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NEWS Index Coop, a decentralized index token provider, has launched its 2x leveraged Ether index token (ETH2x-FLI-P) on the Polygon network. These tokens allow users to access leverage while mitigating liquidation risks by holding the token in their Ethereum wallets.
REBALANCING Despite being billed as reducing the risks associated with leverage, the instruments can behave unpredictably during choppy market action and quickly sustain compounding losses during down-trends due to rebalancing.
LEVERAGE TOKENS For example, Binance’s SUSHUP leverage token experienced a 93% daily loss during May, despite having posted strong returns during the preceding bullish market conditions. Commenting on leverage tokens to The Financial Times, Stephen Kelso of institutional brokerage firm ITI Capital described the instruments as offering retail investors “rope to hang themselves.”
TL;DR DeFi is trending towards capital efficiency as protocols look to maximize users’ bang for their smart contract controlled-buck. Balancer, an automated market maker (AMM), is trying to take advantage of the trend with the launch on Dec, 15 of a protocol called Boosted Pools. It allows unused liquidity to earn yield in Aave, the DeFi lending protocol.
UNUSED TOKENS Users generally deposit tokens into AMMs like Balancer to earn fees as other users trade those deposited assets. But according to a Balancer post, less than 10% of the liquidity actually gets used by traders, with the rest going unused. With Boosted Pools, Balancer will deposit those unused tokens into Aave, earning yield and increasing capital efficiency.
SPARE LIQUIDITY Balancer’s post emphasized that Aave was just the start in terms of where the AMM ends up depositing spare liquidity however. The protocol also named Compound Finance, Rari Capital’s Fuse, Yearn Finance, and BadgerDAO as potential recipients of spare liquidity.
CHEATS Scammers, cheats and swindlers. That’s how Sen. Elizabeth Warren (D-Mass.) described the denizens of DeFi in an anxiously anticipated U.S. Senate hearing on stablecoins on Dec. 15. She said stablecoins must be regulated to safeguard the financial system.
REGULATED “Stablecoins provide the lifeblood of the DeFi ecosystem,” Warren said. “In DeFi, people need stablecoins to trade between different coins, to trade derivatives, to lend, to borrow money — all outside of the regulated banking system. Without stablecoins, DeFi comes to a halt.”
CRACKDOWN Decrying DeFi as “one of the shadiest parts of the crypto world,”the influential lawmaker called for a crackdown on the sector during a hearing of the Senate Committee on Banking, Housing and Urban Affairs.
NEWS Avalanche may have started as a favorite of DeFi enthusiasts. Now financial institutions are poised to hop aboard. On Thursday, BitGo, a crypto platform that caters to Wall Street, said it would support Avalanche’s token, AVAX, and assets launched natively on its C-chain, the company said in the statement.
ECOSYSTEM It’s a big move for Avalanche, a high-speed Layer 1 smart contracts platform launched in 2020. BitGo has $64B under custody and processes about a fifth of all on-chain Bitcoin transactions by value. It’s keen on providing its well-heeled clients with access to Avalanche’s burgeoning ecosystem via its hot wallet and custodial products.
MOMENTUM Adoption of AVAX is picking up momentum. On Dec. 14, Circle launched support for its native coin USD Coin (USDC) on Avalanche. And DeFi Kingdoms, the NFT-driven GameFi player that’s challenging Axie Infinity, is preparing to launch on Avalanche soon. Investors are taking notice. AVAX has jumped 15% in the last seven days compared to an 8.3% decline for ETH.
DAO Legal Primer
In this research piece, lawyers Jacqueline Radebough and Yev Muchnik provide a lucid and invaluable look at how DAOs can overcome one of their thorniest challenges — establishing a legal structure that protects members from liability and preserves the values of cooperation at the heart of their models.
PREAMBLE Self-governing entities like Decentralized Autonomous Organizations (DAOs) are unique and largely incompatible with traditional U.S. legal entities.
Absent the adoption of a new legal entity structure that serves the novel needs of DAOs, we discuss why we believe, at present, the Limited Cooperative Association (LCA) provides the most ideologically aligned legal framework for DAOs.
