Collinstar Capital’s Industry Insights for 2020 and 2021
As a witness and participant in this historic surge, Collinstar Capital has noticed that the entire market is no longer dominated by gold diggers, but by a wide variety of tech geeks and well-funded financial professionals who have built on the technology developed by the former and injected over $100 billion in capital. more than $100 billion in capital.
At the same time, the fascinating narrative of the crypto world has started to change in all directions. Instead of discussing whether blockchain finance is a farsighted need or a conspiracy scam, the crypto economy is a true proposition by default, and the “war of authenticity” is directly cut to the “centralization vs. decentralization” started by DeFi, as well as the “concept war” and “track war” that are intensifying as the bull market progresses.
It all started with the creation of fertile ground for decentralized finance by Ether, paved with Uniswap catalyzing AMM to become a mainstream smart contract, and the first call for the first issuance of COMP, a network-wide governance token by Compound in June 2020 and the launch of liquidity mining, DeFi has grown into a $100 billion market in less than a year, shaking the foundation of the centralized financial system. In less than a year, DeFi has grown into a $100 billion market, shaking the foundations of the centralized financial system, and we have witnessed value rotation in the crypto world – DeFi newcomers Tether, BNB, DOT, and DOGE have beaten the old mainstream crypto assets XME, XLM, NEO, and EOS and jumped into the top 10. Interestingly, Tether, BNB, DOT and DOGE seem to represent just four types of players in this round of DeFi boom.
The rising oligarchy of decentralized financial instruments, represented by Tether.
The low-threshold, high-reward new money, new user grabbers and ethereum value shifters, led by the Binance smart chain.
The explorers of facilities, technological innovation solutions represented by DOT.
MEME and FOMO sentiment traffickers represented by DOGE.
Collinstar Capital’s Portfolio for the past year happens to include all four of these categories, while we also reach out to the broader terrain.
Collinstar Capital 2020 Portfolio Retrospective
The rise of DeFi signals the establishment of new rules and order in the blockchain world. We cannot ignore the rising decentralized system in our investment process, so we have added some DeFi new generations to our portfolio, spanning three levels: application, infrastructure and service; in addition, we also focus on further layouts in the centralized system, which will be unattainable by DeFi for a long time to come In addition, we are also focusing on further laying out in the centralized system, so that for a long time to come, what DeFi cannot achieve will still rely on more practical centralized solutions. In fact, we believe that systems that really work effectively are not extremely decentralized or extremely centralized, and we hope to add the best of both worlds in Collinstar Capital’s investment universe.
In the past and in the future, regardless of the system, Collinstar Capital always identifies quality targets that are revolutionary, experiential and constructive, based on the assumption that everything in the blockchain world is an unsettled change.
DODO is one of the first AMMs to use active market making strategies to increase flexibility in the on-chain trading market.
AMM is one of DeFi’s greatest proven innovations, replacing the role of market maker in traditional trading markets with a written algorithm. The market is already flooded with homogenous products that mimic Uniswap and capture over 30% of the DeFi market share. But they also suffer from a common problem: they are not flexible enough to respond to changing markets and are hamstrung by the Ether dilemma, leading to inefficient funding, illiquidity, high usage costs, and the risk of being attacked by MEVs at any time.
Until the Ethernet scaling problem is truly solved, we can only look to top-level application optimization to alleviate these problems, so Collinstar Capital chose to invest in DODO. we started early with the DODO team and learned about the active market making (PMM) algorithm, which ensures a smoother trading curve around the market price and a liquidity supply that is always around the market price. The PMM algorithm is a relatively complete solution to most of the inherent risks of AMM. At that time, we predicted that the PMM algorithm would become one of the most specialized liquidity building blocks and DODO would be among the top applications.
As it turns out, DODO not only grew into a top 10 DEX in a short period of time, but also immediately reached many significant needs in the DeFi market: attracting a large number of professional market makers to the chain through DODO Private Pools (DPP); laying out the long-tail asset market and building the new coin issuance platform with the lowest liquidity threshold; making continuous efforts in gas quotes and gas subsidies to reduce user transaction costs; DODO also developed the front-end with the best user experience in the DeFi world.
