DET not only focuses on decentralized lending, but also for other parallel chain transactions and asset management applications.

In 2009, the birth of Bitcoin made the whole world realize the potential of block chain. Block chain technology can ensure the transaction security of both parties without relying on third party supervision, that is, it can solve the trust problem.

With the continuous exploration of block chain technology in various industries, the combination of block chain and finance has a different luster. Block chain expands the ability boundary of financial business, especially the emergence of decentralized lending brings some positive impact to traditional finance. Below, let's look at the impact of decentralized lending and how to improve the financial industry.

Central lending of chicken feathers

In the traditional lending products, centralized lending is a kind of lending mode that aggregates private funds to people with capital needs. Early because the information is not transparent, the financing form is relatively new, has been the relevant regulatory authority heavy fist rectification. Among them are the following:

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Mortgage execution is difficult and high risk. P2P network loans are almost unsecured loans, and some KYC verification without wind control;

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Credit risk, bad debt rate is high. P2P the net loan platform inherent capital is small, difficult to undertake the large amount of guarantee, once there is a large loan problem, the bad debt rate is higher, and loan fraud and absconding cases have occurred repeatedly;

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Lack of effective regulatory means. P2P net loan because of the new financing means, the central bank and CBRC have no clear laws and regulations to effectively restrict.

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Decentralized lending VS centralized lending: addressing trust

Decentralized lending is the most important part of the DeFi. The holder's long-term interest in encrypted assets or short-term capital turnover demand will carry out mortgage lending of encrypted assets. Decentralized lending has the following advantages:

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Decentralization. In decentralized lending, all asset management demanders do not need any intermediary to do credit endorsement, can directly build the code "law ". Decentralized lending through intelligent contracts to enforce the rules, with "law" to replace the central organization;

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Transparent and fast. The decentralized lending platform uses intelligent contracts to ensure that the whole process is open and transparent, which is more convenient and fast than the centralized lending assets;

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execution and asset security. Anyone has access, no central control, and all execution is guaranteed by intelligent contracts; decentralized lending generally takes excess mortgages to ensure system security.

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DET ： stability first, ecological successor

The technical attributes of the block chain naturally match the lending products, and most of the decentralized lending in the market is based on Ethernet Square. DET is a public chain based on Substrate development and is committed to becoming an indispensable financial infrastructure for Web 3.0.DET can provide financial derivatives services such as lending, Swap、 asset management, wallets, among which lending is its core business.

DeFi value depression: lending

The traditional mortgage loan needs to carry on the credit qualification examination, the collateral auction and so on, the whole process is more complex, time-consuming and long.DET through the block chain characteristics to achieve cost savings, solve trust problems, reduce financial risks and other advantages.DET has also upgraded more advanced lending agreements based on the current mainstream decentralized lending products, including improved transaction efficiency, accurate exchange rate policies, fair arbiter decision-making mechanisms, and so on, as follows:

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Improve transaction efficiency. The Boca-based DET, can trade up to 1500 transactions per second, much higher than the Compound 20 transactions per second efficiency, greatly improve the user's lending experience;

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Accurate exchange rate policy.DET balance the real borrowing rate by using the capital utilization ratio (Utiliztion Rate), the net borrowing rate (borrow_rate_net) and the ideal borrowing rate (borrow_rate_optimal) to ensure that the exchange rate is not divorced from reality and can be trusted quickly;

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Diversified arbiter decision-making mechanisms. In addition to DET token holders can participate in major decisions, DET will also use external public arbitrators to participate in decision-making, to ensure autonomous governance, but also to consider the external rationality, reduce governance errors.

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Multi-parameter trading protocols to avoid malicious manipulation of the market

Although Uniswap and other liquid mining platforms provide incentives for participants, the trading agreement will have limitations, allowing some speculators to arbitrage the difference between the trading pool and the central exchange. Make other users lose impermanence. The analysis is as follows:

Uniswap flow pool on the A-ETH

known X*Y (X, Y are the number of mobile pool tokens, respectively)=k (k is a fixed constant), Uniswap set the Price A *X=Price ETH*Y①. The number A known tokens purchased is: X'-X, then need to pay Y-Y' ETH. So contemporary 1, PriceA/Price ETH=(Y-Y')/(X'-X), This is the transaction exchange rate of the decentralized platform.

