Niu Fengxuan, founder of DappReview: Breaking down the hot spots of the DApp industry in 2020, such as NFT and DeFi
This article is reproduced with permission from Mars Finance.
At 20 o'clock on March 26th, the 8th issue of the special edition of Mars Open Class "Mars Guests will start speaking in March" officially opened in the Mars community. The theme of this issue is "The Hot Spots of the DApp Industry in 2020". The editor-in-chief of Mars Finance and Economics will have an in-depth conversation with DappReview founder Niu Fengxuan.
In this public class, Niu Fengxuan started from blockchain games, introduced the current development status of blockchain games, and interpreted the hot spots in the DApp industry such as NFT and DeFi. Mars Finance APP has compiled 10 core points:
1. Last year, the total DApp transaction volume reached 23 billion U.S. dollars. Compared with the 5 billion U.S. dollars in 2018, this number has more than quadrupled. Most of the increase comes from the explosion of DeFi projects.
2. As the first large-scale application of smart contract platform, Ethereum's leading position in the DApp field is still difficult to shake. At present, the transaction volume of the three major public chains (Ethereum, TRON, EOS) accounts for more than 98.55% of the DApp market. Form an oligopoly situation.
3. In the future, terminal games with integrated blockchain will be the general trend. In a few years, we are likely to witness the advent of an AAA-level blockchain game.
4. In addition to collections and game props, the application of NFT can also be used in the field of art, tickets, and virtual storage of physical objects.
5. Different from traditional virtual items, NFT has many characteristics endowed by blockchain, which are mainly reflected in standardization, verifiable scarcity, programmability and tradability.
6. With the involvement of well-known IP and large companies, NFT has a great opportunity to become one of the hot spots this year, allowing users outside the circle to understand and experience the NFT gameplay supported by blockchain.
7. More than 90% of all on-chain transactions of Ethereum-based DApps come from DeFi-related applications: From a user perspective, DeFi has been the growth driver of Ethereum in 2019.
8. In 2020, we are looking forward to seeing some new trends in the DeFi field, such as Maker's DSR integration, loan solutions other than over-collateralization, and the increase of one-stop platforms.
9. The continuous development and growth of DeFi will not only affect the development of other DApps, but will also drive the overall growth of DApps, which opens up a new path for future DApp development.
10. The first thing killer apps need is policy support, otherwise they will die like Libra. Under this premise, developers need to capture a "burst point" that only the blockchain can do to achieve a Killer blockchain application.
Hello, everyone, I am Niu Fengxuan of DappReview. Thank you for the invitation of the guests of Mars. Today I will share with you what interesting hotspots and trends in the DApp ecosystem in 2020.
The following is the full text of the sharing (with community Q&A):
First, let's briefly review some data from last year. According to our statistics, last year's DApp transaction volume reached 23 billion U.S. dollars. Compared with the 5 billion U.S. dollars in 2018, this number has more than quadrupled. Most of the increase comes from the explosion of DeFi projects, mainly lending platforms like Maker, Compound, and decentralized transaction scenarios such as Kyber, Uniswap, and Tokenlon. The game category continued to grow, and the gambling category declined slightly as users' interest in the concept of coin mining and dividends decreased.
As the first large-scale application of smart contract platform, Ethereum's leading position in the DApp field is still difficult to shake. In 2018, TRON and EOS, which launched their mainnets in succession, also maintained a good momentum of development. At present, the transaction volume of these three public chains accounts for more than 98.55% of the DApp market, forming an oligopoly. Starting in 2019, a series of newly launched public chains have successively developed the DApp ecosystem. In addition to Ethereum, TRON, and EOS, DappReview also tracked another 9 public chains, which contributed a total of 354 DApps.
Let's talk about each subdivided section below.
Let me talk about games first. In 2018, most of the blockchain games were criticized for lack of gameplay, simple gameplay, and low completion. After nearly two years of development, the overall quality of blockchain games has been significantly improved. The most direct manifestation is that there are more and more cross-platform games. In 2018, almost all DApps only had a web version, and in 2019, the number of game DApps that launched native mobile programs began to increase. Many teams have also launched computer client versions, and blockchain games represented by Light Trail Rush have even logged on to the Steam game platform.
