A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips, who is the king of value capture?

Since the beginning of this year, the concept of “Defi Blue Chip” has been frequently talked about by investors in crypto assets. Starting from this concept, this article attempts to answer some questions.

Research institution: Mint Ventures

Researcher: Xu Xiaopeng

Investors who have experience in stock investment have mostly heard of the concept of “blue chip stocks” and are very dear to the blue chip stocks in the stock market. When talking about blue chip stocks in the Chinese market, investors will discuss Kweichow Moutai, China Merchants Bank and Gree Electric, while investors in US stocks will mention major companies such as Apple, Amazon, and Microsoft.

Since the beginning of this year, the concept of “Defi Blue Chip” has been frequently talked about by investors in crypto assets. Starting from this concept, this article attempts to answer the following questions:

  • What’s the point of paying attention to and understanding Defi blue chip projects?
  • In the rapidly iterating field of Defi, which projects are currently called “blue chip projects”?
  • The current valuations of various Defi blue-chip projects are compared horizontally, who is higher and who is lower?
  • How likely is it that these projects will continue to “blue”? What is the source of its competitive advantage?

If 2020 is regarded as the first year of the Defi outbreak, we are all witnesses of the Defi blue chip project from birth to growth. There is no ultimate answer to the discussion of the above questions, but continuous thinking about them will bring a lot of inspiration. .

Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?

Section One

Defi blue chip we understand


▌ 1. The significance of paying attention to Defi blue chip projects

Before we start discussing what a Defi project is, we need to think about a question: select certain projects from a large number of Defi, and label them as “blue chips” after evaluation. What is the necessity of such behavior?

First of all, we can find and learn from the logic behind the rise of excellent Defi and maintain market occupancy from the research on blue chips, which is helpful to the investment or entrepreneurship of crypto practitioners;

Furthermore, the blue-chip project is a strong player who has won (albeit only temporarily) from the open market competition. Investing in them will hopefully capture the long-term dividend of the follow-up development of the Defi track;

Finally, we can make high-quality blue-chip projects into an asset portfolio for investment, and pursue performance that exceeds the average return of the Defi track project with relatively small fluctuations.

In fact, the way to select representative projects in the industry and compile them as index fund products has already appeared in 2020, such as the Defi Pulse Index (DPI) jointly created by Defi Pulse and Set Protocol. Tokens were issued for investors to invest to track the performance of the Defi asset portfolio.

Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?

As of July 13, 2021, the increase of DPI index tokens relative to the date of issuance (2020.9.9) is 155.73%

Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?

The component tokens of the DPI index basically include the top projects of each track (data on July 13th, 2021)

▌ 2. What is Defi blue chip

The concept of blue chips (Blue Chips) comes from the casino. Since the blue chips in the casino are the most valuable, people later called those stocks with high market value and good business performance in the stock market as “blue chips.” In addition to market value and performance, the characteristics of blue-chip stocks often include: occupying an important dominant position in the industry to which they belong, actively trading, and generous dividends.

From this, we can give a definition of blue chip projects in the Defi field: Defi blue chips are those projects that have high circulating market value, good business performance, and are widely recognized by crypto investors. They should have the following characteristics:

  • Top market value
  • Agreement income is high and stable
  • Leading position in the Defi track
  • Widely adopted by other Defi protocols
  • Active trading and good liquidity

 3. Defi blue chip in our eyes

According to the above criteria, we have selected 10 blue chip projects from the numerous Defi agreements: the
Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?
above Defi projects basically meet the blue chip project conditions defined by us. We found that trading projects accounted for half of the country (Synthetix can also be classified as trading), the total market capitalization accounted for 49.5% of the market capitalization of the top 10 blue chips, lending and currency agreements accounted for 24.6%, and the oracle leader Link single project It accounts for 22.9%. This market value data also basically reflects the current industry pattern: trading and lending are the most important infrastructure in the Defi market at present, and it also captures most of the industry’s revenue and value, and the oracle serves as the infrastructure for all Defi projects. , Has also been given a very high valuation by the market.

Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?Section 2 Defi Blue Chip Business Model and Token Value Capture
reason why the blue chip project’s tokens can carry such a large market value comes from the project’s business model and the economic value captured by its tokens in the business model , Or potential economic value.
Next, we will analyze the business models and token value capture methods of the above 10 blue chip projects.

 1. Solve the business model of blue chip projects and the value capture ability of tokens

A. Trading platform

The four blue-chip trading platform projects listed in this list all adopt the AMM automatic market maker mechanism. Its main business model is to provide trading services for trading users by connecting market makers and trading users, and most of the transaction fees will be As a market maker’s market-making reward, a small portion will be used as the platform’s agreement income.


The revenue model
Uniswap is the proponent of the AMM mechanism, and it is currently the platform with the largest transaction volume and number of active addresses on Ethereum. Uniswap’s revenue is mainly transaction fees. The transaction fees of the V2 version are unified at 0.3%, while the initial support rates of the V3 version are 0.05%, 0.3% and 1%, which vary according to the transaction pair. The only token that
captures the value of
Uniswap is Uni, which was announced on September 16, 2020. The initial total amount is 1 billion. The specific distribution method is as follows-
Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?the release curve of Uni tokens in 4 years

It should be noted that the total amount of Uni tokens is not constant. After 4 years of issuance, an annual inflation of 2% will begin.
The current Uni main token scenarios include-

  • Governance of the Uniswap agreement: including the modification of key parameters, etc.
  • Distribution of Uni community treasury: It can determine the distribution and use of community treasury that accounts for 45% of the current Uni total
  • Uniswap protocol fee switch and parameter settings: modify whether the transaction fee of the agreement is charged and the charging rate

From this point of view, although Uni tokens have relatively sufficient control over the Uniswap protocol, there is currently no design for directly capturing profits in the Uni token mechanism, which is mainly reflected in——

  • Uni can control the main parameter modification rights of the agreement through governance, which is reflected in the control of the agreement;
  • As long as you want, you can take a draw from the transaction fee of the agreement;
  • If the transaction fee sharing of the agreement is activated in the future, it is also necessary to construct an economic relationship between the income and the Uni token.