We expect the DODO team, with strong product design and technical implementation capabilities, to realize their exciting and innovative vision step by step.
It is a well-known fact that there is a huge gap between the percentage difference between digital currency derivatives and spot volumes, and the traditional financial world, which is one of the clues for our aggressive entry into the derivatives track. We also determined that centralized platform solutions would precede the explosion of decentralization in the path of the digital currency derivatives market catching up with traditional finance, and we started with BitWell.
Last June Collinstar Capital made a $1.5 million strategic investment in BitWell.
We noted that the exchange circuit will eventually tend to be heavily homogenized in terms of business categories, so getting a first-mover advantage is key to building competitiveness for exchanges. Based on our trust in the BitWell team’s deep experience in finance, internet and blockchain, and our recognition of their market acumen, product design capabilities and ability to create growth, we chose to become a strategic partner with BitWell. BitWell has the ability to enter the top three in this track and the potential to grow into a headline institutional-level derivatives service platform.
To date, BitWell is equipped with a self-developed multi-layered cold wallet system, a high-performance and highly stable trading system, a top professional derivatives team, a low-threshold and highly flexible white options product, and, gratifyingly, a fairly fair and transparent platform with a standardized system first. Our investment in BitWell has returned nearly 674%.
Since 2017, cross-chain, scalability and the Web 3.0 vision have been three of the biggest themes in the crypto world, and Polkadot, developed under the leadership of Web 3.0 creator and designer Gavin Wood, has taken these themes to the extreme. Over the past year, Substrate 2.0 has become one of the most popular development frameworks for developers, directly driving a steady stream of innovative Poca projects, with 439 projects in the Poca ecosystem and Poca reaching a global market cap of $38 billion as of the date of writing.
A key mission of Poca is to encourage parallel chains to flourish and break single-chain monopolies. Last year, under the impact of Ether DeFi, the topic of cross-chain and expansion temporarily faded out of public view, while the myth of Ether became the mainstream story, and it was not until the skyrocketing usage of Ether made it difficult for users to bear the cost of gas that the industry’s discussion on public chains became a big trend again. It’s not a stretch to think that there will be several more giants with market caps as big as ethereum, and they will eventually converge on Polka once it lands.
Collinstar Capital participated in two rounds of public offerings for Boca in 2017 and 2019, and we tend to think that Boca is the next stage in the development of blockchain technology, which, like Bitcoin and Ether, is a revolutionary iteration of blockchain technology that is incrementally more generalized and progressively carries a larger vision of political economy. open up the blockchain 3.0 era.
As the current bull market kicks off, the DeFi ecosystem is experimenting with new financial structures at an alarming rate, and there is a Cambrian explosion of tools based on bull market trading pain points, of which BlackOcean is a seminal case.
BlackOcean is a liquidity supply and privacy trading platform incubated by European high-frequency quantitative trading firm VRM, one of the top three market makers in the crypto market. blackOcean is essentially a liquidity pool and anonymous OTC platform for institutions, market makers, and bulk users, known in the traditional financial world as a dark pool.
The dark pool is not a brand new concept, but it is a missing presence for the crypto world. Traditionally, there have been high-frequency traders in the market who specialize in tapping insider information to gain access to preemptive trading opportunities for certainty gains. Such rat-running behavior is even more rampant in the dark forest of ethereum, where signals of bulk trading are monitored at all times, and once they venture out, they are instantly grabbed and run or trailed by arbitrage bots, and by the time the trade is executed, they have already paid a pretty high cost. There are already some solutions to save trades, such as designating mining pools or takers and makers for packaged trades to ensure that orders are not competed against each other, as Taiji Network and Tokenlon are providing.
The on-chain dark pool pioneered by BlackOcean is another solution, which acts as a trading venue to hide all market data and pending orders, thus bypassing the listening of arbitrage bots. The difficulty in implementing this solution is that it relies heavily on accurate quotes and excellent liquidity, both of which are VRM’s strengths.
