To the DeFi Community,
There’s blood on the streets, just in time for Halloween.
With DeFi tokens bleeding across the board, many are asking whether or not DeFi summer was exactly that – a fad.
But, let’s quickly flash back to what the Ethereum ecosystem looked like in the summer of 2018. Projects like Augur, OmiseGo and Status were the posterchilds of a nascent dapp ecosystem, virtually all of them with little to no users, and even fewer protocol fees.
Now, let’s compare that to where the DeFi ecosystem stands today. Looking at the TVL leaderboard, we now have 14 protocols with more than $100M locked, and 37 with more than $1M. Uniswap is casually sitting at $3B worth of liquidity with $210M in volume, on a holiday. Dai – DeFi’s golden stablecoin – is on track to break $1B in outstanding supply (its currently at 648M) as Maker continues to prove anyone who said a decentralized dollar backed by ETH wouldn’t work wrong. But you know this. Touting these statistics isn’t going to rekindle the buzz that the word ‘DeFi’ had in June.
So, instead let’s look at the road ahead. Balancer seems to have found a sweet spot for permissionless DEX listings using their Liquidity Bootstrap Pools. We saw it with Perpetual Protocol and more recently with the Nexus Mutual competitor, NSure. DeFi rockstar Andre Cronje is testing in prod again, this time creating a system for an agnostic, easy to implement, incentivize layer for routine ecosystem maintenance through Keep3r Network. The key thing to keep in mind here is that we’ve only scratched the surface of the different DeFi ‘sectors’. Despite what you may think, financial applications go far deeper than DEXs and lending, and 2021 is sure to show that DeFi is not just about farming governance tokens.
But, we still have work to do. What started as an excellent trend to distribute highly demanded tokens in the form of liquidity mining has now turned into a perpetual drip that many farming projects are leveraging as recursive strategies to earn yield. We’re starting to see some projects add vesting to rewards, but I believe this only delays the inevitable Uniswap trade that every yield farmer knows too well. Instead, it’s time for projects to go back to the drawing board. If the only way to leverage these tokens is to participate in infrequent governance votes, we are again reliant on speculation to drive higher valuations.
While DeFi still rests in the murky waters of legal uncertainty, I expect to see decentralized governance become much more explicit about the ways in which tokens accrue tangible value in the form protocol fees and dividends. As we slowly cross the chasm of a web3 token sharing characteristics of equity plus a wide range of uses and global, 24/7 markets, it won’t be long before everyone sees that tokenization is, and always has been, the future.
But, what do I know. Maybe Bitcoin Satoshi Vision (BSV) really is worth 6 times more than UNI. Maybe NEM is worth 2.5x as much as yearn (YFI).
I'm not selling any of my DeFi tokens until they've flippened Litecoin, Bitcoin: Satoshi's Vision, and Cardano, the #8, 10, and 11 coins on CMC. Worth a combined $9.5 billion. $YFI + $UNI worth a combined $0.8 billion, less than NEM. You can pry them from my dead, broke hands. 🖕
— cyrus.ismoney.eth (@cyounessi1) October 30, 2020
Be greedy when others are fearful. This is a marathon, not a sprint, and we’re only in the second inning.
Stay spooky, degens!
This Week in DeFi is now supported by Aave!
- Highest Yields: Fulcrum at 10.4%, dYdX at 5.4% APY
- Cheapest Loan: Maker at 2.00% w/ ETH collateral or Compound at 2.9% (earn 3.02% in COMP rebates!)
- MakerDAO Updates
- Highest Yield: BlockFi at 8.60% (centralized) or Aave at 5.3%
- Cheapest Loan: Nuo at 2.3% or Compound at 3.7% (earn 2.86% APY in COMP rebates)
Find more lending & borrowing rates on our Rates page!
The yield optimizing protocol was hacked for over $25M in user funds
The leading money markets protocol completed a major milestone towards decentralizing the protocol
The Ethereum competitor partnered with Balancer Labs to help scale the programmable asset and liquidity protocol.
A new backstop protocol is joining the DeFi arena, making a big splash through a governance flash loan.
- Total Value Locked: $10.96B (down -10.7% from last week)
- DeFi Market Cap: $14.7B (down -7.5%)
- DEX Weekly volume: $7.7B (up +165% due to Harvest Finance exploit)
- DAI supply: 926.1M35.9M (down -1.0%)
- Total DeFi users: 750K (up +8.5%)
- [David Hoffman – Bankless] The Ultimate Guide to Balancer Smart Pools
- [Cooper Turley – The Defiant] Harvest Finance Tries to Make Users Whole After $34M hack
- [Matthew Spoke – Forbes] Blockchains and the Ownership Economy
- [Camila Russo – The Defiant] He Let Strangers Raid his Private Wallet for Art
- [Spencer Noon – Our Network] Ethereum Scaling Solutions: xDAI, Skale, zkSync
Shoutout to Aave for supporting This Week in DeFi!
Aave is a leading lending protocol supporting dozens of the top DeFi tokens. Aave is currently undergoing its migration from LEND to AAVE which you can do directly through the migration portal!
We’ve done an extensive amount of coverage on Aavenomics – a new suite of protocol upgrades that incentives protocol safety through AAVE rewards and protocol fees. The best part about Aavenomics is that all of its parameters – including the logistics of Aave yield farming – are governed by tokenholders. There’s a ton of good activity happening on the Aave governance forum and we’d definitely recommend checking it out if you fancy yourself to be an Aavenger.
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Cooper is the Editor of DeFi Rate and an active contributor to leading DeFi media outlets like The Defiant, DeFi Pulse, and Bankless. He works with early-stage teams through Fire Eyes DAO to incubate governance models and grassroots community development. He is an ambassador to Set Protocol and an author of a weekly publication called Token Tuesdays. To stay up with Cooper, follow him on Twitter.