To the DeFi community,
This week, 1inch announced closing a $175 million Series B funding round, led by Amber Group. The AMM aggregator will spend the additional capital scaling up the development team and developing new protocols to serve as an access point to DeFi for institutional investors.
L2 non-custodial exchange DeversiFi announced an airdrop of its DVF tokens. Similar to the Paraswap airdrop, DeversiFi focused on active users measured by volume and weekly activity and used on-chain analytics to stop airdrop distributions to multi-account gamers, while making some additional provisions for early DVF holders.
Bancor announced V3 of the feature-laden AMM protocol, bringing improvements to order routing efficiency and significant new impermanent loss protections, now available from day one on single sided liquidity provisions. Liquidity mining rewards are also now auto-compounding, and third-party projects can offer LP incentives on their pools.
And hybrid AMM IDEX has come to Polygon, offering protection from common DeFi issues like front running and sandwich attacks that can lead to failed transactions and added cost. IDEX on Polygon will also offer a host of incentives, including liquidity mining and trading rewards, as well as a free weekly MATIC faucet and a ‘first trade’ bonus from users who have previously used Quickswap or Sushiswap on Polygon.
A week of exchange announcements, and incentives continue to pile up as competition grows ever fiercer for liquidity depth on different AMM platforms. Each has something unique to offer, but the open-source nature of DeFi and the entire crypto industry naturally lead to a highly fractured, even decentralized landscape of different trading options. There’s some time left on the clock, but in the event of a rollover in the broader crypto market, it seems unlikely all players will be able to sustain their growth and development if and when liquidity starts to dry up.
As 1inch joins Compound, Aave, and others in seeking to craft DeFi products for institutions, far deeper liquidity may well find its way into DeFi before much longer – but with a catch. All of these solutions rely on some form of walled KYC garden to give institutions the assurance they need to transact in this experimental new space. That means that to get access to what will likely end up as the best rates in DeFi will also require putting an identity to a wallet address, anathema to a subset of the crypto space.
Ultimately, though, DeFi and all but the cutting edge of crypto are almost certain to be consumed by national and international regulatory frameworks, even as they help shape those frameworks with new technology and greater access to capital and value than ever before. KYC is not a big deal for thousands of small business owners that need cheap financing to grow their operations, or for relatives waiting in home countries that need an easier way to receive remittance payments.
In the long term, deeper liquidity means greater access, and deeper liquidity requires better understanding of parties involved to eliminate fraud and manage risk. DeFi is for the many, not the anonymous few, and we’ll need to play ball with regulation before everyday users can truly reap the benefits of global liquidity and instant access. Let’s get ready for the next billion users!
Highest Yields: Fulcrum at 15.92% APY, BlockFi at 8.50% APY
DAI Savings Rate: 0.00%
Base Fee: 0.00%
ETH Stability Fee: 2.00%
USDC Stability Fee: 0.00%
WBTC Stability Fee: 2.00%
Highest Yields: Fulcrum at 21.91% APY, Celsius at 9.69% APY
Total Value Locked: $108.59B (up 5.13% since last week)
DeFi Market Cap: $161.9B (up 11.82%)
DEX Weekly Volume: $26.32B (down -6.13%)
Total DeFi Users: 4,094,000 (up 1.33%)
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Alex is a Content Writer at Circle, with previous experience at tech startups, Fortune 500 corporations, and as a freelance writer and analyst. Interests include cutting-edge technologies in blockchain, energy, supply chains, transportation, urban living, and more and he has been in the crypto community since 2014.