Collinstar Capital and BlackOcean are deep partners and fully understand that BlackOcean’s creation of a professional platform for bulk trading is an important step towards the maturity of the crypto finance market, and that professional dark pools are the trading infrastructure that will surely emerge in the crypto world to build a better market order. As BlackOcean takes a historic step, the concept of dark pool will become one of the meta-cognition in the crypto world, and BlackOcean will become the leading project in the new track of dark pool because of the strong team strength.
Republic / Crowdfunding, Distribution
Republic (republic.co), launched in 2016, is a fully compliant crowdfunding platform under the U.S. judicial system, and its compliance allows retail investors from most countries in the world to participate in the financing of startups or projects on Republic.
Collinstar Capital is concerned about Republic’s retail-focused user niche, a niche that will undoubtedly drive the gentrification of the venture capital economy.
Information and opportunity are the most valuable resources in finance, and the ones that the traditional world of vested interests instinctively monopolizes to build barriers to wealth. Republic arrives with a mission to break down the barriers and entrenchment of the primary market so that ordinary people can share in the benefits of fast-growing unicorns and industries, which is what makes it bound to be a great project. But vision alone is not enough. Collinstar Capital was bullish on Republic at a time when the market was rather bleak, essentially because of Republic’s team background and business blueprint. Republic is a spin-off from AngelList, the world’s largest investment platform, which is known in Silicon Valley and around the world for helping thousands of companies raise over a billion dollars, including Robinhood, Cruise, Calm, Notion, and others, making it easier for Republic to obtain Republic is also more experienced and capable of protecting the interests of ordinary investors.
Republic’s product line spans venture capital, private placements and fundraising, and is essentially an Internet investment bank using blockchain-enabled technology to offer high-quality assets to retail investors who would otherwise be turned away, with Republic’s crowdfunding threshold being just $10. In addition to equity crowdfunding, Republic is complemented by a strong private investment arm, and early last year, Republic acquired head indie game crowdfunding company Fig and real estate financing platform getcompound, giving Republic access to even more top-tier sources of quality projects.
The public offering of equity and coin rights, the participation of rights-holding users in deciding the direction of the project and accompanying the growth of the project have become commonplace in the DeFi space and have proven to be a mutually beneficial model for both users and project owners, and Republic’s strong capital and product capabilities have taken this model to the extreme. We are looking forward to the day when Republic will start a nationwide angel investment boom.
Jasmy/Data Cloud, Privacy
It is indisputable that “data is the oil of the digital age” and “data ownership and usage should be returned to individuals”. It is hard to explain how to realize it. When we received Jasmy’s project white paper, we saw the beginnings of a new era of data privacy.
The Jasmy loT Platform is a technology facility designed to create a secure data environment that blends IoT encryption with distributed storage to provide each user with a separate “personal data locker” where individual users can not only keep and manage important personal data, but also freely decide whether they want to provide their personal data to enterprises and manage them for data tracking. The technical realization of data privacy sovereignty is the first step in the data rights revolution, and Jasmy is also working on the commercialization of data smart device innovation, as a key project officially recognized by the Japanese government to promote the development of smart cities, and is currently building the highly anticipated new landmark baseball stadium complex in Hokkaido construction, which is a total investment of $600 million.
What problems can blockchain solve is a permanent Socratic question for early stage practitioners, and an important thread of Collinstar Capital’s portfolio is blockchain applications outside of finance. We look forward to exploring more technology explorations like Jasmy’s that have solid teams and are integrated with industry, which we firmly believe will give blockchain technology a deeper meaning and a longer life.
Collinstar Capital 2020 DeFi Portfolio
In addition to the above blockchain-based CeFi and industrial projects, Collinstar Capital has also focused on investing in a number of DeFi products in the past year, with our involvement in lending, middleware, DAO, and aggregation platforms, many of which have become star products after launch.
DeFiner (lending) has been focused on an open, highly customizable, private, multi-chain lending marketplace, and has recently been updated to version 2.0, opening up unconditional access to low-liquidity, long-tail assets and creating a smart contract black box to protect access information for users. deFiner is focused on feature optimization and barrier reduction for lending products, with an upgraded experience that will, in the long run It is easier to capture users than other lending contracts.
