To the DeFi community,
This week in DeFi brought major consolidations of resources, as Yearn Finance announced ‘mergers’ with a slew of DeFi projects, including Akropolis, Pickle Finance, CREAM, Cover, Sushiswap, and several others. These collaborations are cross-functional, allowing Yearn vaults to learn from Pickle yield optimization strategies and use Cover insurance products, or adding Cream leverage products to the Sushiswap UI. The possibilities are endless, and the agreements (validated by governance token holders from the respective protocols) formalize the already open-source, collaborative nature of the DeFi ecosystem. The Yearn Consortium perhaps?
VISA announced a partnership with USDC stablecoin provider Circle (who manage USDC jointly with Coinbase) to allow customers to send and receive USDC. On the very same day, US Congresswoman Rashida Tlaib introduced a bill that would require stablecoin issuers to be regulated like US-based banks, requiring a banking charter and even FDIC insurance. Dubbed the STABLE Act, the proposed legislation has met resistance within the crypto community, and seems unlikely to pass for the time being.
The #STABLEAct is a confused attempt at regulating perceived harms that are not actually caused by the technology, but are, ironically, inherent in the existing financial system that cryptocurrencies are designed to replace
— Reuben Bramanathan (@bramanathan) December 3, 2020
In addition to push back from businesses like VISA, Facebook will also be resistant to overly broad digital currency regulation. The social media giant announced this week it’s Libra project, rebranded Diem, is set to launch in January 2021.
Back on the decentralized side, the first phase of Eth2 began, offering staking rewards to secure the network as Ethereum transitions to Proof of Stake, laying the foundation for the next generation of the Ethereum network. More than 524,288 ETH (worth over $300M) were deposited before the deadline last week, and the deposit contract is now almost 100% oversubscribed with nearly 1 million ETH contributed. When complete, Eth2 will offer lower transaction costs and increased transactions per second, allowing DeFi and other applications built on Ethereum to reach a truly global scale.
And just yesterday Aave released V2 of its borrowing and lending protocol, adding new features like multi-asset flash loans and native credit delegation. Credit delegation allows debt to be drawn against collateral deposited by other uses, vastly increasing the potential DeFi credit pool. Aave is the fourth largest DeFi application by TVL, with more than $1.5 billion in assets locked in the protocol.
And a few notes to end the week…
- Sushiswap fended off an late night exploit, sending an on-chain message to the attacker while the hack was ongoing offering a bug bounty. LP rewards were drained for between $10,000 and $15,000, with the loss covered by the Sushiswap Treasury.
- European Central Bank President Christine Lagarde said stablecoins could pose a risk to financial security, while making a case for a digital Euro.
- DEX aggregator 1inch raised $12 million in a Series A funding round led by Pantera Capital, to be used for marketing and additional protocol development.
DeFi, stablecoins, and cryptocurrencies continue to attract the attention of regulators and venture capital investors as the price of Bitcoin approaches all-time highs. The pace of DeFi development seems to only be increasing, vastly outpacing the ability of lawmakers to keep up with technological changes that are redefining the global financial system. By the time they catch up, crypto and DeFi could be bigger than any of us could have imagined.
The parallel trend of community-led DeFi projects banding together while regulators try to make heads or tails of stablecoins goes to show a clear trend of sovereignty taking place in crypto, a narrative many are banking on as the stage for the future of finance.
Highest Yields: Fulcrum at 12.84% APY, dYdX at 6.62% APY
Cheapest Loan: Bitfinex at 0.15%
Dai Savings Rate: 0.00%
Base Fee: 0.00%
ETH Stability Fee: 2.00%
USDC Stability Fee: 4.00%
WBTC Stability Fee: 4.00%
Highest Yields: Fulcrum at 14.48% APY, dYdX at 6.66% APY
Cheapest Loan: BlockFi at 0.15%
Yearn Finance is changing the collaborative landscape of DeFi.
Nexus Mutual is offering DeFi insurance covers on centralized custodians.
Visa wants to let you use USDC at thousands of retailers worldwide.
Congressional representatives are taking aim at stablecoins with a new bill.
A DeFi blue-chip is evolving, expanding the DeFi credit market with credit delegation via Aave V2.
Total Value Locked: $14.78B (up 14.9% since last week)
DeFi Market Cap: $19.3B (up 17.4%)
DEX Weekly Volume: $3.78B
DAI Supply: 1.07B (up 4.9%)
Total DeFi Users: 996,000 (up 2.1%)
[CoinCenter] – The Unintended(?) Consequences of the STABLE Act
[Fred Eshram] – Governance Minimization
[Cooper Turley – The Defiant] Eth2 Successfully Launches With Many ETH2 Flavors Coming
[Anthony Sassano – ETHhub Weekly] EthHub Weekly #142
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Alex is an analyst and writer with experience at tech startups and Fortune 500 corporations. He’s focused on cutting-edge technologies in blockchain, energy, supply chains, transportation, urban living, and more and has been in the crypto community since 2014.