🇺🇸DeFiChain Transparency Report Q4 2020

DeFi Blockchain
17 min readJan 13, 2021


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

Q4 Transparency Report Video:

Join us LIVE to discuss the Q4 Transparency Report on 13th January 2021 at 8pm Singapore Time:

We hope you appreciate the insights!

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


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 coins, 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

Personal Message by the DeFiChain Foundation’s Chairman

Dear DeFiChain community,

I am sure you agree that Q4 was one of the most successful quarters any project in the crypto ecosystem has ever experienced. Led by incredible engineering and community work, DeFiChain exploded in popularity by any metric you put to it and I want to thank everyone that helped to make this happen. As you will see, this is only the beginning!

In a small townhall session I recorded a review of the past quarter and actually DeFiChain’s entire history. You can watch this here: https://youtu.be/U9sO3_ql46I It will give you a bit of a glimpse into all the magic that the entire community managed to pull together and serves as a good summary if you want to share some background info with new DeFighters.

Let’s look at some metrics. A blockchain centred around DeFi is mainly measured based on two things:

  1. The DeFi value that is being transacted on it, and
  2. How many people use the service.

In Q4, we totally killed it: It all started with the launch of the DeFiChain DEX and its associated liquidity mining: https://dex.defichain.com/mainnet/pool The Total Value Locked (TVL) went up day by day and DeFiChain is now actually the largest DeFi protocol for Bitcoin, bypassing the Lightning Network, hitting approximately 80 mil USD by the end of 2020: http://www.cakedefi-review.com/DefiChain?tab=DEXTVL

With DFI being listed on Bittrex (https://global.bittrex.com/Market/Index?MarketName=USDT-DFI) in October 2020, the community grew and grew not only on Social Media, but also with its active addresses passing 11,000: http://www.cakedefi-review.com/DefiChain?tab=addresses.

This all resulted in massive global interest and the market cap soared to over 800 mil USD, hitting number 40 of all blockchains on Coinpaprika: https://coinpaprika.com/coin/dfi-defi-chain/ Price is not something we focus on or can influence directly, but as a community we can drive massive value to the project, which inevitably will be reflected in the price people are willing to pay to use the service over the long run.

So, looking at the upcoming quarter Q1 2021 and actually the entire year of 2021, I believe that DeFiChain is in a fantastic position to dominate not only the “DeFi on Bitcoin” space, but we also have a shot to become the largest DeFi project as a whole. U-Zyn made a wonderful presentation on a technical outlook of what’s coming up in 2021, and you should take the 15 minutes to watch it: https://youtu.be/fpivp2DyLKU To summarize our 3 main targets until the year-end:

I know these are lofty goals for the entire community, but I rather shoot for the stars and then land on the moon instead of aiming low and then falling behind others, who are more aggressive.

The five ways we get there by the end of 2021 can be summarized as:

  1. Easy and safe DeFi on the main chain (and not as a dApp on layer 2) built around Bitcoin.
  2. Full interoperability via atomic swaps to Bitcoin.
  3. Decentralized Tokenization of stocks and other assets on DeFiChain.
  4. More people and teams applying for community funding to work on and around DeFiChain.
  5. Significant partnerships with other blockchains and teams to interact with and build on top of DeFiChain.

Breaking these annual targets down, as a rough outline Q1 2021 should bring:

  1. Massive usability improvements of the DeFi App.
  2. Reduction of the needed collateral for masternodes to 20,000 DFI for increased decentralization.
  3. Atomic Swap Capabilities with Bitcoin to get in and out of DeFiChain completely trustless.
  4. DFI being picked up by 1–2 more Tier 1 exchanges.
  5. Community Development Fund proposals with an increase in development activity.

To translate these five deliverables into three measurable results for Q1 2021, that obviously greatly depend on the general crypto markets as a whole, I would see DeFiChain to:

  1. Have 10% of Uniswap’s TVL, which would currently be around 250 mil USD in TVL,
  2. Have 25,000 active addresses,
  3. Have a larger market cap than Uniswap, which is currently at around 1.3 bio USD.