Most web-based blockchain games are limited to role-playing, card, collection and other types, while the types of blockchain games on mobile and computer terminals are more abundant, including first-person shooting, real-time strategy, role-playing, and massively multiplayer online , Racing, fighting and other game types.
Compared with page games, terminal games have obvious advantages, such as fast speed, high picture quality, and diverse gameplay. In the future, terminal games with integrated blockchain will be the general trend, and within a few years we are likely to witness the advent of an AAA-level blockchain game.
In the capital market, games are also one of the investment directions that have attracted much attention. From last year to this year, many excellent blockchain game teams have won the favor of capital and obtained large amounts of financing.
For some recent large-scale financing in the blockchain game industry, we have made a table:
Last week, the game The Sandbox, a blockchain sandbox game, also just disclosed a financing of 2 million US dollars last year. The investors also include the famous traditional game maker SquareEnix.
Most of these teams use Ethereum as the main position for blockchain game development. How should the game be integrated with the blockchain? The answers given by the development team are not all the same. Some teams choose to put the game's gameplay mechanism on the chain and interact with users in the form of smart contracts, such as CryptoKitties, Axie Infinity, MyCryptoHero, etc.
Under this scheme, limited by the performance of Ethereum and the threshold of the blockchain, the user experience is poor compared with traditional games, and only users familiar with the blockchain can easily get started. In order to ensure the smooth experience of the game, other game teams usually only put the assets in the game on the chain in the form of NFT (Non-Fungible Token), and the core gameplay rules of the game are all placed off-chain. Such as GodsUnchained, SkyWeaver, etc.
Most of the games mentioned above will basically be launched or open for testing this year. We are very looking forward to the performance of these high-quality game DApps. DappReview will continue to follow up and report on related developments.
Let's talk about NFT.
In fact, when it comes to NFT, most people may think of crypto cats or game props. In fact, in addition to collectibles and game props, NFT applications can also be used in the field of art, tickets, and virtual storage of physical objects. certificate. The NFT conference held in New York in February this year issued NFT tickets that can be used to participate in the conference, and there are also a few particularly Chinese-style versions.
In the crypto art circle, many artists are dedicated to creating and promoting artworks using NFT as the medium. There have also been several websites surrounding crypto art transactions, including SuperRare, KnownOrigin, and so on. In addition to ordinary artworks that we can imagine, there are also people who use the characteristics of blockchain to explore "programmable artworks" very innovatively. Tokenizing and trading artworks is not a new topic, but if the appearance of artworks can change over time, feedback can be given to the owner's operations, and data can even be obtained from the outside world, what will it be like? Kind of experience?
Let's take a look at a work:
This work "First Supper" was auctioned by MetaKovan at the price of 103.4 ETH in early March, which was equivalent to about RMB 160,000 at the time. So what's the difference in this work?
In fact, it is composed of 22 layers and 13 artists participated in the design. And each layer is designed with some parameters. The owner of the layer can change the state of the layer by initiating a transaction to the smart contract. Some of the parameters of the layer are colors, some are actions of characters, and so on. When any layer is changed, the main canvas "First Supper" will also change accordingly. This is a way of expression of the so-called "programmable artwork".
In one hour, we observed four changes in the main canvas (above). According to our rough estimate, most layers have at least 3 styles, and a total of 22 layers are combined. Then the main canvas has at least 3 to the 22 power, that is, at least 31.3 billion different display forms! If one layer changes every second, it would take nearly 1,000 years to traverse more than 31.3 billion different main canvas forms without repeating it.
The realization of the entire work is also based on smart contracts and ipfs storage. This idea of turning into a work of art is very interesting.
In addition, we can see some large companies testing the waters on NFT. Last year, the NBA officially reached a contract with the team behind CryptoKitties DapperLabs. Dapper Labs will make a game NBA Topshots around NBA stars and release the NFT with NBA IP. The game will be launched within this year. UFC and Dapper Labs also released a collection of NFTs this year.