Unifi (Foundation Building Block) is a fully community-started multi-chain smart contract, essentially a complete set of DeFi foundation building blocks born for generalization, which allows developers to develop various DeFi products based on UniFi, and with its large community of users and developers, several new public chains are competing to deploy Unifi on their own chains. has now landed on Wavefield, Ontology, Harmony, BSC, and will soon go live on Ether, while its governance token, UNFI, went live on Binance in November last year.
PowerPool is the result of a thoughtful approach to DeFi governance, forking from Compound and increasing its own voting weight by borrowing and pooling the governance tokens of other DeFi contracts, where retail investors can lend the tokens needed for governance. While it is often difficult for retail investors to play a material role in governance with the size of their holdings, PowerPool allows small retail investors to gain governance power in the DeFi ecosystem that rivals that of the giant whales, and to mine the PowerPool’s pledge pool for token CVPs, which can then be invested in Uniswap to provide liquidity to govern and generate interest. is a new type of DeFi experiment that may inspire a sense of governance simply by paying interest, evolving into the governance hub of the DeFi ecosystem.
Bella is a one-click DeFi asset manager that prioritizes cost of use and product experience, helping users complete the complex steps of mainstream Dapps with a single click, while also developing native income aggregation, lending and smart investment products based on the one-click concept. The basic categories of DeFi products have been well established, and the window of product experience is approaching, with a simpler product logic to attract a wider range of funds and users, and Bella is one of the use cases.
The future is here
Collinstar Capital 2021 will focus on these directions
DeFi’s wild growth over the past year has always been compared to the crypto wave of 2017, which has fostered a lot of skepticism – the boom is an illusion and the growth is a bubble. However, we can actually easily break through these pseudo-logics that confuse sentiment with fundamentals; only market sentiment makes the bull-bear shift a thing of the past, and financial development never stops. Sentiment will always lag behind the speed of technological progress, and Collinstar Capital’s investment principle is to spot opportunities before the market does.
Collinstar Capital laid out a portfolio with underlying facilities as the primary focus and innovation and product experience as the secondary focus before this market sentiment fully boiled over, and going forward, we continue to target DeFi in the three major directions of infrastructure stack (new public chain, privacy, NFT), user experience optimization (lending), and missing financial needs replenishment (financial derivatives) value investments.
New Public Chains
The new public chain race started in early 2021, led by BSC in this round, and new public chains such as DOT, NEAR, Solana, AVAX, Flow, Mina, etc. have become the places where ethereum funds flee and new funds reside. One of the reasons why new public chains are sought after by the market is because of the delay in the realization of the expansion plan of Ether, while the possibility of new public chains replacing Ether is verified on BSC, and every new, or undiscovered public chain intends to recreate the wealthy glory created by BSC at the beginning of the year. The speculative money pouring into new public chains will thus continue to be strong, but Collinstar Capital is bullish on the new public chain ecosystem for deeper reasons.
New public chains have been touted as ethereum killers, and when the ethereum expansion is complete, it is logical to assume that new public chains will be killed by ethereum in reverse. The same killer theory existed between Ether and Bitcoin, as Ether had better throughput and scalability than Bitcoin, so it was thought that as Ether grew, it would completely replace Bitcoin. Ether and Bitcoin have evolved to the point where the positioning has gone through several rounds of renovation and there is no longer any overlap. Many public chains are actually completely different from the consensus and of Ether, and they should not be roughly positioned as alternatives to Ether. We tend to think that multiple chains will coexist in the future, and the tested public chains will serve specific people and scenarios, and the current situation of serious business homogenization will cease to exist and shift to multi-chain division of labor.
We will look for public chain investment targets with clearer positioning and greater possibility of landing, as a complement to Ether, and we can predict that other high-quality public chains will catch up with Ether’s $400 billion market cap.
Despite the native anonymity of cryptocurrencies represented by Bitcoin and Ether, blockchain does not actually protect address privacy, and once addresses are combined with real identities, all on-chain behavioral data and assets will be completely exposed. Although the privacy issues of some cryptocurrencies have now been solved, smart contract transactions are still sufficiently lacking in anonymity and privacy that it leads to at least three current situations that need to be addressed urgently.