All this would make DeFiChain one of the largest and most important DEXes out there. As you can see, our progress so far is just the beginning. DeFiChain’s mission is to bring full DeFi capabilities to Bitcoin in order to not only be the №1 Blockchain for DeFi on Bitcoin, but to achieve the big vision of being the №1 Blockchain for DeFi in general! I can assure you that with more use cases, more exchanges, more platforms and more users, DeFiChain will gain even more popularity and will change the DeFi landscape as a whole. I am very much looking forward to experiencing this with all of you.

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++ or JavaScript engineer, consider working with DeFiChain full time. Commit code on GitHub or interact on Social Media. There is no other way for us to succeed! It takes all of us. So, chip in and help out.

Dream. Plan. Execute.

Dr. Julian Hosp

DeFiChain Foundation’s Chairman


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 = 8,369,272.72635888 DFI

  • DeFiChain was developed without any outside funding and DeFiChain did not pay anyone for its development.
  • DeFiChain Foundation’s annual burn rate is approximately 5,000 USD and includes basic cost of 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 Foundation is committed on NOT selling any of its DFI coins or using them as payment for services. Rather, it will use the DFI to fund usage incentives for liquidity mining, exchange listings, etc.
  • DeFiChain Foundation wants to make it clear that the coins it holds are to be controlled by the masternode network. It is not to benefit its board members.
  • 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.


Last quarter review

  • Ang Mo Kio (AMK) Hardfork was successfully carried out on October 2020
  • This implements DFIP #1: Bitcoin anchoring reward adjustments where 0.1 DFI per block is set aside to fund Bitcoin anchoring
  • Also implements DFIP #2: DeFi incentive funding where 45 DFI per block is set aside to fund for DeFi use-cases on DeFiChain.
  • Bayfront Hardfork was successfully carried out on November 2020 implemented
  • This hardfork activates the first DeFi use-case of DeFiChain, allowing the ability to start Decentralized Exchange and Liquidity Mining.
  • Decentralized Exchange (DEX) was implemented and launched with 3 pairs: BTC-DFI, ETH-DFI, USDT-DFI.
  • Alongside with that Decentralized Liquidity Mining was also then made available.
  • Bayfront Gardens Hardfork, December 2020 was implemented
  • This hardfork fixes some bugs with Bayfront that was discovered during the trial 1 DFI per block period with DEX and Liquidity Mining.
  • Blockchain Explorer, December 2020 extended to support custom transaction types
  • Statistics APIs, December 2020 implemented for DEX and blockchain activity. Providing insights via https://dex.defichain.com to DEX activities on DeFiChain.

Next quarter preview

  • Clarke Quay Hardfork planned for January 2021 hardfork to allow custom pool rewards (DFIP #3, https://github.com/DeFiCh/dfips/issues/5)
  • Ledger Hardware Support allowing users to use a ledger hardware wallet to manage keys securely.
  • Addition of Bitcoin Cash and Litecoin, January 2021 liquidity pools (DFIP #5 and DFIP #6, https://github.com/DeFiCh/dfips/issues/7 and https://github.com/DeFiCh/dfips/issues/8)
  • Reduction of masternodes collateral from 1 million DFI to 20k DFI. (DFIP #4, https://github.com/DeFiCh/dfips/issues).
  • Research is also done to allow the possibility of easy staking directly via the DeFi app itself.
  • On top of that, the app itself is planned to support direct multiple masternode hosting — making staking and masternode hosting much more accessible to DeFiChain users.
  • Collateralized Loan Contracts allowing users to borrow and lend money for returns and enables the potential of trustless tokenizations.
  • Bitcoin Atomic Swap. This allows for a trustless decentralized swap between DST BTC on DeFiChain and BTC on Bitcoin blockchain.
  • This will be made available on the official DeFi app in a very straightforward UX for both directions, either coming into DeFiChain from Bitcoin, or going out from DeFiChain into Bitcoin blockchain.
  • DFI as Ethereum ERC20. This would make DFI accessible to Ethereum users, and potentially get it listed on various ETH based decentralized exchanges.
  • Release of a technical paper, Pink Paper, that covers the implementation of up and coming use cases of DeFiChain — including but not limited to decentralized tokenization implementation, atomic swap implementation and its UX, decentralized stocks, commodities tokenizations, etc.
  • Further updates on various websites, especially Explorer and DEX tracker to provide improved insights into DeFiChain.

