🦄 Recap: DeFi Week of Aug. 29
It was looking like DeFi was easily gliding into a long weekend (in the U.S.) —ETH increased its value by a quarter, while Polkadot and Solana made great leaps forward. NFTs are fetching ever-rising valuations, the DeFi Pulse index was poised to cross $100B in total value locked, and Arbitrum launched a long-anticipated foray into the wild frontier of Layer 2. But things are never quiet for too long in crypto. It’s almost as if Lord Bogdanoff phoned in to add a little drama, and the WSJ dropped a story reporting that the SEC is investigating Uniswap Labs. Traders didn’t panic, but Brady Dale reported this could be part of a broader inquiry into DeFi.
Beyond regulatory turbulence, NFTs continue to dominate open finance news. yyctrader wrote on a blockbuster $100M NFT deal involving the mysterious Vincent Van Dough, and Owen Fernau chronicled the strange phenomenon of text-based Loot tokens. Brady Dale reported how Fantom’s liquidity mining program caused its TVL to go parabolic. In her weekly podcast, Camila Russo explored the state of play in gaming tokenomics with Gabby Dizon, the co-founder of Yield Guild Games and an Axie vet. And in its debut, the SuperMassive NFT Show on our YouTube channel covered the action in all three rings of the non-fungible token circus.
This week we also offered up a number of tutorials and research pieces to help Defiers get a handle on the intricacies of the space. Dr. Brian Huang laid out the basics of leveraged yield farming and trading strategies in two DeFi 101 how-tos. Our partner Global Digital Finance produced a valuable round-up of DeFi trends. And in two provocative essays on the inner workings of DAOs, guest writers Red questioned the primacy of voting in these entities, while Connor Spelliscy wrote about the challenges in scaling them. Good times! Enjoy…
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Balancer, one of the leading DeFi automated market makers (AMM) for multiple tokens. Dive into their pools at https://balancer.finance/
Kraken, consistently rated the best and most secure cryptocurrency exchange, which can get you from fiat to DeFi
Aave, an open-source and non-custodial liquidity protocol where users can earn interest on deposits and borrow assets.
The DeFi Pulse Index, by Index Coop - DPI is the easiest way to capture the upside of DeFi with the benefit of diversification. Buy DPI today on your favorite DEX.
🎙 "I Realized We Could Scale Play-to-Earn to Impact Thousands, Hopefully Millions of Lives:" YGG's Gabby Dizon
In this week’s episode, we speak with Gabby Dizon, co-founder of Yield Guild Games, or YGG. Long before Gabby was into crypto he was into gaming, and that’s how he started playing Axie Infinity, a blockchain-based game where players earn cryptocurrency just for playing. Gabby eventually became a well-known figure in the Axie community, spreading the word especially in his home country, the Philippines, as he saw that crypto earned for playing was making a real difference in people’s lives.
Inbox Dump #23
For paid subscribers only — The Inbox Dump is where we include the updates and announcements that flood our DMs each week and didn’t make it to The Defiant’s content platforms. We also include a compilation of DeFi and crypto funding rounds in the past week so you have these in one handy place.
Everyone loves to vote, and DAOs, that innovative structure enabled by the Ethereum blockchain, is predicated on the idea that democratic cooperation is both desirable and necessary in DeFi. But what if we’ve made too much of voting? What if it’s a component, yes, but not the panacea so many Defiers believe? That’s the provocative argument guest columnist Red makes in this essay. A must read.
The first major blockchain conference I attended in person was this July at EthCC 4 in Paris. It was an amazing experience. I met so many people and learned about so many projects and gathered perspectives on where Ethereum is headed. But there was one common theme that concerned me — this notion that DAOs = Voting.
Nearly every conversation I had about decentralized autonomous organizations gravitated around voting and governance, and rarely did the topic go beyond that. But when I look at the DAO acronym, I don’t see a ‘V’. Autonomous does connote self governance, or voting, and we use decentralized mechanisms to cast our votes — but what about the third word in the acronym, which everyone seems to ignore? Organization. And since all three of these words go together, it is not just voting that needs to be decentralized, but the business organization itself.
If your project’s business structure (organization) is still the same five devs who launched the protocol, and they make all day-to-day decisions on business operations, then is it fair to call it a DAO?
In this essay, Connor Spelliscy highlights five key challenges DAOs must address if they are scale in a meaningful way. He draws on input from the DAO Summit and interviews with influential voices in DeFi.
UPSHOT The only thing cooler than working for one DAO is working for all the DAOs. But to do that you need to figure out what all DAOs need. That sounded tricky to us, too.
BRILLIANT So we asked! We gathered together some of the leading DAO founders, operators, and investors at the DAO Summit. We then separately interviewed more than 20 other brilliant DAO stakeholders, and asked them what they needed most. And here it is: a list of five of the most pressing questions for DAOs. So you can level up and get working right now.
STAKEHOLDERS With DAOs starting to research legal, governance, diversity, treasury management, tax, and other issues, much of the foundational learnings and research of DAO stakeholders remain siloed within their own communities. By doing open source work, you’ll accelerate the functionality of all DAOs, rather than just one. Your work can go so much further.
Global Digital Finance sizes up the dramatic developments of the last three months and what comes next as financial institutions further embrace DeFi’s many innovations.
