tesla. You can access the S&P 500. This is done through crypto-based synthetics — which gives users exposure to assets without needing to hold or own the underlying asset. This is all possible with protocols like UMA, Synthetix, or Market protocol.
Maybe your style of investing is more passive. With PoolTogether , you can participate in a no-loss lottery.
Maybe you’re an advanced trader and want to trade options or futures. You can do that with DeFi protocols like Convexity, Futureswap, and dYdX. Maybe you live on the wild side and trade on margin or leverage, you can do that with protocols like Fulcrum, Nuo, and DDEX. Or maybe you’re a degenerate gambler and want to bet against Trump in the upcoming election, you can do that on Augur.
And there are plenty of DeFi protocols to help with crypto investing. You could use Set Protocol if you need automated trading strategies. You could use Melonport if you’re an asset manager. You could use Balancer to automatically rebalance your portfolio.
With as little as $1, people all over the world can have access to the same investment opportunities and tools that used to be reserved for only the wealthy, or those lucky enough to be born in the right country.
You can start to imagine how services like Etrade, TD Ameritrade, Schwab, and even Robinhood could be massively disrupted by a crypto-native company that builds with these types of protocols at their foundation.https://preview.redd.it/agco8msx12b51.png?width=700&format=png&auto=webp&s=3bbb595f9ecc84758d276dbf82bc5ddd9e329ff8
InsuranceAs mentioned in our previous post, there are near-infinite applications one can build on Ethereum. As a result, sometimes the code doesn’t work as expected. Bugs get through, it breaks. We’re still early in our industry. The tools, frameworks, and best practices are all still being established. Things can go wrong.
Sometimes the application just gets in a weird or bad state where funds can’t be recovered — like with what happened with Parity where $280M got frozen (yes, I lost some money in that). Sometimes, there are hackers who discover a vulnerability in the code and maliciously steal funds — like how dForce lost $25M a few months ago, or how The DAO lost $50M a few years ago. And sometimes the system works as designed, but the economic model behind it is flawed, so a clever user takes advantage of the system— like what recently happened with Balancer where they lost $500k.
There are a lot of risks when interacting with smart contracts and decentralized applications — especially for ones that haven’t stood the test of time. This is why insurance is such an important development in DeFi.
Insurance will be an essential component in helping this technology reach the masses.Two protocols that are leading the way on DeFi insurance are Nexus Mutual and Opyn. Though they are both still just getting started, many people are already using them. And we’re excited to start working with them at Genesis Block.
Exchanges & LiquidityDecentralized Exchanges (DEX) were one of the first and most developed categories in DeFi. A DEX allows a user to easily exchange one crypto asset for another crypto asset — but without needing to sign up for an account, verify identity, etc. It’s all via decentralized protocols.
Within the first 5 months of 2020, the top 7 DEX already achieved the 2019 trading volume. That was $2.5B. DeFi is fueling a lot of this growth.
There are many different flavors of DEX. Some of the early ones included 0x, IDEX, and EtherDelta — all of which had a traditional order book model where buyers are matched with sellers.
Another flavor is the pooled liquidity approach where the price is determined algorithmically based on how much liquidity there is and how much the user wants to buy. This is known as an AMM (Automated Market Maker) — Uniswap and Bancor were early leaders here. Though lately, Balancer has seen incredible growth due mostly to their strong incentives for participation — similar to Compound.
There are some DEXs that are more specialized — for example, Curve and mStable focus mostly only stablecoins. Because of the proliferation of these decentralized exchanges, there are now aggregators that combine and connect the liquidity of many sources. Those include Kyber, Totle, 1Inch, and Dex.ag.
These decentralized exchanges are becoming more and more connected to DeFi because they provide an opportunity for yield and earning interest.Users can earn passive income by supplying liquidity to these markets. It usually comes in the form of sharing transaction fee revenue (Uniswap) or token rewards (Balancer).
PaymentsAs it relates to making payments, much of the world is still stuck on plastic cards. We’re grateful to partner with Visa and launch the Genesis Block debit card… but we still don’t believe that's the future of payments. We see that as an important bridge between the past (legacy finance) and the future (crypto).