Looking beyond

  • Some of the things we are looking forward to:
  • Collateralization of real assets e.g. stocks and commodities
  • Mobile App Wallet will be important
  • Release of JavaScript libraries to allow for more accessible community building of decentralized applications on DeFiChain.
  • A web extension allowing newer users to transact using a centralized node is on the horizon, this will greatly increase adoption and allow for further and more exciting web DApp development such as games, trading platforms, etc.


Last quarter review

  • Version 1.2.0 release with tokenization support. This allows users to not only easily send and receive DeFi Standard Tokens (DST) via DeFi App, but also to create and manage tokens.
  • Version 2.0.0 release. A major upgrade of DeFi app was released on November 2020. This version enables the use of hierarchical deterministic (HD) keys on the app, allowing users to easily restore and backup their wallet via the use of Mnemonic Phrase similar to that of BIP39 of Bitcoin.
  • Version 2.1.0 release with Decentralized Exchange (DEX) and Liquidity Mining (LM) support. This supports the features introduced with the Bayfront DeFiChain upgrades and enables the first fully end-to-end trust no one DEX and LM support right on your desktop.
  • Several releases were also made on the v2.1.x which brings about many improvements to make usage more user-friendly. Some of the improvements include:
  • Easy reindex options
  • Collateral address prefill
  • Share address selection when adding liquidity
  • UTXO transaction showing in account history
  • Improved handling of DFI across UTXO and tokens
  • Improved performance and memory issues

Next quarter preview

  • Hardware Ledger Support allowing users to manage and secure their funds using the industry-proven Ledger hardware wallet
  • Improved Masternode Management allowing users to create and manage masternodes directly in the app. With the passing of DFIP #6, masternode staking will be more accessible to DeFiChain users. DeFi app will include an easy masternode management tool — including allowing users to stake directly on the app itself without requiring external servers.
  • Atomic Swap support allowing users to swap between BTC DST and BTC on Bitcoin blockchain in a very straight-forward UI.
  • Collateralized Loan Management Following the upgrades on DeFiChain enabling collateralized loan, DeFi App will also support an easy management of collateralized loan.

Looking beyond

  • Decentralized stocks trading directly on the DeFi app itself.
  • This might warrant a new section in the future — DeFi Mobile App!


Last quarter review

Next quarter preview

  • Growing the product design team and UX capabilities.
  • Design for additional content and utility at redesigned Explorer.
  • Handing over of defichain.com and the DeFiChain blog to the marketing team, for design and UX to focus more on the apps.
  • Explore ways to better visualize changes in adoption, TVL and other important metrics in Explorer.
  • Design new and evolve existing UI to handle future features such as tokenization and atomic swaps.
  • Explorer and DEX tracker to have improved tokenization visualization.
  • Web-based atomic swap activities explorer and visualization.
  • More usage guides to be published, especially on how to run masternodes, how to use Ledger hardware wallet with DeFi app, how to perform atomic swap, and more.

Looking beyond

  • Better product management process across design/engineering/QA/feedback gathering to improve UX.
  • Work with the community team to publish more guides/resources to spur the community to develop on top of DeFiChain.
  • Work with the marketing team to “grow up” the defichain.com website, introduce CMS and streamline publishing of content.


