📓UPRETS Partner Hotshot | How will the new dForce protocol connect the lending protocol and synthetic assets?

Source: https://www.theblockbeats.com/news/24680

Can the advantages of the lending protocol, stablecoin protocol and synthetic assets protocol be combined?

When Bitcoin became the favored asset of many Wall Street institutions and top US technology companies, Bitcoin could no longer stand alone in the entire capital market. From a niche toy of geeks to a global commodity, Bitcoin along with Tesla, gold and crude oil, together affect the behavior of global investors.

Obviously, Bitcoin traders are no longer the exclusive investors in the cryptocurrency industry. U.S. stocks, commodities and Bitcoin have formed a huge investment network, and the allocation of a single asset cannot satisfy investors in any market.

The trading volume of GBTC in the U.S. stock market reached 400 million U.S. dollars in a single day. In contrast, the demand for U.S. stock was also on the rise for the crypto community. On the first trading day when Binance launched Tesla token, the transaction volume reached 10 million US dollars.

However, in the now prosperous DeFi field, there is no product that can perfectly match the needs of the market for the trading of commodities. The dForce team has filled this gap.

Lending Protocol and Synthetic Asset Dilemma

Players in the DeFi world have pledged USD 5.1 billion worth of tokens in one of the largest lending protocols, MakerDAO, and lent USD 3.7 billion worth of stablecoin DAI. To some extent, lending protocol is the cornerstone of the DeFi world.

Lending protocols can be divided into two categories, one that only accepts specific assets as collateral to lend stablecoins, represented by MakerDAO,and the other one that supports the deposit of any asset as collateral to lend another asset. dForce, Aave and Compound all belong to this second category.

Judging by the data, MakerDAO is the top lending protocol. However, some believe that MakerDAO’s capital efficiency is not sufficient. MakerDAO’s model is called the CDP debt warehouse model. DAI is the only debt in the system, and users’ debts and assets are isolated. In other words, MakerDAO’s mortgage assets are locked assets, unable to participate in lending and obtain interest income, resulting in huge opportunity costs and capital inefficiency.

At the same time, MakerDAO does not consider Euros, British pounds and other fiat currencies, or silver, gold, and securities as the basis for synthetic assets. It only supports the synthesis of the stable currency DAI anchored by the US dollar, which limits the scope of MakerDAO’s utility. Of course, this also provides opportunities for innovation of other protocols.

In the field of synthetic assets, Synthetix is ​​a well-deserved leader. Synthetix platform currency SNX is the main raw material for synthetic assets. At present, SNX accounts for 98.5% of all mortgage assets. If the price of SNX plummets, the entire system may fall into a death spiral. Just like the movie The Big Short, if the bottom building blocks are unstable, the entire system may collapse. Cao Yin, the managing director of the Digital Renaissance Foundation, also holds the same view. When the price of SNX is too high, as long as someone starts to sell, it will immediately cause a catastrophic loss, which will lead to a death spiral. SNX plummeted sharply, and mortgage assets continued to burst.

This is not all the problems of Synthetix. The 700% mortgage rate and closed debt system greatly limit Synthetix’s capital efficiency and the expansion of currency and balance sheet.

More problems mean more market space. In order to solve the current problems faced by lending protocol and synthetic assets, dForce has proposed its own plan.

dForce’s new protocol

In dForce’s new protocol, the advantages of the three protocols of lending, stablecoin and synthetic assets can be combined. It is possible to use more than one single asset as collateral to mint synthetic assets.

On the raw material side, all collateral supported by the dForce lending protocol has no supply cap. This means that dForce’s balance sheet can expand indefinitely. On the synthetic asset side, it is not limited to USD stablecoins. Users can synthesize various fiat-anchored coins, commodities such as gold and silver, stock tokens such as Tesla, and index tokens such as SPX.

Unlimited raw materials and diversification of synthetic assets mean that the dForce lending protocol has a broader space. At the same time, the collateral is not sitting there idly and can continue to generate interest. The interest generated by the collateral can reduce the capital cost of the users participating in the lending.

The raw materials and synthetic assets diversification do not mean that the system is chaotic. The dForce lending protocol adopts different risks, currencies and fee policies for different assets. For example, the interest rate curve and mortgage rate of synthetic stablecoins and synthetic stock tokens will be different.

