To Our DeFi Community,
Another promising week for DeFi is in the books.
The week kicked off with ErisX launching the first US-regulated futures on ETH. While ErisX futures contracts aren’t the most widely traded, the key takeaway is that the CFTC will allow Ether-based futures contracts to launch legally in the US.
Importantly, these are physically-settled futures contracts, meaning that the contracts require the digital delivery of ETH when the contracts expire – rather than the cash equivalent. The introduction of CFTC regulated futures is a vital step in the maturation of Ethereum and massively increases the accessibility of Ether to institutional investors. We can expect Bakkt and CME – two other financial institutions that support crypto futures – to launch their Ether-based derivatives products in the coming future.
On the other side of the spectrum, we saw an entirely new crypto-native offering from Grammy award-winning recording artist, RAC. The artists dropped $TAPE – a limited edition cassette tape of his new album – on Zora. The drop was a massive success as it’s currently the most profitable LE drop we’ve seen on Uniswap to date. In less than 24 hours, $TAPE surged from ~$20 to over $800. While this is a great initiative, there are some things that could be refined to make these offerings more attractive and accessible for dedicated fans. You can read more about the offering and some of the issues here.
The last thing we’ll touch on is probably the most bullish thing we can discuss. Ethereum and DeFi are going mainstream.
This week alone we saw Reddit launch the initial testing for Community Points – tailored ERC20 tokens for Reddit communities – to two major subreddits: /r/cryptocurrency and /r/fortniteBR. These two communities combine for over well over 2M users who will be introduced to the Ethereum ecosystem. In addition, we saw Visa – the payment giant – looking to file a patent for a “fiat-backed digital currency”. The patent mentions Ethereum over 10 times, however, it does not explicitly state it will leverage the public blockchain for its patent.
That said, the fact that both Reddit and Visa (as well as many other corporations) are exploring Ethereum implementations into their multi-billion dollar companies is hard to ignore. Things are looking up for DeFi and crypto at large, and we’re excited to watch it unfold over the next few years.
With that – let’s dive into lending rates!
Another week and the Dai Savings Rate is still at 0%. In fact, based on the latest governance poll, it looks like it will remain at 0% for the foreseeable future. Interest rates across the board continue to sit relatively low compared to their historical averages. However, dYdX and Aave are offering somewhat attractive deposit rates of 3.37% and 3.4% APY, respectively. Compound currently offers the lowest interest rate on the market for Dai deposits, sitting at 0.85% APY. Comparing this to its 30 day average of 2%, Compound is clearly hurting from the 0% DSR landscape. This becomes increasingly worse as many of our favorite DeFi applications – like PoolTogether and Dharma – rely on Compound’s Dai interest rates to empower their application and attract users with high-yielding rates. As an example, PoolTogether is only distributing ~$140 for its weekly prize pool compared to the $1.1K prior to Black Thursday.
USDC rates are dominated by centralized providers like BlockFi and Poloniex who offer 8.6% and 5% APY on USDC deposits, respectively. The only DeFi lending protocol to compete with these rates is Nuo as they offer 8.57% APY. The next closest is Aave, giving USDC depositors a respectable 4.05%. Lastly, we see dYdX, Compound, Fulcrum, and Coinbase all offering relatively similar rates around of around ~1%.
ErisX launches the first CFTC regulated futures products for Ether
RAC dropped a limited-edition good from his new album on Zora
Balancer released the details for their native governance token – $BAL
Aave updated its stablecoin interest rate models to provide borrowers with more attractive rates.
In Other News…
- [Stablecoins] Liquity Steps Up to Compete with Maker
- [Community] Best DeFi Newsletters to Subscribe To
- [Tools] Introducing Rabbithole: Gamifying DeFi
- [Derivatives] Synthetix Stakers Struggle to Combat High Gas Prices
- WBTC doubled its circulating supply with 1,000 WBTC Minted in a single transaction
- Uniswap leads the DeFi sector in Annualized Earnings
- 0x Surges to over $1M in projected earnings
- Aave surpasses Uniswap in Total Value Locked
- TokenSets successfully executes largest rebalance to date
- [Lucas Campbell – Bankless] How to Value Crypto Capital Assets
- [Kain Warwick – The Defiant] Rejecting Permissioned Systems
- [Anthony Pompliano – The Pomp Letter] Quantitative Easing Is The Ultimate Drug and America Is Addicted to Getting High
- [Justin Drake – Eth Research] Enshrined ETH2 Price Feeds
- [Jim McDonald – Attestant] Charting Ethereum Issuance
- [Hasu – Deribit] – The Future of Money Could be Discretionary
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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.