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 received the first Community Development Proposals and will be setting up the first vote in Q1 of 2021
  • DeFiChain Foundation will start at least 4 new DFIPs (DeFiChain Improvement Proposals at the beginning of 2021)
  • Sent out a Slido Survey with a Wish list to the Community
  • Beyond that, DeFiChain Foundation has not funded any external projects as the blockchain itself was developed over the past year.

Next quarter preview

  • 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 on Reddit: https://www.reddit.com/r/defiblockchain/
  • 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.


Last quarter review

(Start Q4: 654 Contributors — End Q4: 803 Contributors — 221% growth)

(Start Q4: 255 Followers — End Q4: 591 Followers — 131.7% growth)

(Start Q4: 422 Followers — End Q4: 1410 Followers — 234.3% growth)

(Start Q4: 66 Followers — End Q4: 239 Followers — 262.1% growth)

(Start Q4: 66 Followers — End Q4: 395 Followers — 498.4% growth)

Next quarter preview

  • The main focus here is to grow our DFI holder base to over 25,000 DFI holders.
  • Also, to grow all our social media channels
  • Move more of the discussion and questions around DeFiChain from Telegram to Reddit and GitHub
  • It will be important to have the community help out and spread the word especially on Twitter
  • Decentralizing the discussion and questions into more independent groups and communities in many more languages

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.
  • Overtaking Uniswap as the biggest DEX (just 30% more growth to be the biggest DEX in the industry)
  • Have a hashtag for our community!


Last quarter review

  • Completed listing with tier one exchange Bittrex Global
  • Participated in Bittrex’s DeFi promo with waiver of DFI trading fees in Dec
  • Organic daily trading volume surpassed $2M USD, maintaining above $1M USD
  • Partnered with Blockfolio Signals, a function to push notifications directly from DeFiChain to app users
  • Listed on Defillama.com, a DeFi listing site, ranking coins/tokens by total value locked
  • Attained ranking in top 30
  • Included in Coinpaprika DeFi List
  • Attained ranking in top 45
  • CoinMarketCap Top 200: eligibility reviewed — more exchanges and volume required
  • CoinMarketCap DEX listing: eligibility reviewed — at least 60 days in operation required
  • Completed security audit by reputable security firm KnownSec,
  • Resulting in full Pass, with no vulnerabilities found

Next quarter preview

  • List on more tier one exchanges
  • Have DeFiChain DEX trading pairs and volume included on listing sites
  • Work on being added to Messari.io database
  • Continue working to be included in Top 200 ranking on CoinMarketCap
  • Have DeFiChain DEX listed in DeFi and Yield Farming section of CoinMarketCap
  • Continue conversation with CoinGecko on circulating supply verification
  • Bring on more partners for endorsement and network effects
  • Work with other chains for joint announcements

Looking beyond

  • Work on even larger tier one exchange listings
  • DeFi listing sites are predominantly ETH based (possibly maximalists), and pushing back significantly on DeFiChain being a novel chain / non-ETH


Last quarter review

Next quarter preview

  • Develop DeFiChain’s narrative to enhance its value proposition amongst the community
  • Craft and deliver a “voice and tonality” guide, to ensure unified and consistent message delivery
  • Create an “always-on” approach to storytelling to increase DeFiChain’s presence amongst influential media
  • On-board new communication agency partner(s) to help amplify awareness and elevate organic media coverage through effective, highly targeted PR and media relations efforts
  • Introduce a new crisis communications guide, outlining best practices in order to keep the community aware and informed of any potential or ongoing issues
  • Identify potential thought leadership and event opportunities, further enhancing DeFiChain’s credibility

Looking beyond

  • Continue to build trust, credibility and advocacy by providing fair, honest and transparent communications to the community, influencers, key opinion leaders (KOLs) and target media
  • Continue to aggressively promote DeFiChain in an efficient and effective manner
  • Compete effectively with other Turing complete blockchains


Last quarter review

  • Facilitation of exchange listings and security audit

Next quarter preview

  • Ensure growth of strong DFI uses cases while falling within the legal frameworks

Looking beyond

  • General uncertainties around legal & compliance in the crypto space