Judging from the past experience of dForce, it prefers to launch a one-stop integrated platform with an aggregating nature. The new protocol launched this time also has this attribute.

In the new protocol, dForce launched a genesis capital pool and a synthetic asset pool. The genesis capital pool supports users to deposit collateral and mint synthetic assets; the synthetic asset pool is independent from the genesis capital pool and accepts DF tokens, core assets, whitelisted synthetic asset via community voting and LP interest tokens as collateral. At the initial stage, dForce will suspend the cross-lending function of synthetic assets until liquidity stabilizes. In other words, once liquidity is stabilized, the security deposit of synthetic assets will be available for borrowing and trading.

According to the official introduction, dForce will launch different pools according to different scenarios in the future, such as low slippage commodity trading pools, fixed-term and fixed-rate protocol protocols, and so on. Through the native integration of the protocol, dForce expands the usage scenarios and makes it more user-friendly.

It is foreseeable that the new dForce protocol can reduce global spread trades and may also create a new global interest rate and foreign exchange market. dForce may become a one-stop DeFi application platform, and meet users’ demand by launching new pools.

At 10:00 on June 4th, dForce has launched a 14-day upgraded liquidity mining program “Summer Vibe (Xia Ku)” on Ethereum and Binance Smart Chain, targeting deposits, borrowing on the dForce lending and synthetic asset protocol, minting synthetic stable coins, and issuing DF incentives for synthetic stocks that provide liquidity on the designated AMM (Binance Smart Chain only).

According to information on the official website, dForce has simultaneously launched lending mining and liquidity mining on Ethereum and Binance Smart Chain, with a maximum total annual return rate of 800%.

Traditional financial markets and the DeFi world are converging.

Under the background of the global QE, crypto investors not only favor the encrypted assets, but global assets such as stocks and commodities. From the perspective of platform development, a single global assets trading platform is an irreversible trend.

FTX and Binance has launched equity tokens in response to the trend, and the DeFi protocol Mirror Protocol also bets on equity tokens. While equity tokens are booming, projects in the DeFi field are undergoing subdivision, such as fixed-rate and fixed-term lending and large-scale stable currency swaps.

Judging by dForce’s newly launched protocol that integrates lending, stablecoins and synthetic assets, its real goal is to integrate the global capital market, not just equity token market. If the multi capital pool model of dForce’s synthetic asset protocol can succeed, dForce may become the first protocol with both good breadth and depth in the DeFi field.

In the environment of “everything can be tokenized”, the new financial market constructed through DeFi may fundamentally change the incentive scheme and modify our existing lifestyle.

At present, dForce has hired four top global auditing firms to conduct code audits on lending and synthetic asset protocols, including Trail of Bits, ConsenSysDiligence, CertiK, Certora (formal verification). dForce has set strict risk control parameters for different assets and enabled 24/7 off-chain monitoring system.

Of course, dForce is not the final form of DeFi products. In the rapidly changing capital market, there will be more and more products like dForce, and investors will become more and more sophisticated.

About Our UPRETS:

UPRETS is a platform focused on simplifying investment in real estate by advising on and digitalizing assets and securities.

We are dedicated to providing a convenient, legally compliant and advanced real estate digital securitization platform for property developers, asset owners and investors globally.

By utilizing our UPRETS platform, real estate developers and assets owners can create digital securities for their properties, providing investors with various low-barrier, secure and convenient forms of investments.

Backed by a publicly listed real estate conglomerate (NYSE:XIN) and our award-winning, patented blockchain technology, Xbolt, we bring a network, experience and luxury assets to the platform.

For more information about UPRETS,

visit https://www.uprets.io

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Lastest SolarX Project MakerDAO Forum: https://forum.makerdao.com/t/solarx-mip6-application-uprets-solarx-industrial-real-estate-backed-loans/6718

OST Digital Securities MakerDAO Forum: https://forum.makerdao.com/t/ost-1-mip6-application-by-uprets-real-estate-backed-digital-security/4438

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NFT Bazaar

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The brand-new founded aggregator (nftbazaar.network) for all kinds of NFT artists, token holders and lovers, esp. BSC for thorough info search and transactions.

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