❔Defi

What is DEFI？

JOJO Defi

JOJO Defi can break down the boundaries of financial markets between countries On JOJO Defi, for example, you can lend money to anyone anywhere in the world, no matter who.

JOJO Defi has smoothed out the huge yield gap in the world's financial markets and greatly reduced frictions in capital flows. Through the JOJO Defi You can also manage your money and invest in the metasverse

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What exactly is DeFi?

In order to have a more accurate understanding of the concept of Defi, I have done a lot of thinking and consulted a lot of materials. My current definition is as follows:

In order to have a more accurate understanding of the concept of Defi, I have done a lot of thinking and consulted a lot of materials. My current definition is as follows:

Defi is a financial service with its own private key and digital currency as the main body.

This is the clearest definition I can think of so far.

This definition contains three levels of meaning: the first is to own the private key, the second is to digital currency as the main body, the third is financial business.

own the private key.

This is the core of Defi, because the Chinese translation of Defi is called decentralized finance, decentralization is the core attribute word, if there is no decentralization this attribute, it is not called Defi.

If decentralization is so important, what is decentralization? How do you tell if a financial business is decentralized? Of course, there are many ways to tell in real life, but I think the easiest and most intuitive way is to see if you have a private key.

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There are a lot of centralized exchange or other centralized organizations will launch a variety of business, and then euphemistically called is Defi business, if single watch their description, as if that's true, their business rules to the public, with code performance, also seems to really is financial business, a bit not careful you are easy to fool.

And, in real life, there are a lot of business, you are actually there's no way to accurately distinguish it is centralized or decentralized, the boundaries of their less obviously, the nature of their business is somewhere in between, have centralized attribute exists already, also have the properties of decentralized exists, it is difficult to make an accurate distinction.

However, it is much clearer from the point of view of whether you control the private key.

If we own the private key, then we can simply think of the business as decentralized; If we do not control the private key, then we can simply consider the business is not decentralized. We can adjust our understanding of it until it is proved that its decentralized nature is really strong from other perspectives.

If I were to identify the most important features of Defi, I would say that "having your own private key" would be the most important feature.

Take digital currency as the main body.

Defi is the Defi of digital currency, which is based on digital currency, which is undoubted.

Because when we say "Defi", we actually refer to the blockchain industry and the digital currency circle. Most of the targets in this circle are digital currencies, and they are all native digital currencies, while the traditional finance involves very little.

If you have a project that is clearly a traditional financial business but is under the guise of Defi, you need to be careful.

A lot of friends have asked me privately: What do you think is the relationship between asset digitization and Defi?

In my opinion, at present, asset digitization and Defi are two different business lines, and the relationship is not too big for the time being. In the future, when both of them develop, asset digitization will be the upstream or starting point of Defi.

First, traditional assets are turned into digital assets through asset digitization, so that efficient chain interaction can be carried out between these assets, so that they will naturally become Defi business.

The business must be financial.

This may seem obvious by definition, but when it comes to real life cases, we tend to ignore it.

At present, what can be called financial business includes transaction, loan, asset synthesis, mortgage and settlement, all of which belong to traditional financial business. It is no problem to understand these businesses as financial business. However, some companies will fish in troubled waters and call their messy business as financial business and their irrelevant business as Defi business, forcing the hot spot.

As an example, FOMO3D was so popular that it was supposed to be the new form of blockchain commerce in the future, and it could even be said that FOMO3D was the prototype for all Defi today. But is FOMO3D technically Defi Financial? I don't think so!

FOMO3D is more "decentralized" and less "financial". It's more like a traditional lottery business, or a traditional commercial business, than a financial business.

The above are the three most important features of Defi finance in my opinion. As for other features, such as "automatic execution by code" or "rules cannot be tampered with", they can only be considered as appearances, not as the core. For example, there are many Internet companies, their rules are also implemented automatically by code; Moreover, Defi rules are not completely unmodifiable, and there are many ways to modify them. Some of them can be modified in the centralized way, and some can be modified in the decentralized governance way, so these are not core features.

Defi finance and open finance, token economy difference Above we have made a more clear and specific definition of Defi finance. Besides the most popular Defi finance, there are other concepts in the market, such as open finance and token economy. What are the similarities and differences between these concepts?

Token economy, in the words of Teacher Meng Yan:

Tokens Are encrypted digital certificates that can be circulated. If tokens were called tokens, the token economy would be called a token economy. Token economy is the most important application in block chain. Token economy and block chain are two systems. Token economy can operate independently of block chain, but if you want token economy to achieve the best development, it must be supported by block chain.

In my opinion, token economy and asset digitization mentioned above are very similar. Both of them are just a form of digital assets in view of the "digital currency as the main body" in Defi's definition.

However, the difference is that Defi focuses more on pure financial business, while token economy emphasizes the combination of token and real economy.

As for open finance, it is a broader concept than Defi finance. Combined with the remarks of X-Order founder Tao Rongqi and General Manager Yao Qian:

Open finance is finance based on distributed ledger. Its characteristics are:

• system is highly integrated: registration, settlement, payment, delivery, chain completion;

• unified seamless connection of business: 7X24 thousands of assets, global cross-chain delivery;

• Ecological openness and inclusiveness: currency, securities and alternative assets cover everything.

Open finance should include both centralized finance and decentralized finance, as well as digital currency finance and traditional financial services. Moreover, open finance is based on specific business, that is to say, open finance not only emphasizes financial services, but also the interconnection between underlying businesses.

Open finance is more of a concept, emphasizing the use of blockchain technology to strengthen distributed cooperation between different centers, and the use of blockchain technology to enhance the credibility of data, so as to make data and financial business more open, so that financial business connectivity is closer, cheaper and more efficient.