Welcome to our third edition of This Week in DeFi – a newsletter covering the top stories in open finance!
The effects of COVID-19 continue on as the world shelters from a global pandemic. While lending rates have taken a toll in light of Black Thursday earlier this month, the DeFi space continues to progress forward on a collective journey in building a new, parallel financial system for the world – lego by lego.
One of the most notable stories this week was MakerDAO opening up consideration for protocol-native compensation for victims of Black Thursday. For those unfamiliar, due to network congestion and lagging oracles, many Vault Owners suffered serious losses as collateral liquidations occurred significantly under market value and in some cases – for $0.
Given the nascency of the Maker Protocol, it’s great to see MKR holders considering compensating the victims for their loss. With 65% of voters signally “Yes”, it seems that the proposal will likely move forward towards an executive poll in the coming weeks.
The other major news included ConsenSys’ CodeFi releasing Inspect – a new risk management tool for DeFi. Inspect aggregates different lending protocols and provides insights into important characteristics like timelocks and audit history, establishing a framework for the degree of decentralization and security each project presents.
With that – let’s dive into lending rates!
Dai lending rates seem to slowly be recovering. Compared to last week, we’ve seen a slight jump in rates offered on dYdX while Compound struggles to offer any attractive yields on Dai deposits. Fulcrum and Aave are offering comparable rates hovering around 1%. Lastly, Nuo remains king in the Dai lending markets, offerings 17.3% APY on all deposits.
As we noted last week, while this interest rate is substantially higher than anything else on the market, it’s important to understand that higher returns generally equate to higher risk. For those still keen on earning this extremely high interest rate, it may be wise to be cautious and explore insurance options for your deposits – like Nexus Mutual.
While the Dai Savings Rate (DSR) is widely understood to act as the “risk-free rate” for DAI based lending markets, we’re actually beginning to realize its broader effects. Since the DSR dropped to 0% following Black Thursday, USDC lending rates have also taken a tumble. Most DeFi protocols are struggling to offer rates above 1% APY on USDC as leading protocols like dYdX and Compound offer 0.73% and 0.46%, respectively. It’s apparent that centralized crypto banks have an advantage during these unprecedented times as CeFi is offering higher interest rates on average. With that, BlockFi – one of the major crypto banks – is offering the highest rates on the market of 8.6% followed by Poloniex at 5.29%.
Find a full overview of all DeFi lending and borrowing rates on our Rates page!
Victims of Black Thursday’s Vault liquidations may be entilted to compensation by the protocol
Nexus Mutual is proposing a sustainable revenue model for its non-profit Foundation.
The proposal would re-allocate the 2.5% sell spread on NXM towards the core team.
ConsenSys’ CodeFi released a new risk management tool for DeFi lending protocols.
Users can now have a better understanding of how lending protocols stand relative to each other.
The DeFi lending protocol expanded its product offering with a new DEX, allowing users to easily swap DeFi assets like DAI, KNC, SNX, and others.
In Other News…
- [Research] Compound Reaches $1.5B in Total Deposits
- Zerion Mobile App Gets an Upgrade
- Raising $20K using Personal Tokens via an Initial $ALEX Offering
- Fairmint Opens Its Doors For Continuous Security Offerings
- DEX monthly volumes reach new all-time highs in March
- TokenSets breaks a new record with 22,900 ETH locked in Set Protocol
- Aave flirts with its previous ATHs as total value locked soars to $31M
- Total Value Locked (TVL) increased by 19% off ETH’s recent comeback
- [Bankless] Is Tokenized BTC Bullish For ETH?
- [Our Network] Issue #16: Crypto Exchanges
- [Week in DeFi] Ethereum’s Upcoming Derivatives Primitives
- [Jonathan Tompkins] Practical Protocol Funding on Ethereum
Thanks for subscribing to This Week in DeFi. All of our content is free and publicly available, so feel free to share it!
Analyst at Bankless – one of the leading resources for open finance. Lucas is an active contributor to the DeFi ecosystem with appearances in other notable DeFi outlets including The Defiant and Our Network. He has years of experience working with dozens blockchain and token startups where he focused on token economics, marketing, and growth.