To Our DeFi Community,
It’s been another thrilling week in DeFi. We saw two prominent projects, 0x and Gnosis, each announced new decentralized exchanges (DEXs), Compound launch its community governance, along with the first-ever ENS-backed loan.
In addition, despite the global economic turmoil, DeFi VCs haven’t skipped a beat. First, we saw Atomic Loans – a DeFi platform for lending Bitcoin and receiving DAI or USDC loans – raise $2.45M led by Initialized along with participation from Anthony Pompliano and Morgan Creek Digital. Second, dForce – a China-based startup aiming to build a DeFi “super-network” – raised $1.5M led by Multicoin Capital and Huobi Capital.
With Compound rolling out community governance, one of the more notable trends emerging in the DeFi space is the increasing importance of governance and DAOs. DeFi projects are beginning to focus on reducing reliance (and liability) on the respective foundations and developer teams and instead electing to incorporate tokenized governance for the long-term direction and sustainability of the protocol. We can see this trend emphasized with protocols like Kyber Network, Synthetix, Uniswap, and other prominent DeFi projects looking to DAOify themselves in the coming year along with Maker scrambling to transition towards self-sustainability amid of $20M+ lawsuit from Black Thursday.
If one thing is for sure, DeFi governance is starting to heat up across the board as it will play an important role in the proliferation of open finance and its money protocols. Expect an announcement from the DeFi Rate camp in the coming week surrounding our gameplan for participating in this movement of Ethereum protocol politicians.
With that – let’s dive into lending rates!
Another week in the books and the Dai Savings Rate (DSR) still sits at 0%. While we thought we were on the brink of recovery and a raise in the stability fee (and in turn the DSR), the current Maker Governance is actually exploring the choice to drop the Dai Stability Fee from 0.5% down to 0%, effectively making it free to open a Maker Vault and take out a loan. This is likely in an effort to restore the Dai peg back to $1 (it sits at $1.02) by flooding the market with new Dai. Decentralized lending protocols like dYdX, Compound, Aave and other struggles to offer any significant yields on Dai based loans. For reference, the average lending rate on Dai loans across DeFi lending protocols is ~0.94% APY, substantially lower than its 30 Day average of ~4.97%.
Similarly, USDC lending rates continue to suffer as the DSR sits at 0%. The highest rate offered on a permissionless lending platform is Aave, offering 1.47% APY on USDC deposits followed by Nuo at 1.42%. In comparison, the average USDC lending rate across all DeFi protocols is a mere 0.96% APY. That said, while DeFi protocols struggle to attract deposits, centralized crypto banks like BlockFi and Poloniex still offer incredibly high yields of 8.6% and 4.38%, respectively.
Atomic Loans closes $2.45M strategic round led by Intialized for native Bitcoin lending.
dForce – China’s DeFi platform – closed a $1.5M strategic round led by Multicoin Capital, Huobi Capital, and CMBI – a wholly-owned subsidiary of China’s 5th largest bank.
The NFT lending platform signed off on its first Ethereum Name Service (ENS) backed loan
In Other News…
- Top DeFi Twitter Accounts to Follow in 2020
- [Exclusive Interview] Opyn CoFounder Aparna Krushnan on DeFi Inusrance
- MetaFactory Launches Gensisi Bomber Jacket Auction
- Introducing Stake On Me: Collateralized Personal Tokens
- DeFi Saver Releases Automation V2
- Aave reaches $50M in market size
- Grayscale Ethereum Trust sees $110M in Q1 inflows
- DeFi tokens valued at $1.1B
- Ethereum stablecoins total for 50% of value transacted on the network
- [Ryan Sean Adams] The Cost of Money Priting
- [Kerman Kohli] Governance, Liability, and Competition
- [Ric Burton] Rise of Protocol Politicians
- [Nic Carter] Bailouts Don’t Save the Economy. They Prop Up Companies That Should be Allowed to Fail
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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.