Foresight Ventures:Intent Asset —A Firm Step to DeFi Mass Adoption
Author: Mike Jin@Foresight Ventures
The Revolution of Idle Assets
In 2013, Alibaba’s Yu’e Bao emerged, heralding a new era in asset management. Before this, it was challenging for ordinary users to find a secure and efficient way to manage their idle funds. Bank savings accounts offered low interest rates, and investment products were complex and hard to understand. Yu’e Bao changed everything.
The Birth of Yu’e Bao
At the dawn of the internet finance age, the Alipay team realized that users often had idle funds in their payment accounts. If these funds could be invested, users could earn returns while enhancing their overall experience. To address this, they partnered with Tianhong Asset Management to launch a product called “Yu’e Bao.”
Yu’e Bao was straightforward to use. Users simply needed to transfer their account balances into Yu’e Bao via the Alipay app, where they could start earning daily returns. This transparent and convenient investment method quickly won over users. Soon, the number of Yu’e Bao users exceeded tens of millions, and the scale of managed funds surged rapidly.
The Opportunity in Web3
With the development of blockchain technology and Web3, a new era of asset management is emerging. Products similar to Yu’e Bao are also appearing in the Web3 space.
The Web3 version of Yu’e Bao holds immense potential due to its ability to leverage the various advantages brought by blockchain technology and the vast market opportunity presented by the substantial amount of idle on-chain assets:
1. Billions of Dollars in Idle On-Chain Assets
The blockchain ecosystem contains a large amount of underutilized assets, valued at hundreds of billions of dollars. Many users store their cryptocurrencies in wallets, waiting for market prices to rise, but these assets generate no returns while idle. The Web3 version of Yu’e Bao can effectively utilize these idle assets by offering functions similar to traditional money market funds, providing users with stable returns. This model can not only increase the utilization rate of user assets but also promote the liquidity and activity of the entire blockchain ecosystem.
2. Decentralization and Transparency
The Web3 version of Yu’e Bao is based on blockchain technology, offering the advantages of decentralization and transparency. Unlike traditional financial institutions, users can invest directly through smart contracts without relying on intermediaries. This decentralized model reduces intermediaries, lowers operational costs, and improves investment efficiency. Additionally, all transactions and fund flows are recorded on the blockchain, allowing users to view and verify them at any time, enhancing user trust through transparency.
3. High Liquidity and Convenience
Compared to traditional financial investment products, the Web3 version of Yu’e Bao typically offers higher liquidity. Users can deposit or withdraw funds at any time without worrying about lock-in periods or early redemption penalties. This high liquidity makes the Web3 version of Yu’e Bao more flexible, meeting diverse user needs. Moreover, with user-friendly interfaces and simple operation processes, the Web3 version of Yu’e Bao can provide a convenient investment experience.
4. Diverse Sources of Returns
The Web3 version of Yu’e Bao can leverage various decentralized finance (DeFi) protocols on the blockchain to provide users with diverse sources of returns. For instance, users can earn returns through lending protocols, liquidity mining, and staking. Unlike traditional money market funds, these sources of returns may include interest as well as platform token rewards, making users’ investment returns richer and more diverse.
5. Broader User Coverage
Blockchain technology enables the Web3 version of Yu’e Bao to cover global users without being restricted by geography or nationality. Anyone with internet access can participate in the investment, presenting a vast market potential. Particularly in regions where traditional financial services are underdeveloped, the Web3 version of Yu’e Bao can offer users a new way to manage their finances, filling gaps in financial services.
In the Web3 realm, the emergence and development of Liquidity Staking Tokens (LSTs) and Liquidity Restaking Tokens (LRTs) showcase the market’s immense potential and opportunities. While most products can generate stable returns, their application scenarios remain relatively limited. Yu’e Bao supports peer-to-peer transfers and can be used for purchases on platforms like Taobao, offering a user experience nearly identical to a bank account. However, existing Web3 products have yet to achieve the same level of widespread use as USDT or ETH.
dappOS takes a unique approach by leveraging intent assets. Although its revenue model still relies on traditional methods like Pendle and restaking, its core innovation lies in using the intent execution network to resolve settlement issues in scenarios like withdrawing assets from exchanges and interacting with dApps. This model is akin to Yu’e Bao’s role in handling money market fund transactions and settlement issues among merchants, demonstrating dappOS’s distinctive value in the Web3 ecosystem.