Uniwap is divided into V2 and V3 versions. Since V3 has not been online for a long time, most of the AMM liquidity is still distributed on V2, and V2 and V3 have different ways of charging protocol fees.
V2 version of the handling fee
Uniswap’s V2 version includes a 0.05% (1/6 of the total handling fee) agreement handling fee, which can be turned on or off, and the handling fee will be sent to the designated address after opening. Before Uniswap issues Uni tokens, this fee can be used as a stable source of cash flow for the official team. After the Uni token was officially issued in September 2020, the switching authority of the protocol fee was returned to the community, and it is currently closed, which means that all transaction fees of UniswapV2 are currently given to market makers.
V3 version of the handling fee
Uniswap V3 version of the agreement handling fee rate is more flexible, through the Uni’s governance can set the agreement fee rate charged to 0, 1/4, 1/5, 1/6, 1/7, 1 One of /8, 1/9 or 1/10. For example, the transaction fee for a certain transaction pair on Uni V3 is 0.3%. If the protocol fee parameter is 1/5 at this time, the transaction fee generated after the transaction is 0.3%*1/5=0.06%. Will be charged by the agreement. The initial value of the V3 protocol fee rate is 0. At present, the community has not formally initiated a proposal to modify this parameter. Therefore , all the transaction fees of UniswapV3 are also given to the market maker.
In conclusion,
Uniswap is deeply loved by users as a veteran Dex. However, the source of value of its Uni tokens currently only comes from its governance rights over protocol parameters and a large number of Unis in the community treasury. The taxation rights for all transaction fees on Uniswap have not been activated. We understand that the market maker fee is zero. The model itself is also a subsidy policy, similar to the effect of providing liquidity mining rewards to market makers.


The income model
PancakeSwap is currently the decentralized trading platform with the highest transaction volume and user activity, but it currently only runs on BSC. Similar to Uniswap, PancakeSwap’s revenue also comes from transaction fees. Currently, a 0.3% transaction fee is levied on all transactions (of which 0.25% is allocated to market makers). In addition, its other revenue sources include lottery, prediction market, IDO, etc., but they account for a relatively small proportion. The only token that
captures the value of tokens in
PancakeSwap is Cake. Cake is distributed by Fair Launch. There is no private sale and no share for the team. There is no upper limit on the total number of tokens. The current net output of each block is about 19, a single day The net output is about 501200 Cakes. According to CoinGecko’s data, the current total circulation of Cake is about 195 million (2021.7.13 12:00 SGT).
Cake’s scenes mainly include:

  • Stake in the syrup pool to obtain free tokens for cooperative projects (but there is a limit to the number of Cake deposits for a single address)
  • Stake Cake on the income farm to obtain new Cake output, the current APR is about 72% (2021.7.13 12:00 SGT)
  • Used to participate in proposal voting and governance
  • All or part of the income of PancakeSwap is used to buy back and burn Cake
  • Used to participate in lottery, create personal files and NFT casting and other functions

From this point of view, as the core token of the project, Cake basically captures the economic value of the project, which is reflected in the main resolution of the agreement to control the agreement through voting, the cash flow income of the project through repurchase and destruction, and the pledge through pledge The ability to obtain tokens for newly added Cakes and other cooperative projects.
However, it should be noted that the current cake output rate of the project is much faster than the destruction rate.
Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?
Judging from the last week’s destruction data published by PancakeSwap on July 6, 2021, the destruction amount of transaction fees + predicted market costs is 1.7 million US dollars, the destruction amount of NFT and personal files is 80,000 US dollars, and the automatic recovery of Cake income farm The investment fee is 140,000 U.S. dollars, and the average cake price last week is 12.6 U.S. dollars. The above main income can buy back and destroy 153,000 cakes. Compared with the net output of more than 3.5 million cakes in a week, this repurchase is of the order of magnitude smaller. However, about 23% of the cakes currently produced are used as rewards for the pledged mining of cakes and paid to the holders of the cakes.
In summary,
Pancake’s income sources are more diverse. At present, the status of DEX overlord on BSC is gradually becoming stable, but this comes from its token model without hard cap and a large amount of Cake output, which also provides it with a sufficient incentive budget, which is useful for improving The overall scale of the business helped tremendously. In this context, PancakeSwap’s total market value is expected to continue to expand, but before the DEX war on BSC comes to an end, under pressure from competitors, it is difficult for PancakeSwap to control its inflation level in a short period of time, reaching the official level. The “balance between output and destruction” of the currency, so the currency price may continue to be under pressure.


The income model of
SushiSwap’s early code Fork is from Uniswap, and its main business income model is similar to Uni and Pancake, mainly based on platform transaction fees. In addition, Sushi currently has a lending product Kashi Lending, but this part of the business does not currently bring profits to currency holders. Sushi’s cross-chain business layout is very radical. In addition to Ethereum, it has also landed on BSC, Polygon, Fantom, Avalanche, Heco and other main networks. The only token that
Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?
SushiSwap’s token value is Sushi, with a hard cap of 250 million pieces. Currently, 17.298 Sushi are produced per block, and the number of outputs gradually decreases until full circulation is achieved around November 2023.
Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?
According to CoinGecko’s data, the total amount of Sushi released now is 228 million, and the circulating share is 91.1% (2021.7.13 12:00 SGT).
There are two current scenarios for Sushi: 1. Governance voting; 2. Repurchase and redistribution of Sushi through handling fees.
At present, the main income of Sushi holders is from 1/6 of the total transaction fee of the platform, which is 0.3%, which is 0.05%. Sushi holders need to deposit tokens in the platform’s SushiBar to obtain the pledge certificate xSushi to obtain this Part of the profit, the profit is distributed by uniformly converting the handling fee into Sushi and injecting it into Sushibar to continuously increase the net value of xSushi relative to Sushi. Subsequent users can redeem xSushi and exchange them for pledge and additional income of Sushi. In addition, users who want to participate in governance must also deposit Sushi in SushiBar to get xSushi to vote.
Compared with Uniswap, SushiSwap, which emerged as a challenger, is more radical in its overall strategy, which is reflected in rapid multi-chain deployment, exploration of lending business, and so on. The subsidy battle between SushiSwap and Uniswap is still underway, but the type is to provide token rewards for market makers’ liquidity, rather than exemption of handling fees.


