Structured Plan for IC DeFi

Tokenization
1

I’ll outline my thoughts as to what the IC needs going forward to create a strong DeFi ecosystem.

(1) We need cross-chain assets. We don’t have the time to wait for the Ethereum integration, the Foundation should call Axelar or Layer-Zero (cross-chain bridging protocols) to get assets like stable-coins and other tokens onto the chain ASAP.

(2) Liquid staking. The IC should not be afraid of this, if people want to dump ICP tokens they can do so on centralised exchanges. Liquid Staking ICP creates DeFi markets for borrowing and lending, margin trading, etc. It can also be used to incentivise assets from other ecosystems, e.g. for Bitcoin to move to the IC to earn a return (lend Bitcoin, borrow ICP, liquid stake ICP).

(3) Synchronous transactions. The IC needs a framework for synchronous transactions. Many DeFi primitives, e.g. flash-loans, multi-hop swaps or smart order routing are not possible or are likely to be implemented in a very insecure fashion without synchronous transactions. This is something we hope to deliver at InfinitySwap in the near-term.

(4) Funding strong teams. The IC should actively seek strong entrepreneurs who can build important protocols. Dfinity should select 5 or so strong teams, and give them the funding they need or introduce them to their investors. We are talking millions of dollars here, rather than small grants.

(5) Interoperability and the SNS: The IC has done well to finally ensure that we have a common token standard. Looking forward to unlocking some of the ICP for product launches. This will be most useful to projects if the funding disburses ICP rather than locked neurons.

(6) Project Listing. We need to have a list of friendly centralised exchanges who can trade the new ICRC-1 tokens and who are keyed into the network. Without this, we can’t get the liquidity/visibility from the broader web3 ecosystem.

(7) Recently, I have noticed an improvement in Dfinity’s marketing efforts. Keep it up, now let’s coordinate for some of the big launches with BTC and ETH integration. We still need to engage with the broader crypto community, and for the respect we deserve I think it would be best to engage at a technical level, unabashed and not dumbed down. To recapture some of the hype that came with Dfinity’s launch, users need to understand what makes the protocol stand out and what its advantages are as compared to Ethereum, Aptos, Polkadot etc, who have done a great job at explaining the evolution and advances of their architecture.

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Actually, I agree with you, especially for (1). Though I know a little about DeFi, I prefer to develop some infra on IC. So if you have any ideas about the Defi or cross-chain infra idea, you can share them with me in this post. I would like to build an IC infra ecosystem with you guys. (about deep learning inference or everything) :grinning:

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Sure, I think there’s some low hanging fruit just integrating Layer Zero on the IC and bridging to an ICRC-1 token. You can check out their docs and our IS20 repo which makes spinning up and testing these things easier.

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I fully support the integration of various blockchains, such as bridges, oracles, etc., with the Internet Computer. The more options available to developers, the better. A stable coin is needed on the IC, as well as more cross-chain assets. I may not be wealthy, but I do hold a significant amount of stable coins on Ethereum. I am considering bridging them to AVAX for governance farming after reviewing the audits of some projects. However, these assets should be on the IC where I spend most of my time interacting with people, not on AVAX. @dominicwilliams, let’s make a strong effort to bring reputable cross-chain assets into the IC while also working on Ethereum integration.

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Wrt layer zero, does Dfinity have to implement or can any team do it?

6

Thanks for the above links, I will check it later. :grinning:

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If we are about to start trusting exchange rates coming from outside of the IC, I don’t see why we can’t build an exact replica of that functionality that queries and looks for agreement on root hashes for a breadth of chains. Once we have that it should be dead simple to write Witness proofs and one time burns contracts for locking tokens in contracts over all those other chains.

We have a few ICDev bounties pursuing these, but progress is slow.

I’m fine if you are talking about just shorting and borrow contracts, but markets for NNS staked tokens is a poison pill that kills the IC. I can be talked off this position to a certain extent if you can prove there can never be enough liquidity to gain control, but you have to prove it in all possible universes.

This is fascinating!!! Can’t wait to see what you come up with. I’m about convinced that we just need some really robust saga roll back patterns. I’d be interested to see what @Hazel came up with at quark if they’d be up for opening up some
Of those patterns now that they are changing directions.

I’ve always felt like canisters acting as a train station where all the assets end up in the ownership of a trusted contract prepped for atomicity could more than handle most scenarios, but I’d love it if you guys pulled off some kind of synchronous magic.

I’m excited about this as well. We just added icrc- to axon and I hope that origyn has it deployed this week. :crossed_fingers:

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Strongly agree with this. More generally, Dfinity needs to open the spigot on funding development so the balance between what the Foundation is doing and what independent devs are doing leans more toward the latter. Missed timelines are not unusual, ETH Merge is a great example, but ETH could afford delays because of its dominant position, and the IC cannot. The departure of Departure labs is a recent reminder of the hurdles facing IC devs. Unless the IC is fully ready with a bunch of trustworthy easy to use crosschain defi dApps when the next bull run begins, it risks redundancy. If we miss the next tide, this ship may never sail.

