To Our DeFi Community,
Another week in DeFi officially in the books!
This Week in #DeFi
💥 @UMAprotocol Uniswap listing launches with a bang
🚀 @keep_project goes live on mainnet with tBTC
💵 @compoundfinance elects to support USDT
💰 @TheLAOOfficial launches for-profit investment DAO
— DeFi Rate (@DefiRate) May 1, 2020
The most notable event this week was UMA – the permissionless derivatives and synthetic assets protocol – launching an Initial Uniswap Offering. For those that missed it, the offering deposited 2% of the 100M UMA supply into Uniswap along with roughly $500k in ETH, allowing anyone to participate. As a result, the token distribution event saw massive demand as UMA tokens were quickly soaked up from the open market. While the tokens were set to start at the same valuation as the seed round of $27M, UMA tokens surged to over $2 per token within minutes, valuing the protocol at over $200M. With the dust still settling, UMA tokens are currently trading for roughly $1.35 per token at a fully diluted market cap of $135M, according to DeFiMarketCap. The Uniswap Listing was the first token distribution event available to the public. But with over 35M UMA set to be distributed to users and developers, the Risk Labs Foundation (the team behind UMA) has a request for comment out on how the Foundation should approach the remaining distribution. If you want to learn more about what’s in store for the rest of the public distribution, you can read up on the official doc here. The derivatives protocol is planning it’s main net launch later in May.
In addition to UMA’s Uniswap Listing, we also saw tBTC launch on Ethereum mainnet this week. For those unfamiliar, tBTC is a trustless version of Bitcoin on Ethereum – a critical attribute for garnering adoption in DeFi protocols. The launch of tBTC creates a permissionless mechanism for anyone to lockup BTC on the Bitcoin network and port it over to Ethereum in a trustless fashion. We conducted an interview with Founder Matt Luongo, which you can read more about below.
Lastly, DeFi Rate’s Governance campaign is heating up as this week marked the beginning of our campaign with the first two Compound proposals going live. The first proposal was rather controversial as it proposed to support Tether (USDT). While Compound Labs’ implementation was extremely conservative (can’t be used as collateral for additional borrowing power), and we believe it would be safe for Compound users, we elected to vote against the proposal in an effort to preserve protocol integrity and not support the adoption of an asset with a background as poor and controversial as Tether. All in all, while the proposal still passed and the lending protocol will be supporting USDT in the coming future, we’re happy with our decision and the stance we took.
With that – let’s dive into lending rates!
While the Dai Savings Rate and the Stability Fee at 0%, Dai lending rates are continuing to recover from sub <1% APY and the events of Black Thursday. It seems that with the impending bull market around the corner (sorry if I jinxed it), there seems to be a demand for capital as DeFi users look to get leveraged as interest rates are rather high given the current environment. The highest rates this week go to Aave, yielding 3.29% APY with the 30D average sitting at 2.21%. Following Aave, dYdX and Compound are offering higher rates than their historical average. While slightly lower than Aave, dYdX is offering 3.02% APY with Compound offering 2.85%. What’s interesting is that Compound’s utilization rate is on the Dai liquidity pool is roughly 92%. Dharma’s new proposal, which passed governance voting earlier this week, adjusts the current model to provide a modest interest rate to capital suppliers when utilization rates are below 90%. As an added benefit, when rates are greater than 90%, the interest rate volatility should decrease slightly. Once this proposal is implemented, we should see better deposit rates for DAI lenders on Compound.
USDC lending rates remain steady relative to last week. BlockFi – the Gemini-backed crypto bank – continues to dominate by offering the highest rates on the fiat-backed stablecoin at 8.6% APY. What’s interesting with BlockFi is that users are given the option to earn their interest in other assets, like BTC or ETH. Therefore, prospective users can deposit a cash equivalent to BlockFi, earn yields comparable to the S&P500, and then paid out in the best-performing assets of the past decade. While BlockFi isn’t decentralized finance, the available yields offered from the US-based crypto bank are worth noting. In terms of DeFi and open protocols, Aave is also offering the highest rates on USDC deposits, sitting at 3.42% APY. Nuo comes in at a close second offering 3.1% APY – up from its 30 day average of 2.35%. Other major DeFi protocols, like dYdX and Compound, are struggling with USDC rates as they sit at 1.31% and 0.52% APY, respectively.
The first public distribution of the derivatives protocol went wild on secondary markets
A trustless version of Bitcoin is coming to DeFi. Read more about the launch with Founder Matt Luongo.
The sector-leading money markets protocol elected to support USDT. Read up on reasoning for our vote against supporting Tether.
The LAO is a venture fund built on Ethereum and OpenLaw. Read up on the new DAO venture fund and what it takes to get involved.
Bancor announced details surrounding the next version of its liquidity protocol and how it intends to solve impermanent loss.
In Other News…
- Gnosis Launches Gnosis Safe Apps: Multi-sig DeFi Transactions
- SNX Link: A New Portfolio Manager Built on Synthetix
- Everest Launches the “Crypto Crunchbase” Leveraging a TCR
- PoolTogether Launches Pod Feature
- Hegic Options Launch Takes a Turn
- DeFi on track to hit 1M users by March 2021
- A Whole Bunch of Stats on Aave
- Synthetix activity driven by users who trade more than $100K per month
- 32 Findings From Manually Analyzing Ethereum’s Top 10K Wallets
- [Richard Chen] DeFi Usage Numbers
- [IDEO CoLab Ventures] Meet the SAFG: DeFi’s Emergent Framework for Participatory Investing and Protocol Development
- [Kenny White]: The Next Money Upgrade
- [Our Network] Issue #19: Updates on Synthetix, MakerDAO, Terra, and Celo
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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.