🇺🇸DeFiChain Transparency Report Q3 2020

14 min readOct 22, 2020

In order to give our community and partners full transparency into what’s happening in front and behind the curtain at DeFiChain, we would like to publish our quarterly board report. For more information on the project please visit: https://www.defichain.com

Q3 Transparency Report Video:

Join us LIVE to discuss the Q3 Transparency Report on 29th October 2020 at 8pm Singapore Time:

We hope you appreciate the insights!

Thanks for your support and happy reading — Have fun! :)

DISCLAIMER

This transparency report does not constitute nor imply a prospectus of any sort. No wording contained herein should be construed as a solicitation for investment. Accordingly, this transparency report does not pertain in any way to an offering of securities in any jurisdiction worldwide whatsoever. Rather, this transparency report constitutes a description of the development and distribution of DeFiChain. Do not trade or invest in any tokens, companies or entities based solely upon this information. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. Investors should conduct independent due diligence, with assistance from professional financial, legal and tax experts, on topics discussed in this document and develop a stand-alone judgment of the relevant markets prior to making any investment decision.

This document does not constitute nor imply a final technical specification of DeFiChain. Information presented in this transparency report, technical or otherwise, is meant to outline general ideas, designs and use-cases and is subject to change with or without notice. For the latest up-to-date technical specifications, check out the updates and documentations on the official website www.defichain.com The graphs, charts and other visual aids are provided for informational purposes only. None of these graphs, charts or visual aids can and of themselves be used to make investment decisions. No representation is made that these will assist any person in making investment decisions and no graph, chart or other visual aid can capture all factors and variables required in making such decisions.

While this transparency report was compiled with the greatest care possible, it cannot be guaranteed that all information is complete or accurate. The information contained in this document may include, or incorporate by reference, forward-looking statements, which would include any statements that are not statements of historical fact. No representations or warranties are made as to the accuracy of such forward-looking statements. Any projections, forecasts and estimates contained in this document are necessarily speculative in nature and are based upon certain assumptions. These forward-looking statements may turn out to be wrong and can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors, most of which are beyond control. It can be expected that some or all of such forward-looking assumptions will not materialize or will vary significantly from actual results. For any questions on a specific subject covered in this document, please contact us on partners@defichain.com

DeFiChain Foundation is registered in Singapore with UEN 201937328C at 7 Temasek Boulevard #12–07, Suntec Tower One, Singapore, 038987.

Personal Message by the DeFiChain Foundation’s Chairman

Dear DeFiChain community,

looking back on the past quarter it makes me proud to see all the contributions by engineers and the community coming together. The speed we all are moving at is truly mind-blowing, and I think each and everyone of us can feel that, with all the progress that is happening. Let me reflect on four things that stood out for me personally over the past three months:

DeFi sector underperforming: While DeFi was every crypto investor’s darling at the end of Q2 / beginning of Q3 2020, especially in September and October the entire sector crashed by close to 50%:

I believe this was rather surprising to many investors but rather showed that people came to their senses when it came to many worthless tokens that were rather hyped by influencers and VCs. I can highly recommend you read this blog post on some of the shady stuff that is happening in the space: https://medium.com/@crypto_angel/the-corruption-of-defi-in-2020-bbcdadccf201 With that being said I am very glad that DeFiChain goes a completely different route by delivering DeFi on layer 1 and by having a solid and strong use case in DFI. More about that in a bit.

2. DeFiChain staying strong: There is no denying that we also felt the general DeFi setback at DeFiChain with massive hype building in July and August with a slight community slowdown in September. Nevertheless, adoption was insanely strong over the past quarter as you will see in the community and marketing details, and we had no problem keeping up the momentum. A lot of this has to do with our continuous focus on community, which are essential to any good blockchain project.

3. Engineering work outperforming: Team work makes a dream work and on the engineering side the team delivered on all fronts, pumping out 2 DFIPs, running the first hardfork called AMK, integrating tokenization support and improving the DFI app. It all laid the groundwork for the exciting use cases that will be published in the upcoming weeks. This is especially crucial as there seems to be a clear correlation between GitHub activity and a project’s longterm viability. I can confidently say that our team is strongly committed to keep outperforming and to keep delivering massive value.

