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Original title: Looking at the Defi market and token allocation reform from the A-share market
If we say that the innovation of the A-share market is to deliver the benefits of risk-free new shares as a way for investors to lock up positions In exchange, DeFi will also deliver risk-free new currency benefits in exchange for currency users to lock their LP pairs. Locking LP pairs will cause a reversal of supply and demand, causing currency prices to skyrocket, which will trigger positive feedback.
Many people don’t understand why Defi (decentralized finance) can rise and skyrocket. Since I was originally engaged in securities investment, I can be said to be a time traveler living in two parallel worlds at the same time. I unexpectedly discovered that Defi and 2014 The reform of new share issuance is very similar. The Defi bull market of , and even the currency bull market, is likely to have the same path and ending as A-share in 2015.
Review of the 2014 A-share new share issuance reform
The A-share market had some problems with the "inquiry issuance" of new shares in 2010. At the end of 2013, the A-share new share issuance system was reformed into the current " market value allotment , lottery" model . According to the "Relevant Measures for Improving the Reform of New Share Issuance", new shares are issued at a fixed price-to-earnings ratio of 23 times, and the lottery share is determined based on market value. In addition, there is an increase or decrease limit on the first day of listing. It was 20% at first, 10% every day thereafter, and later changed to 44% on the first day, and 10% every day thereafter. Currently, there is no limit on the Science and Technology Innovation Edition and GEM . The reform of
began to be attacked by the "market faction" at that time, saying that it was a return to the " planned economy ". However, with the new launch and the skyrocketing price after winning the lottery, stock investors began to feel "really good". Investors bought some big blue chips in the Shanghai and Shenzhen stock markets as lottery chips, and drew new shares for free. After the lottery, closed 44% of the market at the opening of the market, and then continued to rise without limit every day. In the end, the total increase far exceeded the new stock issuance reform. The increase in the previous " inquiry system ". Before the reform, investors attacked the "three highs" of the issue price of the "inquiry system", and all their benefits were taken away by primary market . Now after the change, all the gains after the issue price of 23 times the price-to-earnings ratio was listed were taken away by shareholders. Yes, it smells so good! At the beginning of
, I also had the enthusiasm of an intellectual for book business. I felt that this reform was not "market-oriented", and I even expressed my opinion that I was not optimistic about the reform. Later, I won a lottery for a stock and actually made 100,000 yuan! It’s so fragrant. You can go as far as you want about inquiry and marketization...
In fact, it seems now that the issuance of with a price-to-earnings ratio of 23 times distributes part of the benefits of the listed company’s financing to shareholders. . Originally, if the company set its own price, the issue price of could be 46 times, and it would be able to raise twice as much funds. However, now this part of the funds is not raised into the company, but becomes the price difference between the primary and secondary markets and is used to subscribe for new shares. People made money and walked away.
Before the reform, the issuance price of stocks under the "inquiry system" was relatively expensive, and listed companies and primary market investors made more money, leaving little for retail investors, who complained a lot because of their losses. After the "reform", it turned out that the flesh of listed companies was cut into the hands of shareholders who won the lottery. The shareholders laughed, but the listed companies cried. Moreover, investors did not feel grateful because the "issuance price was low". Instead, they turned to Ben & Gary's hype and speculated on stocks with a price-to-earnings ratio of 23 times to 100 times. And if according to the original inquiry price, the issue price is up to 50 times, it may even fall after listing.
The most ridiculous thing is that stocks with a price-earnings ratio of 50 times issued under the inquiry system have more investment value than stocks issued with a price-earnings ratio of 23 times, because stocks with a price-earnings ratio of 23 times raise less funds and the company is stronger. Low, and 23 times is just the benefits delivered to the winners. Once the market is launched, it will become a piece of garbage with a price-to-earnings ratio of 100 times and less funds raised.
However, it is useless to be reasonable in the stock market. It can just rise. Where can you be reasonable? The analogy between
Defi and 2017 ICO
The grand occasion of 2017 ICO in the currency market will not be repeated here.But if you think about it carefully, the IC0 model is exactly the most similar to the new stock issuance model of the "inquiry system"! During the currency issuance craze in late 2017, ordinary retail investors could not buy ICO or invest in projects. They had to spend money to find someone to invest on their behalf, or participate in a "fund." Before a coin is listed, there are often multiple rounds of private equity financing. When it is finally listed on the exchange, it is like a new stock under the "inquiry system". It is listed at a super high price. Once it is listed, it plummets, harvesting a large number of retail investors. .
IC0 has been criticized because, in addition to the unreliability of the project itself, the team and various private equity companies have been very serious about cutting leeks. This reminds me of the previous issuance system of A-shares, such as , Hepalink, , and Sinovel. This routine is to issue at a high price, open at a high price, and the opening price is the highest price. It is completely a return to zero altcoin model.
The most important improvement of Defi is the improvement of the initial token distribution. There is no private equity fund in the new projects in Defi, and there is no pre-ic0. The tokens of the project are gradually released to investors by investors completing some tasks (such as being an LP, liquidity provider). This makes the tokens The huge benefits of listing have been transferred from the hands of the original Li Xiaolai , Guo Hongcai, Yi Lihua and Laomao to ordinary retail investors.
You must know that the currency market, like the stock market, is a cannibal, and capital is also very bloodthirsty. In the past, when certain projects were popular, some big funds would find ways to block the ETH network and prevent small investors from issuing contracts, or Use various methods to get most of the early chips into your pocket. Many of the current DeFi first deposits are first deposited in the pool, and then mining is required to release the tokens. This objectively eliminates the possibility of large funds monopolizing the price difference in the primary market. Many retail investors have made hundreds of dollars by relying on the free tokens airdropped. Ten thousand.