Different from traditional virtual items, NFT has many characteristics endowed by blockchain. Let's pick a few points that we think are more important to talk about:
1. Standardization. At present, several NFT standards are widely used and recognized by project parties in the industry, such as ERC721 and ERC1155. Standardization means that service providers surrounding this ecosystem can be compatible with new products in a more convenient way. For example, NFT exchanges.
2. The scarcity that can be verified. When deploying smart contracts, developers can set a hard cap to control the number of NFTs issued.
3. Programmability. Programmable art is mentioned in the above example. The same can also be used with collectibles and game props. Through smart contracts, NFTs can have interesting functions such as forging, pledge, decomposition and synthesis, etc. Think about the space is very large.
4. Tradeability. Under the same standard, NFT can easily complete exchanges and transactions between people in various scenarios. At present, the secondary market transaction volume of NFT is about 3 million US dollars per month. .
With the involvement of well-known IP and large companies, NFT has a great opportunity to become one of the hot spots this year, allowing users outside the circle to understand and experience the NFT gameplay supported by blockchain.
Let's briefly talk about DeFi. I saw that the blue fox teacher has already introduced several projects in the DeFi ecosystem in great detail a few days ago, and the content is very comprehensive. I won't repeat the introduction, and I recommend everyone to take a look at the issue of the Mars guest appointment-Teacher Blue Fox. Let me introduce it from a broader perspective.
As shown in the figure above, more than 90% of all on-chain transactions of Ethereum-based DApps come from DeFi-related applications: From a user perspective, DeFi has been the growth driver of Ethereum in 2019. Although DeFi represents only a small part of the crypto circle, it is one of the most dynamic areas.
In 2020, we are looking forward to seeing some new trends, such as:
Maker's DSR integration: Although Maker's dominance may be challenged, it will still be the backbone of the DeFi field. After a major update at the end of last year, Maker brought DSR (Dai Savings Rate) integration and multi-collateral Dai. ETH and BAT became the first mortgage assets of multi-collateral Dai. At the same time, DSR may become one of the most important interest rates in the DeFi field. Recently USDC will also become Maker's mortgageable asset.
Lending solutions other than over-collateralization: At present, most of the current lending products still require users to mortgage excess encrypted assets in order to lend another asset, such as stable currency. This method does not help those who do not have much encrypted assets. People. So we are discussing some early solutions other than over-collateralization. They include: social fund recovery, credit scoring system, zero identification certificate, credit market DAO and so on.
We also expect that one day DeFi projects can be like credit cards, allowing users to borrow expected future cash flows as promises. At the beginning of this year, the first new loan product that does not require over-collateralization was launched, which is the lightning loan that you may have heard of. But flash loans also triggered a series of "hacking" incidents through market manipulation arbitrage in February.
Increase of one-stop platforms: Platforms such as Zerion and InstaDApp are committed to lowering the barriers to use of DeFi by creating one-stop DeFi platforms, and integrate multiple Defi platforms under the same UI. At the same time, protocol aggregators such as DeFiZap and Dex.ag will also attract some users because they allow users to trade with the lowest gas fee, and because they integrate multiple platforms, users can easily put eggs in different In the basket.
Other types of DApps: such as gambling and Ponzi funds, so I won't introduce them here. With the passage of time, we have seen that the entire DApp has entered a sound development track, innovative ideas continue to appear, and the threshold for users is gradually lowering. In 2020, we look forward to seeing the explosion and large-scale applications in the fields of gaming, finance, NFT, etc.
Community Q&A
Fierce Snake: When people in the circle talk about DApps, they often think of DappReview and you. What I am particularly curious about is what role does DApp play in the crypto world in your eyes? Looking back at the development of the DApp industry in recent years, which keywords would you use to summarize?
Niu Fengxuan: In the long run, DApp is a channel for the large-scale implementation of blockchain to C-end users. We have seen so many public chains, so many infrastructures, so many middleware and service providers, and the lack of one link is consumers. Consumers need products that can solve problems, and only DApps that meet user needs can act as a bridge between blockchain technology and consumers.
