How does Coinbase deploy DeFi?

In May 2020, Coinbase wrote such a sentence in its blog: "The coming DEX revolution". Subsequently, DeFi began to become the hottest hotspot in the encryption industry. Carbon Chain Value found that well-known DeFi projects are more or less connected with Coinbase or the capital behind it.

Author: Hydrogen 3

Editor: Jiang Xiaoyu

Produced by: Carbon Chain Value (ID: cc-value)

Under the Fed's epic release, cryptocurrencies such as Bitcoin have strengthened. However, what most investors did not expect is that the hot spot under the background of water release is not "halving" but DeFi.

The total locked position exceeds 7 billion US dollars, the daily transaction volume is about 400 million US dollars, and 45,000 bitcoins are locked in the agreement... Yes, this is the current status of DeFi.

The newly created DeFi project YAM was launched in less than 10 hours, and the lock-up funds exceeded 600 million US dollars; the market value of Curve token CRV, a DeFi automatic market maker, once exceeded 90 billion US dollars when it was launched, far surpassing Ethereum; the liquidity mining DeFi project Compound was detonated The token COMP was scrambled to go online by major centralized exchanges; it only took 6 days for the aggregated trading platform yearn.finance token YFI to go from $4,000 to surpassing the price of Bitcoin. This is a hot corner of DeFi.

The full name of DeFi is Decentralized Finance, which means decentralized finance. It was first proposed in 2018 by Brendan Forste, founder of the cryptocurrency lending platform Dharma.

In 2019, many encryption industry communities believe that the emergence of DeFi will subvert the traditional financial system. However, with the increasingly popular concepts of "liquidity mining" and "decentralized exchanges", they believe that DeFi will first subvert centralized exchanges. (CeFi) rhetoric supersedes the former.

But are CeFi and DeFi really in opposition? Maybe there is an extremely close relationship between DeFi and CeFi? Who is the driving force behind DeFi?

Coinbase: the CeFi veteran who shaped the concept of DeFi

As we all know, exchanges are the industry at the top of the food chain in the encryption industry. Therefore, it has the ability and sufficient capital to carry out the layout of CeFi. In April 2018, Coinbase announced the establishment of a venture capital fund, Coinbase Ventures, which will provide early investment in cryptocurrency and blockchain startups, including companies that may compete with Coinbase.

To this end, the carbon chain sorts out the projects invested by Coinbase Ventures:

Among the DeFi projects invested by Coinbase Ventures, the most famous one is Compound. Compound launched liquidity mining in June 2020, which directly or indirectly ignited the DeFi boom. The investment was completed as early as May 2018, and Bain Capital Ventures, A16z, Polychain, Transmedia Capital, Abstract Ventures, and Danhua Capital also participated in the investment.

In addition to Compound, UMA and Celo are currently popular DeFi projects on the market.

From the perspective of investment time, Coinbase Ventures’ investment in DeFi projects is basically concentrated in 2018 and 2019. It is not difficult to show that Coinbase has already been deploying DeFi.

In May 2020, Coinbase wrote such a sentence in its blog: "The coming DEX revolution". Subsequently, DeFi began to become the hottest hotspot in the encryption industry. The article was written by Justin Mart, a Coinbase corporate development and investment researcher, which detailed the various advantages and disadvantages of DEX, and pointed out the direction that DEX needs to improve in the future:

“DEXs are linked to programmable currencies, they can create new derivatives and synthetic assets, and deeply combine with other DeFi services to create truly differentiated products.”

Now, three months later, looking at Compound, Curve, YFI, and reading Mart’s views carefully, I have to admire the profound insights. Perhaps this is one of the reasons why CeFi like Coinbase has already seen that DeFi will undergo a "revolution" sooner or later.

The capital promoters behind DeFi: Coinbase entrepreneurial alumni

Coinbase Chief Operating Officer Emilie Choi once said that Coinbase Ventures will focus on entrepreneurs who have worked at Coinbase, and hopes to build an "entrepreneurial alumni network."

At present, the "Entrepreneurial Alumni Network" in the domestic Internet investment circle is more like making people choose to "stand in line", but Coinbase is not. Coinbase has received investment from large and small capital in the encryption industry, and has actually enjoyed the benefits of the "Startup Alumni Network". Its No. 1 employee, Olaf Carlson-Wee, founded Polychain Capital after leaving, and participated in Coinbase's E round of financing.

At the same time, Carbon Chain Value found that well-known DeFi projects are more or less connected with Coinbase or the capital behind it. Select the top few projects from the total lock-up volume, transaction volume, and token market value as sample analysis.

Total locked positions: MakerDAO, Aave, Synthetix, Compound

Volume: Uniswap, Curve, 1inch, Balancer

Token Market Cap: LINK (Chainlink), LEND (Aave), UMA, SNX (Synthetix)

As MakerDAO, the crown project of DeFi, its main investors include A16z, Polychain, FBG Capital, Wyre Capital, and 1confirmation. The main investments of Aave, an unsecured loan known for its "flash loan" attacks, are ParaFi, Framework, Three Arrows Capital, and DTC Capital. The main investors of Synthetix, the third synthetic asset issuance agreement with a total locked position of more than 1 billion US dollars, include ParaFi, IOSG, Framework Ventures, DTC Capital, Hashed, and Three Arrows Capital.