What is Intent Asset?
Intent Asset, supported by dappOS, is a new type of asset that can automatically adapt to different scenarios and generate interest while idle.
For example, dappOS provides a flexible asset called intentUSD, which can be used as currency and generates interest while idle. This innovative approach allows stablecoins to automatically convert between different forms based on user needs. For instance, when USDT is needed, intentUSD can be used as USDT; when conducting a USDC transaction, intentUSD can convert to USDC.
dappOS uses its intent execution network to help users handle the staking, unstaking, and conversion of yield-generating assets, ensuring they are directly usable in different scenarios. This means that intent assets function similarly to native assets like USDT or ETH but continue to generate returns while idle.
Key Advantages Include:
- Immediate Redemption: No waiting periods or lock-in periods.
- High Yield: For example, the annual yield for USDT/USDC is 12%, and for ETH, it is 7%, with yields paid out in real-time without waiting for token issuance.
- Ease of Use: When interacting with dApps or withdrawing to exchanges, USDT/ETH balances are directly available, providing a user experience similar to native USDT/ETH.
In this way, intent assets not only function similarly to native assets but also continuously generate returns while idle, significantly enhancing the efficiency and profitability of user assets.
Use Cases for Intent Assets
Intent assets have extensive application scenarios and can be comparable to stablecoins, offering unique advantages in different customer segments and scenarios:
DeFi Player: Alex
Alex is an experienced DeFi player familiar with various decentralized finance protocols and tools. One day, he discovers dappOS’s intent assets and sees it as a great opportunity to leverage his existing assets.
Alex has some idle ETH and decides to convert it into intentUSD to generate returns. He stakes his intentUSD in dappOS’s liquidity pool and starts earning staking rewards. Later, he notices a new liquidity mining project offering high returns and transfers part of his intentUSD to that project’s liquidity pool to earn additional rewards.
Soon, Alex needs some stablecoins to participate in an emerging DeFi project. He converts part of his ETH to intentUSD and uses it directly in the DeFi project. This way, he maintains asset flexibility while maximizing returns across different DeFi platforms. Alternatively, Alex wants to supplement margin on Arbitrum’s GMX for perpetual contract trading. He finds he can directly use intentUSD as USDC without extra conversion steps.
New Entrant: Lisa
Lisa is new to Web3 and cryptocurrencies but has heard many stories about digital assets and DeFi, prompting her to give it a try. She buys some USDT but is unsure how to use these assets effectively.
Through a friend’s recommendation, Lisa learns about dappOS’s intent assets. She decides to convert her USDT into intentUSD. Initially, she just keeps the intentUSD in her wallet, watching it generate interest daily. She is pleased with this simple and convenient investment method, as it offers significantly higher returns compared to traditional bank deposits without the need for complex conversions, cross-chain transactions, or staking.
One day, Lisa wants to use some of the interest to buy groceries. Not familiar with on-chain operations, she attempts to withdraw the intentUSD directly to an exchange and then use the exchange’s debit card for purchases. To her surprise, she finds that intentUSD can be seamlessly withdrawn to the exchange and magically converted into USDT/USDC, with gas fees settled in intentUSD.
Institutional Investor
Imagine a traditional large investment institution managing billions of dollars in assets. They are deeply interested in blockchain and DeFi and are looking for stable and efficient investment methods.
They notice dappOS’s intent assets and see it as an excellent opportunity to optimize fund management. The institution decides to allocate part of its funds to intentUSD to earn stable returns without sacrificing liquidity. They use dappOS’s intent execution network to convert and diversify intentUSD across different chains, reducing risk.
The institution also uses intent assets to participate in various high-yield DeFi projects. For example, they allocate part of their intentUSD to liquidity mining to earn additional rewards. Additionally, in times of market volatility, they can quickly withdraw intent assets to fiat currency for emergency handling, ensuring immediate and flexible entry and exit. The intent execution network’s security features also provide assurance, allowing the institution to manage and optimize its asset portfolio efficiently.
