🧱Aave Adds New DeFi Lego With AMM Market
Hello Defiers! Here’s what we’re covering today,
Aave launches AMM market to borrow from liquidity provider tokens
NFT of Elon Musk tweeting about NFT is selling for over $1M
Index Coope launches the Flexible Leverage Index to help avoid liquidations
Terraform Labs releases protocol that targets 20% fixed stablecoin yields
and more :)
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TLDR Aave launched a market yesterday which will allow users to deposit liquidity provider (LP) tokens from automated market makers (AMM) and use them as collateral for borrowing.
SO WHAT As LP tokens provide more money-making opportunities, more users will provide liquidity to AMMs in order to deposit them in protocols for leverage. The leveraged tokens can be deposited back into AMMs resulting in less slippage, increasing the overall utility of DeFi.
14 UNI-POOLS The market, called AMM Market, initially accepts deposits for 14 of Uniswap’s, and two of Balancer’s LP tokens. It has over $5M currently locked in its smart contracts without liquidity mining, as Aave CEO Stani Kulechov said in an interview. The release post emphasized that the initial 16 LP tokens chosen were only the beginning.
At this time, users may borrow DAI, USDC, ETH, wBTC, and USDT against their collateralized LP tokens.
VIRTUOUS CYCLE The functionality spurs “a positive feedback loop between all DeFi participants,” Nik Kunkel, backend engineer at MakerDAO told The Defiant. “AMMs get more liquidity, LPs gets more yield, credit protocols like Maker and Aave earn more fees, and traders get less slippage.”
SAFETY MODULE The AMM market will not initially be covered by Aave’s Safety Module, which serves to offset lost funds by selling locked AAVE tokens, though governance can vote to change this.
TLDR The NFT of an Elon Musk tweet about making a song about NFTs to sell as an NFT is selling for over $1M USD —Yeah, that’s a mouthful. To break it down, Elon Musk tweeted that he had made a song about NFTs that he would sell as an NFT.
625 ETH Currently, the highest bid is for 625 ETH ($1.1M USD). This would make it the second most valuable Tweet NFT on Valuables after Twitter founder Jack Dorsey’s NFT of his first ever Tweet, which is currently bidding for 1,630 ETH ($2.5M USD).
VALUABLES The NFT of Elon Musk’s NFT tweet is now up for auction on Valuables—a dapp built on the Ethereum-compatible L2 platform, Polygon (formerly Matic). Valuables allows users to tokenize, “autograph,” and sell tweets.
TLDR Leverage is difficult to monitor in DeFi’s current state, but it may have found a friend in a new product called the Flexible Leverage Index (FLI). The ERC-20 token, pronounced “Fly,” created by Index Coop and DeFi Pulse, using Compound and Set Protocol, aims to help token holders manage their leveraged positions.
RE-CENTER Managing these positions currently requires a user to manually monitor the ratios of deposited collateral’s value against borrowed assets’ value. If the value of the collateral falls below a threshold against the borrowed asset, users face liquidations and fees. FLI aims to automatically recenter towards a set ratio so as to minimize the possibility of leveraged users losing their collateral.
TLDR Anchor Protocol will be targeting a 20% fixed annual yield on stablecoins—the highest fixed stablecoin rate to-date.
BUT HOW?? Anchor, a newly launched low-volatility savings protocol by the Terraform Labs team, aims to achieve this 20% rate by passing borrowers’ staking rewards onto lenders, instead of charging a borrowing rate. In other words, the borrowing cost equals the lost staking rewards.
✊ Head to THEDEFIANT.IO for more DeFi news 📰
🧑💻 ✍️ Stories in this newsletter were written by Owen Fernau, Dan Kahan and Cooper Turley, and edited by Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila, edited by Alp.
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