Revenue models
with respect to the above three integrated DEX, Curve major cut is stable currency and packaging assets (Wrapped token) track exchange trading in this segment, its main source of income with other businesses as DEX, from the transaction procedures fee. Compared with other DEXs, Curve is characterized by less transaction contrast, low slippage, and large single user transaction volume (relatively less active users). According to the statistics of IOSG in March 2021, at that time, Curve had a single user day within 30 days. The average transaction volume is more than 1.3 million U.S. dollars, the highest among all DEXs.
Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?
In addition to the exchange of stablecoins and encapsulated assets, Curve is also entering the field of other asset trading through cooperation with Synthetix.
In terms of the layout of Layer2, Curve has logged in Polygon, Fantom and xDai, but compared with its TVL on Ethereum, the latter has a smaller capital volume and only accounts for only a proportion of Curve’s total lock-up funds Digits. The only token that
Curve by token value is Crv. Crv will be issued on August 13, 2020, with a total of 3.03 billion. The specific distribution is as follows-

  • 62% distributed to liquidity providers
  • 30% to shareholders, linearly unlocked within 2-4 years
  • 3% to team members, linearly unlocked within 2 years
  • 5% as a community reserve

Of the 3.03 billion, 1.3 billion (43%) of Crv has been distributed in the initial issuance, and the distribution ratio is ——

  • 5% will be distributed to the early Curve liquidity providers and will be unlocked linearly within 1 year
  • 30% to shareholders, linearly unlocked within 2-4 years
  • 3% to team members, linearly unlocked within 2 years
  • 5% as a community reserve 

The specific unlock release rhythm is as follows-
Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?image source: https://dao.curve.fi/releaseschedule
According to Coingeke data, the currently released Crv is 1.545 billion (2021.7.13 SGT).
The value of Crv to token holders includes:

  • Obtain the transaction fee of the platform: After the user locks the Crv token pledge, he can obtain the locked token certificate veCRV, and obtain the fee share of the whole platform with veCRV. The ratio of the share is 50% of the total fee (the other 50% To the LP that provides liquidity), and the share is issued through 3Crv tokens (the LP in the stable currency exchange pool can be exchanged for stable currency).
  • Accelerated return of liquidity market making: Liquidity providers can speed up the Crv rewards for their own liquidity market making by locking Crv, and improve their overall APR for market making.
  • Protocol governance: The governance of Curve also needs to be implemented through veCRV. In addition to the modification of protocol parameters, the scope of governance also includes the currency voting of the Curve protocol, and the weight distribution of Crv’s liquidity incentives among various transaction pools.

Crv captures the value of the overall agreement quite adequately. It can not only obtain the cash flow of the agreement’s fees and accelerate the market-making income, but the most worth mentioning is the role of Crv in governance.
Curve is different from DEX, which can freely initiate market-making depths such as Pancake and Sushi. An asset needs to land on Curve and obtain sufficient liquidity (Crv’s subsidy ratio to each liquidity pool), which requires a community vote. Asset issuers that enter Curve and gain trading depth (such as Binance for BUSD) will have a strong demand for Crv to lock and vote, which provides Crv with a strong source of demand and motivation for locking.
Therefore, we can see that more than 69% of released Crv has become veCRV locked, and the average lock period is 3.67 years (the maximum period that can be locked is 4 years).
To sum up
, the degree of competition in the subdivision of the DEX track where Curve is located is lower than that of the comprehensive DEX, which is reflected in the right of Curve to choose the listed tokens and the distribution of the tokens used by Curve for incentives in each liquidity pool. Curve’s unique lock-up, revenue acceleration, and incentive weight voting mechanism make the demand source of Curve tokens more extensive and stable. Its investors and users are also mainly high-net-worth crypto groups and institutions.

B. Loancurrency agreement

The Defi blue chip project of lending and currency agreement plays the role of a bank and even a central bank in the crypto world. On the one hand, they attract deposits through interest and platform token subsidies, and on the other hand they release liquidity to users in need. Like trading platforms, lending and currency agreement projects are also the infrastructure of the Defi world today, and their main way to obtain profits is interest rate differentials or seigniorage.


The income model
Aave is currently the highest locked-up loan project, and it is also one of the highest locked-up Defi projects. Its lock-up amount on July 13 was 8.78 billion U.S. dollars, second only to Curve’s 9 billion U.S. dollars. Aave’s current agreement income sources include interest margins on deposits and loans, as well as V1’s flash loan fees. Currently, Aave does not impose any commission on the flash loan commissions on V2 and Polygon, but instead gives them all to depositors. At present, in addition to providing services on Ethereum, Aave also landed on Polygon in May this year, and its TVL on Polygon is as high as $1.9 billion.
The token value captures
the only token of Aave with the same name as the project. Since the predecessor of the project was ETHlend, which was established in 2017, after subsequent reshaping of the project’s business model and economic model, the original fully-circulated 1.3 billion Lend tokens were also used according to 100: 1 Converted to 13 million Aaves, and newly issued 3 million Aaves for the governance of the agreement and subsequent community incentive budgets.
According to CoinGecko data, the current circulation of Aave is 12.83 million, and the circulation accounts for about 80%. The remaining 20% ​​of Aave is determined by the community. Currently, it is mainly used for DAO governance budget, donation support for ecological projects, and loan mining Vault subsidies for mines and projects.
It should be noted that Aave DAO usually adopts a quarterly discussion mode for the remaining major expenditures of Aave. For example, Aave’s loan incentives started in late April this year, and after July, the community will need to vote again to determine whether the next quarter Continue to use Aave in the ecological budget pool for the loan incentive plan, as well as the planned amount and distribution details.
The current main scenario of Aave tokens is governance, including voting for new tokens to enter the currency market, adjustment of important parameters, etc. Although Aave’s current protocol cash flow income is good, the community has not initiated the use of protocol income to repurchase Redistribution, or repurchase and destruction proposals.
However, according to the Aave2.0 new economic plan released last year, the Safety Module (deposit vault) that encourages Aave holders to deposit tokens in the project should be adopted in the future, and the income of the agreement will be distributed to the deposit participants.
Although Aave tokens currently do not provide direct empowerment other than governance, the accumulated funds of the agreement income are also under the control of the token holders, so it is equivalent to “the meat has not been eaten in the pot”. State, the economic value of the agreement has not been dissipated. Aave’s rapid innovation speed and extensive agreement adoption are expected to continue to allow it to maintain its leading position as the largest lender Defi.
For a comprehensive analysis of the Aave project, you can read Mint Ventures’ previous in-depth research report on Aave:
[Mint Ventures in-depth research report] Aave: How is the Defi lending king made? 


