Cryptomustar
Friday, May 20, 2022
  • Home
  • Altcoin
  • Bitcoin
  • Ethereum
  • Litecoin
  • Cryptocurrency
  • Blockchain
  • Regulation
  • Market
  • Prices
  • ICO
No Result
View All Result
  • Home
  • Altcoin
  • Bitcoin
  • Ethereum
  • Litecoin
  • Cryptocurrency
  • Blockchain
  • Regulation
  • Market
  • Prices
  • ICO
No Result
View All Result
Cryptomustar
No Result
View All Result
Home Market

How the DeFi Craze Made Its Way to China

by admin
October 15, 2020
in Market
0
How the DeFi Craze Made Its Way to China
0
SHARES
8
VIEWS
Share on FacebookShare on Twitter


When Nervos co-founder Guoning Lü saw a few China-based decentralized finance (DeFi) projects raise millions of dollars in a matter of hours, he knew the DeFi craze had officially reached the East.  

One project saw its total value locked (TVL) climb from $2.9 million to $14.4 million within two weeks after launching in August, before tripling three days later. The project called DODO, a liquidity provider founded by a Chinese development team, now has total value locked (TVL) – the total amount of assets staked in the protocol – of over $100 million, ranking 16th in DeFi Pulse as of press time.

DeFi is one of the hottest trends in the crypto world. So it’s not surprising the DeFi craze would find its way to China, which has an active cryptocurrency community despite government restrictions on trading and token sales. 

Chinese startups are playing a crucial role in the DeFi boom with highly localized and nimble adaptations of western projects as well as a marketing apparatus that is laser-focused on Chinese crypto communities, industry watchers say. 

From July through the middle of October, the number of searches for DeFi has soared on China’s social media platform WeChat. It has almost doubled during this period of time, according to WeChat Index, a data analysis tool that includes keyword searches, articles and forwards in WeChat moments. 

The term “DeFi” has received an inordinate amount of interest over the past two months.
(CoinDesk Research)

Major Defi projects, such as NEST, DForce and YFII, all with huge Chinese followings, have raised millions of dollars in the span of a few weeks and topped the TVL ranking on DeFi Pulse.

Not just copycats

China often has a reputation for adapting western products to local markets, or in some cases mimicking them. Compound alleged China-based DForce “stole” its code and Chinese liquidity mining site YFII cloned another foreign-based project, Yearn.Finance (YFI).

“Admittedly, many Chinese projects copy code from western DeFi pioneers such as the liquidity leader Yearn.Finance and decentralized exchange UniSwap,” Nervos’ Lü said. “However, Chinese companies are making innovations in localizing the original products and that is what makes DeFi products more popular in the country.” 

DeFi-friendly crypto wallets, centralized exchanges’ financing schemes for retail investors and targeted marketing strategies are among the localized products and services that Chinese startups have created to pave the way for DeFi inside the country.   

Chinese DeFi startups reach many crypto investors through wallets. 

“Not many people know how to use DeFi applications directly given its complex technical features and financial schemes,” Lü said. “However, many Chinese crypto wallets simplify and optimize processes for users to participate in DeFi projects.” 

four-defi-asset_v4

DeFi projects received major boosts this year, over the past few months in particular.
(CoinDesk Research)

Hangzhou-based imToken, for example, is one of the most popular mobile wallets in China. It has a built-in decentralized exchange (DEX), Tokenlon, enabling its users to trade tokens from different dapps on Ethereum, EOS and TRON within the wallet. 

While the wallet is natively integrated with blockchain protocol Kyber, the in-wallet DEX is built on top of the code from another DeFi project 0x. Founded in 2016, imToken secured $10 million through a Series A round led by IDG Capital two years ago.  

While some U.S. counterparts may also provide similar services, such wallets have emerged to be one of the major channels for Chinese investors to participate in DeFi, Lü said

Trading costs are another hurdle for retail investors to participate in DeFi. As most DeFi dapps run on Ethereum, transaction fees on the blockchain have become prohibitively high for smaller investors.

Centralized exchanges, which are major players behind the Chinese DeFi scene, have a solution for that, said Jason Wu, CEO of decentralized crypto lending startup DeFiner. 

“Centralized exchanges are pooling money from retail inventors to invest in DeFi so that millions of Chinese smaller investors can afford the high gas fees in the projects,” Wu said. In turn, these centralized exchanges increase trading volume and earn more fees by listing and trading the native governance tokens of such DeFi projects on their platform. 

