Hello Defiers! Here’s what we’re covering today:
The doomsday scenario of a digital dollar
DeFi protocols are generating record monthly revenue
Crypto corrects as short-term aders spike
1inch expands to Binance Smart Chain
Brave wants to build a DEX aggregator
and more :)
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TLDR The launch of a digital dollar is looking increasingly likely, as this week’s comments from US Secretary of the Treasury Janet Yellen show. It’s too soon to tell what the impact of that would be in the broader crypto space. We explored what the pessimistic scenario looks like.
PICTURE THIS The year is 2023. Blockchain technology has reached unprecedented heights. DeFi is mainstream. Gas fees are negligible now. Your memecoins alone are worth millions of dollars. You’ve reinvested half of your net worth in NBA Top Shots, and you’re confident that this is the best financial decision you’ve ever made.
And then the US government makes an official announcement:
“So, yeah, fiat currency was kind of a bust. And cash is so... untraceable. But we really love what you’ve done with this whole blockchain thingie, and thanks for making so much of it open source! You can move along now, we’ll take it from here. We’ll be making a digital dollar so you can get rid of your Bitcoins now. Sorry, that made it sound like you have a choice. You don’t. It’s illegal to own Bitcoin. But don’t worry. All of your new digital dollar transactions will be fully traceable in our new immutable chain. See? We totally love the benefits of blockchain now!”
TLDR DeFi protocols are generating more money than ever before, and users are taking the large majority of it, according to a dashboard released by The Block yesterday.
Uniswap, SushiSwap and Compound generate the most revenue out of the DeFi protocols tracked by The Block. This month, they’re each on track to bring in record revenue of $78M, $37.6M and $28.5M, respectively.
SUPPLY SIDE REVENUE All of Uniswap’s revenue is going to its users, defined in the dashboards cited as “supply-side revenue,” or fees that go to liquidity provider (LP) fees and lenders. The same is true for Balancer and Synthetix. Mote than 80% of total revenue is categorized as supply-side.
PROTOCOL REVENUE When analyzed by protocol revenue, or fees taken directly by the protocol and its token holders, SushiSwap leads the way with almost $92M in annualized protocol revenue, or 17% of its total revenue. MakerDAO stands out as the only project with its revenue, $54M, fully categorized as “protocol revenue.”
Protocol revenue has been on the rise in 2021, now comprising just over 13% of total revenue, compared with 11% three months ago.
On-Chain Markets Update by Lucas Outumuro, IntoTheBlock
TLDR Having been some of the highest-performing assets in 2021, DeFi tokens experienced a sharp correction this week. The aggregate market crap in DeFi governance tokens managed to drop approximately 30% from $41 billion to $28 billion within three days. At IntoTheBlock, we have been pointing to the increase in short-term activity as one of the key insights of the bull market.
SHORT-TERM TRADERS The number of addresses holding Ethereum for under one month — classified by IntoTheBlock as traders — reached record highs in February. This metric points to high amounts of speculation and short-term trading taking place over the past few months based on blockchain data. We observe the same pattern in Bitcoin, Chainlink, Aave and Synthetix just to name a few.
HEALTHY CORRECTION While speculation is nothing new to crypto, it is worth highlighting the data pointing to increased short-term trading and recurring patterns. Overall, the current correction is “healthy” considering there had been signs of the market getting overheated.
TLDR 1INCH is expanding into Binance Smart Chain (BSC), one of the first major Ethereum-based DeFi projects to make the jump.
“Crossing the hell of burned #Ethereum lands our hero stumbles upon the mysterious yellow portal,” the project tweeted today.
BSC BRIDGE BSC users will get access to all the same 1Inch functionalities that are already available on Ethereum, including 1Inch Aggregation Protocol and 1Inch Liquidity Protocol. Likewise, 1Inch users will have a bridge to access PancakeSwap and other popular Binance protocols.
TLDR Brave, the company behind the open source Brave web browser that allows users to tip publishers and content creators with its first-party Basic Attention Token (BAT), is setting their sights on a lofty new project: a Brave DEX aggregator.
DETAILS The Brave DEX aggregator is intended to have multi-chain support featuring many assets across different blockchains, along with various discounts and advantages for BAT holders who trade on it. This project will go hand-in-hand with an Ethereum-native Brave Wallet intended to unify all existing crypto wallets on Brave.
TLDR The SushiSwap community is now voting on a proposal to build SushiSwap on the Solana blockchain using the Solana-based Raydium DEX as a bridge.
DETAILS Raydium proposes “acting as a bridge and partner for SushiSwap’s expansion onto Solana,” allowing SushiSwap to access additional liquidity from Serum and leverage the chain to increase transaction fees and lower fees. Raydium’s protocol is already able to support SushiSwap liquidity pools for the Serum orderbook, according to the proposal.
“Cryptocurrency exchange Coinbase on Thursday filed to go public via a direct listing. It includes a placeholder figure of $1 billion, but that's likely to change. Coinbase could go public at a higher initial valuation than any other U.S. tech company since Facebook,” Axios said. “Coinbase reports $322 million of profits on $1.28 billion in revenue for 2020, compared to a $30 million net loss on $534 million in revenue for 2019. That's right, this one can claim a more legit unicorn title because it's actually profitable.”
“For about four hours Wednesday, Federal Reserve systems that execute millions of financial transactions a day -- everything from payroll to tax refunds to interbank transfers -- were disrupted by what appeared to be some sort of internal glitch,” Bloomberg reported. “Systems were restored by the end of the day, but the outages once again raise questions about the resilience of critical infrastructure that Americans rely on to process payments. The episode follows two significant disruptions to the Fed’s payment services that occurred in 2019.”
✊ Head to THEDEFIANT.IO for more DeFi news 📰
🧑💻 ✍️ Stories in this newsletter were written by Owen Fernau, Dan Kahan, and Lucas Outumuro and edited by Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila and 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 ($10/mo, $100/yr).