Our first post in this series shared more on why legacy finance is broken. We talked about the countless unnecessary middle-men on every card swipe (merchant, acquiring bank, processor, card network, issuing bank). We talked about the slow settlement times.
The future of payments will be much better. Yes, it’ll be from a mobile phone and the user experience will be similar to ApplePay (NFC) or WePay (QR Code).
But more importantly, the underlying assets being moved/exchanged will all be crypto — digital, permissionless, and open source.Someone making a payment at the grocery store check-out line will be able to open up Genesis Block, use contactless tech or scan a QR code, and instantly pay for their goods. All using crypto. Likely a stablecoin. Settlement will be instant. All the middlemen getting their pound of flesh will be disintermediated. The merchant can make more and the user can spend less. Blockchain FTW!
Now let’s talk about a few projects working in this area. The xDai Burner Wallet experience was incredible at the ETHDenver event a few years ago, but that speed came at the expense of full decentralization (can it be censored or shut down?). Of course, Facebook’s Libra wants to become the new standard for global payments, but many are afraid to give Facebook that much control (newsflash: it isn’t very decentralized).
Bitcoin is decentralized… but it’s slow and volatile. There are strong projects like Lightning Network (Zap example) that are still trying to make it happen. Projects like Connext and OmiseGo are trying to help bring payments to Ethereum. The Flexa project is leveraging the gift card rails, which is a nice hack to leverage existing pipes. And if ETH 2.0 is as fast as they say it will be, then the future of payments could just be a stablecoin like DAI (a token on Ethereum).
In a way, being able to spend crypto on daily expenses is the holy grail of use-cases. It’s still early. It hasn’t yet been solved. But once we achieve this, then we can ultimately and finally say goodbye to the legacy banking & finance world. Employees can be paid in crypto. Employees can spend in crypto. It changes everything.
Legacy finance is hanging on by a thread, and it’s this use-case that they are still clinging to. Once solved, DeFi domination will be complete.https://preview.redd.it/svft1ce422b51.png?width=700&format=png&auto=webp&s=9a6afc9e9339a3fec29ee2ae743c07c3042ea4ce
Impact on Genesis BlockAt Genesis Block, we’re excited to leverage these protocols and take this incredible technology to the world. Many of these protocols are already deeply integrated with our product. In fact, many are essential. The masses won’t know (or care about) what Tether, USDC, or DAI is. They think in dollars, euros, pounds and pesos. So while the user sees their local currency in the app, the underlying technology is all leveraging stablecoins. It’s all on “crypto rails.”
When users deposit assets into their Genesis Block account, they expect to earn interest. They expect that money to grow. We leverage many of these low-risk lending/exchange DeFi protocols. We lend into decentralized money markets like Compound — where all loans are overcollateralized. Or we supply liquidity to AMM exchanges like Balancer. This allows us to earn interest and generate yield for our depositors. We’re the experts so our users don’t need to be.
We haven’t yet integrated with any of the insurance or investment protocols — but we certainly plan on it. Our infrastructure is built with blockchain technology at the heart and our system is extensible — we’re ready to add assets and protocols when we feel they are ready, safe, secure, and stable. Many of these protocols are still in the experimental phase. It’s still early.
At Genesis Block we’re excited to continue to be at the frontlines of this incredible, innovative, technological revolution called DeFi.---
None of these powerful DeFi protocols will be replacing Robinhood, SoFi, or Venmo anytime soon. They never will. They aren’t meant to! We’ve discussed this before, these are low-level protocols that need killer applications, like Genesis Block.
So now that we’ve gone a little deeper down the rabbit hole and we’ve done this whirlwind tour of DeFi, the natural next question is: why?
Why does any of it matter?Most of these financial services that DeFi offers already exist in the real world. So why does it need to be on a blockchain? Why does it need to be decentralized? What new value is unlocked? Next post, we answer these important questions.
To look at more projects in DeFi, check out DeFi Prime, DeFi Pulse, or Consensys.