Conclusion
Whether it’s an experienced DeFi player, a newcomer to Web3, or a large institutional investor, dappOS’s intent assets offer tailored solutions to meet different needs. Through these stories, we can see the wide range of applications and immense potential of intent assets, helping users efficiently manage their assets and maximize returns in the blockchain world.
How Intent Assets Work
Intent assets leverage dappOS’s unique execution network capabilities to handle complex settlement tasks by taking ordinary or intent assets as input and outsourcing these tasks to service providers within the network to achieve user-expected results. Users do not need to worry about underlying operational processes but can focus on the final outcomes of their transactions, such as earning yields, completing interactions with dApps, and withdrawing assets to centralized exchanges.
dappOS’s Intent Management System (OMS) provides nodes with a high degree of freedom to optimize costs and efficiency without compromising user security. The OMS mechanism assigns a predetermined value to each intent task, allowing nodes to flexibly adjust resources according to actual conditions to achieve optimal performance and cost-effectiveness. This ensures that user intent tasks are executed at the fastest speed and lowest cost, maintaining smooth and efficient user experiences while keeping user assets highly secure.
dappOS’s intent execution network handles various intent tasks and ensures seamless compatibility across different blockchains and decentralized applications. Users can freely use intent assets in a multi-chain environment without worrying about compatibility issues between different assets. For example, users can withdraw intentUSD as USDT on an exchange when needed or use it as USDC on Arbitrum’s GMX. This flexibility and compatibility allow intent assets to be used seamlessly in a wide range of application scenarios, offering unparalleled convenience.
Potential Future Challenges
While dappOS intent assets show immense potential in on-chain liquidity and global access, their success faces multiple challenges, including user acceptance, technical complexity, market competition, regulatory compliance, liquidity management, and user experience. Continuous optimization and enhancement in these areas are essential to realize their widespread application and long-term development in the blockchain financial ecosystem.
1. Regulatory Pressure
As the scale of funds grows, regulatory bodies will impose stricter requirements on the risk management of intent assets. Intent assets, attracting a large number of individual investors, necessitate rigorous liquidity and risk management. Regulatory bodies may introduce more restrictive measures to prevent systemic risks, such as capping individual investment amounts and increasing liquidity requirements, potentially impacting the yield and user experience of intent assets.
2. Intensified Market Competition
As intent assets gain attention, numerous competitors will emerge, with various ecosystems launching their intent assets to capture the market. They may attract users by offering higher APY and strategies or even promising airdrop expectations. However, dappOS’s early-mover advantage and forward-thinking team will raise the competitive barrier.
3. Yield Volatility
Market changes and the expansion of fund scales may cause fluctuations in the yield of intent assets. Although intent assets offer competitive yields, declining trends compared to early high returns may affect user enthusiasm, leading to fund outflows. dappOS can maintain its leading position in yield by aggregating more protocols or seeking new yield opportunities off-chain. The advantage of dappOS is that eager solvers will actively fill market gaps, capturing new yields and benefiting users’ wallets whenever new opportunities arise.
4. Liquidity Management
As a highly liquid fund-like asset, intent assets must always meet users’ withdrawal demands. This requires maintaining sufficient high-liquidity assets while ensuring a certain yield rate. Balancing this is a complex challenge, especially during market volatility. Ensuring ample liquidity is a key focus for intent assets.
5. Diverse User Needs
As the number of users grows, their financial needs become more diverse. Different users have varying preferences for risk, return, and liquidity, necessitating a wider range of financial products and services from intent assets. However, too many product choices may increase operational complexity and risk. Finding a balance between meeting user needs and controlling risks is a challenge for intent assets.
6. Technical and Security Risks
As a financial product reliant on solver networks, intent assets face technical and security risks. With frequent on-chain hacking incidents, DeFi protocol rug pulls, and resulting MEV, ensuring the safety of users’ funds is a crucial challenge for intent assets. Moreover, rapid technological advancements require dappOS to continually upgrade its solver system to stay competitive.
7. User Acceptance and Education
While intent assets offer flexible yield generation methods, users need time to understand and accept this new type of asset, especially those unfamiliar with crypto assets and blockchain technology. In the long-term development of Web3, dappOS still needs extensive user education and promotional activities to help users understand how to use intent assets and their advantages.