BitPay Thinks ETH is Money, Vitalik's Idea Could Spur the Next Hot DeFi Project

Good morning defiers! Here’s what’s going on in open finance:

  • BitPay adds ether payments

  • Borrowers return to MakerDAO after rate cut

  • Vitalik’s idea at Ethereal conference

BitPay Thinks ETH is Money

Businesses using BitPay, a global crypto payments provider, will soon be able to accept ether for purchases, in addition to bitcoin and bitcoin cash. The company’s wallet users and prepaid Visa card holders will be able to store and use ether and top off their cards with the cryptocurrency.

The ability to use ether globally for payments strengthens its use case as a means of exchange, on top of acting as fuel for the Ethereum machine, and as the reserve currency of centralized finance. Voices arguing that ETH is money have been getting louder, and this news gave them more ammo.

MakerDAO Strengthens Hold on DeFi

MakerDAO’s interest rates were cut for a fourth time in a month to 12.5 percent from 14.5 percent last week and 20.5 percent in August.

Borrowers have taken note and are flooding back into the system after switching to Compound Finance when rates were climbing. Currently, Maker’s and Compound’s rates to borrow Dai are at roughly the same levels. The results are the following:

  • The total value locked in Maker is at $303 million, the highest in six weeks

  • Maker is regaining its dominance after total value locked in the system approached 50 percent of DeFi just a couple of weeks ago. Now it’s at 54 percent, according to DeFi Pulse

  • Loans originated jumped today and yesterday to the highest in a month and most happened on MakerDAO, while Compound was taking most of the market share recently, according to LoanScan

Image source: DeFi Pulse

This is the market reaction to lower rates. What’s interesting is that those rates were set not by a central bank committee, but by MKR holders voting on their laptops from wherever they were in the world.

Vitalik Comes Up With Scheme to Reward Developers

Speaking at ConsenSys’ Ethereal conference in Tel Aviv, which just wrapped up, Ethereum creator Vitalik Buterin came up with an idea to reward publishers of highly-used smart contracts with a share of gas fees.

Rewards could start at zero and scale super-linearly with usage, Matt Huang at investment firm Paradigm tweeted.

Don’t be surprised if we see a couple of solutions based on Vitalik’s comments very soon, in addition to similar projects already in the works. His blog posts have served as inspiration for many of the most successful ventures in the space, like the ERC20 token standard and Uniswap, to name two.

There was already a response in the thread which combined Vitalik’s idea with, of course, DeFi: What if contracts that require their own gas fee store those fees in Compound so that with time they’re paid with interest and users get free transactions.

This is what Vitalik said about DeFi at Ethereal:

I’m very excited about the potential that DeFi offers in principal. The idea that anyone anywhere in the world can have access and choose their financial exposure is a very powerful thing.

Still, he warned people shouldn’t be putting large amounts of money into projects that are new, untested and risky.

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About the author: I’m Camila Russo, a financial journalist writing a book on Ethereum with Harper Collins. 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.