Other Ways to Consume Today's Episode:
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submitted by DeFiCoin to u/DeFiCoin [link] [comments]
The financial industry has been changing from decentralization to centralization and back to decentralization. In the early stages of the entire Internet, decentralized data was used to build a universal distributed read/write system. With the passage of time, the expandability of the Internet has become higher and higher, and the blockchain has gradually emerged, becoming an opportunity to plan and describe the blueprint of financial technology and build a next-generation Internet based on credit.
Opportunities in the era of DFC: Link the world and stand outThe global financial system has created tremendous wealth, but the centralized management of traditional financial institutions often leads to an unfair distribution of resources, and people with resource advantages are more likely to obtain funds. As global inequality becomes more severe, is there a way to break this shackle and give everyone the opportunity to achieve equal wealth growth? DeFi Decentralized Finance came into being.
In the past two years, the DeFi ecosystem has made great progress. According to Consensys reports, there are more than 100 cutting-edge blockchain projects in the field of decentralized finance. DeFi is already an economic system with a value of up to 3 billion yuan. After many years of precipitation, the DFC project has become more and more perfect, and the company has chosen to announce it at this time, taking advantage of the DeFi industry heat wave.
Create a decentralized and prosperous ecosystem
At present, the DFC project is conveniently connected with other DFC services through clearly defined APIs and standard smart contracts; focusing on its professional fields, integrating with other blockchain projects and building channels, opening the cross-chain exchange ecology to serve customers well, at the end of 2020, the lending and mining ecology will be officially launched, and mortgage lending will be started. The test network will be released in the first quarter of 2020, the stablecoin USDS ecological construction will be gradually completed, and the staking product based on DFC revenue will be launched simultaneously. It is expected that after a year of ecological testing, the main network will be officially released in the third quarter of 2021. In 2022, the construction of cross-chain ecology will be completed, and the community gradually expanded to 14 countries around the world. It will achieve the growth of millions of users worldwide, complete the leap of platform profits of tens of millions of dollars, and gradually develop and upgrade to DFC version 2.0, building more decentralized financial application ecology.
What should be the future blueprint for DFC? No one knows. However, it is foreseeable that DFC will be an important supplement to traditional finance because of its non-access feature. If the emergence of Bitcoin makes low-cost cross-border payments possible, then the development of the DFC system is the second breakthrough in the blockchain system. It is fundamentally changing the settlement structure of the global financial system.
With the development of technology and wide application, a new decentralized financial system came into being. DeFi Coin (hereinafter referred to as DFC) is a cross-chain decentralized financial (DeFi) platform created by the Singapore DIFI Blockchain Foundation. With the decentralized operation and management mechanism of DFC, DFC proves to the world that the promotion of decentralized business structure is a widely used business blueprint for human society. Every innovative product is launched with powerful support behind it.
Adhering to the direction of decentralization and financializing encrypted assets, this is the evolution direction of encrypted assets. Blockchain is born to serve the economic system and financial system. DFC stands out and is expected to become the key to the bull market.
DFC is currently building DeFi and cross-border financial solutions globally. Our scalable public blockchain supports an open financial infrastructure layer-a set of smart contracts. Developers can build products and applications accordingly, without having to start from scratch. In addition, we are also creating products that fully serve cross-border payments, allowing partners to use DFC's global settlement layer in various scenarios, such as import/export, international payroll, and international e-commerce payments.
Of course, the world's largest well-known financial ecosystem created by DFC has reached a strategic partnership with the world's leading C2B blockchain data trading platform Datawallet, Indonesia's head financial technology company Ayo Uang and other large-scale traffic portal platforms. Relying on the advantages of extensive community resources and platform resources, DFC quickly formed a considerable influence on the global scale, with a total financing amount of tens of millions of dollars, and won the favor of more than 20 top blockchain investment institutions and individual investors. At the same time, CNBC, ABC, Yahoo, "The Wall Street Journal", "Forbes", Sinovision, Xinhua News Agency, Phoenix Satellite TV, Sina, SMG Vietnam VITV TV and other top media have been widely reported.