The investors of Uniswap, a decentralized exchange whose daily trading volume once reached one-third of Coinbase, mainly include Paradigm, a16z, USV, ParaFi, and SV Angel. Curve, whose market capitalization once surpassed that of Ethereum when it was first launched, did not disclose its investors, so it is not included in the statistics. 1inch's main investors are Galaxy Digital, IOSG, and Dragonfly Capital. The main investor in Balancer is Placeholder.

The fundraising method of the oracle machine Chainlink is ICO, so it is not considered. The main investors of UMA, a decentralized synthetic asset agreement, are Placeholder, Blockchain Capital, Coinbase Ventures, and Two Sigma Ventures.

As can be seen from the figure, institutions that have invested in Coinbase are deeply involved in DeFi investment. Of course, this is just one corner of the DeFi world. When the perspective is enlarged to the encryption industry, the intricate relationship between capitals will be even more dazzling. Coinbase, DTC Capital, and Framework, which have no intersection in the DeFi field, all participated in the investment of Graph Protocol; Coinbase and Wyre Capital also participated in the investment of Linen.

Some users said that it is precisely because there are projects full of capital behind them that YFI, which has no pre-mining and is open and transparent, is precious.

Everything has two sides, YFI has its unique charm, but capital also has its advantages. For example, capital is much faster than the former in terms of user education. For example, in June this year, Coinbase launched Compound and Kyber courses on its "Earn" platform, and users can earn tokens COMP and KNC rewards by watching and learning.

Follow Coinbase to fry DeFi

When it comes to DeFi and CeFi, listing coins is an unavoidable topic. Previously, CarbonChain once mentioned that Coinbase was very restrained in listing coins in "Coinbase Bear Market Expansion", and only launched 4 cryptocurrencies in the first 7 years of its establishment.

Coinbase has announced the list of "investigation projects" five times so far, and each release of the list has aroused considerable discussion in the industry. In the eyes of different groups of people, the role of the list is not the same. For those who speculate in coins, this is a list of tokens that are about to be born. From the perspective of industry practitioners, this is a general trend of the future development of the encryption industry. Analysts believe that this will determine the hot spots in the encryption industry for some time to come.

The most recent inspection list included Ampleforth, Band Protocol, Balancer, Blockstack, Curve, Fetch.ai, Flexacoin, Helium, Hedera Hashgraph, Kava, Melon, Ocean Protocol, Paxos Gold, Reserve Rights, tBTC, The Graph, THETA , UMA, WBTC and other projects.

In this list, there are 10 DeFi projects involved: Ampleforth, Band Protocol, Balancer, Curve, Kava, Melon, Reserve Rights, tBTC, UMA, WBTC. After the list was announced, all projects skyrocketed. Among them, BAND has the highest increase.

Many users think that DeFi and CeFi will have a battle sooner or later. Apparently Coinbase responded to this incident with an investigation list, and the answer is No.

Currently, Coinbase has launched 26 projects, including 8 DeFi projects: LINK, MKR, ZRX, COMP, DAI, KNC, BAND, REP. Coinbase Pro has listed 9 DeFi concept tokens: MKR, DAI, ZRX, LOOM, KNC, COMP, REP, and BAND. In addition to MakerDAO (MKR, DAI), Compound (COMP), and Band Protocol (BAND) introduced above, there are also 0x Protocol (ZRX), Loom Network (ZRX), Kyber Network (KNC), and Augur (REP). online. And these online projects are backed by a lot of capital support.

Dark clouds have already appeared on the DeFi market

From the above, we can see that Coinbase itself is one of the biggest promoters of this round of DeFi market, and it can also be regarded as a kind of weathervane of the market. If you look at it from this perspective, dark clouds have actually appeared in today's DeFi market.

On July 31st, Coinbase announced the inspection list, and on August 10th announced the listing of BAND. In just 10 days from the announcement of the list to the announcement of the launch, BAND rose as high as 340.67%. After the announcement of the launch, the price of BAND began to fall all the way. This is clearly different from all previous tokens listed on Coinbase.

This has to make people wonder whether Coinbase leaked the news and helped the funds behind BAND to flee profitably. Even the "investigation list" itself is a cover, just to attract the attention of the market and attract more investors to buy these tokens, so that their capital friends can better sell the tokens in their hands. Otherwise, it would be difficult to explain that Ampleforth (AMPL), the founder of Coinbase himself participated in the investment, appeared in the "investigation list".

It is undeniable that there is a big bubble in the DeFi field now, and the vast majority of investors in the market have lost their rationality. The "wealth code" conceals the meaning of DeFi itself. Perhaps, DeFi is about to usher in the moment of bursting the bubble; at that time, the cryptocurrency market will usher in pain again.

However, the concept of DeFi is different from ICO after all, and it points to the innovation of financial infrastructure. Although the current bubble is rampant, its goals are practical, and the ecological development is also rapid. With the improvement of decentralized insurance, the enrichment of decentralized derivatives tools, and the emergence of various combinations of decentralized financial instruments, we are still full of hope for the future of DeFi.

Recommended reading:

Behind tZERO's parent company Overstock stock soared 37 times in five months

DeFi Meditations: History, China and the Future

The rapid growth of DeFi and DEX may make Ethereum surpass Bitcoin

Bitcoin is expected to break through $20,000 in 2020

Bloody Warrior | Biography of Wu Jihan

A massive bull run is brewing for Bitcoin

The National Development and Reform Commission officially incorporated "blockchain" into the new infrastructure

The first application scenario of the central bank's digital currency landed

Agricultural Bank of China internally tests the outflow of "central bank digital currency"

Yao Qian: The new currency war has just begun

Blockchain Ten Years Dream