4. DFI airdrop: I guess the only decision I personally would reconsider in Q3 was to do the free airdrop to all BTC hodlers as we had outlined it in our whitepaper. The sudden spike in additional DFI supply paired with the general DeFi weakness in September led to a slight DFI sell off, which might have been preventable with a slightly different setup. I completely take full responsibility for this decision, which was based on the expectation that people would see such an airdrop a bit more long term oriented. The decision to immediately halt the airdrop and only continue it at a later point was a correct one in my opinion as it protected the existing community and DFI hodlers. Future airdrops will definitely have some lock up periods to avoid repeating a similar scenario. We live to learn.

With that being said, let me focus a bit on the upcoming quarter and what DeFiChain Foundation is expecting to deliver to the community:

DeFi on Layer 1: Through DeFiChain, we are solidifying the DeFi experiments that have been carried out on Ethereum. DeFiChain makes DeFi transactions blockchain-consensus-level transactions on layer 1 rather than layer-2-dApps as they are on Ethereum. This finally makes DeFi a first-class citizen on a blockchain, enabling the most efficient, safest and most user-friendly DeFi applications the world has ever seen. I believe that most crypto users do not yet fully understand what it means when for example Liquidity Mining does not happen on layer 2, but rather on layer 1. On Ethereum this would mean, that you could mine ETH via liquidity and some questionable smart contract token. On Ethereum it will never be possible, but on DeFiChain it will be with the upcoming Bayfront hardfork in November. This will be a complete gamechanger.
DFI wallet: We will be continuously improving the DFI wallet with all the DeFi applications DeFiChain needs. In Q4 2020 it will receive mnemonic seeds, direct DEX capability and liquidity mining ability. It will be the most user-friendly DeFi application you will ever use and together with true DeFi on Layer 1 this will create a massive boom in the entire crypto industry.
Community: DeFiChain is NOT DeFiChain Foundation. DeFiChain Foundation can NOT make DeFiChain or DFI valuable by itself. Neither myself nor U-Zyn nor anyone else by him- or herself is responsible for DeFiChain’s success. It is all of us. We win or lose together. We are all in the same boat. So, if you want DFI and DeFiChain to succeed, spread the word. Tweet about it. Share it in groups. Talk about it. Apply on various platforms and sites for DFI to get listed. If you are a C++ engineer, consider working with DeFiChain full time. Commit code on GitHub or interact on Social Media. We have seen the very first community development fund applications, and we would like to see more. There is no other way for us to succeed! It takes all of us. So, chip in and help out.
Looking beyond: Looking a bit further than just Q4 2020, the key things you can expect in 2021 will be 3 things that will completely revolutionize DeFi:
i. Decentralized Lending in Q1 2021 for non-Ethereum DeFi. This does not exist at all so far.
ii. Decentralized Tokenization in Q2 2021 to represent any asset in a trustless and compliance easy manner on DeFiChain. Investing in stocks or real estate will never be the same again after this.
iii. Interoperability with other DeFi blockchains, so DeFiChain can become the Nr. 1 global DeFi aggregator by Q4 2021 and all you need is DeFiChain to get access to any other DeFi blockchain.

As you can see, our success with DeFiChain so far is just the beginning. I can assure you that with more use cases, more exchanges, more platforms and more users, DeFiChain will gain massive popularity and will change the DeFi landscape. I am very much looking forward to experiencing this with all of you.

Dream. Plan. Execute.

Dr. Julian Hosp
DeFiChain Foundation’s Chairman

1. FINANCE

Last quarter review

Foundation funds: https://explorer.defichain.io/#/DFI/mainnet/address/dJEbxbfufyPF14SC93yxiquECEfq4YSd9L
+ https://explorer.defichain.io/#/DFI/mainnet/address/dMysnhSbg8VbJJjdj273bNQi6i69z4WL6Z
(pledged for airdrop) = 273.714M + 11.87M = 285.584M

Community development fund:

https://explorer.defichain.io/#/DFI/mainnet/address/dZcHjYhKtEM88TtZLjp314H2xZjkztXtRc = 4.662M DFI

DeFiChain was developed without any outside funding and DeFiChain did not pay anything for its development.
DeFiChain Foundation’s annual burn rate is approximately 5,000 USD and includes basic cost as website fees, accounting fees, domain fees, e-mail services, etc.
This excludes development work, for which DeFiChain has partnered with Cake Pte Ltd (Cake DeFi). There is no salary paid to Cake Pte Ltd, however Cake has the right to charge the foundation’s staking rewards as a fee.
DeFiChain Foundation’s main asset is the DFI it holds and can be traced publicly on the blockchain: https://api.defichain.io/v1/stats?q=tokens.supply.foundation
Currently, DeFiChain Foundation is NOT holding any other assets on its balance sheet. It is therefore a long term believer in its own coin.
DeFiChain Foundation is willing to reconsider any of its strategies to deliver maximum value to the DeFiChain community.

