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TLDR Ether lost more than half its value in the last two weeks, hitting $1,853 on May 23, then it jumped 40% to $2,591 by the time of writing. Bitcoin and DeFi Blue Chips have done likewise. But what if this is just a dead-cat bounce?
HALF SAY YES More than half of crypto investors believe this week’s rally may just be a temporary respite from a longer-term swoon, according to a May 24 poll conducted by Darren Lau, formerly of crypto fund The Spartan Group, who got responses from 2,781 voters.
“Looks like a lot of the leverage has been washed out, or so we hope,” Ryan Cantering Clark, a crypto trader with more than 55,000 Twitter followers, told The Defiant. “If anything I would expect most market participants to sort of be waiting on each other to make a move,” he said, expressing the middling sentiment that Lau’s poll revealed
LOANS DOWN It isn’t just token prices that are prompting worries that this is just a dead-cat bounce. Outstanding loans on three top DeFi lending protocols, Aave, Compound, and Maker, are down 23% off their all-time high of $17.5 billion to $13.4 billion as DeFi investors wind down their positions or are liquidated. The lower the value of outstanding loans, the more difficult for the market to overheat based on leverage-funded buys.
NO BEAR MARKET Still, for all the speculation on whether we’re witnessing a dead cat bounce or a bona fide floor, Cantering Clark for one doesn’t foresee an outright bear market in DeFi tokens. The overall thesis is sound, say the bulls, and the market has strengthened its resilience in the last 12 months. Zhu Su, the CEO at Three Arrows Capital in Singapore, said the mass entry of financial institutions into the space is a game-changer.
TLDR Gitcoin has been funding open source projects for a more decentralized web since 2017 and now it’s decentralizing itself. Yesterday the Ethereum-focused startup announced it will be now governed by a DAO and holders of its new token, GTC.
15M GTC AIRDROP The first step in this gradual decentralization was to issue 100 million GTC tokens, 15 million of which were distributed to past users of its platform for doing things like creating grants or contributing to other projects. About 9,200 addresses of 25,500 eligible accounts have so far claimed GTC, at a median distribution of 68 GTC, which is worth$476, according to Gitcoin founder Kevin Owocki.
The biggest recipient of GTC got as much as 1.7% of the airdrop, worth $1.7M at the time of writing.
SO WHAT Gitcoin’s airdrop is the latest example of how web3 is enabling an internet where users are also owners –– projects are increasingly rewarding users of their blockchain-based applications with native tokens. This increases participation, creates loyalty, and crucially, grants users the power to make decisions over the products and services they interact with on the platform. Uniswap spurred this trend of retroactive distribution by airdropping 150 million users to anyone who had used the decentralized exchange before Sept. 1, 2020, when the airdropped happened.
DELEGATED VOTES When recipients of the airdrop went to claim their GTC, they were taken through a website that required users to decide on whether they would vote on governance decisions themselves or delegate their voting power to one of around 45 stewards.
“The 100% delegation upon airdrop I think is our big contribution to the space/crypto governance,” Owocki said in an email interview with The Defiant. “I’m very excited; I think it’s gonna set us up for more voter turnout/engagement.”
TLDR When billionaires Elon Musk and Michael Saylor met behind closed doors together with Bitcoin miners, there were certainly confronting a big problem: addressing the amount of power consumed to process transactions on the blockchain. Yet forming an ersatz coalition called the Bitcoin Mining Council smacked of greenwashing — and the crypto community wasn’t shy about letting them know.
“Closed door meetings do not typically have any good outcomes in Bitcoin’s history,” said in the popular Bitcoin archival account “Documenting Bitcoin.”
SO WHAT The issue is that decentralization and open-access to information have been gospel in the crypto community ever since pseudonymous Bitcoin creator(s) Satoshi Nakamoto published the whitepaper entitled “A Peer-to-Peer Electronic Cash System.” While the initiative may be a laudable attempt to address Bitcoin’s carbon footprint, the private meeting has drawn the ire of many in the crypto community who view wealthy elites making executive decisions amongst themselves to be the antithesis of decentralized cryptocurrency.
PROOF OF STAKE The Council’s introduction seems out of touch with the support for more innovative solutions. Ethereum’s upcoming transition from a proof-of-work consensus algorithm to a proof-of-stake one promises to make the network significantly more energy-efficient. Various Layer 2 solutions like Polygon are already utilizing proof-of-stake to scale DeFi applications without consuming as much energy.
TLDR Yearn Finance users have sent a clear message — buy more Ether. More than 82% of voters in Yearn’s online poll have urged the platform to accumulate more of Ethereum’s ETH and strike a better balance with its native token, YFI.
YEARN BUYBACKS The poll supports buying Ether as an extension of Yearn’s Buyback and Build proposal (YIP-56), which replaced the protocol’s staking rewards with buybacks. Yearn recently made headlines with $1.47 million spent on buybacks. Now, the proposal says, the protocol may begin to “own the land (ETH)” where Yearn operates just like “the best restaurants” own their real estate.
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🧑💻 ✍️ Stories in this newsletter were written by Dan Kahan, Owen Fernau, and edited by Edward Robinson, Bailey Reutzel and Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila, edited by Alp.
The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money. Sign up to learn more and keep up on the latest, most interesting developments. Subscribers get full access, while free signups get only part of the content. Click here to pay with DAI (for $100/yr) or sub with fiat by clicking on the button above ($15/mo, $150/yr).