The article “Why does EOS keep hitting new lows?” thoroughly analyzes the reasons behind the continuous decline of EOS price. It has received significant affirmation and sparked intense discussions within the community. Despite some adjustments and responses from ENF regarding the recent new low of EOS price, there hasn’t been a clear response regarding the super DeFi solution (referred to as “super DeFi”), a “decentralized Binance” on the EOS native chain. The author believes that “super DeFi” has the potential for over a thousandfold growth and is currently the most optimal, fastest, and feasible solution for EOS to overcome its price predicament. It represents the best way for EOS to seize the next bull market and achieve a significant price breakthrough. Therefore, this article will further elaborate on three aspects, aiming to gather community consensus and collectively promote the implementation and effectiveness of the “super DeFi” solution, ultimately boosting the price of EOS.
Firstly, let’s briefly summarize several important events in the EOS community over the past month: 1) The price of EOS has continued to plummet from 0.9 to the 0.6 range, decline >30% and reaching a new historical low. 2) ENV transferred 22.7M EOS to the CEX Kraken and emphasized investing $20M in EVM and GameFi, with an initial investment of $5.4M. 3) The transparency issue of ENV also sparked in-depth discussions in the ENF Telegram group, and Yves addressed ENV’s behavior in a Fireside chat. 4) Yves published an open letter regarding layoffs and restructuring, prioritizing investment and development. 5) ENF announced the June BP meeting recap, stating that they have contacted 2 fund managers, are planning to invest in 4 EOS community projects.
The above information confirms some of the author’s previous observations in the previous article and acknowledges that ENF has made some positive adjustments and feedback. However, regarding the core issue of boosting the price of EOS, there still isn’t a well-documented and definitive solution. Therefore, I’ll further present arguments for the “super DeFi” solution from the perspectives of users, assets, and safeguards, inviting further discussion and contributions.
1. Free the 3 Major Sources of EOS Users
The relatively low number of EOS accounts has always been one of the significant challenges faced by ecosystem projects. Firstly, as of June 19, 2023, 9:00 (UTC), EOS has a total of 5,959,803 accounts, which is only 2.53% of the 235,319,144 ETH accounts. If we deduct the approximately 1.4 million accounts created during the Pizza Hack event on December 8, 2021, there are actually only around 4.6 million accounts. Secondly, the number of holding accounts for EOS tokens (valid EOS accounts) is only 1,583,079, accounting for only 26.6% of the total accounts. Approximately 3/4 of EOS accounts do not hold EOS tokens. Based on my years of research on EOS, it is recommended to target the following three user groups for breakthroughs.
1) New Users: Removing the Biggest Barrier to Entry into the EOS Ecosystem
For new users, the high cognitive threshold for EOS accounts, which require resources such as CPU, NET, RAM, is a significant obstacle. The minimum cost of creating an EOS account is approximately $1, which is a high entry barrier. This barrier has been one of the key reasons for the low user count on EOS over the past five years. Although there are channels such as EOS Microloan that provide the option to create a free EOS account using a Telegram account and Wombat that offers the option to create a free EOS account using popular Web2 methods like Gmail and Twitter (figure below), these channels need further optimization in terms of user experience and have not received significant official promotion and support from ENF. When I was preparing to publish the article, I was glad to see that Yves also publicly acknowledged the issue of new users.
Currently, the number of Internet users is approximately 5.18 billion, with social media users accounting for 4.8 billion. Providing a seamless and frictionless registration experience for these users on EOS will bring a significant number of new users to the Web3 ecosystem. For example, if ENF can allocate funds specifically to address the issue of free registration for new users of EOS wallets and incentivize major EOS wallets and ecosystem DApps to support new user registrations, along with activities such as gifting NFT artworks, allowing new users to experience the benefits and fun of EOS for free before understanding its principles and considering paid registration, it is expected to attract more valid EOS users, significantly increase the number of EOS holders, and boost the token’s holdings.
2) ETH Users: EVM as the Crucial Bridge to EOS Native Chain
ETH and its L2 and EVM-based platforms have a large user base with cryptocurrency trading experience, making them potential high-quality users for EOS DeFi. The outstanding block time of 0.5 seconds on EOS serves as an excellent technical foundation to attract these users. There are various methods to convert ETH users to the EOS native chain. Taking DefiBOX as an example, if an interface is developed on EVM to share the use of the DefiBOX Swap protocol for liquidity depth, users can purchase EOS native assets on the EOS EVM. The diagram below illustrates the process of using EVM-based USDT to purchase EOS tokens on the native chain, with the entire transaction taking only 3 seconds. The only task required at present is to develop a shared interface on EVM.
With such a simple liquidity sharing solution, EOS can attract a large number of high-quality potential EVM traders. If these EVM users desire faster (0.5 seconds) and lower gas fee transactions, they can choose to complete transactions on DefiBOX and effortlessly convert into direct users of the EOS native chain. Uniswap had a trading volume of 524,000 in May 2023, representing a massive potential user base. The advantages of EOS “Super DeFi” can attract a significant wave of such traders.
