Analysis and thinking on the encryption business model

Author: YettaS

I have roughly sorted out my thoughts on various types of Fi, from DeFi to CeDeFi to PayFi, as well as the StableCoin that runs through them. Everyone is welcome to discuss.

I classify current business models into four categories.:

1.Focus on on-chain revenue, whose income comes from fee sharing. This is actually the keyword of the previous cycle. For example, the DeFi three-piece set earns income by providing financial venues. The biggest innovation of this cycle appears in Pendle. I think such opportunities are becoming less and less, unless there is a delivery-centric level innovation.

2.Focus on on-chain and off-chain revenue arbitrage, whose income comes from product fees. This model is the mainstream of this cycle. Ondo Finance brings RWA income to the chain; Ethena Labs brings DN income strategy to the chain; BounceBit brings many BTC cedeFi strategies to the chain, all with the same logic. The competition in this track is now very homogeneous and tired.

3.Focus on on-chain liquidityThe classic example here is Sun Ge’s TRC20-USDT. At that time, people had not yet seen the huge opportunities of stablecoins on the chain. ETH conversion to U was expensive and slow, while Tron was cheap and fast. Sun Ge immediately began to subsidize the market on a large scale, spending hundreds of millions of yuan (of course from Tron node income) to subsidize TRC20-USDT.exchangeDeposit and withdrawal, anyone who deposited and withdrawn at that time could basically enjoy 16%-30% of income, so we have nowXiaobai NavigationI have seen that Tron has a revenue of nearly $1.5b a year. I think there is an opportunity here, but we need to find the place where the liquidity on the chain is split. For example, Noble is an asset issuance chain, and now it mainly helps USDC to be issued on various appchains.

Recommended reading:What is the origin of TRC20-USDT of the attacking TRON?

4.Focus on on-chain and off-chain liquidity and financiality, which covers a wide range of things, including the deposit and withdrawal system such as USDT/USDC and the PayFi mentioned by SolanaLily Liu. Its core is to integrate payment and borrowing, and use the efficiency of the chain to increase the capital rate and reduce the cost of funds off the chain. This requires connecting and integrating a large number of real off-chain needs, which is whyDoveyWanCNThey say that unless you have "fought in the Internet or mutual finance battles, or have been familiar with cross-border e-commerce/drop shipping, in short, have dealt with global cash flow," the know-how of Web2 required here is far beyond what we at Native Crypto have been able to achieve in the past.

My thoughts:

1. The difficulty and narrative of these four types of models increase in sequence. The market has reached the stage of competition between the third and fourth types, which can be differentiated and have a high moat;

2. This market has been thoroughly educated by DeFi, and the innovation of Tokenomics alone cannot make it work or can only be played for a short time;

3. The market will only give the highest premium to the first place. Become the first place in the market like Ondo and Ethena, and don’t get involved in homogeneous competition;

4. Understand what is being arbitrage? Demand, technology or regulation, why couldn’t these happen in the past? For example, Latin American payments don’t accept Crypto, it’s definitely not technology;

5. The personal skills and resource requirements required by founders in each model are completely different. Founder Product Fit is the first priority for investors.

There are actually plenty of opportunities in this column. I hope the founders can broaden their horizons and do something different.

Friends who are interested in various Fi during 2049 are welcome to make an appointment!

The article comes from the Internet:Analysis and thinking on the encryption business model

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