The revenue model
Maker has a long history, and the organization behind it, Makerdao, was established in 2014. The Maker protocol is one of the largest decentralized applications on the Ethereum blockchain and the first Defi application to gain mass adoption. Its role is to forge a decentralized stable currency: Dai. The mechanism of Maker is to allow users to use crypto assets supported by the protocol as collateral to mint (lend) Dai, and charge a stability fee (borrowing interest) for the Dai lent by users. In addition to minting interest, Maker currently has two other revenues from: 1.PSM (Peg Stability Module) business-other USD stablecoins can be exchanged for Dai in Maker, there is a handling fee in the process; 2. Liquidation penalty income.
The token value of the token value capture
Maker is Mkr, with a total of about 1 million, and it is basically in circulation (the team account has more than 90,000 uncirculated).
The token scenarios of Mkr include:

  • 1. The core governance token of the protocol allows its holders to vote to modify the risk parameters of the Maker protocol, introduce new collateral, modify Dai’s deposit interest rate, and select oracle node groups, etc.
  • 2. The income of the Maker agreement will enter the Maker Buffer address (Maker Buffer). After the Maker buffer reaches a certain surplus scale, part of the surplus will enter the surplus auction, and MKR will be repurchased and destroyed to increase the intrinsic value of Mkr tokens. .

However, it should be noted that if the Maker system has bad debts and the buffer funds are not enough to pay, it will issue additional MKR to auction, and use the sold Dai to fill the system’s bad debts, which also restricts Mkr holders to be cautious. Attitude to govern the agreement.
In addition, according to the monthly report disclosed by MakerDAO, the Maker Agreement has substantially increased costs since May this year. The expenses in May were US$594,000, and in June it was as high as US$1.261 million. The income of the Maker Agreement needs to be deducted. Part of it can be counted as the net income of the agreement.

Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?

Makerdao revenue and expenditure, source: Maker Financial report-2021-06

Maker’s business volume has soared with the explosion of Defi in the past year. The main benefit is the widespread adoption of Dai, but its borrowing flexibility and composability are not as good as Aave and Compound. We believe that the key battlefield for Maker is not borrowing, but the market share of stablecoins. During this year, BUSD, which is rapidly expanding with Binance ecosystem, and USDC, which backs on major US institutions Coinbase and Circle, will all be Dais in the future. Main competitor.

Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?

Distribution of transaction volume on the stablecoin chain, source: Maker Financial report-2021-06


The income model
Compound project was established in 2018 and is currently one of the most successful lending agreements and the first Defi project to launch a lending fund pool model. This innovation later became the target of imitation of Aave and other lending agreements. Compound’s revenue comes entirely from the interest rate difference between deposit users and borrowers. Although Compound has plans to deploy to Layer 2, it currently only provides services on Ethereum.
Token value capture
Compound did not initially issue coins, and only carried out equity financing through traditional financing channels. It was not until April 2020 that the project launched loan mining (this event was also the starting point of the Defi mining wave in 2020). The agreed governance token Comp has been issued. The total amount of Comp is 10 million. The specific distribution plan is as follows:
Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?
According to CoinGecko data, the current circulation of Comp is 5.377 million, and the circulation ratio is 53.7%.
The current only function of the Comp token is governance, and there is no clear value capture method other than that. Even so, Compound’s current agreement income derived from loan interest spreads is kept in the form of reserves. Among them, the USDC asset’s reserve has reached 6.55 million U.S. dollars. This part has not entered the team’s pockets. It is mainly used to deal with bad debt losses arising from extreme conditions of the agreement. And will the subsequent Comp reserves be included in the jurisdiction of the community, like Aave, and even used to repurchase or destroy Comp? There is a certain degree of uncertainty here.
To sum up, the
slower pace of innovation and the vague token value capture model make Compound less attractive than another lending giant, Aave. But its leading position in the lending market is expected to continue to be maintained.

C. Oracle

The operating logic of the encrypted world is different from the real world. It operates based on consensus mechanisms, cryptography, smart contracts, and distributed and transparent characteristics. In the smart contract, when we input the X variable, it will produce the expected Y result. The source of the X variable can be divided into two types, one is from the on-chain data of the blockchain itself, which can be directly obtained; the other is from data outside the chain, such as the results of the 2021 European Cup finals , This part of the data needs to be provided to the smart contract through the oracle.
In the current crypto market, there are three kinds of oracles: centralization, decentralization, and alliance. Among them, the most widely used on Defi is decentralized oracles, such as Chainlink, Nest, and Trellor.


The revenue model
Chainlink launched on the main network in 2019 and began to provide price-feeding services. It consists of a two-layer structure. The bottom layer is provided by multiple data sources to provide data to the oracle node network, and the upper layer is provided by multiple oracle node networks to the blockchain. data.

A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips, who is the king of value capture?

Chainlink’s two-layer structure
Chainlink’s ecosystem contains three main roles: data demander, oracle node, and data source.
The cooperative relationship of the three runs under a two-tier structure. The general process is: the data demander initiates a data demand, the oracle node obtains the data from the data source and pays the fee, and the data is processed and provided to the data demander, and the data demander does this Pay fees to the oracle node on a per-time basis.
Chainlink’s two-layer structure has 3 characteristics-

  • 1. The data demander can customize the composition of the data source, including the node reputation and the number of nodes.
  • 2. The underlying structure ensures the decentralization of data, and the multiple oracles at the upper level ensure that the system can continue to operate when any one of the oracles fails at a single point.
  • 3. Chainlink uses the method of aggregated data on the chain to send data to the data demander. The advantage of aggregated data on the chain is that the data content can be reviewed multiple times, and the data provided by the data source is recorded on the blockchain to increase reliability.

Let us take an example to explain the above process: In order to ensure the security of the collateral, a Defi lending application needs to regularly obtain the price information of its collateral and the loaned assets, so it initiates a request for the price data of the asset to Chainlink and receives the request Later, multiple oracle nodes in the Chainlink oracle network request asset price data sources, such as Binance, Huobi, Kraken and other exchanges for real-time prices of assets and pay fees, and then the oracles send data to the chain. The smart contract, after removing the abnormal value from the smart contract, takes a reasonable data and provides it to the data demander.
In addition to the oracle price feeding service, Chainlink also provides services such as VRF (encrypted proof mechanism to generate verifiable random numbers), project reserve certification and other services.
Tokens Value Capture
Chainlink Link tokens issued in September 2017, the total amount of one billion, there are currently 436 million in circulation, the flow ratio of 43.6%, the specific token allocation is as follows:
Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?
most of the previously mentioned Different projects, Chainlink’s project tokens do not have the right to govern the project, and there are two main uses:

  • Used to pay for the cost of data obtained by the node operator for the smart contract;
  • It is used for the mortgage made by the node operator at the request of the contract creator.