3) CEX Users: Core Target User Group for EOS DeFi and Ecosystem
Binance had a revenue of $20 billion in 2021, and surpassed 30 million users in 2022 (figure below). Customers and assets on centralized exchanges (CEX) are also a core target user group for EOS DeFi. Based on the analysis in the previous article, EOS’s excellent performance allows EOS native chain DeFi to achieve performance comparable to Binance. Coupled with the unique advantages of DeFi over CEX, such as decentralization, no KYC, DAO governance, and increased transparency, EOS DeFi can be highly appealing to CEX users!
Promoting the value and knowledge of EOS through activities like Binance Simple Earn on CEX is an effective approach, but it has relatively weak financial stickiness. If CEX customers can be directly redirected to EOS DeFi, it will significantly enhance user stickiness and the amount of EOS tokens held. CEX users have high trading demand, and “Super Defi” can largely replace Binance’s spot trading, lending, margin trading, and wealth management services.
2. Maximizing the Three Major Sources of EOS Assets
Over the past five years, the tradable assets within the EOS ecosystem have been relatively limited. The TVL of EOS DeFi on Yield+ is only around $20 million. Additionally, more than 90% of the market capitalization within the EOS ecosystem is dominated by the EOS/USDT trading pair. The locked EOS quantity represents less than 1.5% of the circulating supply, and there is a lack of high market capitalization tokens on the EOS native chain. Even an EOS project like BOX, with a market capitalization of less than $4 million, is considered outstanding within the EOS ecosystem. Moreover, the cross-chain integration of BTC, ETH, and other assets through the Ptoken network faced potential security issues and had to be terminated. To address the issue of asset sources in EOS, here are three proposed solutions:
1) Leveraging the EVM Cross-Chain Bridge to Enable the Flow of All Cryptoes into the EOS Native Chain
Looking at the Uniswap liquidity pools, ETH and BTC are the two most important trading assets in DeFi (figure below), with market capitalizations that are approximately 300 times and 750 times larger than that of EOS, respectively. If the EVM can securely enable cross-chain integration of BTC and ETH into the EOS native chain, “Super DeFi” could attract over 10% of Uniswap’s TVL and increase EOS’s TVL by over 10 times, with trading volume growing by over 100 times. Considering the influx of stablecoins like USDC and other tokens, the variety and scale of tradable assets would experience exponential growth. This is why I mentioned that “the primary advantage of EOS EVM is that tokens can circulate on the EOS native chain” in the previous article. Therefore, the EVM should prioritize the development of cross-chain interoperability between tokens other than EOS, facilitating seamless integration between the EVM and the native chain.
If we further consider that the 7-day trading volume of ETH/USDT spot trading on Binance is approximately double the trading volume of ETH/USDC on Uniswap, and that the 7-day trading volume of EOS/USDT spot trading on Binance is approximately 40 times that of EOS/USDT trading on EOS DeFi, “Super Defi” still has at least a 1000-fold growth potential. Therefore, completing the development of the V3 protocol, leverage trading, perpetual contracts, one-sided liquidity provision, and other important protocols will bring a 100-fold increase in TVL and a 1000-fold increase in trading volume to EOS.
2) Increase investment in DeFi and foster native assets such as GameFi, NFTs, and Web3.
Looking at the top 100 tokens by market capitalization, almost only the market capitalizations of DeFi dApps can surpass the market capitalizations of many public chains. This includes Swap dApps represented by Uniswap, stablecoin categories represented by DAI, stablecoin governance tokens represented by MKR, lending categories represented by AAVE, and stablecoin Swap categories represented by Curve. Therefore, DeFi on EOS is the most valuable ecosystem project without a doubt. According to the data comparison from Dapp Radar, besides DeFi, GameFi, NFTs, and social media are also DApps that can have high balances(figure below). Although Alien Worlds (WAX), which has the highest number of active users in the industry, did not make it into the top ten of the balance ranking.
Therefore, it is suggested that ENF and ENV focus on investing in “Super DeFi” (with a weight of >50%), promote the development of new protocols and project open sourcing, develop more critical DeFi protocols, enhance security and credibility, and stimulate the coordinated development of various native chain ecosystem DApps such as GameFi, NFTs, and Web3.
3) Offer official liquidity to leverage more TVL and gain market-making yield
Higher DeFi liquidity provision depth plays a crucial role in reducing trading slippage, increasing trading volume, incentivizing large-scale and high-frequency trading, and more. The first-phase 5% incentive program of Yield+ has had a significant positive effect on increasing EOS TVL and stabilizing EOS price, but the second and third phases of the Yield+ Blue Paper plan are yet to be launched. The TVL of EOS DeFi still struggles to enter the top ten in the public chain industry (figure below). According to the DefiLlama ranking of Defi TVL, the leading Defi project DefiBOX on EOS is only ranked 195th in the industry in terms of TVL, let alone other EOS DeFi projects. The ranking is exceptionally low compared to the potential of EOS DeFi!
