In the case of a weak market, the tokens of the DeFi 3.0 concept that came out soon after the debut have seen a surge in the last half month, with REFI and ECC rising about 968% and 744% respectively in the last half month, driving the whole DeFi 3.0 segment to heat up, and other tokens of the DeFi 3.0 concept have gained more than 40% in the last half month.
In this article, PANews will introduce in detail the concept, characteristics of DeFi 3.0 and the relevant representative projects of this ecology.
Concept and Features
DeFi 2.0 (protocol controlled liquidity), represented by Olympus (OHM), mainly solves the problem of DeFi 1.0 capital efficiency, while DeFi 3.0 specializes the business of Yield Farming (liquidity mining), and the protocol formulates the corresponding Farming strategy to gain revenue and return the profit to token holders, i.e. DeFi 3.0 specializes the business of Yield Farming, with a protocol that sets the corresponding Farming strategy to gain revenue and return the profit to the token holders, i.e. “Farming as a service”, aiming to lower the threshold for ordinary investors to participate and increase Farming revenue.
DeFi has a relatively high threshold and is not friendly to ordinary users. Farming in DeFi requires setting a slippage factor, forming LPs, pledging, and understanding gratuitous losses, etc. Moreover, in order to obtain high APY returns, one needs to invest a lot of time in researching and finding new liquidity pools, while facing many potential risks, such as “mining difficulties” caused by large investors, project owners running away, and other problems. and high risk factor for on-chain operations.
The DeFi 3.0 protocol uses Farming as a service to develop specialized and diversified Farming strategies across chains, helping investors achieve higher returns than if they were to operate on their own. DeFi 3.0 lowers the barrier to entry and increases the returns, especially for the average user.
The DeFi 3.0 protocol sets a percentage of the transaction fee (buy/sell), which flows into the protocol’s pool of funds, which is used to Farming according to a defined strategy, and the profits are used to buy back tokens, reduce the supply to maintain the price of the coin, or reward the holder with a portion of the bought back tokens in the form of an airdrop. In addition, holders are rewarded with a percentage of the fees from each transaction.
Earnn Finance, a revenue aggregator, also helps users select high APY liquidity pools through a protocol to increase their revenue. However, it only Farming on the corresponding deployed public chains, and often the APY of the same Token on different chains varies widely, such as USDC on Etherum and Fantom, where the difference in APY is more than three times.
In order to get higher yields, users would have to transfer funds from Yearn Finance to Fantom from Etherum. the protocol does not automatically transfer funds to higher APY liquidity pools on other chains and requires users to do it themselves, which can cause users to miss out on higher yielding pools on other chains.
Unlike Yearn Finance, the DeFi 3.0 protocol implements cross-chain diversified Farming, optimizing the Farming scheme based on the APYs offered by the protocols on different public chains.
The APYs on different public chains tend to vary greatly, especially when new public chains launch incentive programs and generate higher APYs in order to attract developers and users. For example, after Avalanch and Fantom launched their multi-billion dollar incentive programs, their TVLs and ecosystems saw rapid growth, and the APYs of protocols on both ecosystems were generally higher than those of other public chains.
The DeFi 3.0 protocol implements cross-chain Farming, which can continuously track the high and low APY of protocols on different chains to enhance the safe and high APY Farming funds for higher returns. For example, Fantom’s TVL has recently continued to grow, with higher APY on-chain protocols than Etherum, BSC and Avalanch, and almost all DeFi 3.0 protocols have invested more Farming funds on Fantom than other public chains. For example, Multi-Chain Capital ($MCC) protocol’s funding distribution.
The DeFi 3.0 protocol provides Farming as a service to its users, using specialized and cross-chain diversified Farming strategies to obtain higher returns and return profits to token holders, helping ordinary investors to obtain better returns in the DeFi ecosystem.
As with DeFi 1.0 and 2.0, the original DeFi 3.0 protocol has been launched on all major public chains, and several representative projects are described below.
Multi-Chain Capital ($MCC): With a token increase of about 52% in the last half month, 21125 addresses held, and 29.4k Twitter followers, it is the pioneer of the DeFi 3.0 concept and has been audited by Certik and Solidity Finance.
The public chains currently involved in Farming are Fantom, Avalanch, BSC, Polygon and Etherum, and its main investment strategies are.
Stablecoin Farming. to ensure the security of funds, stablecoin accounts for a large proportion. The protocol selects stablecoins with high liquidity and sufficient collateral behind them, mainly USDC, USDT and DAI, obtaining an APY of about 7% ~ 24%.
Lowest possible unearned loss Farming. to reduce unearned loss, the protocol will select tokens with high correlation to form an LP with the lowest possible unearned loss Farming. according to the official 21-year annual report, the representative LP is FTM-TOMB, the price of TOMB is pegged to FTM and the relative price of the two remains relatively stable, the LP has a small unearned loss of APY of approximately 155%.
