The combination of NFT and DeFi is becoming more obvious.
The Sandbox, the NFT platform, launched its liquidity mining and sought the marriage of NFT and DeFi again. There are also NFT-based lending, such as CryptoKitties’ lending.
With the explosive growth of Swap platform, the community began to discuss the possibility of NFT + DAO。
After entering the second half of 2020, DeFi’s popularity gradually reached its peak. But with the market returning to rationality, the drop of recent interest of staking mining, and the DeFi project’s high-level callback, all the phenomenons make funds already to look for the next runner.
Just last week, the rise of MEME turned the market’s attention to the concept of NFT, which is a combination of NFT&DeFi. Similarly, recently, the Sandbox, NFT’s established platform, started the liquidity mining and sought the marriage of NFT and DeFi again.
It is worth noting that the relationship between NFT and DeFi is not mutually exclusive. To some extent, it shows a very good “compatibility” between them. MEME, with the main logic of “mining points, raising points, exchanging points for cards”, is a manifestation.
In the community, the new term “NFT-FI” has emerged, and at the same time, there are a number of “NFT-FI” innovative products. Facing the emerging of “Swaps”, can NFT-FI grasp the flow of funds?
NFT seamlessly joins, while DeFi heats cool down
According to many investors, DeFi can’t be described as dead yet. The positive view from the community is that in the long run, liquidity mining is just a tool, not the essence of DeFi, which still lies in multiple directions including payments, lending, stablecoins, decentralized exchanges and so on.
“As a tool, mining can be good for DeFi as well as potentially good for NFT,” In an analysis of DeFi’s next move, Cao Yin, managing director and general manager of Digital Renaissance Foundation, makes this point.
In recent months, affected by the currency rise of NFT plate such as Sand, ENJ, DEP and MEME, the voice of NFT gradually becomes louder and louder, many exchanges sort out NFT plate, and the heat is spreading. Some analysts believe that the financial leverage with NFT may be the next trend.
This heat and trend are seen as a continuation of the DeFi. Among the popular currencies of DeFi, the typical ones include MEME, SAND, RARI, etc. their logic all roughly to “transplant” the liquidity mining to the NFT, and bring liquidity to the project. At the same time, the combination of NFT and DeFi is becoming increasingly apparent, and there are already NFT-based lending, such as Cryptokitties’ lending.
Another investor from the community discussed the possibility of NFT + DAO, he said that “I think the era of NFT is coming soon. DeFi, which can embrace NFT and tokenized real assets as early as possible, is the way out. But there are problems that need to be solved:
1. Valuation of NFT. It is impossible to be completely decentralized. DAO model can be used to introduce professional people as governance, such as DAO of valuation, and DAO of legal can participate in governance and vote to give fair NFT valuation.
2. NFT circulation and confirmation of rights. If NFT could be sharded and then recycled, it would greatly increase the liquidity premium, which will bring another burst of DeFi. So far MakerDAO has done the best.”
New Concept: NFT+DAO
It can be seen that with the explosive growth of DeFi market and Swap platform in the first half of 2020, DeFi’s locked value has become an indicator to guide market liquidity. One of the core functions of finance is to solve the incentive problem. The emergence and development of DeFi provide new ideas and more possibilities for this function. Next, many investors are beginning to expect the NFT concept to bring new ideas.
BeeSwap, the AMM decentralized trading platform of the NFT-DAO underlying governance architecture based on ERC20, believes that at present, the AMM system represented by UniSwap is still facing some defects. On the one hand, the high popularity of liquidity mining is fading away and miners are returning to be rational. DEX, on the other hand, does have a lot of room to improve the user experience. For example, problems such as high transaction fees, long transaction confirmation time, limited order types, and no cross-chain support have all hindered users’ deep participation, which has become the choke-point that DEX is currently facing.
BeeSwap introduces a new type of community governance and introduces the concept of NFT using a protocol called “Community Governance with Consensus — NTF-DAO”.
How to understand this new NFT-DAO concept?
According to BeeSwap, the platform introduces NFT attributes to the governance token BEE, and users can synthesize NFT-Bee through it, while users can also obtain NFT-Queen through the draw. NFT-queen holders have the right to propose, and all proposals will be reflected on-chain, so as to help the community complete governance, and achieve justice and transparency of community governance.
This structure(as it showed in the image) proposes a new governance model: BeeSwap DAO, a cross-chain aggregated decentralized trading platform, adopts a dual-currency governance structure. Here, it is composed of DAO governance token BEE and BeeSwap ecological token HON. Its core logic lies in: users get BEE (BEE) through staking the mainstream token, which can be used to synthesize NFT- BEE. Meanwhile, users can get HON (honey) by staking Bee. Among them, holding NFT-BEE or higher NFT-Queen can obtain more HON rights and interests. In addition, in community governance, NFT-Queen has the right to propose, which consumes the corresponding BEE, and users also need BEE to vote on the proposal. Through the NFT-DAO model based on BEE and NFT-BEE, community governance is carried out. The higher community consensus is, the higher BEE value will be. The value of queen bee itself is not only reflected by its scarcity but also the value it can create and the bonus of its output equity are set as the best benign support for its value.
Thus, in the NFT ecology of BeeSwap, it formed a complete ecosystem: the output of staking — — deflation — — buyback — -burn. In BeeStore auction shop, NFT can be auctioned to maximize the value of NFT, while HON can realize the value circulation in BeeStore as hard currency. In this model, NFT’s “value capture” and the liquidity provided by DeFi breakthrough to achieve long-term sustainable value support.
Compared to traditional DeFi, NFT+DeFi is a step further in value development.
This new approach is similar to a concept that Aragon founder Jorge has been discussing on Twitter. Earlier, Jorge tweeted about the possibility of NFT being enforced on Aragon Court as a liability and using the Twitter account on the DAO platform as a concrete example of how to implement the process. This will open up new imagination for the introduction of NFT assets as collateral for financial derivatives on the DeFi platform.
But will this NFT concept and DeFi’s bold foray breathe new life into the DeFi space? That still needs to be proven by the market and time.
“Post-DeFi era” of Swap
High yield, high risk and rapid changes in hot spots are the obvious features of this DeFi party. At present, there is no shortage of “Swap” as new projects keep pouring out of the market. In such a “Post-DeFi era”, projects tend to diversify and investors return to be rational.
By the entering of NFT, will it continue DeFi’s mining myth?
Although there is a lot of outcry in the market, there are still different voices that NFT’s current infrastructure, user scale and funding scale still cannot meet the requirements of the outbreak, and NFT’s funding scale and small user population are still a problem. Though NFT can rely on “liquidity mining” to bring in speculators quickly, it remains to be seen whether it can meet the market’s demand for “universal benefit” in the long term.
The high liquidity offered by Defi, and the high-value capture demonstrated by NFT, are still in the exploratory stage, but in a way NFT still opens up new ideas for DeFi. On the connection between NFT and DeFi, Richard, cocos-BCx co-founder, holds that the core value of DeFi’s combination with NFT is whether NFT can be used to generate more assets. In DeFi’s usage scenario, whether mortgage, loan or pawn, they are all very suitable for NFT assets.
In any case, the positive view from the community remains that whether NFT and DeFi can succeed in marriage or not, DeFi will continue to fulfill its historical destiny in the long run.
Article from Blocklike/Translated by Yang(Milian Tech)