To the DeFi community,
This week Sushiswap and Synthetix and yearn are letting us in on their plans for the new year. Fei Protocol prepares a new stablecoin contender, and Layer 2 solutions offer different paths for DeFi evolution.
Sushiswap released their plans for 2021, including consolidation to a broader open organization as a part of the Yearn ecosystem. V3 will add MIRIN – allowing CEXs and partners to add liquidity to Sushiswap alongside leveraged yield farming. MIRIN brings one-click deposits, staking and automated yield rebalancing powered by Yearn’s Keep3r Network. Smart contracts for the Miso launchpad program are set to add a more structured approach to launching a token using AMM liquidity pools. Layer 2 transactions powered by zk-rollups (favored for compatibility with other Yearn ecosystem products) are also in the works, as are cross-chain integrations with help from Rune on Cosmos and Moonbeam on Polkadot.
The roadmap sparked contention in the community as the Uniswap vs Sushiswap community continues to build, largely revolving around Andre’s rant around building in DeFi.
This conversation was cemented by a new proposal for yearn to mint new tokens to fund protocol development. While the 30k hard cap meme was great, the community is now divided over whether or not issuing new tokens goes against the ethos of the project.
1/ The past 24 hours YFI debate has been fascinating to watch.
1. Clear contributor vs holder divergence, both sides citing greed
2. The "devs" did not start the proposal, nor request it
3. The roadmap remains v2 and buy back and build
— Andre Cronje (@AndreCronjeTech) January 15, 2021
Synthetix also shared its 2021 plans, preparing to add Layer 2 capabilities for faster and cheaper synth trading. Tokenized debt, order matching, reconfigured staking rewards, and a rework of existing smart contract designs are all in the works, along with a host of as-yet unannounced new synthetic assets. Synthetix plans to follow in the footsteps of Yearn in absorbing talent and developer resources, including providing funding for developers who work on the optionsDAO protocol to help improve options liquidity within the Synthetix ecosystem.
Notably, Synthetix appears to be taking the Optimistic Ethereum path to Layer 2 rollups, as opposed to the zk-based L2 framework being adopted by the Yearn ecosystem. Hopefully a fully functional Eth2 release will arrive sooner than later, but the emerging split between Layer 2 solutions become a breaking point in the legendary composability of DeFi that has allowed the industry to quickly iterate and grow over the last year.
With algorithmic stablecoins like Empty Set Dollar (ESD) and Dynamic Set Dollar (DSD) bringing attention to a new sector of DeFi, a new decentralized stablecoin contender – FEI – is looking to differentiate itself after coming out of stealth. Fei Protocol plans to release a dollar-pegged stablecoin with permanent deep liquidity and strong mechanisms and incentives for maintaining its peg.
Fei backers will make permanent contributions to the underlying liquidity pool, known as the Protocol Controlled Value, in exchange for an equal value of Fei stableconis. From that foundation, the Fei protocol will use programmatic mints and burns of Fei tokens within a Uniswap liquidity pool and directly against balances held by traders when performing transactions that impact the dollar peg of the Fei token supply. While still in development, Fei Protocol ambitiously seeks to address issues of centralization and capital efficiency still not solved by existing stablecoin designs, and will be one to watch closely as a launch sometime in Q1 approaches.
In summary, 2021 is shaping up to be another incredible year for building, with multiple protocols set to deliver products and functionality that will supercharge existing trends like yield farming, margin trading, and launching new DeFi projects, all at the speed of Layer 2. Still, unique communities are rallying around different narratives, showing that DeFi is becoming more competitive and differentiated by the day.
If you thought DeFi was redefining what was possible in financial wizardry in 2021, you ain’t seen nothing yet.
DAI Savings Rate: 0.00%
Base Fee: 0.00%
ETH Stability Fee: 2.50%
USDC Stability Fee: 0.00%
WBTC Stability Fee: 4.50%
Yearn Finance has just 30,000 tokens to govern the protocol. But some community members are calling for more.
Sushiswap will partner with centralized exchanges to multiply liquidity, and that’s just the tip of the iceberg.
Synthetix will add new tokenized assets and put Optimistic Ethereum to use in 2021, plus much more.
Fei Protocol is the most advanced design yet for creating the perfect stablecoin.
Anchorage receives approval for the first Federal Bank Charter in the US for a crypto business, paving the way for more banks to hold crypto assets.
Total Value Locked: $21.41B (down -4.03% since last week)
DeFi Market Cap: $30.97B (up 16.17%)
DEX Weekly Volume: $11.96B (down -7.29%)
Total DeFi Users: 1,244,500 (up 1.9%)
[Chris Powers – Dose of DeFi] AMM LPs and Layer 2 in times of Market Volatility
[Anthony Sassano – The Daily Gwei] – The Holy Grail of Stablecoins – The Daily Gwei #159
[The Defiant] – Aragon Faces Wave of Resignations
[Andre Cronje] – Building in defi sucks (part 2)
[Allan Niemerg – Yield Protocol] – Fixed-Rate Loans for MakerDao Users
[Anthony Sassano – The Daily Gwei] – Unicorns or Sushi? – The Daily Gwei #160
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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.