🦄 Recap: DeFi Week of May 21
Hello Defiers! It’s a long weekend in the U.S. and the U.K., and the unofficial, start of summer in the Northern Hemisphere, so we hope you’re all unwinding after two bruising weeks in the crypto markets.
Summing up: The watchwords this week were recovery and optimism, as in the worst of the May crash subsided. The total market cap for the cryptocurrency market did slide 3.7%, to $1.75T, as of Friday, according to data from CoinGecko. But that’s way better than the 20% plunge during the prior seven-day period. Some DeFi coins showed resilience — Polygon, which we wrote about this week, notched a 4% jump, and Uniswap was also up 4%.
Early in the week, we all got to watch Elon Musk try to reboot his green bona fides by joining forces with fellow billionaire Michael Saylor in something called the Bitcoin Mining Council. That triggered more than a few crypto faithful who took umbrage at the idea of a closed-door meeting about the fate of Bitcoin (more on that below). And it was nice to see NFTs, which punctuated the euphoria of the first quarter, back in the headlines again. The Associated Press, about as mainstream a media organization as you can get, is going to auction artistic representations of 10 of its iconic images as non-fungible tokens. We wrote about that, too.
We also unpacked all the talk about whether the market was truly on the mend or just a dead-cat bounce. Soothsayers in the stock market have long tried to forecast market bottoms, and it was notable that traders are now deploying the same terminology to fathom the crypto space. Maybe that’s a sign of a maturing market, or maybe it’s just grasping for a way to understand an asset class that defies easy explanations. Mark Cuban didn’t care. He pounced on Polygon, the L2 darling, and sent it soaring. The move cast a spotlight on the push to take the Ethereum ecosystem to the next level, which we explored in a piece on Arbitrum. Competition in Layer 2 is heating up, and that’s a story we’ll be following closely in the weeks to come…
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🙌 Together with:
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, a capitalization-weighted index that tracks the performance of selected DeFi assets across the market.
"The Bull Market is Intact for the Next 10 to 20 Years; We are in a Secular Shift:" Arca's Jeff Dorman
In this week’s episode, I interview Jeff Dorman, chief investment officer at Arca, an investment management firm focusing on digital assets. Jeff has been valuing assets for the past 20 years, from investment-grade bonds, to high-yield debt and equities, and now he’s doing the same for crypto. We talk about the recent selloff and he thinks the big crash is over but that doesn’t mean we’ve seen the market bottom. Still, Jeff says this is a buying opportunity and he gives insights into which sectors will outperform and underperform. He believes we’re heading to a 10 to 20-year secular bull market in crypto, where there will be a decoupling of sectors and where DeFi continues to grow.
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.
Mark Cuban Sends Polygon Soaring Amid Glitch: Even as the crypto market continues to recover from last week’s crash, the price of Polygon (MATIC) has soared 25% in the last seven days. The trigger: On May 25, news broke that Cuban had invested in the next-generation Ethereum player. The performance trounced Bitcoin’s 4.8% rise in the same period, and that of Ether itself, which notched a 11.5% hike.
AP’s NFT Auction Ushers in New Era for Digital Media: The Associated Press, the 175-year-old paragon of traditional media, is planning to auction off 10 one-of-a-kind NFTs to celebrate its iconic photojournalism. The AP is the latest of both legacy and new media to experiment with non-fungible tokens.
Arbitrum is the Latest Layer 2 to Join the Ethereum Scaling Race: Arbitrum, the Layer 2 scaling solution for Ethereum using optimistic rollups, will open its mainnet to developers on Friday and it’s already attracting one of DeFi’s biggest fish — Uniswap. That could mean help is on the way for DeFi investors who are freaking out over soaring gas fees.
It’s a Most Welcome Rally, but is It Just a Dead-Cat Bounce?: 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?
Gitcoin Drops GTC Token to 25,500 Users; Now Worth More Than $100M: 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.
Musk and Saylor Catch Flak for Mining Council Gambit: 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.
Yearn Proposal to Buy Ether Picking up Mojo: 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.
Defiant Degens: How to Earn Yield with Automated Options Selling on Ribbon Finance: Ribbon Finance is a new structured products protocol in DeFi for earning yield. Ribbon’s first product focuses on earning yield through automated options strategies. The protocol also allows developers to create arbitrary structured products by combining various DeFi derivatives.
Terra’s UST Dip Raises Questions on Algo Stablecoins: Crypto markets went haywire last week and while extreme volatility is expected from most tokens, stablecoins are the one category designed to peacefully weather the storm. The stablecoin issued by the Terra network, UST, got mixed marks as it dipped well below its peg.
DeFi100: Hack or Rug Pull?: The defacing of the website for DeFi100-Rebase, a Binance Smart Chain-based index token, has sparked a flurry of speculation about a possible heist and a brazen rug pull.
Index Coop’s Leveraged ETH Token 2x-ed Only on the Way Up –– Here’s Why: In a week where the entire market was gapping down, a curious case was how Index Coop’s indexed token ETH 2x – FLI did not reflect this price action proportionally in relation to its methodology, i.e. if ETH is up X, this index token should be up 2x, while if it’s down X, the FLI product should be down approximately 2x.
An Ape-Friendly Guide to DeFi Yield Derivatives: Generating passive income using DeFi is one of the most attractive things for a newcomer. The interest rates of these protocols are often promoted to be in the range of hundred to thousands % APY, putting the bank interest rates to shame –– but that’s somewhat misleading as returns are calculated on an annual basis, when the reality is, they often evaporate in a matter of weeks. That’s where swaps come in, a huge market in TradFi but an entirely new segment in DeFi.
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 below ($15/mo, $150/yr).