Next quarter preview

DeFiChain’s cost are currently covered and therefore DeFiChain Foundation is NOT planning on giving away or selling any of its DFI coins in the upcoming quarter.
DeFiChain Foundation is NOT intending to increase any of its cost in the upcoming quarter.
It is NOT intending in hiring any personnel nor is it intending on paying any salaries to its directors.
With its current arrangements DeFiChain Foundation is NOT relying on donations.
With no payroll to meet, and only very small cost as covering the website’s domain fee, DeFiChain Foundation’s runway is as of now practically unlimited.

Looking beyond

The cryptocurrency markets depend a lot on the general sentiment around Bitcoin and the financial markets in general. This can bring unforeseeable challenges to the project’s long term viability.

2. RESEARCH & DEVELOPMENT

Last quarter review

Decentralized DFI BTC airdrop was implemented.
Decentralized Exchange (DEX) was halted at around halfway mark of the quarter to pivot to Liquidity Mining capabilities at around August 2020.
Liquidity Mining system design finalized at late August 2020.
Stopped minting of foundation nodes after community and tracker feedback. This is well accepted by community and set DeFiChain towards a better decentralization path.
Worked out a hard fork plan for DeFiChain.
Planned and laid out the technical specifications for the first hard fork, which would take place by the 2nd week of October. Engineering team is developing and testing to ensure hard fork safety.
Improved on block explorer. Addressed a few inconsistencies with the information presentation on block explorer.
Successfully upgraded across exchanges and services.

Next quarter preview

AMK upgrade successfully carried out on October 12, 2020 that brought about DFIP #1, DFIP #2 updates and Tokenization support on mainnet.
Hardware wallet support for DFI
Bayfront upgrade planned for early November 2020 that would bring about an exciting use-case of DeFiChain — swap protocol and liquidity pool yield farming.
A relaunch of new DFI block explorer — retiring the existing one which is based on Bitcore that has brought about some issues.
GUI app update to support:
Tokenization (AMK upgrade)
Liquidity Pool management (Bayfront upgrade)
Swap protocol support (Bayfront upgrade)

Looking beyond

Iterating on a live mainnet is very challenging.
Hiring of blockchain developers, especially with live mainnet hard fork experience is a challenge.

3. DFI UTILITY

Last quarter review

Established a community improvement proposals and voting process — DeFi Improvement Proposals (DFIPs).
Successfully proposed and approved 2 DFIPs:
#1: Bitcoin anchor reward source and mechanics adjustments
#2: DeFi incentive funding
Development started on Liquidity Mining and is near completion. Planned to launch in Q4 2020.
Successfully implemented, improved and tested tokenization support for DeFiChain on testnet and devnet.
DFI GUI app release across 3 major operating systems: Windows, Mac and Linux. It has since undergone 3 more further releases and getting increasingly stable.

Next quarter preview

First hard fork (AMK hard fork) carried out by mid-October which should see:
Implementation of DFIP #1 & DFIP #2
Tokenization support (as per our white paper)
Liquidity Mining and Swap Protocol will be the first major use-case of DeFiChain — allowing free exchanges of different cryptocurrencies on DeFiChain. It is also going to be a very rewarding endeavor for liquidity providers, hoping to see a significant increase of attention and usage on DeFiChain when it is launched.

Looking beyond

It will be important for DFI holders to understand the power of liquidity mining on a blockchain that has native DeFi integrated. It is very different to any other blockchain so far.
Attracting liquidity from Ethereum DeFi and other blockchains and cryptos will be key.

4. COMMUNITY DEVELOPMENT FUND

Last quarter review

The CDF can be traced on the public block explorer at address dZcHjYhKtEM88TtZLjp314H2xZjkztXtRc.
Details about the community development fund can be read up on here: https://www.defichain.io/white-paper/#community-development-fund
DeFiChain Foundation has made one 150 DFI bounty payment to a GitHub user: @huguesk for providing French translation to our DeFi app.
Beyond that, DeFiChain Foundation has not funded any external projects as the blockchain itself was developed over the past year.