If you use a few key words to describe it, savage development, a hundred schools of thought, and continuous innovation. 2018 was a period of barbaric growth. There were a variety of Pond's games, as well as crude products that copied CryptoKitties. But at that time, there were already a group of capable teams that began to work hard. Until 2019, we saw games, financial Various DApps of category, gambling category, and NFT category have begun to have a significant improvement, and more and more innovative products have appeared, such as lightning loans, programmable artworks and so on.
Fierce Snake: DeFi was originally a branch of the DApp ecosystem, but since 2019, the limelight has clearly overwhelmed DApp and is regarded as the next flashpoint. In contrast, DApps are often associated with gambling, and participants are more speculative. Is it because our cognition has deviated, or is DApp really declining? What does the prosperity of DeFi mean for the DApp ecosystem?
Niu Fengxuan: In terms of definition, DeFi is actually the application of blockchain technology in the field of financial tools. It is completely reasonable that the prosperity of the industry first develops from economic architecture. The prosperity of DeFi itself is the prosperity of DApps. They are definitely not separate. Many DeFis such as Kyber and MakerDao are seeking to combine with game DApps to divert each other. Axie Infinity has previously cooperated with Maker, Kyber, and Uniswap. .
In the past, everyone used to associate DApps with gambling. This is indeed because from the second half of 2018 to the first half of 2019, gambling DApps emerged in an endless stream, and they did occupy most of the transaction share, exceeding 80%. And last year, DeFi became a DApp branch with a larger transaction volume of currency gambling. The continuous development and growth of DeFi will not only affect the development of other DApps, but will also drive the overall growth of DApps, which opens a new path for future DApp development.
Fierce Snake: In August last year, you announced a set of data at the Global Blockchain Game Ecological Conference (GBGEC): The number of DApps with a life cycle of more than two months accounted for only 20-30% of the total, and the life cycle was two DApps within a week accounted for 30%. Will this situation improve in 2020? When we evaluate the quality of a DApp, in addition to looking at its life cycle, what factors should we consider?
Niu Fengxuan: The life cycle of an ordinary mobile game is generally within 6 months. The quality of DApp and the number of DApp users cannot currently be compared with traditional apps. Short life cycle is a normal phenomenon. The life cycle will grow with the growth of DApp quality, the ability of the project party, and the number of users.
In 2020, the life cycle of DApp will definitely grow, but this is a slow process. Let's take a game DApp as an example. In addition to the life cycle, the size of the player community (Telegram, Discord, Twitter, Line group) is a very critical indicator. DApps with large communities will have relative DAU, transaction volume, and life cycle. good performance.
Fierce Snake: I remember that since 2018, everyone has been calling for killer apps, but two years later, the top DApps on DappReview have only a few thousand daily lives. It can be speculated that the vast majority of DApp players come from the currency circle, which actually limits the DApp ecology to a small range and cannot really break out. In your opinion, how should public chain and DApp developers attract more off-site users to participate?
Niu Fengxuan: First of all, this is a big and difficult problem in itself. To attract off-site users is to attract 7 billion people around the world. This is the goal of all companies in the world. Ordinary DApps attracting off-site users means that DApps have to directly compete with super giants such as Ali, Tencent, FB, and Google. The currency circle is not a small circle. MetaMask alone has more than 1 million downloads. As long as DApp developers can attract enough users in the circle, they will be very successful, because the payment rate and ability of users in the currency circle far exceed other users. , CryptoKitties, Wink, MyCryptoHero are all good examples.
In addition, to paraphrase the sentence "Blockchain is borderless, but blockchain projects have it." Killer applications first need policy support, otherwise they will die like Libra. Under this premise, developers need Capturing a "burst point" requirement that only the blockchain can do can make a killer blockchain application.
Finally, we usually use To C's DApp, but in fact, the blockchain has grown silently in the direction of To B. The "big four", banks and other institutions are gradually using blockchain technology. We are still optimistic about this industry. .
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