In other words, unlike other functional DeFi projects, DFC is not satisfied with being an "upgraded version" or "alternative" of a traditional financial instrument, but hopes to work together with super volunteers with a high consensus spirit around the world. Using the underlying technology of the blockchain to build a decentralized financial ecosystem with complete bottom, rich applications, and prosperous communities.
DFC ends financial crisis, two-way enabling scenariosThere will be more and more financial products on both the B-end and C-end on DFC, and they will definitely be uneven. However, all products will enter the global unified community evaluation system, and evaluations based on product performance, safety, stability, underlying asset quality and other dimensions will also be chained to become a product traceable credit system.
It is necessary for DFC's invention patents to use blockchain technology to solve existing problems on the Internet. DFC has completely independent intellectual property rights for "an implementation of a decentralized application development platform". The underlying technology platform of the DFC blockchain has the characteristics of high TPS, low latency, security, and 3D data upload, which can fully meet the needs of Internet applications data on-chain, and has applied for more than 300 invention patents, has become the strongest technology community after BAT independent research and development technology.
It is not just technology that drives the decentralized financial system. The power of DFC’s huge community is based on the help of the global community.The global super-volunteer community allocates community traffic and capital resources at any time according to their respective behavior rights and functions. In response to the global community, the DFC project team concentrated on exploring the application of blockchain technology in the field of people's livelihood, contributing to the compliance and practicality of blockchain, and giving back to society with technology. In addition to the strength foundation laid by DFC North American technology development team, the community of South American community developers has also continuously added to the DFC system. Unlike the American community's strong interest in technology, the power of DFC's blockchain cultural ecology has been advancing the globalization process of the DFC community and market. DFC's African community has continuously contributed brand power to users around the world.
There are volunteer communities in 100 countries around the world, and the fission of more than 100,000 communities will change the global world financial system, realize the basic ecology of DFC belonging to all mankind, and bring on-chain life services to users around the world. The decentralized ecological community has promoted the progress and development of the blockchain cultural ecosystem.
In addition, it is worth mentioning that DFC includes all DeFi businesses in the current market-cross-chain asset exchange, decentralized exchanges and stable currency, financial services, loan services, and mining ecology. For DFC finance to develop, it needs to be built on the basis of other higher-frequency businesses, on the basis of the precipitation of a large number of existing assets, and on a reliable stable currency system.
According to the existing ecological deduction, if decentralized transactions can slowly become popular, there will be more and more accumulated and precipitated funds. After more and more precipitated funds, the mortgage will generate decentralized stable coins. Basically, with the flow of decentralized transactions and reliable stablecoins, the development of DFC financial business is much easier, and DFC finance is where the advantages of decentralized transactions are truly reflected, and centralized exchanges cannot really do it. With DFC Finance, decentralized transactions may go hand-in-hand with centralized transactions, or even overtake.
Since the entire community is a strong consensus ecology, the DeFi business can not only quickly land on DFC, but also realize model upgrade. In the future, the ecological scenario of DFC will continue to be concrete, detailed, and implement applications, get rid of the shackles of the platform, build a free economic world with the interconnection of everything using finance as a medium, and enable global fintech business in both directions.
Top teams work hard to build DFC services worldwideThe core of the future form of DFC is to realize a distributed autonomous borderless open financial system, and form a stable, self-evolving community autonomous financial system that supports the full integration of online and offline finance. Therefore, DFC will rely on cross-chain and decentralized exchanges and other technologies, expand the DeFi application ecosystem, establish a community autonomous financial system, implement modern financial transformation of existing digital token products according to certain rules, and improve the communication channels between existing physical finance and digital token finance. In the world of digital tokens, share the latest global economic achievements; in the future architecture, connect with the digital token system issued by global central banks and enterprises, such as DC/EP and Facebook’s Libra.
Based on this, DFC can achieve ecological closed loop and sustainable development, serving billions of users worldwide.
It is understood that the DFC team is an international team, which is composed of global financial professionals and blockchain technology talents. Its blockchain and DeFi technical teams are composed of the Musk rocket startup team, Google artificial intelligence research institution, Russian cryptography and other global diverse teams. At present, these teams have joined the DFC community in accordance with the organization principles of the open source community, and have conducted in-depth and extensive research and construction work. The participation of top international talents has prompted DFC to break through technical barriers and set off a wave of Genesis for the future.