Next quarter review

DeFiChain Foundation is OPEN to receiving community proposals that are aligned with DeFiChain’s goals to be supported by the community development fund. Please submit proposals under: partner@defichain.com
Projects that could be open for community development fund consideration can span from engineering (e.g. development of open source tools for DeFiChain), marketing (YouTube videos, blogs), and more, as long as they benefit DeFiChain and adds values to DeFiChain.
In the future proposals will be voted on by masternode voting.

Looking beyond

Finding quality projects worth funding.

5. COMMUNITY

Last quarter review

While difficult to define exactly, we estimate around 10,000–15,000 DFI holders over different exchanges, staking platforms and with their own private keys.
Cake DeFi transparently displays 3037 stakers on their platform, while probably even more users hold coins on there without actively staking: https://pool.cakedefi.com/#/rewards This is up almost 100% from the beginning of the quarter.
Nominating Community Volunteers Moderators on Telegram
Setting up Bots in Telegram to counter Spam & Bots
Highlight Q3: Airdrop, HotBit offering DFI Listing & Staking
This is the first quarter we track our community channels:
GitHub / Source Code: https://github.com/DeFiCh/ain
(Start Q3: 435 Contributors — End Q3 654 Contributors 50.3% growth)
Twitter: https://twitter.com/defichain
(Start Q3: 2,100 Followers — End Q3 14,000 Followers 566.6% growth)
Medium/Blog: https://medium.com/@defiblockchain
(Start Q3: 110 Followers — End Q3 213 Followers 93.6% growth)
Facebook: https://www.facebook.com/defichain.foundation
(Start Q3: 201 Followers — End Q3 255 Followers 26.8% growth)
YouTube: https://www.youtube.com/channel/UCL635AjCJe6gNOD7Awlv4ug/
(Start Q3: 150 Followers — End Q3 422 Followers 181.3% growth)
LinkedIn: https://www.linkedin.com/company/defichain/
(Start Q3: 30 Followers — End Q3 66 Followers 120% growth)
Reddit: https://reddit.com/r/defiblockchain
(Start Q3: 41 Followers — End Q3 66 Followers 60.9% growth)
Telegram: https://t.me/defiblockchain
(Start Q3: 900 Followers — End Q3 11,400 Followers 1166.6% growth)

Next quarter review

The main focus here is to grow our DFI holder base to over 10,000 DFI holders.
Also, to grow all our social media channels.
It will be important to have the community help out and spread the word.

Looking beyond

As soon as we get larger, the DeFiChain community will get attacked by other DeFi communities — we have to be prepared for that.
Strong competition with other Turing complete blockchains.
Find a name for our community members!
Have a hashtag for our community!

6. BUSINESS DEVELOPMENT

Last quarter review

Listed DFI on our forth exchange Bitrue
Signed listing agreement with tier one exchange Bittrex Global
Integrated our second staking partner for DFI on Hotbit
Listed DFI on Staking Rewards, a comprehensive resource site for POS coins and tokens
Listed DFI on Masternodes Online, a masternode coin monitoring and stats service
Verified DFI Circulating supply by CoinMarketCap and Coinpaprika, enabling market cap and ranking to be displayed
Attained Fintech Certification from Singapore Fintech Association
Completed security audit by reputable security firm SlowMist, resulting in a ‘Pass’ on the report

Next quarter review

Complete listing with tier one exchange Bittrex Global
Have circulating supply verified by Coingecko
Have CoinMarketCap review ranking for Top 200 eligibility
Bring on more partners for endorsement and network effects
Have our liquidity pool covered on DeFi rating sites
Plan out partnership roadmap for DeFiChain going into 2021
Engage second security firm for future code audits

Looking beyond

Tier one exchanges require mass traction and adoption.

7. MARKETING & COMMUNICATIONS

Last quarter review

Public relations / article coverage on Yahoo News, PRNewswire, Business Insider, CryptoPotato, CryptoAdventure, Cryptofolds
Coverage of DeFiChain progress by Ivan on Tech’s morning show on YouTube
Conducted trading competitions on exchanges: LATOKEN and Hotbit
Conducted marketing campaign airdrop on LATOKEN
Conducted live AMAs (Ask Me Anything) with Julian on Hotbit and Bitrue
Follow and Retweet Promotions on Twitter
Gained access to CoinMarketCap Signals, a platform for sending updates on project developments and events

Next quarter preview

Have DeFiChain appearing on various events, such as Hong Kong Blockchain Week (Nov 2020), Singapore Fintech Festival (Dec 2020)
Increase collaborations with influencers and media appearances