Chainfeeds Preface:
DeFi is essentially about moving traditional finance onto the chain and playing it again, with the key being how to build more ingenious Lego blocks.
Article Source:
https://mp.weixin.qq.com/s/zKAknPbSsNw5Qd90uuTqcA
Article Author:
Cryptoria
Perspective:
Cryptoria: DeFi protocols need to compete on ten dimensions: liquidity, trust, returns, transaction fees, availability, user experience, composability, capital efficiency, scalability, and specialization. Among these, liquidity is the most important competitive factor. The four core business models of DeFi are: 1. Matchmaker model. Representative projects: Uniswap, dYdX. Matchmakers are like matchmakers, connecting people with liquidity and those who need services. This is the model we are most familiar with, but the problem is: to attract liquidity providers (LP), the protocol must give up most of the fees. Taking dYdX as an example, it connects liquidity providers and traders, providing spot trading, perpetual contract services, etc. But the challenges it faces are severe: intense liquidity competition, with only so many wealthy people, making the competition fierce; huge fee pressure, with transaction fees constantly being lowered to maintain competitiveness; limited profitability, with most fees going to LPs to attract liquidity. Data shows that since 2021, the proportion of DEX transaction fees to trading volume has been declining. Uniswap has dropped from an initial 30 basis points to 5 basis points, and then to 1 basis point, with a nearly 50% decrease in fee efficiency. The fifth model: Supply Service Model (Hybrid Model). Now, top DeFi protocols are beginning to evolve towards a hybrid business model, combining matchmakers and liquidity services. Core logic: earn money as a matchmaker and as a liquidity provider. Taking dYdX as an example, suppose it not only becomes a perpetual contract exchange but also issues its own stablecoin: users can trade perpetual contracts on dYdX; users can mint dYdX stablecoins by pledging assets; stablecoins can form a closed loop within the dYdX ecosystem. The benefits are obvious: reducing incentive costs, no longer needing to spend a lot of incentives to get others to use the stablecoin, because dYdX itself is a mature use case; diversifying income sources, in addition to transaction fees, there are also stablecoin interest income, and this income completely belongs to the protocol; enhancing competitiveness, with better income sources, transaction fees can be lowered to attract more users; improving composability, with collateral that can be reused, creating more innovative possibilities. Let's look at the actual impact of issuing stablecoins on protocol valuation: Aave's GHO, if the GHO supply reaches $250 million, calculated at a 2.1% interest rate, Aave will increase its annual income by $1.3 million, a growth of nearly 50%. Future Outlook: The Evolution Path of DeFi. DeFi is undergoing a major evolution from simple income models to complex ecosystems, similar to how the internet evolved from static web pages to interactive applications. Trends that can be confirmed: more protocols will launch stablecoins, with each protocol wanting a piece of the stablecoin pie; hybrid models will become mainstream, with single business models no longer sufficient; liquidity integration and fragmentation, with balancing being the key challenge. For investors who missed DeFi Summer, now is another historic moment - the great transformation of DeFi business models. Understanding these changes may help you seize the next opportunity. After all, DeFi is essentially about moving traditional finance onto the chain and playing it again, with the key being how to build more ingenious Lego blocks. New protocols adopting hybrid models face two major challenges: the need to first establish demand scenarios; extremely high customer acquisition costs. This explains why only OG projects can successfully transform, and why new projects like Hyperliquid choose not to take VC investment, but instead directly raise funds from users - because liquidity is the most important, and liquidity comes from people.
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