Spreading the word

Community building and marketing strategies are crucial to the success of a DeFi project. In China, key opinion leaders (KOLs), in-person meetups and online Ask Me Anything (AMA) gatherings are all key parts of the crypto marketing apparatus, Jason Wu said. 

“The crypto space, including DeFi, is very KOL-driven,” said Sharlyn Wu, chief investment officer at Huobi DeFi Labs. “For a new project coming to the market, you need a number of KOL to support it and the KOL will influence a bigger group of audience to get into the projects.” 

Many of the KOLs in China understand English, and they translate and process the western thought leaders’ content to inform the Chinese crypto community, according to Jason Wu. 

There are three tiers of KOLs, says Sharlyn Wu. “The KOLs in tier 1 dig into white papers, code and the formula of economic models and the tier 2 KOLs basically translate to the Chinese community. Tier 3 KOLs are the ones who move things to the border retail market.” 

These Chinese influencers tend to be researchers, venture capitalists and crypto journalists, Sharlyn Wu said. 

Now, in-person meetings and conferences are coming back as China appears to have contained the spread of coronavirus. DeFi-themed gatherings have increased recently in China, Jason Wu said. 

“Last week, I attended three conferences across three Chinese cities. Some of the conferences held more than 1,000 participants,” said Jason Wu, who has launched his own DeFi project recently. “There are retail investors, but most people there are business development managers from centralized exchanges, DeFi startups and crypto media members.” 

Wu said Chinese KOLs tend not to use Weibo, the Chinese version of Twitter, as their main social platform. He noted there are many limitations on topics you can post about, such as direct trading between fiat and cryptocurrencies.

WeChat is also where most online meetings take place in the crypto community. Through Ask Me Anythings (AMAs), crypto investors ask Chinese KOLs about new DeFi products and the latest industry trends.

According to Jason Wu, Chinese crypto media also plays an important role in informing people of new DeFi projects, in addition to organizing conferences. They tend to focus on the technical side of the crypto business since the Chinese central bank restricts the promotion of crypto trading.

Deep pockets

“Capital in crypto is always on the lookout for returns, and DeFi has offered a great opportunity.”    Lü said. “When liquidity mining took off earlier this year, the capital started not only flowing into but concentrated in the DeFi space.” 

The capital that backs Chinese DeFi projects might not come from new capital but two existing forces that have exited in the Chinese crypto industry for a long time, he said.

On the one hand are the industrialists who have invested in infrastructure and ecosystem, who share dividends as the whole space grows, he says. On the other are institutional investors that tend to be more speculative and prioritize short-term gains. 

China’s deep pockets in crypto can be traced back to its crypto mining industry with miner maker giants such as Bitmain and MicroBT. 

China-originated centralized exchanges such as Huobi, KuCoin and Binance have also been a driving force behind many crypto crazes in China.

However, helping DEX upstarts could become a problem  for China-originated centralized exchanges such as Binance. In a recent interview with CoinDesk, Binance CEO Changpeng Zhao said centralized exchanges might have to share the crypto trading market with DEXs. 

Binance, Huobi and Kucoin, three exchange giants birthed in China, have made efforts to get into the DeFi space. Binance recently rolled out its patented blockchain, where developers can build DeFi applications on the platform, while Huobi launched DeFi Labs to back DeFi hopefuls. All three exchanges have listed DeFi assets such as governance tokens for trading. 

The first wave that hit China’s DeFi scene is casino-style gambling, Sharlyn Wu said, noting there has been too much speculation in the market. But this could change. And China may not always be in the position of following the West. 

“Even though Asia was initially behind in the first wave of the DeFi from the U.S., I think developers in China will lead DeFi the way they have led CeFi,” Sharlyn Wu said.  



Source link

RELATED POSTS

First a Hum and Then a Bang –Niagara Falls Residents Forced to Reckon With Crypto Mining

Bitcoin Returns Above $30K; Resistance at $35K

Tags: ChinaCrazeDeFi
ShareTweetShare

Related Posts

First a Hum and Then a Bang –Niagara Falls Residents Forced to Reckon With Crypto Mining

First a Hum and Then a Bang –Niagara Falls Residents Forced to Reckon With Crypto Mining

by admin
May 20, 2022
0

Most residents near the Blockfusion site told CoinDesk they had heard the explosion but weren't too alarmed at the...