From this point of view, Link is a typical functional token, which plays the role of the settlement medium of the Chainlink ecology and the role of credit collateral (the more Link the node mortgages, the more the data demander believes in the data reliability of the node). It is an important resource in the ecosystem, but it cannot capture the full economic value of the ecosystem. This is different from the positioning of most Defi tokens as “equity tokens”. Taking the token Aave as an example, Aave holders can initiate proposals and votes through tokens to determine the direction of project development and the distribution of the protocol ecological fund. The cash flow income of the protocol will also be all distributed to the token holders. Basically, all the rights and interests of the project have been captured.
To sum up
, Chainlink, which was established in 2017, is more like a centralized company that provides services with the help of blockchain technology, rather than a Defi project. Its token design model also prevents its investors from enjoying the rapid growth of Chainlink’s dividends. However, because the moat of the oracle product is relatively stable, it is not easy for latecomers to challenge the position of Chainlink. For details, please refer to the analysis of the moat in this article.

D. Derivatives

Derivatives may be one of the most promising tracks for rapid growth after the DEX and currency lending markets. Judging from the data of centralized exchanges, the number of transactions in derivatives has been similar to that of the spot, and the growth rate is much higher than that of the spot.

At present, the relative Uniswap and Pancakeswap trading volume is less than 10 times different from the centralized exchange at the peak, while the decentralized derivatives trading volume and the centralized derivatives trading volume are still several orders of magnitude different. Binance Daily Derivatives The trading volume has exceeded US$50 billion, and the sum of the daily trading volume of all decentralized derivatives exchanges is still around US$100 million. The potential of the decentralized derivatives market is significant. The revenue model of derivatives services is also very clear: transaction fees.


Revenue model

Synthetix defines itself as a “derivatives liquidity agreement” and its main business is synthetic asset/derivatives trading. In brief, the main business process of Synthetix currently has the following steps:

1. Minting: Users pledge project tokens SNX, and generate sUSD at a mortgage rate of 400%. sUSD is always anchored to 1USD

2. Trading: In the kwenta exchange (and the previous Synthetix.exchange), users can use sUSD to trade and exchange for any kind of synthetic assets supported by the system (synths is substituted below), including:

  • Cryptocurrency assets, including sToken (long asset) and iToken (reverse synthetic asset, used for short), such as sETH and iETH, sDefi, etc.;
  • Foreign exchange assets sEUR, sJPY;
  • Equity assets such as sTSLA and sFTSE (FTSE 100);
  • Commodity assets sXAU, sXAG.

The transaction process will actually destroy sUSD and mint synths.
3. Destruction: After the transaction is completed, users can exchange synths into sUSD (in fact, destroy synths and re-mint sUSD), and return sUSD to get SNX back.
The handling fee generated in the above transaction process is the business income of the Synthetix platform.
Token value capture
SNX is currently the only token of the project. There were a total of 100 million tokens in the initial ICO, of which-

  • 60 million for ICO
  • The team and consultants received 20 million
  • Foundation 12 million
  • 5 million pieces reserved for cooperation
  • 3 million pieces reserved in the market

In March of 19, in order to incentivize the stake behavior of SNX holders, the project’s token model has undergone a major change. By 2024, the total number of tokens will expand to 245 million.
Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?Note: “Year one” refers to 2018 From March to March 2019, it has now entered “Year four”.
At the end of 2019, the above new tokens were changed to a smoother release. At present, the total number of SNX tokens is about 229 million, and the current circulation is 159 million, accounting for 69.4% of the circulation.
Like most other Defi tokens, the value of SNX tokens comes from governance rights and protocol cash flow——

  • Governance: Synthetix adopts the DAO model of decentralized governance, and divides the proposals into SIP and SCCP: SIP is a problem improvement proposal, and all SNX holders can vote; SSCP is a proposal for important matters of the agreement, which requires 8 The “Spartan Parliament” composed of people voted (similar to the representative system, also elected by the holders of the currency), and the ProtocolDAO composed of core developers is responsible for the final review and execution.
  • Handling fee dividends: as long as the token holders pledge their SNX, they can get Synthetix’s handling fee dividends every week
    Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?
  • SNX pledge mining: get token rewards from project pledge mining

On the whole, SNX’s capture of the economic value of the agreement is still complete.
But it should be noted that: Staking SNX is essentially a process of casting Synthetix’s stable currency sUSD, which is equivalent to loaning a stable currency with SNX as collateral (without interest). The current ratio of SNX to casting sUSD is 400%. . The mortgage minting also means that you start to participate in Synthetix’s “dynamic debt pool”. Even if you mint without doing any operations, your debt level will fluctuate with the system debt level of Synthetix, and you may earn or lose.
For the specific analysis of the Synthetix project and its dynamic debt pool, you can read Mint Ventures’ previous in-depth research report on the project:
[Mint Ventures in-depth research report] Synthetix’s ambition: a

summary of the derivatives trading market
with unlimited liquidity With the arrival of Layer 2 , Derivatives may be the next outburst of Defi track, whether it is the business of Synthetix products or its SNX token, we think it is worth looking forward to their follow-up performance.

E. Income Agreement

The income agreement is a new species that appears after the Defi wave in 2020. The services it provides are somewhat similar to fund services in traditional finance. Investors deposit encrypted assets on the income agreement platform. The agreement will also be balanced according to various strategies. In the case of income and risk, it can realize the appreciation of assets for investors. Since the income agreement will adjust the position according to the changes in the income of each platform in order to pursue high returns, this behavior is similar to the machine gun mining pool that switches the computing power between different POW currencies to pursue the highest income, so the income agreement is also called ” Defi machine gun pool”. The income model of income agreements is similar to traditional private equity funds, mainly charging performance fees or fund management fees.


Revenue model

The core product of Yearn is the machine gun pool. Users can obtain passive income by depositing assets in Yearn’s various gold inventories without having to be proficient in the knowledge of the underlying Defi protocol. Compared with gaining Defi income by own operation, the advantages of using Year are reflected in——

  • 1. The expensive gas is shared by the funds in the entire strategy pool;
  • 2. The guardians and strategists of the strategy will continue to monitor and adjust the strategy to ensure that the funds obtain the best returns in the market;
  • 3. The income tokens will be sold through the Keep3r network and the underlying assets will be reinvested to maximize compound interest.

Through the above series of services, Year’s V1 version charges 5% performance fee and 0.5% withdrawal fee, and V2 version charges 20% performance fee and 2% annual management fee.