Therefore, it is recommended that ENF or ENV provide at least $2 million in liquidity support for “Super Defi.” This would be beneficial for maintaining the price of EOS and also allow for capitalization when the EOS price rises. Additionally, the market-making yield, which is approximately 4–15%, would help promote the preservation and appreciation of EOS value, counteracting inflation. Moreover, it would increase the Total Value Locked (TVL) in Defi and attract more capital to participate in EOS Defi market-making.
3. Addressing the Three Key Safeguards of EOS
According to the author’s evaluation and analysis of EOS holding accounts, it is believed that the majority of EOS tokens are held by centralized exchanges (CEX), with Upbit holding over 210 million EOS, accounting for 18.11%; Binance holding over 197 million EOS (across multiple accounts), accounting for 17.1%; and other exchanges such as OKEX, Bithumb, Kraken, Gateio, also holding a significant amount of EOS. A rough estimate suggests that CEX holdings exceed 50% of the circulating supply of EOS tokens, while the voting rate for EOS is only around 201 million, accounting for 17.35%. This indicates that a significant portion of EOS tokens are idle and lack real-world use cases, remaining in a state of inactivity. One of the core reasons for this is the underdevelopment of DeFi, which serves as the largest reservoir for EOS tokens. This underdevelopment can be attributed to the lack of three key safeguards.
1) Lack of oracles on the EOS mainnet and the urgent need to address off-chain data connectivity.
Oracles serve as bridges for trusted data interaction between blockchain and the real world (figure below), playing a crucial role in ensuring the synchronization of off-chain data with EOS native chain DeFi and various dApps. They are also essential for leveraging EOS’s high-performance data processing capabilities. The lack of a high-speed and stable oracle is one of the major obstacles hindering the further development of DeFi on the EOS native chain.
Therefore, it is recommended that EOS develop its own oracle software or at least integrate with mature and stable oracle services such as Chain Link and Provable. A high-performance oracle is a fundamental safeguard for the development of the EOS ecosystem, and it is advised that ENF address this issue as soon as possible.
2) Expensive audit fees impeding contract development, need an EOS contract audit team.
Security remains a paramount concern in DeFi (figure below). However, the cost of smart contract audits ranges from $10,000 to $70,000, and depending on the complexity of the code, the audit fees for some smart contracts (especially C++ smart contracts on EOS) can be even higher. This has become one of the most burdensome challenges for development teams. On January 31, 2022, the ENF Audit+ working group released a blueprint proposing various solutions to enhance the security of EOS smart contracts, but after 17 months, it appears that these solutions have not been effectively implemented.
The proposal presented in the Audit+ blueprint, which suggests building an “open-source security audit API and platform,” is a good solution. It is recommended that ENF take the lead in establishing a contract audit expert team composed of outstanding developers from the EOS community, based on the Audit+ working group. This team should focus on conducting security audits and bug bounties for EOS contracts. Due to their familiarity with EOS code logic, they can provide lower-cost and high-quality audit services, significantly reducing the audit costs for EOS contracts.
3) Establish a Specialized Sub-fund Focusing on Investing in “Super DeFi” on EOS
It is encouraging to see that in the June BP meeting recap, ENF has explicitly stated that they have established partnerships with two VC companies and will be investing in four EOS community projects. This indicates that ENF may operate using a model of a main fund and multiple sub-funds to diversify risks. However, historical data shows that approximately 65% of VC investments result in losses (figure below). Therefore, it is crucial to select exceptional GPs who possess expertise in this specialized field. These exceptional GPs themselves can bring professional financial talent and extensive resources to the EOS community.
As analyzed in the previous section, the DeFi market on EOS far surpasses other categories, and the potential of the native chain exceeds that of EOS EVM. However, the native chain’s DeFi on EOS has not received significant capital support, limiting its growth. Therefore, it is recommended that ENV establish a specialized investment sub-fund for “Super DeFi” with a focus on the decentralized Binance-like track. This sub-fund should aim to create a leading EOS DApp that drives the development of the EOS ecosystem.
Conclusion:
The price dilemma of EOS is the most urgent issue facing the entire community. It is crucial to have a thoroughly researched and well-defined executable plan that aligns with the goals. Within this plan, the most optimal options should be chosen, focusing resources to break free from the downward spiral of low prices. Based on the author’s years of EOS research experience and professional expertise in finance, “Super DeFi” is the best solution for EOS at present.
This article provides an in-depth analysis of the three key challenges related to users, assets, and safeguards, along with corresponding execution recommendations. It is hoped that this will draw attention from ENF, ENV, and the EOS community, sparking in-depth discussions and reaching a consensus. By concentrating over 50% of EOS’s advantageous resources and dedicating 6–24 months, we can build a leading “Super DeFi” on the EOS native chain, break free from the price dilemma, and achieve a 1000-fold increase in assets, benefiting EOS holders and propelling the rapid rise of the EOS ecosystem!
“The biggest challenge is making sure you have corrective feedback loop, and then maintaining over time even when people won’t tell exactly what you want to hear.” — Elon Musk
EOS community members who support this viewpoint, please like, comment, and share, to show your support! Thank you!
Note: The above content only represents personal opinions and does not constitute investment advice.
Welcome to donate $EOS, $BOX to support creation, EOS wallet: dalio.mlt.