First, on-chain metadata is purposefully screened and tracked, revealing a great deal of financial privacy, some even involving enterprise-level secrets.
Second, on-chain behavior, especially transactions, is publicly broadcast to all nodes, resulting in a large number of malicious attacks and arbitrage events.
Third, with increasingly stringent regulation, one day on-chain addresses will be forced to associate with off-chain identities by regulation, and the blockchain, which originally represents a tool for democracy and freedom, will become a space for society as a whole to monitor on-chain users at will.
The expansion of DeFi participants from individual retail investors to large institutional enterprises is an inevitable development trend, but the resolution of privacy issues is a prerequisite for on-chain financial tools to attract enterprise-level customers and undertake the gradual transfer of traditional finance. With the development of smart contract privacy algorithms, privacy currency, anonymous mining, metadata block encryption protection, and encrypted transactions now have basic prototypes, and in the split state, they can each guarantee the anonymity and confidentiality of some user information, but these protocols are not compatible with each other and with other DeFi protocols, and they are still some distance away from being usable and easy to use. As the privacy track is getting lively and users are waking up to on-chain privacy awareness, we are looking forward to privacy coins, privacy-enabled components, privacy platforms, privacy public chains, or even more imaginative privacy solutions in 2021.
NFT is a track that Collinstar Capital is focusing on deploying. Originally, NFT was a niche area in the crypto world, but it is rapidly becoming one of the most imaginative tracks in the crypto world in 2021. Its entertaining nature and low perception threshold make it easier to border with the masses and also with different groups of attributes. While practitioners in the crypto world undoubtedly see NFT as the best exit for the crypto world to break the circle, we are more concerned about how NFT, which currently has just surpassed $600 million in total sales, will take on the global trillion-dollar culture industry.
NFT is full of use cases, NFT+IP, NFT+Music, NFT+Collectibles, NFT+Copyrights, NFT+Finance, NFT+Games, NFT+Social, NFT+Fan Economy ……
The use cases we elaborate have already seen some products emerge and gain growth, although there is still a huge gap between the current NFT market volume and the traditional culture market size, a distance that is sufficient to give us confidence in the value-carrying capacity of the various combinations derived from NFT. At present, we have seen NFT investment events continue to white-hot, many KOLs, celebrities and brands enter to add support, the myth of wealth creation with sky-high bidding and strong association continues to escalate, NFT spreads out like a social movement, and as the more perfect public chain infrastructure increases the scalability of the NFT platform and removes technical barriers to participation in NFT, we are sure that the value input around NFT is just The beginning.
Collinstar Capital’s investments around NFT will move from the most basic play of NFT to deeper experiments with NFT, which has inadvertently given rise to a large social experiment that has silently reshaped much of the real-life economy and ideology in the guise of glossy art, and which many people do not yet fully understand as a source of value beyond speculation. But once the transformation of content and rights to digital forms is complete, NFT will be a fundamental tool for the next stage of consciousness.
Lending and borrowing are two fundamental elements of DeFi. Lending is a permanent need in the DeFi world, and because of the profitability of lending contract users and liquidity providers, the autonomy to exit without a threshold, and the experience orientation, lending contracts can never create an absolute monopoly, which means that this track will always be full of possibilities.
There is already a leading product in the lending space, Compound, which has reached a maximum of $9 billion in total borrowing in a single day, and the total borrowing amount of lending agreements across the Ether network was about $18.8 billion on that day. Although Compound already occupies half of the lending market, we still believe that lending is a blue ocean of value with great potential for long-term development.
This judgment is mainly based on the fact that most DeFi lending contracts are currently only in the most basic form, such as over-collateralization and the model of using mainstream crypto assets and blue-chip DeFi assets as the main collateral, which makes users have to bear the liquidation risk brought by the high-frequency and highly volatile market all the time, and as a facility to take over the traditional world lending system, it is a drag on capital efficiency and far from mature and complete. . In the future, just innovations in terms of collateral, collateral rates and liquidation risk can bring transformational levels of development to this track.