At present, some decentralized financial products have appeared in the cryptocurrency market, and DFC is one of the pioneers. Its founder and CEO Piyush Gupta is a leader in this regard. He has held various positions in Morgan Bank, DLT Association, DAO Decentralized Organization American Association, and now Piyush Gupta said that DFC has passed the 0x Project protocol test and is beginning to break the traditional use case of Bitcoin as a value store, which has become a leader in the development of decentralized financial technology.
DFC Leads Financial Change: The Best Times for BreakersThe first important development of the financial system in history is its own transformation to the direction of "finance". This sentence sounds a bit abstract，to put it in a nutshell, when people finally have enough resources for trading and cooperation, and not just for their immediate survival, abstract finance is formed. For example, extra wheat can be exchanged for pottery, animals, or even original portrait sculptures or toys.
Throughout the history of finance, from coins to paper fiat currencies to digital finance, the latter is probably the most successful form of finance to date. It can realize the DFC vision, tokenize all assets, and open up the financial transformation of global free transactions.
At present, the total monthly transaction volume of popular crypto exchanges can exceed billions of dollars. DFC leads the next round of financial change, from infrastructure to applications to network security, DFC embraces the future of financial technology and is a major opportunity for global finance. We are in the middle of a thousand-year opportunity, there are many changes in the process , and due to our inherent limitations of thinking, we cannot see clearly the trend of future outlets. The economic cycle of DFC's future layout faces huge global challenges, but it also contains rare opportunities. Under internal and external troubles, this is the worst era, but for those who break the game, this is the best era.
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QuarkChain holds a monthly AMA (Ask Me Anything) on Telegram/Wechat groups on Saturday at 7–8 PM PST. This is the summary for February AMA. We welcome any questions, comments, and suggestions.
Q1: The Bitcoin halving is taking place this year. How do you expect this to affect the entire blockchain industry? What role will QuarkChain play in the industry?
The Bitcoin halving is a major event in 2020 and we believe this event may have significant impacts.
Technically speaking, this means every block reward is reduced from 12.5 BTC to 6.25 BTC, and the inflation rate is also halved.
As a result, firstly, the inflation rate will be below 2%, which means the rate is close to that of gold. Secondly, the selling power from miners is also halved. While as cryptocurrency and blockchain become more popular, more people may be more likely to own BTC.
From the perspective of the market, BTC has become a hedging asset against risks since there are not many global assets that have a good story as well as good liquidity. There are two main factors influencing the price of BTC: namely the manufacturer of mining machines and the Wall Street. As long as selling mining machines is still making a profit while the global economy is still thriving decently, the value of BTC will maintain its level. So I think that the market will view the halving this time around in a more optimistic light.
BTC is rather out of sync with other blockchain projects because its financial nature far outstrips its technical nature. We can compare BTC to gold while other projects are more comparable to technology companies who focus on technological applications and innovations.
Another question is what halving signifies for our QuarkChain team. Since 2018, QuarkChain has been focused on inventing a faster and more convenient public chain. Since the launch of mainnet, our product has evolved to become a framework like Polkadot and Cosmos that enable launching a chain with one click and provide cross-chain framework consensus. During our Stanford 2020 meeting last week, we further proposed the idea of a “quark family” whereby one can adopt this sharding layer framework on public chains. If this concept is applied to consortium blockchain, then it becomes “quark-union.” Such framework can be applied in other scenarios and interoperate for other use cases and provide a plethora of choices for users, which is our target goal this year.
In the middle of the year, we will announce the next product developed specifically for this framework, which functions like Polkadot’s Substrate framework that allows developers to build products as parachains. Please follow us to learn more!
In general, I think this is really good news for the whole cryptocurrency world!
Q2: The Chinese market pays more attention to the consortium blockchain. Will this affect QuarkChain? Will the team consider joining the consortium blockchain?
One of our goals is to broadcast our QuarkChain technologies to more people around the world, and we are happy to see that not only can our technology be applied to the public chain space, but also to the consortium blockchain space!!