Token value capture

Yfi is the only token of Year. It adopts a method of no pre-mining and no fundraising. A total of 30,000 were issued in the early stage, all of which were distributed to early users of the Year platform, as well as liquidity providers on Curve and Balancer. Subsequent to the community’s YIP-57 proposal, 6666 YFIs were issued, of which 1/3 were used to reward project contributors, and 2/3 entered the project’s financial database for subsequent project operations.

The value of Yearn mainly comes from governance rights + cash flow repurchase. The governance rights are better understood, that is, users implement proposals and votes through YFI.

The YFI token’s capture of project cash flow has undergone several changes: starting from the YIP-36 proposal in August 2020, the part of the project’s accumulated income funds exceeding the cumulative total of 500,000 US dollars will be allocated to pledge YFI in governance The user pledged in the contract. In the YIP-58 proposal in January 2021, the dividend plan was changed to repurchase the operating fund of the YFI injection project, which is a way of repurchasing without destroying it, but not distributing it to currency holders. The basic logic is: continuing to use the cash flow of the project to repurchase YFI can increase the value of YFI. However, compared to distributing the repurchased YFI directly to the existing investors of YFI, it is better to keep YFI in the operating fund as a project The operating capital of the company can better promote the long-term development of the project.

to sum up

The income agreement may be the Defi track that lacks the most barriers. If Yearn wants to continue to survive, it must keep evolving in its business model and develop services that have more long-term value for customers before the funds leave.

 2. Comparison of cash flow capture methods for Defi blue chip projects

We found that the same Defi blue chip projects that continue to generate cash flow have very different ways of using cash flow, including:

  1. The direct distribution of cash flow to currency holders is similar to a public company’s direct cash dividend distribution. The projects that adopted this program are: Synthetix, Curve, Aave (only for planning, no actual implementation).
  2. Using cash flow to repurchase tokens and distribute tokens to token holders is similar to the way that a listed company repurchases shares and then gives them to shareholders based on their shareholding ratio. The project adopting this scheme is: SushiSwap.
  3. Using cash flow to repurchase and destroy tokens is similar to the cancellation of stock repurchase by a listed company, reducing the number of shares in circulation. The project that adopts this scheme is: PancakeSwap.
  4. Using the cash flow report to repurchase tokens and using tokens as project operating funds is similar to the repurchase of stocks by listed companies and the use of stocks for subsequent employee equity incentives. The project that adopts this scheme is: Yearn.

3 other projects-

Uniswap: The agreement fee has not yet been collected, and there is no agreement cash flow;

Compoud: Cash flow is retained as a reserve fund, but the ownership of the reserve fund is uncertain;

Chainlink: Cash flow is not directly related to currency holders.

No cash flow, cash flow has nothing to do with the holder of the coin, and the attribution of the cash flow reserve is not clear. Naturally, they are not the ideal state of token cash flow capture, so I will not discuss it here.

Method 1 and Method 2 are relatively close. They both guide users to pledge tokens to obtain the cash flow distribution of the agreement. Compared with direct repurchase and destruction of tokens, the pledge dividend model increases the token pledge rate and drives out short-term speculation. This is conducive to price stability.

However, the third method of direct repurchase and destruction also has the advantages of simple operation and reduced dividend loss (users no longer need to claim dividends by themselves, transaction sales, etc.).

Method 4 is the least adopted, and we believe that the controversy is also the most. Whether it is reasonable to adopt this plan should be determined by the project. We believe that it is reasonable to use this scheme only in one case: the repurchase funds of the project are reinvested in the project (to be used by the operating fund), the project is in an important window of development, and the core members of the project are sure to use it back The purchase income creates a very high project growth rate for token holders. In the end, token holders can obtain token appreciation from the growth of the project, which will far exceed the dividend income. This is like Amazon, as a fast-growing Internet ecosystem, has almost never paid dividends in the 20 years after its listing, but instead used all the profits that could be converted into cash dividends for new business expansion or investment in other sectors. Amazon’s shareholders also believe that the overall revenue that Amazon creates by doing so is far higher than directly giving them cash every year. But does the Year project meet the above criteria? Considering that the revenue agreement itself is a track that lacks competitive barriers, we are not optimistic about the ultimate efficiency of the Yearn team’s use of funds originally belonging to the coin holders.

On the whole, in the scheme of token capture cash flow, we believe that——


 3. Valuation comparison of blue chip projects

Since most of the above blue chip projects have revenue and agreement profits, we try to compare the valuation levels of these projects horizontally through the two indicators of price-to-sales ratio (PS) and price-to-earnings ratio (PE) to see if we can get a high project Preliminary conclusion of underestimation.

Before the formal comparison of indicators, let’s briefly explain the two indicators, PS and PE. PS and PE come from the stock market and are used for horizontal and vertical comparison to initially assess the investment value of stock assets.

Among them, the market-sales ratio PS=total market value of stocks/main business income, which is an indicator to measure the high and underestimation of stock prices from the perspective of income.

The price-to-earnings ratio PE=total stock market value/net profit is a measure of stock prices from the perspective of profitability.

Put the above two indicators into Defi to split the understanding, then——

  • Total market value of stocks = total market value of Defi tokens
  • Main business income = total income of the Defi agreement
  • Net profit = Net profit of Defi’s total income after deducting various expenses (such as Aave’s deposit interest to depositors), also known as agreement profit. In most Defi projects, this is also the economic value that currency holders can obtain.

In general, the lower the PS, the lower the value of its tokens relative to the main revenue of the Defi protocol, the more investment value it has; the lower the PE, the more the net profit of the Defi protocol is. The lower the value of the token, the more valuable it will be for investment.

Then, we use Token Terminal to compare the PS and PE of the above Defi blue chip projects. Among them, the business data of Chainlink and Year are not available for the time being, so we only compare the other 8 projects.

Let’s first look at the comparison of the PS indicators of each project-

Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?

https://www.tokenterminal.com , data date: 2021.7.10

Let’s look at the comparison of the PE indicators of each project-

Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?

https://www.tokenterminal.com , data date: 2021.7.10

Before we officially start to compare the valuation levels of various projects based on the PS and PE indicators, there are three situations that need to be noted:

  • 1. Because some projects are multi-chain deployment services, such as Aave, Curve, SushiSwap, their income and profit outside of Ethereum (mainly Polygon) are not counted by Token Terminal, resulting in inaccurate data;
  • 2. For the above PE and PS values, Token Terminal uses the market value of the maximum supply of tokens to calculate, rather than the market value of the actual supply in the market.