The lending agreement will also back the derivatives track in the future. After the completion of the Ether expansion, the scale of on-chain derivatives transactions is expected to grow to exceed the scale of spot transactions by tens of times, and players’ leverage needs to rely on the capital reserve of the lending contract. We anticipate that the lending agreement can later produce a higher coupling access with the derivatives agreement, and also expect a series of on-chain reputation system, real assets on-chain and valuation system to be developed by supporting the reception agreement. We will actively look for projects capable of implementing these solutions to enrich our ecological layout in the lending track.
Collinstar Capital has always believed that every growing market will naturally develop its own derivatives market, and derivatives have always been the main driver of growth in the financial industry. The route will be dominated by the continuous upgrade and renewal of the original projects, and the number of new derivatives projects will not see explosive growth for the following reasons.
Market volatility has been high, high volatility will drive derivatives trading volume, centralized exchanges rely on technical advantages, product innovation, traffic accumulation and spot market transformation to achieve high market share growth, while caught in the limitations of tools, the development of on-chain derivatives is not as fast as many other practitioners expect, digital currency derivatives catch up with the volume of traditional financial derivatives in the process, it will be centralized platforms break the ice long before decentralized platforms do.
In addition, the vast majority of participants in the derivatives market are currently individual retail investors, and we confirm that the huge opportunity in the crypto space will be noticed by more and more hedge fund trading professionals who may enter with huge liquidity and demand for derivatives trading, and excellent products will help this group of professionals enter the market, and they will feed back into the market to breed more mature derivatives instruments.Finally, although the growth of DeFi derivatives is slow, considering that it was born less than two years ago, it has already brought huge financial innovations, synthetic assets, perpetual contracts, swap contracts, derivatives AMM …… just that the current Ether cannot support these innovative products to really enter the market, DeFi derivatives now are going through the difficult development and rollout phase of the ancient DeFi blue chip projects, and we believe that now is perhaps the best time to spot unicorns and gain early participation.
Conclusion – Welcome to the Crypto Era
Collinstar Capital has witnessed the rapid rise of DeFi in 2020 and has been fortunate to be deeply involved in the full cycle of many projects from idea to implementation, with Collinstar Capital’s investments achieving superb returns and industry recognition, winning numerous awards; including Golden Finance’s 2020 “Collinstar Capital has won many awards, including Golden Finance 2020 Most Popular Investment Institution for Entrepreneurs, DeepChain 2020 Most Influential Investment Institution, PANews Most Powerful Investment Institution, Nova2020 Blockchain Active Investment Institution of the Year, etc. TOP20, etc.
Collinstar Capital China CEO Xu Yinglong’s insightful investment vision won the DeepChain2020 Most Influential Investor of the Year, PANews Most Powerful Investor of the Year, and Nova2020 Blockchain Active Investor of the Year Top 30, all sponsored by DeepChain Finance.
From 2020 to 2021, Collinstar Capital will continue to build community ecology for invested projects, connect with traditional finance and business policy support, organize industry From 2020 to 2021, Collinstar Capital will continue to build a community ecosystem for its invested projects, connect with traditional finance and business policies, organize internal and external exchanges, host offline meetups for 34 projects, support dozens of technical exchange events in the industry, assist project owners in brand PR, and output more than 20 investment research reports.
As a veteran blockchain venture capital firm established in 2015, our years of experience in finance have taught us that the Matthew effect and the first three theories are constant axioms in all market operations, but the history of the crypto world illustrates the fact that it is the best at breaking such axioms. We are surprised to learn that in the crypto world, everything is still unsettled, full of downside risks and upside lanes. In spite of numerous shipwrecks, human beings still set sail, and investing in the crypto world is exactly a great voyage. We will always believe that in this great playing field, in the flywheel of history, all institutions, including us, are just ordinary people riding on the current.
Next, the battle between centralization and decentralization in the crypto world will gradually come to a climax. 180 years ago, because of the incompatibility of the two systems of continents and oceans, and the communication protocols at that time were extremely rudimentary, which led to the strong collision of the two systems, and then the mutual integration through war to produce a new world order. 180 years later, now, the two systems of centralization and decentralization are now extremely incompatible, and the current communication protocols also have many pressing problems to be solved, and we, as pioneers, will leave a strong mark in the history, whether or not we can recreate a new world order.
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