Aave’s $3M Token Sale Reveals It’s a VC Favorite Ahead of Protocol Upgrade
Also, LEND on-chain stats shows holders are selling, mStable delays MTA listing, Rari Capital is the latest yield bouncer.
|Jul 16, 2020||3|
Hello Defiers! Here’s what’s going on in DeFi:
Aave has become a DeFi VC darling
Aave’s LEND tokens’ on-chain stats show long-time holders are selling
mStable delays token listing to avoid front-running bots
Rari Capital is the latest yield bouncer, with a twist
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Aave’s $3M Token Sale Reveals It’s a VC Favorite
In the already cutting-edge DeFi space, Aave is pushing the boundaries even further, and that’s making it a VC darling.
Yesterday, Aave announced the sale of $3M worth of LEND tokens to crypto funds Three Arrows Capital and Framework Ventures.
The sale of LEND at $0.10/token was a huge win for both firms, as the price soared to over $0.26/token on the back of the news. The announcement prompted crypto funds ParaFi and Spencer Noon’s DTC Capital to share their position in Aave too.
With over 20+ supported assets and counting, the most among other DeFi protocols, Aave has cemented itself as the lending platform with the most diverse lending pool.
Beyond that, this year it’s been fiercely adding new, innovative features. Last week it unveiled Credit Delegation, which allows anyone to borrow against a counterparty’s collateralized credit line. Earlier this year it spearheaded flash loans, which allow anyone to take a loan of any size so long as it’s paid back in the same block.
Just today, it introduced a new fiat onramp, alongside support for ENJ and REN and in tandem with updated risk parameters
Underpinning the fundraising news was the formal announcement of the migration of LEND token amid a wider protocol upgrade which will be detailed in a soon-to-be-released Aavenomics governance paper. Aave’s transition is set to introduce a suite of new incentives, including staking and yield farming opportunities backed by distributed governance.
Aave’s governance upgrade sets the stage for the introduction of new asset classes - all of which are introduced, vetted and governed by Aave Improvement Proposals and a framework for protocol, market and risk policies.
For LEND enthusiasts, Aavenomics introduces a new staking module, allowing token holders to stake to an insurance pool in exchange for AAVE rewards and protocol fees. The staking module will feature both plain AAVE staking and an 80/20 AAVE/WETH Balancer Pool, giving users flexibility while rewarding Balancer LP’s with BAL governance token and additional trading fees.
Outside of staking, Aavenomics will feature new yield farming incentives, giving those who lend and borrow from Aave’s diverse asset pool AAVE rewards.
All in all, Aave is striving to push DeFi to its limits, with some calling features like Credit Delegation some of the most exciting the sector has seen to date. The upcoming upgrades have the goal of making sure LEND holders benefit from all this innovation.
Aavenomics will be formally rolled out to the public in the next two weeks, followed by a Genesis Governance poll in which LEND holders will vote to deploy the AAVE migration contract. To join the conversation today, pop into Aave’s Discord!
On-Chain Markets Update by IntoTheBlock
This Week: Key Insights Assessing Aave’s (LEND) Remarkable 2020
Decentralized lending protocol Aave has been on a tear this year. Having increased its value locked by 60x and LEND’s market cap by over 20x year-to-date, Aave has earned a spot amongst the top DeFi protocols.
Since rebranding from ETHLend to Aave, the protocol has consistently brought innovative solutions to the DeFi space starting with flash loans and more recently undercollateralized loans through credit delegation. Additionally, the Aave team is currently working on a protocol upgrade that will grant governance rights to stakers, akin to Kyber’s recently deployed Katalyst upgrade.
All of these improvements have led to robust expansion in some of Aave’s key on-chain indicators. Using IntoTheBlock’s LEND indicators, we have a closer look at what’s happening under the hood at Aave, showcasing the protocol’s remarkable growth, but also a few potential areas of concern for LEND holders.
1. Transactions Growth Following Price
Aave’s native LEND token has been on high demand throughout 2020. The number of daily LEND transactions has increased by almost 10x, from an average of 172 at the beginning of the year to one of 1,630 in the past seven days. While this is a remarkable increment, it is still less than half the amount of daily transactions it achieved on June 22, when they hit a two and a half year high of 3,640.
2. Large Transactions Hit All-Time High Then Drop
By classifying the types of transactions taking place, we can better determine what types of users Aave’s LEND token is attracting. Using IntoTheBlock’s large transaction volume indicator — which filters the aggregates the daily volume in on-chain transactions greater than $100,000 — we can gauge institutional and whales’ interest.
LEND’s large transaction volume hit an all-time high of $26 million on June 18. This is more than double the previous all-time high of $12 million recorded on Jan. 8, 2018, at the peak of the 2017/18 bubble. Therefore, on-chain data points to institutional interest picking up for Aave, as also evidenced by venture capital firm ParaFi’s recent $4.5 million investment.
While large transaction volume peaked on June 18, it has since dropped despite price still rising. This signals the most recent LEND rally is being driven by retail investors following its 2,000%+ price appreciation.
3. Hodlers Sell while Traders Rise
Contrary to most Aave indicators, ownership metrics raise concerns about LEND. In general, the total number of addresses with a balance of a token tends to rise along with its price. However, this has not been the case for LEND in 2020, with the number of holders dropping by year-to-date.
As can be seen in the graph below, the decrease in the number of addresses with a balance accelerated in mid to late June while prices started going parabolic. This is a clear indication of holders realizing profits by selling their LEND tokens.
