To Our DeFi Community,
Another week in the world of DeFi in the books! Per usual, it’s been filled with excitement and innovation.
This Week in #DeFi
👀 @Coinbase launches price oracle
🦄 @UMAprotocol announces Initial Uniswap Listing
🛠 @zerion_io releases SDK
👻 @AaveAave publishes risk framework
🎢 @dForcenet hacked for $25M
— DeFi Rate (@DefiRate) April 24, 2020
The week started off with a bang as dForce – the Multicoin-backed Chinese DeFi startup – was hacked for $25M. The attacker leveraged what’s called a “reentrancy attack” via the ERC777 token standard which also allowed for the imBTC Uniswap exploit just a day prior. The attack comes the same week the dForce team closed their strategic round with industry-leading investors like Multicoin and Huobi Capital. While this seemed to have marked the beginning of the end for dForce, the attacker ended up returning all of the capital after accidentally revealing their identity information while exchanging out the stolen assets. Whoops.
The dForce hack was a rollercoaster for the DeFi community. It sheds some light on the implications of copying and pasting code from other DeFi platforms. For those unfamiliar, dForce allegedly stole the code for Lendf.me from Compound. The Compound V1 code didn’t support the ERC777 token standard and the dForce team likely didn’t realize this. Not knowing of this loophole, the team went forward with integrating the imBTC token and the rest is history.
In more positive news, we saw the biggest US exchange launch a price oracle for DeFi. Coinbase’s oracle opens up a new range of options for DeFi developers in need of secure price oracles. The launch of a critical piece of DeFi infrastructure is just another step for the crypto giant into the world of DeFi. This year alone, we’ve seen Coinbase integrate Compound and dYdX natively into its non-custodial wallet as well as making deposits into PoolTogether and the USDC Uniswap pool via its USDC Fund in an effort to boost adoption of its fiat-backed stablecoin, USDC.
Next, we saw UMA – a derivatives project which recently rolled out priceless synthetic assets to mitigate oracle risk – announce an Initial Uniswap Listing for their native token – UMA. Not only does the listing leverage a sector-leading DEX in Uniswap, but it also gives anyone the opportunity to participate in the governance token’s initial offering at the same price as seed round investors. Talk about Universal Market Access!
Speaking of new tools for DeFi developers, Zerion released their DeFi SDK earlier this week. Zerion’s DeFi SDK is an open-source system of smart contracts designed for precise accounting across multiple protocols and dApps. This makes it easier for teams to integrate on-chain data and reduce the inefficiencies surrounding DeFi accounting. In short, the SDK aides in limiting fragmentation across various DeFi products by providing tools to quickly plug in the top players and all their relevant protocol & token data.
While all of this is great, the most important news this week is 100% without a doubt our governance announcement! In case you missed it, DeFi Rate is leveraging our brand and position as a trusted resource in the DeFi community to become a DeFi protocol politician. We launched this initiative beginning with Compound – the leading DeFi money markets protocol. Given our close work with the lending sector, we believe Compound is the perfect fit for our first governance campaign.
We’re officially on the leaderboard, all thanks to the Compound team for coordinating an initial allocation of COMP tokens towards our cause. We’re extremely grateful for the delegation given COMP tokens are still closed off to the public. To us, this is a great signal that we’re on the right track as we now sit next to some of the most well-known players in the space.
DeFi Rate is just getting started on our governance initiative and we’re fired up to throw our name into the hat this early in the game. Expect more in the coming weeks, especially as we see DeFi protocols launch governance with publicly accessible tokens.
If you’re interested in delegating your tokens, you can do so via our official wallet – defirate.eth.
With that – let’s dive into lending rates!
Dai lending rates are beginning to recover from Black Thursday in March. This week, a whale withdrew over $6M in Dai deposits on Compound, resulting in significant volatility in the underlying lending rates. Earlier this week, we saw interest rates spike upwards of 12% APY as the protocol demanded more in Dai deposits to fill the void. Since then, lending rates have mellowed out on Compound, sitting at 2.44% APY with the 30D average slightly lower at 2.05%. Aave is currently offering the highest rates on the market at 2.73% APY. Generally speaking, it’s great to see Dai lending rates going back above 1% given the past month or two have been relatively rough for the lending sector as a whole. That said, the Dai Savings Rate still sits at 0% as Maker doesn’t even register in our system.
While we thought the DSR would come back online again soon, this notion was squashed with Maker Governance currently voting to drop the stability fee to 0% in an effort to return Dai’s peg back to $1. For those unfamiliar, Dai has been sitting idle slightly above its peg for weeks now. The crypto-native stablecoin is currently trading at $1.01 as Maker Governance scrambles to dampen the demand for its stablecoin. With the stability fee potentially going to zero, access to leverage/credit will become free for the DeFi community. Potentially huge implications with this.
We’ll keep an eye on how this develops in the coming weeks!
USDC lending rates have also seen a fair uptick in the past week. Gemini-backed BlockFi is the clear leader in the field as the crypto bank offers 8.6% APY on USDC holdings. This is extremely attractive as BlockFi users can deposit USDC and receive the 8.6% interest in any major crypto asset of their choice – like BTC or ETH. This mechanism provides keen users with an interesting opportunity to hold their cash in BlockFi and earn high-yields in their favorite crypto asset. All said and done, while deposits into BlockFi are the complete opposite of decentralized finance, it still presents an attractive opportunity for anyone willing to take on the risk. Remember – higher yields generally translates to higher risks. In terms of DeFi protocols, Aave offers the highest yields to users at 3.42% APY. This is followed by Nuo at 3.1%, dYdX at 1.31% APY, and then Fulcrum at 1.29%. Coinbase is still offering the 1.25% APR while Compound continues to struggle with its USDC lending markets, only offering 0.52% APY with a 0.44% 30D average.
The biggest US exchange is launching a new price oracle for DeFi with signed price feeds from Coinbase Pro.
The permissionless derivatives protocol is listing its native token on Uniswap next Wednesday at a valuation of ~$26M.
The sector-leading DeFi asset management platform is releasing a DeFi SDK, making it easier for developers to easily plug in major DeFi protocols & token data.
dForce – China’s DeFi platform – was hacked for $25M earlier this week via a “reentrancy attack’ available through the ERC777 token standard.
We’re launching our governance campaign beginning with Compound. Delegate your COMP tokens to defirate.eth today!
In Other News…
- Aave Introduces Risk Framework for Asset Selection
- Synthetix Adjust Liquidity Incentives
- [Ecosystem Report] MakerDAO
- dYdX Launches Perpetual Contracts – 10x leverage on BTC-USDC
- FutureSwap Launches with 20x leverage on ETH-DAI
- imBTC Uniswap Pool Drained for ~$300k in ETH
- The Case for DeFi Rate Governance
- DeFi Annualized Earnings declines to ~$7M
- Dai averaging $105M in daily transaction volume – a 228% increase in only four months.
- Opyn surges past $2M in total value locked
- Curve daily volume reaches $3M
- dYdX originates $1B in loans
- [Emilio Frangella] Full Timeline on the dForce Attack
- [David Hoffman] The Fundamental Value Proposition for Ether
- [Illia Polosukhin] NEAR Protocol Economics
- [Jacob Horne] The Democratization of Value
- [Microsponsors.io] The Rise of Personal Tokens and Social Money
- [ThorChain] Thoughts on Uniswap V2
- [DeFi Saver] Meet the Team and Story Behind DeFi Saver
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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.