And objectively speaking, the mining participation project is also a two-way win-win situation. In addition to the lock-up to help the increase, investors objectively help the project complete some tasks. For example, in the dex project, LPs participating in Uniswap work for the project while holding shares (the job of dex is to provide liquidity), participate in lending Defi contracts, and some engage in lending mining, which objectively enables this lending project to It works because someone has to deposit money in order to lend money. In this way,
not only can projects start from scratch, but a large number of individual investors can also rise through these projects. If we use new stock subscription as an analogy, then you may be able to earn millions by winning a lottery in the currency world.
Therefore, Defi has improved the distribution of initial token benefits. Compared with IC0, it is a huge benefit, allowing more people to benefit from the increase in token projects. Therefore, this benefit provides a higher initial risk-free rate of return in the currency circle (equivalent to the new risk-free rate of return of A-shares) - which may in turn attract OTC funds to enter the market.
The cycle of overheated new share issuance and bull market
After the reform of new share issuance in 2014, due to the skyrocketing increase in new shares, the increase after the surge far exceeded that of listed companies in the same industry, which led to a retaliatory rebound in a large number of old stocks in the same industry. The board is out of the bull market. A-shares have seen the rise of new shares lead to the rise of old shares, and their rate of return comes from the low-risk returns generated by subscriptions.
On the other hand, the market value allotment policy is also a transaction with retail investors. At that time, A-shares had been falling for many years, and no one paid attention to the blue chips of the market. The price of delivering benefits to retail investors at a price-to-earnings ratio discount of 23 times was that retail investors bought the market value to protect the country. In this way, the bottom position used by retail investors to draw lots becomes staking, which objectively significantly reduces the circulating chips of A-shares. The market value of this part of the locked position obtains excess returns from new stock subscriptions, effectively offsetting the bottom position. The risk of the position falling.
By 2015, the quantitative change turned into a qualitative change. Since the bottom position had turned upward (due to various factors, including the increase in demand caused by the market capitalization and the central bank loose monetary policy -) new stock subscription became In order to realize the risk-free huge profits of "increasing bottom positions + earning from new stocks", funds poured into A-shares at an accelerated pace, and then a round of mad bull market was triggered due to regulatory releases, leverage capital allocation and other factors. The fate of countless people changed.
This can also explain why the market generally believed that in 2015, A-share listed companies experienced significant increases without improving their performance. In addition to monetary easing, it is likely to have a lot to do with the market value allotment policy. Market value allotment The policy unexpectedly triggered a positive feedback loop, which combined with loose monetary policy and a laissez-faire regulatory environment triggered an out-of-control bull market. Can
Defi’s staking trigger positive feedback in the currency circle’s bull market?
The same is true for defi staking, which is likely to trigger a bull market with positive feedback in the currency circle. In in defi, most projects require participating in LP to be allocated the project token, which is equivalent to holding a certain amount of coins before you can be allocated the new token of the project, and this new token has huge risk-free benefits. . This is the same as if you hold a market value of 10,000 yuan and you can draw a new stock.
If the A-share market delivers risk-free new stock benefits in exchange for investors locking up their positions, then DeFi also delivers risk-free new currency benefits in exchange for currency investors locking up their LP pairs. Locking LP pairs will cause a reversal of supply and demand, causing currency prices to skyrocket, which will in turn trigger positive feedback.
However, the market situation in September last year tells us that relying solely on LP lock-up for liquidity mining will cause the currency price to spontaneously Ponzi scheme be like a left foot stepping on the right foot, and it will break sooner or later, so external conditions are also needed. Support - This is the same as A-shares. A-shares still have this issuance system. Why can't they become more popular? If the external conditions are exhausted, the core benefit of the sudden surge in new stocks cannot be maintained continuously, and the reason for increasing lock-up positions will disappear. If the bull market rises too high, existing stocks will collapse, and then everything will return to normal (just like now) ).
But now the currency market has the possibility of triggering positive feedback-extremely loose monetary policy does not refer to the Federal Reserve , but refers to USDT, and a large amount of funds are injected into the currency circle. At the same time, there is no supervision, you can increase leverage at will, and you can even take the coins into DeFi and mortgage them to continue increasing leverage.
The current currency market is likely to be like the A-share market in 2014, with positive feedback just beginning. A lot of funds are trying to enter DeFi to earn low-risk returns, and this will form a positive feedback, allowing those funds with high risk preferences to invest more leverage in the currency market. In the end, it is likely to trigger a crisis like the A-share market in 2015. Uncontrollable mad bull market.
Many things cannot be stopped once they happen, right? How will
end?
I don’t want to say here that defi is a bubble that will burst sooner or later. This has no practical significance. Just like in the long run, everyone ends up the same.
But many things are not linear. For example, after the A-share bull market collapsed in 2015, Jia Yueting also collapsed. But now it seems that the road electric vehicles pointed out by Jia Yueting have succeeded. In a bubble, the direction represented by the bubble is often correct, but the individuals in the bubble die.
is as far back as the Internet bubble in 2001. Most Internet companies at that time died, but today we are already in the Internet world. I think the A-shares in 1993 were worthless. They were all local collective enterprises. The stocks were like altcoins. People didn’t even know what the “shareholding system” was for. But now everyone knows that we are also in a joint-stock world.
One day in the future, today's defi projects may be obsolete, but in the future we will live in a world of blockchain, where decentralized finance is widely used to make financial activities more free and convenient. and today's defi bubble only points out a rough, vague, and correct direction. On the one hand, we need to see this direction, and on the other hand, we need to make money first. Only by making this money can you afford to lose money when the tide ebbs. Only then can you invest the remaining money into the next round of the real blockchain economy and realize your dream of success in life