PS: Three concepts about the supply of tokens: 1. max supply: the total amount of all tokens released; 2. actual supply (total supply): the total amount of tokens currently released , Including tokens in free circulation and various lock-up mechanisms; 3. Circulating supply: The number of tokens in free circulation currently on the market.
In the case of the Curve project, 1 in the figure below refers to the maximum supply, 2 refers to the current actual supply through mining and various outputs, and 3 refers to the actual supply without participating in lock-up and freedom. The circulating part.

Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?

https://www.CoinGecko.com/en/coins/curve-dao-token, 2021.7.14

  • 3. Many of these projects are subsidizing users through their own tokens, such as Pancake and Sushi’s liquidity mining subsidies for market makers, and Compound and Aave loan subsidies.

Therefore, we need to calibrate the data, use the actual supply market value, and include the income and profit of the Polygon business, and then adjust the PS and PE of the 8 projects. The results are as follows (market value units are: 100 million US dollars) ——
Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?

It should be noted that there are still some factors above that have not been taken into consideration in the calculation of PS and PE in the table. For example: Maker’s agreement income needs to deduct part of MakerDAO’s expenses to be the real agreement profit (the amount was less in the past month, but this year It began to increase significantly in May and June); The income and profits of Sushi and Curve on Polygen are only rough estimates, and the income and agreement profits of these two projects on Fantom and xDAI are not included. I believe that with the enrichment and improvement of Defi data tools, the accuracy of the above data can be further improved.
Although we have considered a number of factors as much as possible and tried to calculate the PS and PE corresponding to the maximum supply market value of each project and the actual supply market value, we will find that it is still difficult to directly compare the PE level of each project because: most projects The current income and cash flow are affected by the token subsidy. It is difficult for us to predict the actual changes in the PS and PE of the above projects if the token subsidy ceases. But what is certain is that the amount of token subsidies for most projects is on a downward trend as a whole. The token subsidies for many projects will stop within 2-4 years. At that time, we will make similar comparisons and we may be able to draw a more accurate conclusion. .
However, if the two Defi projects to be compared are on the same track, and the subsidy amount ratio and type are similar, such as Aave and Compound, the comparison of PE at this time has a greater reference value.
Based on the above data, we found an interesting situation: Why is the PE of Curve so much higher than SushiSwap and PancakeSwap under the same token subsidy?
Does the huge difference in PE of each project mean that low-PE projects have more investment opportunities than other high-PE projects? Or is there a reasonable explanation for Mr. Market’s higher valuation of certain projects?
We believe that both views may be correct. To judge which Defi blue chip project has more investment value, in addition to quantitative comparison, we need to combine the project’s business model, token economy and moat to conduct a qualitative analysis to get a more objective conclusion. Judgment.

Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?

Section Three

Defi blue chip moat


 1. What is a moat?

The moat is one of the important concepts in the value investment theory. It was first proposed by Warren Buffett in a 1993 shareholder letter. He said in the letter: “The global market share of Coke and Gillette razors in recent years has actually been The market is still increasing. Their brand power, product characteristics, and sales strength give them a huge competitive advantage, forming a moat around their economic fortress. In contrast, the average company does not have such protection Fight underneath.”

In subsequent texts and speeches, Buffett explained more about the concept of the moat. For example, at the shareholders meeting in 2000, he said: “We judge a great family based on the ability of the moat to widen and its inability to attack. The main standard of the enterprise. And we tell the management of the enterprise, we hope that the moat of the enterprise can be widened every year. This is not to make the profit of the enterprise more and more year by year, because sometimes it is not possible. However, if The company’s “moat” is constantly widening every year, and this company will operate very well.”

Although Buffett himself did not systematically summarize what a “moat” is, later researchers summarized the elements of the company’s moat into the following four categories:

  • Intangible assets: such as brands, patents, franchise rights.
  • Customer switching cost: The cost incurred when a customer switches from one productservice to another productservice. The cost here includes time, finance, emotion, etc.
  • Network effect: A network effect occurs when the value of a product or service increases as more people use it.
  • Cost advantage: The ability to deliver services or produce goods at low cost, weakening its competitors in price. The cost advantage may come from the size of the enterprise, resource endowment, geographic location, etc.

Therefore, the moat can be understood as: a source of solid and lasting competitive advantage.
High-quality products, leading market shares, and excellent management teams are not strictly a moat, because these factors are difficult to maintain for a long time, have great uncertainty, and are easily imitated or destroyed by competitors.
However, it should be noted that it is not only companies with a strong moat that can grow and be worthy of investment. Companies with a shallow moat can also achieve phased success with product innovation, excellent teams and execution capabilities, just like many companies with rapid growth today. The same as the Defi project.

 2. The moat of the Defi blue chip project

Like the real world, Defi projects are now also facing increasingly severe competition. They are also seeking and constructing their own moat, and the moat theory of value investment is still valid in the crypto world.

At present, for most projects in the Defi field, the influence of the four elements of the moat is as follows: customer conversion cost>network effect>intangible assets>cost advantage.

First talk about customer switching costs

We can divide the users of a Defi product into individual users and external agreements. The conversion cost exists for both, but the latter has greater influence.

Taking the loan agreement Aave, it has become a source of income and liquidity for a large number of other Defi protocols, and it is the base of Defi Lego. If a certain Defi protocol connected with Aave wants to switch to other lending protocols to replace Aave, it means brand new The protocol research, code changes and re-audit of the overall protocol security not only require high time and financial costs, but also face the uncertainty of the new Defi LEGO portfolio.

For individual users, the conversion cost will be much lower than that of agreement users, and many users even enjoy the fun of exploring new products. Nevertheless, excellent Defi products will retain individual users through well-designed mechanisms and increase their conversion costs.

In this regard, Curve provides us with a classic case. After users purchase their project token Crv, only by staking Crv can they obtain core rights and interests such as platform fee dividends, liquidity market-making income acceleration, and the longer the pledge time, the higher their profits and rights, so there are currently More than 69% of circulating Crv are pledged on the platform, and the average pledge time has reached a terrible 3.67 years (the maximum pledge time is 4 years).

Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?

Curve’s pledge page: https://dao.curve.fi/locker

We have reason to believe that these users will find it difficult to leave Curve in the next three years. They will always be loyal users of Curve and enthusiastic followers of community governance.