Despite the significant drop in holders seen in late June, the trend appears to be reversing throughout July so far. As shown previously with the drop in large transactions, it is likely that more retail users are buying LEND following the trend towards DeFi tokens.
Furthermore, by segmenting holders by the amount of time they have held tokens for we can estimate what type of users have been selling their tokens. IntoTheBlock’s Hodlers indicator, which tracks the number of addresses holding tokens for over a year, shows that long-term investors have been selling their LEND tokens.
While the number of addresses hodling has dropped by less than 4% year-to-date, the impact on the volume of tokens sold or transferred out by these holders is much larger. The amount of LEND tokens held for over a year has dropped by 42%, pointing to large players with long-term positions selling as price spikes.
Finally, IntoTheBlock’s Traders indicator offers a proxy for short-term activity in the LEND token. As can be seen in the image below, the number of addresses holding LEND for less than a month has increased significantly, growing by almost 50% just in the last 30 days, signaling a high likelihood of retail FOMO taking place.
Aave’s growth throughout 2020 is due to more than speculation, as the team has shipped innovative solutions and managed to substantially grow the usage of its lending protocol. That being said, on-chain indicators suggest that the current rally may be over-extended as retail users enter the frenzy and large players appear to be selling.
Feel free to check out more Aave and DeFi token indicators at IntoTheBlock. This piece is not to be used as financial advice.
Rari Capital: A New Yield Bouncer With A Twist
Rari Capital is a newly launched yield bouncer for maximizing stablecoin interest, specifically DAI, USDC, and USDT. It currently moves funds between Compound and dYdX lending pools to maximize lending interest returns.
If you've ever used Idle.finance, Staked RAY, or iearn.finance it's the same yield bouncer concept, but with 3 differences to call out.
1) In the near future, they intend to add “more currencies across more lending protocols, among other strategies.” I would imagine this means adding ETH and other premier Ethereum tokens like SNX.
2) When one deposits stablecoins, the Rari web client may exchange your tokens via 0x and then deposit them to maximize yield. For example, if you deposit USDC and if DAI is earning higher interest, it makes sense to swap newly deposited USDC for DAI. When you do deposit USDC, you also may be paying an ETH transaction fee via 0x + slippage, but the intention is to maximize your gains for that upfront exchange cost.
3) I think the really clever part of Rari is the fact it takes COMP mined from lending Rari funds on Compound and liquidates COMP every 3 days to increase interest payments to RFT token holders, which is just the IOU token you receive in your wallet when you deposit stablecoins into Rari.
WARNING: While this is an interesting new take on a popular and proven concept of yield bouncers, Rari is in progress with an audit and hence unaudited. There is a $350 limit on deposits and one should assume they can lose any value deposited into this new DeFi app
Step by Step
As long as one is fully aware of the risks of using this app with unaudited smart contracts, here's the steps for how to experiment earning interest with stablecoins deposited into Rari Capital App (or The Fund).
Scroll down to the green Deposit textbox and choose DAI, USDC, or USDT from the dropdown menu
Specify how much to Deposit
Follow the prompts to approve 2 transactions .
If one would like to exit their position earning interest with Rari in the future, come back to this same page and use the red Withdraw button.
Disclaimer & Risks: This is not financial advice and you should approach all DeFi applications, wallets, protocols, and tools with caution. Please be aware there is always risk in using DeFi, including technical risks (ie smart contracts hacks), financial risks (ie liquidity crises), and potentially admin risk (admin key compromise, governance vulnerabilities). Also, there's risk of the dollar-peg failing in any stablecoin.
For more DeFi video tutorials and insights, follow @DeFi_Dad on Twitter and subscribe to DeFi Tutorials with DeFi Dad on YouTube at https://www.youtube.com/channel/UCatItl6C7wJp9txFMbXbSTg.
mStable Delays Sale to Thwart Front-Running Bots
As one of the hottest yield farming projects on the block, mStable was about to kick off its MTA Genesis token distribution yesterday on Balancer.
With over $20M in newly minted mUSD fueling over $30M in aggregate liquidity across two of the top Balancer Pools, the rising liquidity aggregator was set to make big waves with it’s Initial DEX Offering early Wednesday morning.
However, less than 24 hours before the offering, mStable hit the brakes in light of BZRX’s Uniswap listing on Monday morning. For those who missed it, bots ended up scooping the vast majority of cheap tokens and making a major profit at the expense of hungry DeFi power users.
Citing misaligned incentives as the cause for a marginal delay, mStable shared an updated release plan which outlines a way to mitigate “bot” front-running to incentivize long-term MTA holders rather than incubating a frenzy of speculation.
The delay post explains how AMM-based Initial DEX Offerings encourage participation from short-term traders, rather than building the long term Meta Governs mStable seeks to incubate. mStable will turn to the Gnosis-based Mesa DEX - a solution offering ring trading and batched orders - which prioritizes a fair price over instant order fulfillment.
mStable 🧮 @mstable_1/ Recent events have revealed a mismatch in incentives between some actors in a Balancer/Uniswap pool launch and the long-term interests of a protocol and its users. After team & community review, the MTA Genesis will be marginally delayed. Learn more: https://t.co/fKMz1Adw9m
The new MTA Genesis sale will launch on Friday at 12:00 UTC followed by the creation of an incentivized MTA/mUSD Balancer pool.
Stay tuned to the projects’ official blog for more details around how to participate in the Mesa offering and how to get involved in what aims to be one of DeFi's more fair distributions to date.
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About the founder: I’m Camila Russo, a financial journalist writing a book on Ethereum with Harper Collins. (Pre-order The Infinite Machine here). I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.