DeFi 2.0 Movement Ushers in a New Wave of Innovative Projects

VYSYN Ventures Weekly Insights #86: The new generation of DeFi is poised to push the current landscape to new heights

Overview of the current DeFi 1.0 landscape

DeFi 1.0 is the early infrastructure that makes up the current DeFi ecosystem. It is on this solid framework built by DeFi pioneers that innovations within the space are launched. Protocols like Uniswap, Bancor, Aave, Compound, MakerDAO, and more have provided users access to reliable exchanges, frictionless lending/borrowing, and stable pegged currencies. These DeFi pioneers raised the industry’s first “money LEGOs”, including liquidity provider (LP) tokens and decentralized stablecoins, which have set the stage for further DeFi evolution.

Protocol-owned liquidity platforms

A massive DeFi 1.0 problem is the loss of platform liquidity once investors exit the project, typically, the project gains liquidity after an initial rush that pumps token values high. At this point, speculators sell their token and exit, leaving the platform with low liquidity. To counter this, several new-generation DeFi protocols have adopted the protocol-owned liquidity mechanism. Unlike existing systems where investors can remove liquidity by exiting in droves at any time, the protocol owns the LP tokens.

Self-repaying loans on Alchemix

Another innovation that DeFi 2.0 protocols are introducing is self-paying loans. Self-paying loans are a new class of loans that allow users to borrow digital assets on the back of the future yields of their collateral. DeFi traders deposit crypto collateral and borrow a synthetic version of the underlying asset while the locked collateral generates yields that are used to pay off the debt.

Collateralized stablecoin lending on Abracadabra.money

DeFi lending platform, Abracadabra, seeks to add value to digital assets while improving capital utilization. Abracadabra is intended to be an improvement over existing DeFi 1.0 lending platforms like MakerDAO. Abracadabra’s collateralized stablecoin loans help investors leverage their capital by converting their interest-bearing assets into liquidity.

The evolution continues

With the rise of these new solutions, the DeFi economy is rapidly becoming more user-friendly and accessible to mainstream users. Developers are becoming more creative in building protocols that will maximize capital efficiency, profit, decentralization, and everything in between.

About VYSYN Ventures

VYSYN Ventures is a longstanding venture capital company that specializes in funding and supporting disruptive startups in the blockchain and cryptocurrency industry. We have provided early-stage support to several projects that have grown USD market capitalizations of hundreds of millions and even billions. Our incubation program focuses on providing capital allocation, versatile marketing support, and tech assistance.

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VYSYN VENTURES

VYSYN VENTURES is a premiere venture capital firm focused exclusively on blockchain technology and the digital currency ecosystem. www.vysyn.io / hello@vysyn.io