🔥 ETH Heats Up and Not Just The Price
Also, Kyber's KNC, Synthetix on Layer 2, Saddle launch, Yearn's V2
Hello Defiers! Here’s what we’re covering today,
ETH at record price, while other Ethereum metrics also soar
Kyber’s KNC picks up steam after lagging
Synthetix introduces staking on Layer 2
Saddle is the latest AMM on the block
Yearn’s new fee structure
The open economy is taking over the old one. Subscribe to keep up with this revolution. Click here to pay with DAI (for $100/yr) or sub with fiat by clicking on the button below ($10/mo, $100/yr).
🙌 Together with Zerion, a simple interface to access and use decentralized finance, and Value DeFi Protocol, a suite of DeFi products including the Value Liquid AMM, which allows anyone to create trading pools with flexible ratio pairs.
TLDR As Ether makes headlines surging past its previous high, other less flashy metrics are also near records, signaling the Ethereum network is strengthening not just in price.
💯 BY THE NUMBERS ETH climbed to a new all-time high of $1,439, topping the previous record of $1,432 reached during the crypto boom in mid-January 2018. The current ETH market cap is $162.3B, compared with $131.8B during the 2018 peak.
Meanwhile, wallet addresses, number of daily transactions, transaction volume and ETH trading volume are all surging. The ETH to BTC ratio is lower than in the 2017-2018 bubble, but to some traders, that may very well be bullish too.
🔥 OTHER ATHS:
Wallet addresses: 133.6M unique Ethereum addresses, up from 22.4M in Jan. 2018 according to data on Etherscan.
Number of daily transactions: Climbed above the 2018 record at 1.26M on a seven-day average, according to CoinMetrics data.
Value transacted: Surged past the previous high at just under $8B, or about $1B higher than the previous peak.
TLDR Kyber Network eyes the $2 high last seen in August 2020. KNC has lagged DeFi, but now bulls are attempting to take the lead. The next trading block of note is the $1.50-$1.70 range, where sell-side pressure from various bag-holders might increase.
WHAT DOES THAT MEAN Market makers who might be less familiar with the technicalities of on-chain smart contracting can make use of Kyber without the operational barriers to entry that can be off-putting.
TLDR Synthetix, the synthetic asset issuance protocol, deployed its staking code from Ethereum to Optimism, a Layer 2 scaling solution on Jan. 15.
Users can migrate their Synthetix Network Tokens (SNX), used to mint the protocol’s synthetic assets, to Optimistic Ethereum’s Layer 2, where they can continue staking without the high gas costs of Layer 1.
SO WHAT? Things are hopefully about to speed up and get cheaper in Ethereum land. The launch represents the much anticipated first run of the Optimistic Ethereum mainnet.
As Ethereum suffers from high gas fees and congestion, which limits adoption, Layer 2 solutions constitute an essential piece of the scaling puzzle as Ethereum developers try to push the network from 15 transactions per second (TPS) into the thousands.
😱 THE RISK As the first major DeFi protocol to implement a Layer 2 scaling solution, the Synthetix team is taking a risk. Major protocols could converge on different solutions, leaving Synthetix with wasted technical effort along with isolation from integration with other platforms.
THE REWARD The team’s post Why Optimism calls the choice “an asymmetric bet.” This is because if DeFi converges on Optimism as a solution, Sythetix will be far ahead, benefiting from the quick and cheap transaction fees which layer 2 enables while also being able to seamlessly integrate with protocols.
TLDR Saddle, the freshly launched dApp “designed to enable efficient trading between pegged value crypto assets,” aims to tackle slippage. And while the project quickly reached its initial deposit cap, it wasn’t without a couple of hiccups.
SADDLE IS A new automated market maker (AMM) that intends to provide liquidity for pegged-value crypto assets—or tokens with their value attached to an underlying asset—by using Synethetix’s synthetic Bitcoin. The founder hopes that launching with a tokenized Bitcoin pool (with four options available at launch: tBTC, WBTC, sBTC, and renBTC) will help minimize slippage.
“So one of the problems that we’re setting out to solve is to basically unlock deep on-chain liquidity for pegged value crypto assets,” Saddle founder Sunil Srivatsa told Coindesk. “That means you’re able to make trades and lose a very minimal amount to slippage and transaction fees.”
😬 BUT THERE WAS SLIPPAGE Saddle’s initial launch had a somewhat rocky start, as some transactions did suffer from slippage. Saddle updated their high slippage warnings on the front-end in response, and hopes to learn from their early transaction issues.
CURVE COMPARISON Some members of the DeFi community have criticized the new AMM for not innovating much beyond Curve Finance.
“Congrats on the launch [Srivatsa] but when you say ‘building’.... you mean ‘Forking’ right? I'm a little bit confused here. I mean it's 1:1 Curve maths....” tweeted Stake Capital founder Julien Bouteloup.
“What does Saddle do that Curve doesn't already do? I don't understand why this exists,” ChainLinkGod tweeted.
MAX DEPOSIT REACHED It’s yet to be seen if Saddle will live up to its goal within the coming weeks, but at least by last night the project said it had reached the initial maximum deposit limit of 150 BTC.
TLDR Yearn Finance, the yield farming aggregator, dropped its version two (V2) on Jan. 17, with a slew of changes including a mechanism to funnel staking fees to the protocol’s treasury, meant to make development sustainable in the long term.
BY THE NUMBERS Yearn’s V2 comes with a new fee structure which, while maintaining the same overall fee level of roughly 20%, eliminates the project’s withdrawal fee, adds a management fee (2%), and increases the performance fee (taken as a percentage of the yield generated on behalf of the user) to 73% from 17%.
With the new fee model, “incentives are better aligned as Yearn earns most of its fees and Users pay most of their fees only if the Vaults are performing well,” the proposal said.
Single vaults to employ multiple yield farming strategies
Yearn improvement proposal (YIP-56), also known as the Buyback and Build Yearn (BABY) proposal. With YIP-56 YFI staking rewards will now be used to buyback YFI tokens and deposit them continuously in the newly established Operations Fund
Permissionless pools in collaboration with Curve Finance. Permissionless pools, a key feature of exchanges like Uniswap, mean users can themselves create a pool to swap tokens
🧑💻 ✍️ Stories in this newsletter were written by Daniel Kahan, Owen Fernau, and Christopher Attard, and edited by Camila Russo. Video was produced by Robin Schmidt and Alp Gasimov. The podcast was led by Camila Russo and edited by Alp Gasimov.
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).