Bitcoin Returns Above $30K; Resistance at $35K

Bitcoin Returns Above $30K; Resistance at $35K

by admin
May 20, 2022
0

Lower support is seen at the 200-week moving average, which is currently at $21,954. A break below that level...

There Was No Terra ‘Attack’

There Was No Terra ‘Attack’

by admin
May 20, 2022
0

There’s a natural impulse to want to protect people who might not understand those risks. At the same time,...

Dai Creator Rune Christensen on Terra's Collapse

Dai Creator Rune Christensen on Terra's Collapse

by admin
May 20, 2022
0

The MakerDAO founder wasn’t in the mood to say “I told you so,” following Terra’s stablecoin collapse, on CoinDesk...

Terra’s LUNA Has Dropped 99.7% in Under a Week. That’s Good for UST

It’s Not Just LUNA. Terra’s DeFi Apps Have Hemorrhaged $28B

by admin
May 20, 2022
0

As widely reported, much of the lost value was on the lending protocol Anchor, which took the biggest hit,...

POPULAR NEWS

4 Cryptocurrency that Blow Bitcoin Out of the Water

4 Cryptocurrency that Blow Bitcoin Out of the Water

September 25, 2020
Memoriae – Next Generation of Decentralized Cloud Storage Based on Blockchain

Memoriae – Next Generation of Decentralized Cloud Storage Based on Blockchain

July 1, 2021
Apollo CBDC: The CBDC Platform that can Power Economies

Apollo CBDC: The CBDC Platform that can Power Economies

October 6, 2020
Stratus: The Most Feature Rich Social Media Network

Stratus: The Most Feature Rich Social Media Network

September 9, 2020
Binance Coin (BNB) erupts above $270 as the whole Smart Chain ecosystem soars

Binance Coin (BNB) erupts above $270 as the whole Smart Chain ecosystem soars

February 19, 2021

EDITOR'S PICK

Bitcoin Likely to See Price Discovery in 2021; Analysts Foresee Local Top

Recent Bitcoin Transaction Shines Light on Institutional Accumulation Trend

December 23, 2020
Police in China’s Zunyi City Bust a $124M Money Laundering Scam

Police in China’s Zunyi City Bust a $124M Money Laundering Scam

October 13, 2021
Crypto Unicorn Amber Group Acquires Japanese Exchange DeCurret Inc.

Crypto Unicorn Amber Group Acquires Japanese Exchange DeCurret Inc.

February 1, 2022
Bitcoin addresses sending coins to exchange plummets to new low

Bitcoin addresses sending coins to exchange plummets to new low

December 14, 2021

About

We publish a comprehensive news feed covering all news relevant to the crypto user, covering main industry news, politics and regulation as well as consumer-level “news you can use” (practical stuff), including handy DIY tips, links to useful tools, unbiased reviews and opinions revolving around cryptocurrency. Simple logic and real-world examples are preferred before technical jargon and personal rants.

Follow us

Categories

  • Altcoin
  • Bitcoin
  • Blockchain
  • Cryptocurrency
  • Ethereum
  • Litecoin
  • Market
  • Press Release
  • Regulation
  • Uncategorized

Recent Posts

  • A Noble Launch Gets Underway
  • First a Hum and Then a Bang –Niagara Falls Residents Forced to Reckon With Crypto Mining
  • Grow Marketing Company Supplies Entrepreneurs with Practical Business Information
  • Bitcoin Returns Above $30K; Resistance at $35K
  • About Us
  • Privacy Policy
  • Contact Us

© 2020 cryptomustar.com

No Result
View All Result
  • Home
  • Altcoin
  • Bitcoin
  • Ethereum
  • Litecoin
  • Cryptocurrency
  • Blockchain
  • Regulation
  • Market
  • Prices
  • ICO

© 2020 cryptomustar.com

  • YAM v2YAM v2(YAMV2)$4.70-1.41%
  • yfBetayfBeta(YFBETA)$4.27-0.10%
  • IDLEIDLE(IDLE)$1.44-12.39%
  • WPP TokenWPP Token(WPP)$0.006826-3.49%
  • DSLA ProtocolDSLA Protocol(DSLA)$0.003681-6.85%
  • lympoLympo(LYM)$0.004392-4.43%
  • Werewolf CoinWerewolf Coin(WWC)$0.098082-2.58%
  • PolkaBridgePolkaBridge(PBR)$0.439784-6.92%
  • Dev ProtocolDev Protocol(DEV)$1.76-16.14%
  • EvidenZEvidenZ(BCDT)$0.122949-3.85%