To Our DeFi Community,
Boom. Another week in the books!
The week kicked-off with Balancer, the DeFi non-custodial liquidity and asset management protocol, launching Liquidity Mining. Users can now earn BAL tokens by becoming a liquidity provider. With these tokens following the SAFG framework, BAL has no economic rights and are non-transferable. They simply represent voting power for future protocol changes. However, it’s important to recognize that upon a successful distribution, nothing is stopping the protocol’s governance system from changing and/or lifting these restrictions. That’s the beauty of the SAFG. It’s a simple framework for legally distributing protocol tokens in almost any jurisdiction. Even Compound – a US company based out of SF – is taking a similar model with its public COMP distribution. Be on the lookout for that to begin later this month.
What’s interesting with the Balancer model is that the liquidity pools with the lowest fees will actually receive a higher allocation of BAL tokens (which are distributed pro-rata based on total liquidity). In other words, if two Balancer liquidity pools have the same amount of liquidity, the pool with the lower trading fees will receive more BAL on a weekly basis. As stated in our article this week:
“Ultimately, this creates a rather elegant design as pool creators (as well as liquidity providers) will have to factor in whether they’d prefer to play the short-game and potentially earn higher trading fees or play the long-game by minimizing trading fees to maximize their BAL earnings.”
Moreover, with many Balancer pools now charging marginal fees (some as low as 0.001%), we may see the protocol begin to siphon away volumes from Uniswap which charges 0.30% on trades. For those interested, you can stay up to date on Balancer via this Dune Analytics Dashboard from Matteo Leibowitz.
The week capped off with another amazing milestone. DeFi reached $1B in total value locked for the second time this year. With DeFi comprising of dozens of money protocols on Ethereum (and growing), it’s further evidence that our nascent industry is maturing into open financial infrastructure for the world. As intended. The wild part is that despite the milestone only being 4 months apart, the landscape looks surprisingly different. DeFi governance is trending. Bitcoin on Ethereum is hitting its stride while composability continues to flourish.
But we’re not done at a billion. The proliferation of DeFi will be realized with hundreds of billions in value locked. Maybe trillions. We’re still quite a ways away.
And that’s only a drop in the ocean of value.
Till next week, stay safe out there!
- Highest Yield: dYdX at 3.28% APY
- Cheapest Loan: MakerDAO at 0% when using ETH as collateral or Compound at 0.94%
- Biggest Mover: CoinList now offers a 2.4% APY (up from 0%) on Dai deposits. Institutions/accredited investors only
- Highest Yield: Nuo at 8.63% APY or BlockFi at 8.6%
- Cheapest Loan: dYdX at 3.25% APY
- Biggest Mover: Nuo borrowing rates decreased from 21% down to 13.11%
Liquidity providers can now earn BAL, the protocol’s native governance token.
OMG Network – an Ethereum L2 scaling solution – deployed their Beta version on mainnet with support for Tether (USDT).
The protocol behind Erasure closed a $3M investment round from Placeholder VC and Union Square Ventures.
DeversiFi, a self-custodial DEX, deployed a new version of the privacy-focused DEX leveraging StarkWare scaling solution.
The DeFi sector is holding over $1B in value across dozens of money protocols, reaching this milestone for the second time since February.
In Other News…
- [Governance] DeFi Governance heats up with pNetwork + Curve DAO
- [Ecosystem] Top 5 ETHGlobal HackMoney Winners
- [NFTs] CryptoPunks Sales Skyrocket
- [Staking] RocketPool Shares 2.5 Upgrade – Tokenized rETH for ETH2
- [Ecosystem] Formatic Wallet Rebrands to Magic: Announces $4M Seed Round
- DEX volume reaches $1B last month
- DAI supply reaches new ATH with 128M in circulation
- Quick thread on Balancer by Matteo Leibowitz
- Tokenized BTC on Ethereum now past $50M
- Curve Finance experiences $220M trading volume in 4 months
- Whale mints 10M DAI from MakerDAO
- [Nemil Dalal – Bankless] DeFi will do to banks what the internet did to newspapers
- [Lucas Campbell – The Defiant] The State of Ethereum DEXs: Open and Trustless Wins the Race
- [Danny Ryan – Ethereum Foundation] The State of ETH2, June 2020
- [dYdX – The Integral] Understanding Perpetual Market Funding
- [Kyle Samani – Multicoin Capital] DeFi’s Invisible Asymptotes
- [Maker Foundation – Blog] Maker Governance Review: May 2020
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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.