Secondly, it is also natural to extend the public chain technology to the consortium one, where Ethereum has EEA, and JP Morgan is also working on Quorum, which is the consortium version of geth.
With the Chinese government’s support of this domain, I think it is a very good opportunity for QuarkChain to participate in the market and meet the needs in the consortium blockchain space. We will soon announce the new products in the area soon!
Q3: The QuarkChain team attended the Stanford Blockchain Conference recently. Are there any differences between the direction of exploration in 2020 and in 2019? Did you find any new or interesting ideas?
A lot of interesting things happened during the Stanford Blockchain Conference. I also discussed with several people, including Vitalk and Professor David Tse about their works. We discussed some details about their proposal in the extreme case such as network partition and asked more details in how Lamport’s BFT algorithm’s relationship with his proposal.
First of all, I found there is a rapidly rising interest from academia to enter into the blockchain space, including professors from renowned universities such as Stanford, UIUC, and Cornell.
Secondly, I found more and more people are taking serious considerations into practical problems such as scalability and security. For example, Vitalik gave a talk about 51% attack and how to avoid that; people are working on both vertical and horizontal scalability. Of course, Facebook Libra also presented their blockchain.
We are watching these technologies closely and are looking forward to seeing its development, which will guide our future growth as well!
Q4: QKC held a meetup yesterday and you talked about what the future of blockchain looks like and topics related to business. Can you give us a brief summary about the discussion? How can QuarkChain be applied in the real world? Any use cases?
We delivered a speech titled “What The Future Blockchain Looks Like to Empower Business.” Looking back, the early days of blockchains were chasing after pure technical breakthroughs with little considerations for practical business needs. This is related to what we talked about also at the year-end review: after TPS, what else can blockchains propose?
One of the big trends that we see is that, typical major business applications rely on both consortium blockchain and public chains. Even for Facebook Libra, it starts with consortium blockchain and then will move onto public chains. From a business perspective, the space is looking for a more comprehensive solution that allows seamless communication between consortium blockchain and public chains altogether.
The Boson consensus is the paper we published during the world-class 2019 IEEE conference. It is the sharding infrastructure framework that we have been referring to since day 1, which is analogous to the Substrate framework from Polkadot. We have applied this framework to implement QuarkChain, as you are all familiar with it by now.
We are now applying the same framework onto consortium blockchain to allow different enterprises to define different chains based on their own business requirements and also create plug-ins to interact with other chains such as IBM Hyperledger, Ant Financial blockchain, WeBank, and so on.
With the great efforts of our BD team, we are working on some use cases with our important partners. One direction we believe is to speed up financial processing using blockchain in the enterprise space. For instance, with immunity and transparency, we could facilitate regulated financing and circulation of assets more easily. Imagine DeFi in consortium!
As I mentioned before, we are building the consortium version of QuarkChain, and actually, the first version of the product is almost ready and is under testing.
Q5: What does your roadmap for 2020 look like? Name some important milestones you hope to achieve. What are the major developments lined up for QuarkChain this quarter?
In 2020 H1, we plan to fully support our native token to enable DeFi composability. We would like to make the token more user-friendly as well.
Actually, ETH2.0 is targeting native tokens for a while, and we also have a long conversation with ETH. While ETH2.0 is still planning and designing the feature, our goal is to fully support ETH 2.0 in 2020 — probably the first blockchain that enables all these!
For the second half of the year, we are still looking into several areas, namely privacy, heterogenous chain, and new consensus mechanism. We also would like to learn from the community to see what the best idea may be.
Please check more details here:
Q6: In the past years, we all said ZIL was your biggest competitor, but the fact is we did not see too many updates from them. So who is your current strongest competitor? How do you stand out from your competition?
Actually, in this growing new area, we learned tremendously from different projects in sharding, multi-chain area: ETH2.0, Polkadot, Cosmos, and ZIL.
And for us, our idea is quite simple — to achieve our goal with using all technologies from us and also from others. We also interacted with the blockchain communities actively so that we could jointly contribute to the blockchain space. This philosophy explains why we have an active presence in different projects such as ETH and Libra.
