Lightning Gets You $20, DeFi Gets You $50,000, ERC20s in The Big Leagues

Good morning defiers! here’s what’s going on in DeFi:

  • Comparing deposit rates on the Lightning Network versus DeFi

  • First ERC20 set to be sold in an actual IPO


Lightning Gets You $20, DeFi Gets You $50,000

A person or group with $5 million locked in the Lightning Network, a payments channel-based system for Bitcoin, is making $20 on transaction fees, according to TrustNodes. DeFi Prime thought of taking the amount staked and plugging it into decentralized finance platforms and the difference is staggering.

The average annual interest rate for lending Dai is about 11.5 percent, according to LoanScan. That means that interest gained from $5 million of staked Dai ranges from almost $50,000 on Compound and dYdX, to around $61,000 per month on Fulcrum, according to DeFi Pulse’s handy tool.

To be fair, the comparison isn’t exactly apples to apples as LN is a payments network, while the DeFi platforms listed are lending protocols. Still, the point is it’s pretty amazing that anyone can start earning 10 percent interest on a dollar-linked assets in a couple of clicks on their laptop. It makes the opportunity cost of putting your money almost anywhere else pretty high, including in the Lightning Network.

Of course, I wouldn’t recommend actually putting $5 million in a DeFi platform at this stage. For now, the safest bet on DeFi if you wanted to make a big deposit, is to insure it. The highest amount allowed today on Nexus Mutual, which insures smart contracts, is about $75,000 for an insurance fee of about about $160, which would earn you about $700 of interest with Dai. Not bad.

First ERC20 Token Set to be Sold in an IPO

Crypto trading platform INX Limited plans to raise up to $129.5 million selling Ethereum-based tokens in an IPO. This would be the first time ERC20 tokens are sold in an offering registered with the SEC.

Previously, startups wanting to make sure they were complying with U.S. securities laws had sought exemptions from the SEC that allowed them to sell tokens to accredited investors. More recently, Blockstack registered a token sale under Regulation A+, which is open for individual investors. The difference is that Blockstack’s tokens aren’t ERC20s.

The fact that it’s an ERC20 token is pretty significant. In three years they went from obscurity, to being the default standard for ICOs, which then became the focus of a regulatory crackdown after the boom, to being issued in a U.S. IPO.

INX’s and Blockstack’s registered sales, DAOs popping up everywhere, and different token-based business models, shows crypto startups’ crowdfunding mechanisms are getting new life after the ICO boom and bust cycle. It’s a sign the industry is healing after the craze, and finding more sustainable ways of raising money.