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).

Be greedy when others are fearful. This is a marathon, not a sprint, and we’re only in the second inning.

Stay spooky, degens!

– Cooper


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Top Stories

Harvest Finance Exploited for Over $25M

The yield optimizing protocol was hacked for over $25M in user funds

Aave Hands Over Admin Keys to Community

The leading money markets protocol completed a major milestone towards decentralizing the protocol

Aave Admin key

Balancer Partners with NEAR for AMM Scalability

The Ethereum competitor partnered with Balancer Labs to help scale the programmable asset and liquidity protocol.

B.Protocol Introduces New Liquidation Mechanisms

A new backstop protocol is joining the DeFi arena, making a big splash through a governance flash loan.

 


Stat Box

  • 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%)

Bonus Reads


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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!

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