Focusing on compounding Farming. when the opportunity to compound or pledge earned tokens for additional rewards arises, the protocol increases the Farming position in that direction. For example, when BOO is earned on the SpookySwap protocol, the BOO is used to earn an additional $FTM reinvested for a reinvested return of approximately 49.5% of APY.
The protocol uses the tokens repurchased from the investment proceeds for two purposes.
Direct destruction to reduce supply.
Adding to the MCC/BNB or MCC/ETH pool to provide liquidity.
As the protocol uses the proceeds to repurchase its tokens, the tokens will gradually transition from inflation to deflationary mode.
Reimagined Finance ($REFI): up about 968% in the last half month, with 2,832 addresses held, 10.8k Twitter followers, and has passed the Certik audit. The Farming strategy of this DeFi 3.0 protocol is similar to Multi-Chain Capital and will not be repeated here.
Profits gained from the protocol will be given back to holders with 10,000 REFI or more in the form of airdropped ETH or REFI, and the protocol will charge a 12% fee on each transaction, which will be used as follows.
6% flows into the agreement’s pool of funds for Farming.
5% flows into the token holders to be rewarded in the form of ETH.
1% to repurchase tokens to provide LP liquidity.
One strategy of the protocol in a weak market state is illustrated below.
Cross Chain Farming ($CCF): up about 54% in the last half month, with 5,784 addresses held, 16.2K Twitter followers, and has passed Hashex audit. The Farming strategy for this DeFi 3.0 protocol is similar to Multi-Chain Capital and will not be repeated here.
In addition to Yield Farming, which is the same as the DeFi 3.0 protocol described above, Cross Chain Farming will build a portfolio of investments, the benefits of which will be airdropped to token holders in the form of BNB. In addition, the agreement will create its own Launchpad to analyze and audit live projects to ensure user safety, and token holders will have the opportunity to participate.
The specific uses of the transaction fees charged by the agreement are as follows.
3% to repurchase tokens, of which 2% will be used for destruction and 1% to replenish the liquidity pool.
3% is automatically awarded to token holders.
3% is donated to DAO for Farming or investment, where Farming proceeds are used to repurchase tokens and investment proceeds are rewarded to token holders in the form of BNB.
3% goes to the protocol’s marketing wallet, which is used to build Launchpad.
Empire Capital Token ($ECC): up about 744% in the last half month, with 2,493 addresses held, 1.8k Twitter followers, and has passed the Certik audit. The Farming strategy of this DeFi 3.0 protocol is similar to Multi-Chain Capital and will not be repeated here.
The protocol charges a 10% fee for each transaction, which is used as follows.
9% of the Buy is awarded to the token holder.
1% of Buy to repurchase tokens for burning and destruction.
2% of Sell to provide BNB-ECC liquidity.
8% of Sell flows into the protocol’s funding pool or repurchase tokens.
In addition to Farming, the agreement will invest in the startup Cefi, which will invest in an IPO through a registered company in New Zealand.
Cross Chain Capital ($CCC): up about 141% in the last half month, with 4,341 addresses held, 8.7k Twitter followers, and no security audit yet. The Farming strategy for this DeFi 3.0 protocol is similar to Multi-Chain Capital and will not be repeated here.
Cross Chain Capital charges a 10% fee on each transaction, which is used as follows.
10% of Buy is awarded to the token holder.
10% of Sell is donated to the protocol’s funding pool.
According to the official roadmap, the agreement will lay out GameFi and meta-universe related projects in the future.
Scary Chain Capital ($SCC): up about 44% in the last 7 days, with 1814 addresses held, 2.9k Twitter followers, and has been audited by Solidity Finance. The Farming strategy for this DeFi 3.0 protocol is similar to Multi-Chain Capital and will not be repeated here.
Scary Chain Capital charges a 10% fee for each transaction, which is used as follows.
5% to reward token holders.
5% goes to the agreement’s treasury.
According to the official roadmap, the protocol will create its own Launchpad in the future.
DeFi 3.0 is a valuable way to increase Farming revenue for the average investor, but DeFi has a high threshold, especially for the average user who wants to gain revenue through Farming. DeFi 3.0 has the practical significance of lowering the threshold for ordinary investors to enter the DeFi ecosystem and make profits.
At the same time, it should be noted that DeFi 3.0 has already accumulated significant risk. deFi 3.0 is at a very early stage, with the entire board of projects having been online for less than two months, and has not been validated by the market for a longer period of time. Secondly, the market has not paid much attention to DeFi 3.0, with the exception of concept pioneer Multi-Chain Capital, which has a low number of addresses held and Twitter followers. Finally many tokens have seen large increases in a short period of time, such as REFI and ECC which have risen about 968% and 744% respectively in the last half month, and there is a certain bubble.
The projects that have passed the security audit so far are Multi-Chain Capital, Reimagined Finance, Cross Chain Farming, Empire Capital Token and Scary Chain Capital, and the one that has not passed is Cross Chain Capital.