Deri’s external liquidity pool fires the first shot of the 2022 “DeFi 2.0 Revolution”

DeFi 2.0 is being discussed more and more, although many times the discussion is actually about different projects, and these projects put forward different solutions around liquidity.

But this at least shows that the past DeFi protocol paradigm has no discussion value (are you still excited about AMM?), and the new paradigm is still being explored.

If there are innovations and hot money in the DeFi field in 2022, then there is a high probability that it will appear in DeFi 2.0 projects, that is, those projects that revolutionize liquidity, and really become the infrastructure of DeFi.

Standing at the beginning of 2022, we saw that the first shot of the DeFi 2.0 revolution was the launch of Deri Protocol V3, which brought an “external liquidity pool.”

DeFi 1.0-Liquidity Fragmentation

For the entire macro financial market, liquidity is too important, especially for those DeFi agreements based on AMM.

If the liquidity in the liquidity pool is not high, then the slippage of the transaction will be high.

High slippage means additional burdens and risks for users, which will persuade users, and ultimately allow users to concentrate in those liquidity pools that are inherently high liquidity, so the benefits will not be high.

On the other hand, this is not friendly to the following DeFi protocol. They have to spend a lot of energy to attract users to deposit funds in their own liquidity pools. The most common and the least mind-free way is to release more generations. currency.

This seems to be an endless loop… but there is no way.

AMM is of course very good. It allows everyone to become a market maker that can only be done by institutions in one minute, which greatly reduces the barriers to financial entry and improves capital efficiency.

But the liquidity pool of DeFi 1.0 is still decentralized and isolated-even though it is “non-custodial”, it is essentially custody in the DeFi agreement. For the entire market, liquidity is still fragmented.

DeFi 2.0-Liquid Market

In order to solve the problem of liquidity fragmentation, many projects make full use of the composability of DeFi to make innovative attempts.

In the early days, there was a machine gun pool such as YFI, which concentrated liquidity first, and then carried out more efficient liquidity distribution, and users could get incentives from the machine gun pool again.

There is also Stafi, a pledged derivative agreement that provides liquidity for Staking assets. Although the assets will still be locked, it will tokenize these assets so that users can deploy them to other places.

When these projects first appeared in 2020, they were derided as infinite doll games, but they did solve the problem of liquidity fragmentation at different levels and improved the capital efficiency of the entire market.

They are trying to improve liquidity in the DeFi 1.0 era. They are scattered in different DeFi. To a large extent, they are bicycles for buses, and they have used the advantages of scale to improve capital efficiency, but the fundamental situation of liquidity fragmentation has not changed.

The DeFi 2.0 era is a more thorough improvement-directly establish a liquidity supply market, that is, Liquidity-as-a-Service (Liquidity-as-a-Service).

For example, Tokemak, which has been discussed a lot recently, is a liquidity provider for DeFi protocols, such as providing liquidity for Uniswap, Sushiswap, Balancer and other protocols.

There is also the Venus introduced by Tianlian Teahouse. Although it seems to provide stable coin casting and lending services, it is essentially a liquidity supply market, which can open the liquidity pool to other DeFi protocols.

Venus was the first to open to Deri Protocol (V3) to establish external hosting.

Deri V3-Introducing an external liquidity pool

Deri Protocol is a decentralized derivatives exchange. When discussing V3, it is necessary to review V2 and V1 first.

Deri V1 has launched perpetual futures, which is not much different from other decentralized derivatives exchanges on the whole chain.

Deri V2 is the first to introduce perpetual options, which is the first native derivative in the DeFi world.

Moreover, Deri V2 also introduced a dynamic hybrid margin design, a dynamic liquidity provision mechanism, multiple transaction targets in a liquidity pool, etc. In short, different assets are placed in a pool for custody and settlement.

This saves users the trouble of exchange between different assets, not only improves the convenience of operation (that is, capital efficiency), but also reaches a larger market (whether it is a trader or an LP, as long as the Assets are the basic tokens supported by Deri V2, and all can participate).

The liquidity of V1 and V2 is still in Deri’s own liquidity pool, but V3 is directly introduced into the external liquidity pool.

Whether the user provides liquidity as an LP or deposits margin as a trader, Deri V3 is not hosted in its own liquidity pool, but in the liquidity market.

Specifically, Deri V3 will deploy a vault for users, and then send funds to the liquidity market through the vault, which is the external liquidity pool, and it can also calculate the user’s real-time dynamic effective balance.

The advantage of this is that any tokens supported by the liquidity market will become the basic tokens automatically supported by Deri V3. The current liquidity market, that is, the external custodian, is Venus.

Of course, there is an obvious advantage that the capital held by users can also make additional profits in the liquid market.


A lot of DeFi 2.0 projects have emerged recently, and they are all based on liquidity to provide services. Of course, Deri V3 is not a DeFi 2.0 project in a pure sense, but a service that uses the DeFi 2.0 project.

The adoption of Deri V3 is not simply using DeFi composability and adding a function as simple as (like a machine gun pool supporting a DEX), but it is really adapted from the product level (this involves DPMM, we will expand it in another article) .

Except for Deri V3, we have not seen the DeFi protocol that adopts DeFi 2.0 in the true sense.

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