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#6 is currently being worked on by a project with a good development team. It’s a charting suite. The issue currently is inter project cooperation in regards to reliable Price APIs. As anybody knows, the ic is somewhere disconnected where canisters and dexs may have different prices for the same asset (making it ripe for arb opportunities for experienced traders but that’s besides then point) so it’s hard to chart certain projects across the whole ecosystem. Currently the team is trying to do a twofold thing; visualize the data in a form similar to projects on the binance chain, and collect and publish certain metrics such as whale Wallet watching, dex lists, and liquidity metrics. It’s in its infancy but is comming along nicely.

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es3he-kyaaa-aaaah-abzna-cai

standard: DIP20

Is the canister of the project

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I don’t think dfinity, or the foundation should be responsible for funding. The biggest issue in my humble poor repute opinion is that

A) projects view each other as competitors in the space, so interproject cooperation is lacking. There seems to be a lot of nft based grabs for quick bucks and not so much tech innovation outside of the foundation and serious devs. Projects seem reluctant to list other projects or share data because the current liquidity in the space is low, so everything is “fighting for scraps” as it were. It would be much better if project devs would feel safe sharing certain things to help the eco grow.

B) lack of clear goals within the space in regards to either encouraging a “casino” or not. There seems to be a couple schools of thought: quick, flashy colored nft schemes to collect Icp, or fee driven projects that are way too high intellect for the average user.

The Benefit of of the IC tech that Austin and team have worked so hard on gets lost in the sauce when people are moonboying over jpgs. I think once the tech evolves a little bit and things on this list are developed we will see the ic blossom.

As an aside, I personally think an automation of cycle-to-canisters would ease things. Currently, unless someone knows otherwise, cycles are managed but basic scripts that alert that they need to be replenished. It would help the ecosystem tremendously if there was a system that automaticly collected a transaction fee, swapped it for a cycle, and deposited it in the appropriate canister for seamless use.

All of you guys do great work.

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Let me add to the list “public access to subnetwork blocks for full verifiabilty”. Without this no large scale Defi will be possible in the IC

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Departure lab has left? I thought they looking to employ other web 2 solutions but still wanted to build on the IC.

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This was the message I read: “The IC is wonderful for building, but it is still immature and lacks the tooling we need to move fast in order to succeed in onboarding a large number of users. To be clear, this is not a goodbye to the ecosystem - we just want to set expectations moving forward.”
That the IC is immature and lacks the right tooling is a devastating assessment by a veteran of the ecosystem. Doesn’t sound like the IC is going to be central to their plans much more than it is to Psychedelic’s future.

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Sir, this is what I am saying. The current atmosphere is very gatekept and appears non-cooperative. Not this forum per se, but project to project. I don’t want to imply that developers or dfinity or the foundation is gatekeepin; rather the opposite they are very open and help cultivate tech improvements. To be specific I am talking about defi projects that view other defi projects are competitors. In attempts to protect IP it seems that certain features available on other “chains” are unavailable on the Ic. For example, amm dexes are few and far between and some devs not wanting assets moved because of rigid profit oriented roadmaps. I’m not opposed to projects protecting ip but at a certain point the users themselves bring and move Capitol to the ic and thus will flock to projects that can provide services regardless of what investor roadmaps say.

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You’re right. This sounds like diplomatic way to say good bye. Oh well. Good to luck to them.

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“Once we have that it should be dead simple to write Witness proofs and one time burns contracts for locking tokens in contracts over all those other chains.”

Yeah, this would be the least expensive way to do cross-chain transfers on the IC, but the tradeoff is slower development when building something new vs a pattern that has been built for other chains and can be shipped fast. Ok, if a strong team is building this infra would do a good job.

Liquid staking doesn’t have to be built in a way that is harmful to governance, depends on the setup. Happy to discuss further.

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the AMM space does seem a bit more competitive. There are 3 or 4 DEX projects, but we need oracles, we need bridges, we need margin trading etc. Seems like everyone is going for the same slice of pie.

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bridges: to what? We have ckbitcoin, evm bridges are coming thanks to very hard work of devs

oracle: I somewhat agree! See my upper posts and also consider that canisters themselves can do calls so they can act as oracles if fed the correct Data

Imo the hardest things to overcome are the cycle/canister relationship and asset liquidity between dexes but this is a problem most other chains have as well; A decentralized system like the ic will always have that sort of issue

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I personally totally agree with you. Hope to see further discussion and feedback from dfinity team.

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