Among the 10 Defi projects mentioned in this article, most of them have a moat in terms of customer conversion costs, especially ——

  • Curve: Accessed by a large number of external protocols, and long-term binding users through token lockup
  • Aave: Accessed by a large number of external protocols, it is their basic liquidity layer
  • Synthetix: Users will be forced to mint sUSD after staking SNX, which is conducive to the conversion from investor to trading user. After becoming a trading user, the willingness of investors to release the mortgage will also be significantly reduced, forming a relatively sticky Staking+ product system in a loop
  • PancakeSwap: The largest DEX on BSC, trust and access for most BSC protocols that need to be traded
  • Compound: similar to Aave
  • Chainlink: Most of its customers are Defi agreements, and the overall cost of replacing the oracle partner is very high

Second, the network effect of Defi products.
The role of network effects in public chain competition is very obvious. It is embodied in the ecological flywheel that enhances the number of users, the number of developers, and the amount of funds. Countless “Ethereum killer public chains” fall under this powerful rule.
Network effects also exist in multilateral user markets such as trading and lending platforms. On Uniswap, the more traders and the greater the transaction volume, the more market makers will be attracted to market to provide liquidity, and the increase in market-making depth will in turn increase the user stickiness of traders. Achieve mutual reinforcement.
However, due to the open source nature of blockchain projects and the rise of liquid mining, emerging projects can use Fork project code + mining subsidies to suck blood from users and market makers of existing projects. SushiSwap uses this to catch up with the previous ones. Uniswap, which believes that the network effect is strong, and a large number of new Dexs on BSC also challenge PancakeSwap in similar ways. However, from the results, the success rate of this approach is getting lower and lower. Uniswap and Pancake are still active users on Ethereum and BSC respectively. With the highest number of DEXs, the moat built by network effects helps them resist a certain degree of attack.
Another classic case of network effects in Defi is the stable coin Dai issued by Maker. The wider the circulation of Dai, the more protocols and users that accept it, the higher the value of its currency network. Other latecomers to decentralized mortgage stablecoins such as LUSD issued by Liquity, even with a superior economic mechanism, are still difficult to catch up with the ever-expanding Dai in a short time.
For the in-depth research report of Liquity, please see:
[Mint Ventures in-depth research report] Liquity stablecoin market rising star

Among the 10 Defi projects mentioned in this article, the projects with obvious network effects are——

  • Currency agreement composed of Maker+Dai
  • 4 trading platform projects
  • Aave and Compound’s Lending Bilateral Market

Defi’s intangible assets may also be one of their moats.
We will observe a phenomenon in the Defi world: Although other lending agreements have higher deposit yields and have passed the audit of well-known security companies, many users are still only willing to deposit in established projects such as Compound and Aave. Their reason is that these two projects have been in safe operation for a longer time, have gone through multiple rounds of tests, and are more trustworthy.
It can be seen that the brand as an intangible asset is extremely valuable to the Defi protocol. Although different from the emotional attributes of real-world brand power, the brand of Defi protocol often comes from the reputation of long-term risk-free operation, the decentralized community spirit and even the community influence of leaders.
Another type of Defi intangible asset that has quietly emerged may be the original code protected by BUSL (Commercial Source License). Uniswap used this method to prevent its code from being Fork before the V3 code was released, although the anonymous project Fork still appeared later. The incident of its code, but at least this hinders projects that value their reputation and the Fork of real-name projects. But just as the product itself is not a solid moat, the competitive advantage brought by the original code is not strong, because other projects may be innovating completely different models from the old projects.
Since the 10 projects mentioned in this article are all well-known and widely recognized projects, they all have certain advantages in terms of brands in intangible assets. Of course, this advantage is not strong compared to switching costs and network effects.
Due to the composability of blockchain business, the flexibility brought by anti-regulation, the current extremely active encryption venture capital support, and the full-service onlineization of the Defi project does not require a large amount of fixed costs, and the cost advantage may be Defi business The most common moat factor in the world.
We found that excellent Defi blue-chip projects have at least 1 item, or even 2 to 3 items in the above moat, which makes them more difficult to be chased by later competitors. This may be because Curve has a higher PE estimate than PancakeSwap and SushiSwap. One of the reasons for the value.

Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?
Coin World-A comprehensive comparison of the token models, cash flow and moats of the top ten Defi blue chips. Who is the king of value capture?

Fourth quarter

to sum up


There are many reasons why a Defi project can become a blue-chip player. For example, it is on a good track (such as trading and lending), or it may catch up with the industry’s explosive dividends, such as the Defi mining wave brought to Yearn. Opportunity, or the team itself is quite good.

However, if blue-chip projects want to continue to stay ahead of the market, they need to have a healthy revenue and token value capture model, and more importantly: a wide enough moat to gain long-term follow-up from users, investors, and partners. And favor.

After analyzing 10 current blue chip projects, we believe that Curve, Aave, and Syntheix have a better overall performance in the above aspects, and it is expected to maintain the current blue chip position and even go further.

Curve: A clear revenue model and excellent token model design have greatly increased the overall demand for Crv by project participants and locked positions, which also increased the conversion costs for users and investors of the project. Because Curve is also a typical bilateral market , The existence of network effects can also have a sniper effect on latecomers trying to enter this field.

Aave: The income model is clear, and the method of capturing the economic value of the token is reasonable. The basic status of the loan agreement in Defi, and the higher conversion cost of external agreement users to replace the combination agreement, make Aave’s competitive advantage relatively stable. In addition, the long history of development and zero major safety incidents during operation have also made many ordinary users and institutional users willing to give up the high returns of other lending agreements and prefer Aave.

Synthetix: The revenue model is clear, the method of capturing the economic value of tokens is reasonable, and the derivatives track is long and wide. Its unique token mortgage mechanism also makes it easier for Synthetix investors to pledge tokens and convert them into product trading users, not easy to leave.

However, it needs to be emphasized that in a free, open, and transparent encrypted world, the moat of the existing Defi leaders is much more fragile than the moats of traditional world companies. Later, through economic mechanism innovation, product iteration, and even huge subsidies, it is possible. Let the moat of the former be crossed easily. Defi users who are more exploratory and more rational are also far less obsessed with a product than ordinary users are enthusiastic about traditional brands.

Therefore, although we do not think that the core team of Defi is the moat of the project, they are the offensive end of the project’s expansion. Only the team continues to be diligent, enterprising and innovative, and the existing project barriers will not be gradually eroded by latecomers.

From this point of view, even the relatively mature Defi leading project is a complicated decision that places equal emphasis on value investment and venture capital. This is exactly the fun and challenge of investing in gold nuggets in this ever-changing crypto world.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/a-comprehensive-comparison-of-the-token-models-cash-flow-and-moats-of-the-top-ten-defi-blue-chips-who-is-the-king-of-value-capture/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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