Since the A-ETH trading pool Price A *X=Price ETH*Y, with the purchase of more tokens, the X will be less and less, the number of Y representing the ETH will be more and more, which directly increases the exchange price of A to the ETH, resulting in the problem of excessive slippage.

DET introduce more market factors based on Uniswap trading agreements, greatly avoiding the appearance of impermanence. The introduction factors are: the total number of basic tokens stored by the liquidity provider, the total number of quoted tokens stored by the liquidity provider, the current number of basic tokens in the pool, and the quotation in the current pool.By adding four asset weight parameters, the DET extends to the multidimensional angle to calculate the price, increases the depth in the form of parameters, avoids the large holder to cause the slip point to be excessive, and makes the exchange price more stable.

Comprehensive lending rates: market incentives, stable returns

Generally speaking, in the decentralized lending rate, the interest model is mainly set to meet the supply and demand of the project. The following are Compound and DET lending rate formulas and trends:

The most commonly used Compound (left) and DET (right) lending rate formulas

The most commonly used Compound (left) and DET (right) lending rate trend (coefficient is not a reference)

Both interest rate functions take the capital utilization ratio (Utiliztion Rate) as a horizontal coordinate, that is, the proportion of the loan amount to the total fund pool. The most commonly used Compound interest rate model is linear interest rate, while the DET interest rate model is polynomial interest rate. Compound interest rate can achieve rapid change in capital utilization at different stages, the disadvantage is that in the initial stage, low interest rate is difficult to stimulate the early market, and DET interest rate is in the process of gentle rise in the whole stage. Can adapt to different stages and play an incentive market role.

Judging from the area covered by both (interest ratio), DET total interest income will also be higher than Compound, and the interest income of participants will be higher.

With the help of Boca Ecology: Open Multi-Common Chain Value Exchange

Features of the Boca Substrate architecture: the ability to enable parallel chain projects in this ecology to highlight their own professional, that is, service professional vertical scene, but also to achieve interaction with other parallel chains.

DET not only focuses on the field of decentralized lending, but also provides value binding for other parallel chains of Boca ecology, provides more application operations for this ecology, and becomes a link of financial lending business. How DET the value?

DET value anchoring

we can split the potential market value of DET from macro market and service category.

Potential DeFi Lending Market Prospects: The Trillion Market

According to the people's Bank of China, as of December 2018, the balance of personal consumption loans of financial institutions in China was 37.79 trillion yuan, an increase of 19.90 yuan over the same period last year.

In China, personal consumer loans have achieved tens of trillion yuan. With the explosive growth of the Internet financial industry, the rapid development of the lending field and the strong flow attribute of encrypted currency, it can quickly penetrate into more fields, more countries, and strengthen the asset flow between countries and industries. The future, DET DeFi lending market prospects can not be underestimated.

Potential for horizontal and vertical expansion of services

DET also supports Swap、 asset management and other financial derivatives services in addition to lending (horizontal expansion). At the same time, more encrypted currency will be supported in the future, providing users with a variety of products and more flexible encrypted asset management (vertical expansion).

Horizontal expansion is DET from the product line expansion, vertical expansion is from the encryption asset support attributes. Meet more user needs and provide users with more asset classes, reducing the risk of single asset investment in Black Swan.

A research group headed by Zhang Xingzhou, Chinese Academy of Sciences, summed up Metcalfe's law of enterprise valuation formula: V=a*n^2. (V is the value of the network; a is the Metcalfe coefficient, related to industry attributes, similar to the price-earnings ratio; n is the number of nodes).DET expand from horizontal and vertical, once the coverage of nodes (n, users) can be rapidly developed to achieve positive benefits. At the same time, DET governance rules will make ecological benefits ultimately returned to the community.

DET outlook

Bitcoin broke through $30,000, ethernet 2.0, and the boca slot auction is about to open. This will not only set off a wave of block chain development, but also make the decentralized lending market surging.

And in this wave, decentralization lending is the first step after DET, diversification of services is the second step. Against the background of closed financing channels and lack of asset circulation channels, DeFi lending scale has gradually risen. We don't know when Web 3.0 will come, maybe it's on the way, DET're building a new generation of financial facilities in its way.