Open DeFi — a consortium of decentralized finance (DeFi) protocols to bridge the east to the west — launched the Open DeFi DAO this week, to incubate early-stage multi-chain DeFi protocols and applications.
“The goal of Open DAO is to develop a truly integrated multi-chain DeFi ecosystem that will open up liquid markets and establish a new operating system for finance,” said Marek Laskowski at Open DeFi. “With the support of our members and our community of more than 10,000 DeFi developers and strategists worldwide, we look forward to accelerating the next generation of DeFi.”
DeFi’s value continues to rise markedly
The DeFi industry currently holds around US$140 billion in total value locked. DAOs, or decentralized autonomous organizations, are projects that exist as smart contracts on the blockchain. Many major DeFi applications such as Uniswap, Aave and MakerDAO are now governed by DAOs, which provide a mechanism for protocol development and treasury management through smart contracts. With the rise of non-fungible tokens (NFTs) and Web 3.0, DAOs are emerging as a popular way to manage tokenized assets and facilitate transparent governance within decentralized entities.
The Open DeFi DAO aims to make transacting across layer one chains a more seamless experience by supporting multi-chain use cases and new digital asset classes, including NFTs and data tokens. Anyone can join the DAO and participate through the Open DeFi DAO governance token, which will enable the community to fund and support new projects.
‘Multi-chain DeFi is here to stay’
Dhaliwal noted that in Oct. 2020, Ethereum secured nearly 98% of the total DeFi market with over US$10 billion total value locked (TVL), while the rest of the chains had less than US$150 million combined. “Today the total value on other chains is more than US$35 billion, a growth rate of 270X. This is now more than 30% of the entire DeFi market. As a result, DeFi will increasingly become more cross chain and interoperable across layer one ecosystems,” he said.
Along with exorbitant gas prices, another factor that has contributed to this growth of multi-chain DeFi is the advancements in cross-chain infrastructure and liquidity solutions between Ethereum and other sidechains and layer twos, Dhaliwal said. For example, Conflux allows assets to transfer across Ethereum, Binance Smart Chain, Huobi ECO Chain and OKchain.
“This multi-chain future will have a net-positive impact on Ethereum and the overall DeFi movement as faster sidechains will attract more retail investors and DeFi power users that are not just the whales that can afford Ethereum’s high gas fees,” Dhaliwal added.
Dhaliwal also sees DeFi being applied to new digital asset classes, such as data tokens, social tokens and NFTs. “We’ll see new financial services form around these assets and offer new types of liquidity needed to take DeFi to the masses.”
Open DeFi is holding a hackathon this month to kickstart development in projects across multi-chain DeFi, stablecoins, asset and governance models, decentralized applications and non-fungible tokens (NFTs).
Since its launch by China-endorsed public chain Conflux, Open DeFi has become a community-run organization with more than 30 members, making it one of the largest DeFi alliances of its kind. Earlier this year, Open DeFi created a security standards blueprint, led by Quantstamp, Barnbridge, mStable and dForce, to guide protocols in disclosing risks associated with institutional investments in DeFi protocols.
The consortium also incubated OptyFi, a multi-chain yield aggregator that will be used to host vaults on the Open DeFi platform with the launch of the DAO.
As DeFi continues to grow, it is likely that DAOs will also continue to gain traction.
“Interest in DAOs used to be limited to only the most active members of the blockchain community but that’s starting to change with the rise of NFTs and DeFi,” said Mark Lee, founder of blockchain agency Eightfive PR. “Since a lot of people are starting to understand the value of digital assets, they can now understand the value of having decentralized organizations that adhere to the rules set by the blockchain.”