1. “Not just Bitcoin”: Altcoins are having their moment with institutional investors
Institutions are rushing back into crypto with $21M net inflows, following six weeks of outflows. This time, however, the funds which saw the largest inflows were not Bitcoin-related. Funds with exposure to Solana and Cardano related products saw the largest inflows with $7.1M and $6.4M respectively. These are followed by Ethereum and Litecoin related products.
Bitcoin, meanwhile, saw its seventh week of outflows. This is expected to change with Bitcoin reaching $50K on August 23rd.
While ETFs have been available across Europe for a while, investors in the US have been awaiting approvals from the SEC with anticipation. The SEC has yet to approve an application for a Bitcoin ETF, delaying decisions on high-profile applications. This includes applications from WisdomTree, who launched a Bitcoin ETF on Switzerland’s SIX stock exchange back in 2019.
DeFi 101: Tutorials
In this latest addition to The Defiant’s DeFi 101 curricula, Brian Huang walks us through the ins and outs of one of the hottest trading strategies in the market.
Does leveraged yield farming sound intimidating? It’s understandable that some would feel that way. After all, leverage and yield strategies are tools that professional investors have been known to utilize, their inner workings esoteric to the every-day investor. Yet, with the growth of decentralized finance, that’s no longer the case. Easy-to-use platforms now exist to allow normal investors to take advantage of these tools and earn yields that even professional investors can’t beat.
Of course, for professional investors, it’s also a positive situation. With these tools, they can further customize their strategies to perfectly align with their market biases, risk profiles, and target yields. And all this while participating in the high-growth high-yield sector of decentralized finance.
So let’s break down leveraged yield farming strategies step-by-step.
In this latest addition to The Defiant’s DeFi 101 curricula, Brian Huang walks us through one of the most important projects in the space — leveraged yield farming. Put on your thinking caps!
In DeFi, while it’s not necessarily true that bigger is always better, the beauty of a high APY never fails to turn heads. And regardless of how much higher DeFi yields are compared to traditional finance, there’s no shortage of DeFi users eager to maximize their profits, chasing higher yields from platform to platform and network to network. Therefore, it’s no surprise that leveraged yield farming, with its superior capital efficiency to alternative DeFi products, has become a popular choice for experienced DeFi participants to maximize their yields.
The concept behind leveraged yield farming isn’t as complicated as it might seem at first mention; If yield farming with X yields you Y returns, then yield farming with 5X yields you 5Y returns. In other words, borrowing funds to ramp up your position X, aka using leverage, multiplies your yields. Of course, it’s not for free; Like any lending platform, you have to pay borrowing interest for the privilege to use borrowed funds. Yet, where leveraged yield farming shines is in its capital efficiency–the ability to borrow more than you put up as collateral.
NFT Traders are Dropping Millions on Text-Based LOOT Tokens Pixelated jpegs going for millions of dollars were already blowing people’s minds. The latest NFT project goes one step further –– traders are dropping what for some is a year’s salary or a property down payment, in exchange for white text on a black background.
DeFi Giant Uniswap Takes Hit After News of SEC Investigation Breaks Crypto traders are scrambling as news that Uniswap is under investigation by the U.S. Securities and Exchange Commission roiled the DeFi industry Friday.
SEC is Reported to Have Started Inquiries on Other DeFi Dapp Makers Beyond Uniswap U.S. regulators are looking at more decentralized finance players than just Uniswap, according to a person familiar with the matter.
Arbitrum Launches with Full DeFi Ecosystem Locked and Loaded Arbitrum, one of the most awaited Ethereum scaling solutions, has attracted $2.9M on its first day after launch, becoming the 11th largest so-called Layer 2 platform, according to L2BEAT.
Liquidity Mining Drives Stablecoin DEX Curve to Become More Than 20% of Fantom’s TVL Fantom’s liquidity mining program is once more showcasing the power incentives can have in markets as total value locked in the smart contract chain’s DeFi projects has nearly doubled in the three days since offering token rewards.
Yearn Finance Backs Atlantis World to Draw Degens Into the Metaverse What’s the answer to make decentralized finance more fun and immersive than its current incarnation of websites and bulletin boards? Apparently it’s community environments reminiscent of video games played on 1990s-era consoles.
MetaMask Posts Torrid Growth As Users Flock to Ethereum MetaMask has broken 10 million monthly active users, according to the blockchain infrastructure company ConsenSys.
Startup Taps Facebook Approach to Build Social Network for NFT Collectors In Facebook’s early days, it famously limited membership to students in colleges and universities, opening a few at a time. Hyype, a new social network for NFT collectors, plans a similar approach but Discord server by Discord server rather than school by school.
CREAM Finance Attack Leads to $23 Million Loss in AMP and ETH New token standards introduce complexity that DeFi applications are still learning how to grapple with. Prime example: Money market CREAM Finance was hit with a reentrancy attack on Aug. 30 that allowed attackers to drain $22.8 million in Flexa’s AMP token and $4.2 million worth of ETH (based on market prices in mid-morning trading Monday).
Three Arrows Founders and Mysterious Collector ‘Vincent Van Dough’ Launch $100M NFT Fund A prolific NFT collector who goes by the pseudonym VincentVanDough (VVD) on Aug. 29 announced they would be launching a new NFT fund in partnership with Su Zhu and Kyle Davies, the founders of crypto hedge fund Three Arrows Capital.
Thanking all the amazing Defiers for the support and love this week (and always)!
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