The LCA integrates cooperative principles and values that are similar to core DAO principles and provides a legal framework for DAOs seeking to wrap a portion or all of their related activities in a legal structure.
I. Evolution of the Corporate Form
CONTRACTS The corporation is one of the most significant inventions in history. Corporations allow people to create entities legally distinct from themselves, while giving those entities similar rights attributed to natural persons, including the ability to own assets, pay taxes, enter into contracts, and have legal standing independently of their owners.
DIGITAL REALM Cooperatives, as a form of corporation, have been part of the U.S. economic landscape since the 1700s, but modern cooperative organizations began to flourish in the 19th century. Cooperatives have been created across all business sectors, from producers to consumers, workers to multi-stakeholders and multi-sector coops, and are now present in the digital realm in the form of “Platform Cooperatives,” like Stocksy United, Savvy Cooperative and Fairbnb.coop.
When you shop for plane tickets, you probably use Kayak, Expedia, or Google to compare ticket prices... So why would you limit yourself to just one exchange when you trade crypto?
When you make your trades, you want to make sure you’re getting the best possible price, that’s why you should be using MATCHA!
Matcha routes your orders across all the various DeFi exchanges on Ethereum, Polygon, BSC, fantom, and Avalanche and gives you the best possible prices without taking any commissions. Matcha has smart order routing that splits your order across multiple liquidity sources, it also allows you to make limit orders on-chain, so you can set-and-forget your DeFi trades.
New to Matcha is an integrated fiat on-ramp so you can purchase crypto directly with your credit/debit card, and have that fiat be instantly traded for any token that has liquidity. Head over to matcha.xyz/defiant and connect your wallet to start trading.
Bitcoin was trading little changed after the Bank of England delivered a surprise interest-rate hike and the European Central Bank (ECB) announced an end to the crisis-era asset purchase program.
Gnosis Safe, a multi-signature smart contract wallet, now supports Avalanche, enabling users to increase security practices by requiring a minimum number of people to approve a transaction before it can occur.
Binance has moved to restrict UK customer access to crypto derivatives after its chief executive said the exchange plans to renew its push for regulatory approval to operate in the country.
Six-time NBA champion and Chicago Bulls legend Michael Jordan is the latest celebrity to see potential in how crypto and Web3 technology can connect athletes and entertainers with fans. Today, Jordan revealed plans to launch a fan engagement app platform built on Solana.
The centuries-old art auction house Sotheby’s reported that it earned $100 million from non-fungible token (NFT) sales this year, according to a release shared with The Block.
Artnet @artnetThe internet killed the yellow pages. Netflix killed Blockbuster. Will NFTs kill traditional art? Greetings, my name is @CozomoMedici. What I'm about to share with you may make you angry. You may disagree. But it's crucial you here it. So buckle up, and let's begin👇
Trending in The Defiant
DeFi Kingdoms Challenges Axie Infinity’s GameFi Supremacy with NFT Play Questioning the utility of NFTs as simple collectables may be missing the point. DeFi Kingdom, an entrant to the blossoming GameFi sector, is expanding the definition of NFTs by offering its version of the tokens, called Heroes.
Questions Swirl as Solana Loses a Fifth of its Value in Seven Days The carnage has been widespread in this latest selloff. Yet no major DeFi name has tumbled as much as Solana, the would-be challenger to Ethereum.
Aave Latest DeFi Protocol to Delay Open Source and Lock Down V3 Code Is the open source era in DeFi ending? Aave, one of the top decentralized finance (DeFi) money market protocols, looks set to upgrade to version 3 under a business license that restricts use of their code for something like a year, according to a poll of AAVE holders that closed on Dec. 13.
🧑💻 ✍️ Stories in The Defiant are written by Brady Dale, Owen Fernau, Samuel Haig, DeFiDad, and yyctrader, and edited by Edward Robinson, yyctrader, and Camila Russo. Videos are produced by Robin Schmidt, Alp Gasimov and Daniel Flynn. Podcast is 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).