Hello everyone, I am Gordon Gao, CEO of WaykiChain. I am very pleased to be invited to share my views on Decentralized Finance and WaykiChain’s layout in DeFi field on Standard Consensus. The term DeFi has been hot recently, but many people have not seen where DeFi’s vision and future lie. In my opinion, DeFi’s disruption to the financial sector will not be less than Bitcoin’s disruption to currency. Within 10 years, the market value of Bitcoin will be surpassed, and it may be by WaykiChain, even if it is not WaykiChain, it will also be a token in the field of DeFi.
DeFi establishes a new financial order
Let me first talk about the traditional financial system. When it comes to finance, let’s start with issuing currency. Modern currency is essentially an invoice, and this invoice is endorsed by the credit of the repayer. For example, the national debt issued by the state is a government-level loan, and the repayment ability is evaluated by economic development and taxation. After that is the commercial banks’ borrowing notes. Their repayment ability relied on their reserves in the central bank since this part of the reserve was only part of the reserve, commercial banks also increased their leverage when issuing currency. The bottom layer is the private loan, like P2P. We can see that the closer to the top level, the lower the loan interest rate, the better the credit. In this system, ordinary people’s borrowings are inherently different from the government’s borrowings. Ordinary people have a high loan interest rate, and because of poor credit, the acceptance level is low.
However, it is different in DeFi. The issuance of stablecoin in DeFi is issued in the form of collateral loans. Everyone has the same power. The repayment ability depends on the collateral, and the collateral of the digital currency should be in theory, the best collateral for the following reasons. First, liquidity is strong. Second is that it is splittable, and it can be traded in 24 hours worldwide and can be liquified at any time. In other words, the DeFi of blockchain gives people the power to issue debits (currency) and has the advantages of credibility and low-interest rate. Therefore, it is fair to say DeFi thoroughly implements the concept of equality for all and achieves inclusive finance.
The 1% of the world’s people have 50% of the wealth, and this 1% is almost all capitalists. They control the rules of the entire financial system to decide when will the currency be oversold, how should interest rates be determined, and through a +series of rules to harvest the wealth of the world, so that wealth has been gathering towards the top. It is these people who have become the biggest beneficiaries of the entire economic system. As ordinary people, we can neither change the way we make money nor can we can participate in the setting of rules.
But DeFi gives us an opportunity to participate in the system as various roles. For example, people who hold the governance coin WGRT or MKR can become the theoretical shareholders of the bank, enjoy the interest rate differential income of loan interest and deposit interest, and can also make distributed decisions and enjoy the treatment of capitalists. In addition to being able to participate fairly in the financial system as users, as more people participate in it, the market value of the economy of the entire system will reflect on the token prices, thus people who are optimistic about this economic system can expect to get rich.
DeFi will boost the next generation of blockchain explosion
Bitcoin’s original vision was to make a peer-to-peer electronic cash system and tell the story of a currency. The core circle attracted by this story is anarchists. The earliest positive occurrence of Bitcoin was that Bitcoin payment was accepted again in some places, and where Bitcoin ATM appeared again. But Bitcoin’s deflationary attributes and value fluctuations are inherently unsuitable as currencies, so this story can’t finish. However, as an asset, the constant amount and strong liquidity of bitcoin tell a new story of sustainability. Bitcoin Cash, Litecoin, etc, are also telling the same story. But we found that none of them surpassed Bitcoin.
Ethereum’s original vision was to become a global computer, and it told its story as a public chain. The core circle attracted by this story is technical geeks and programmers, who start expressing their own business logic on this. But in 2017 it was ICO that was made popular. ICO allows more ordinary people to participate in future construction, and it makes people rich overnight. However, except for Ethereum, other public chains are hard to utilize this model.
I think the opportunity for the next wave of blockchain comes from DeFi. The core circle is someone who wants to cross the class in the traditional world and change his/her role in the traditional financial system. This part of the core circle is larger than that of anarchists and programmers. In fact, DeFi’s ultimate vision is to provide a fair financial system, and WaykiChain is working step by step towards this goal. What surpasses Ethereum must not be another Ethereum, the market also needs a new vision to make them re-believe in the blockchain.
WaykiChain DeFi provides integrated financial services
All DeFi starts with borrowing. Finance revolves around currency, and as mentioned above, the essence of currency is invoice, and the loan agreement can be regarded as the basis of DeFi. Ethereum has MakerDAO and stablecoin DAI, while WaykiChain also has Waykichain CDP and stablecoin WUSD, which is also WaykiChain’s first contract in DeFi. Then what is the role of governance coin?
Governance coin WGRT is the shareholder of the central bank in this financial economy. All the interest that normally charged by the lending system and part of the fines will be used to repurchase WGRT for destruction, which is equivalent to distributing dividends to the currency holders. That is to say, the DeFi products created by WaykiChain will revolve around the WUSD currency system, and the beneficiary of the currency system is the holder of the WGRT. This is completely different from DeFi on Ethereum. DeFi on Ethereum is spliced from various protocols, and there are dozens of stablecoins. First of all, using this method to establish DeFi, the synergy effect between different products is very limited, and users must be familiar with multiple products without a one-stop service experience. More importantly, this will also expose a lot of security issues. Two major attack events this year, Dforce and Lightning Loan, are both cross-protocol compatibility issues.
This model is like building a sandcastle on the beach, and it is impossible to build a skyscraper with sand. WaykiChain has developed the core lending agreement in DeFi at the core layer, unifying the currency standards and pricing units in the economy without compatibility issues, and use stablecoins to pay miners’ fees, which is something Ethereum can never do with their current thinking. What WaykiChain aims at doing is to build an integrated DeFi platform and open protocol.
Liquidity is fundamental to DeFi. Liquidity means moving from a literal point of view. For example, the stablecoin borrowed from the loan agreement needs to be sold in the market to cash it out. Then there needs to be someone in the market who wants to buy this stablecoin. The motivation for such a person is nothing more than making money. In a financial system, a loan agreement alone is not enough. A deposit financing or investment agreement is also required to make the stablecoin WUSD flow. Therefore, WaykiChain will launch a synthetic asset trading product called Wayki-X by the end of July or early August. This product can allow users to trade various valuable assets around the world theoretically, thus making users have real demands for WUSD.
After WaykiX, we will continue to improve financial management, as well as off-chain asset release and investment, automatic market maker, and other agreements. By the end of 2021, we will complete all the basic closed loops of DeFi and let the assets fully flow in it. At that time, users can truly enjoy one-stop financial services on WaykiChain, which include loans, deposits, financial management, investments, transactions, derivatives, and so on. All agreements are completely open and transparent, and lower in cost, more efficient, and more profitable when compared to traditional finance.
In 2013, Bitcoin led a wave of the bull market with the idea of currency. In 2017, Ethereum led another wave of the bull market with the concept of the global computer. Then the next wave of the bull market needs a new leader, a new story and belief, I think the DeFi we do will be the pioneer who leads the next wave of blockchain.