Our technology, the Boson consensus, is the key for us to differentiate from others. Even better, the Boson consensus is designed to be flexible, and thus is able to incorporate a lot of novel ideas! To my knowledge, this flexibility can hardly be found for other blockchains. Unless other projects decide to follow us someday, I think we should have plenty of space to stand out!
Q7: What are your future plans for the developer community?
We just started our bounty program for supporting native token auction — an important part for multi-native token support. This means many dApps on ETH can be rewritten and enjoy the benefits of the multi-native tokens, and we will have demos and programs to educate the public.
Q8: QKC technology is at the forefront of the industry. What are its strategies in market expansion? How are you planning to take over more market share in 2020?
We need to acknowledge that the speculation is widespread across the entire market, similar to what was observed during the early days of the stock market. As we can see now, the era of speculation and fast money is fading away. What we observed in the US stock market for the last decade is that the out-performers are no mere speculation but outstanding technology companies who keep innovating themselves. To adapt to this shift of culture, we now align the overall marketing strategy to branding.
What this signifies is that besides telling people the acronym of QuarkChain, we should let other people know more about the details of QuarkChain and the recent updates of our team.
What we will do in the future is to share more quality in-depth contents which vary in format but are easily readable. We would like to intrigue more people by experimenting with different forms of data visualization. We also want to step onto different school campuses for technical sharing sessions and have first-hand engagement for technology enthusiasts and gain their recognition. From there, we will then carry out more public advertisements. Because of the outbreak of virus, we will develop more online activities to enable more people to participate free of physical constraints.
Q9: Why do we see less interactions from the team recently? How are the team members faring? Can you work on developing the Chinese community in 2020?
Someone messaged me offline wondering why I appeared in the group less often recently. I actually am still with QuarkChain and have been working on various projects in great depth. For example, I was lecturing MBA classes and summarized how blockchain can step out from its current bottlenecks.
Some also discovered that they were no longer able to private chat with me. As I have explained before, such a decision was made on the basis of freeing up more of my time from customer services to allow more creative thinking and R&D. I have been paying close attention to the discussion and suggestions within the group chat. I am also in consultation with Yufeng and Daisy for the latest news within the group chat as well. Our team is doing well with more technologies underway. We are landing more business applications and are shifting our marketing focus from operations to branding. We will continue to update our latest developments so stay tuned!
About the community, we aim not just to grow only the Chinese one but around the world. You may understand the idea of developing a community in a different sense than I do. As I might have mentioned before, for the past two years, blockchain was highly speculative and some projects only wished to boost the number of followers with little maintenance of the community. Since the days of speculation are gone, developing a community is no longer just counting heads but providing contents of added values and spreading the awareness of these quality contents to more people. This is also why I appeared less in the chat but have published more in-depth articles over the past few months.
Q10: What are the latest updates in terms of business developments? Who are some of your latest business partners?
Let me first talk about the potential effects of the COVID-19 outbreak. Its ramification is of global scale; interestingly, it has an accelerating effect for blockchains since people came to realize that after thrifting on big data and large-scale IT systems, these white elephants did little to present timely, effective, and accurate data. Such inefficiencies have created tremendous challenges for public administration and blockchain is the perfect solution to fill this vacuum.
When it comes to commercialization, as an early entrant, we are happy to share some initial progress with our supporters.
Firstly, related to government affairs, we have business use cases for large business enterprises and governments regarding data management, public governance, and public services.
Secondly, targeting this outbreak, we have proposed a comprehensive 2G solution using blockchain and are in close communications with the government.
Lastly, in terms of management of public assets and finance, we have made some significant attempts to manage assets that were previously overlooked and were unable for financing. Our approach may be used to create financial products for circulation.
Let me give you a concrete example in factory monitoring. During production, with the automated and trustless production of data, the discharge data from the factory will become more reliable. Environment department can then use discharge data collected from automatic devices with little worry that factories have tampered with the data for the sake of avoiding penalties.
FYIThanks for reading this summary. QuarkChain always appreciates your support and company.
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