📣 Announcing: The Defiant’s DeFi 101 Series. Watch The Pilot Episode!

https://thedefiant.substack.com/p/-announcing-the-defiants-defi-101

Hello Defiers! This is what’s going on in decentralized finance,

  • MKR holders choose to not compensate Balck Thursday Vault owners

  • Synthetix takes first step in move to Optimism’s Layer 2

  • Secret Network releases roadmap for private DeFi

  • Fairmint launches CAFE, a rolling equity offering

If you’re receiving this email, that means you’re a paid subscriber of Th…


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The Future is Here

https://defiweekly.substack.com/p/the-future-is-here

Like many of you who read this newsletter, you probably got 400 free $UNI tokens from Uniswap as part of their token distribution scheme. At first it’s a nice little surprise to wake-up to but as I’ve been thinking about it more over the past few weeks, it keeps blowing my mind over and over again. This piece is more abstract but important to understand…


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NFTs Should Be Experiences, Not Just Products: IDEO CoLab’s Ian Lee

https://thedefiant.substack.com/p/nfts-should-be-experiences-not-just

Hello Defiers! NFTs —non-fungible tokens meant to serve as representations of things rather than currency— are having a moment. But Ian Lee of IDEO CoLab Ventures says they’re not very interesting, At least not in the form they’re usually presented, that is, as products; tokenized art, tokenized game assets, etc.

But NFTs are a lot more interesting when…


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Was it a Pump and Dump? Few Will Ever Understand

https://thedefiant.substack.com/p/was-it-a-pump-and-dump-few-will-ever

Hello Defiers! Another day, another drama,

  • DeFi influencers accused of creating a pump and dump token called $FEW

  • Set Protocol releases yield farming strategy

  • IntoTheBlock’s on-chain analysis of UNI distribution

The open economy is taking over the old one. Subscribe to keep up with this revolution. Click here to pay with DAI.

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🎙Listen to this week’s podcast episode with Jihoz from Axie Infinity:

📺 Watch New Video on The Defiant’s YouTube Channel and Subscribe

We’ll be talking about MEME so check out the epic video we made about it. The video was produced in partnership with Robin Schmidt of Harmony Protocol.


🙌 Together with Zerion, a simple interface to access and use decentralized finance,  Perpetual Protocol, which provides decentralized perpetual contracts for any asset, and HackAtom V, a two-week virtual hackathon organized by Cosmos.


Few Understand This Shows DeFi is Loosig its Footing

A leaked Telegram chat has the DeFi community decrying that some of the space’s most well-known influencers were orchestrating a pump and dump scheme around a token called $FEW, an accusation the crypto personalities involved deny.

The question is whether the group was created with the specific purpose of leveraging the members’ follower base to push the price of a token they would later sell. The answer is probably not the same for everyone. There were more than 500 people in the chat at some point, and it’s unlikely that all of them had the same intentions.

This latest drama highlights that speculation surrounding self-proclaimed DeFi projects is reaching a frenzy. A dollar sign placed in front of certain words —specifically those related to memes or food items— spouted out on Twitter in some cryptical haiku-like message peppered with fire and rocket emojis, will create an irresistible urge to buy that token, regardless of what or who is behind it.

Next Big Thing

How did we get here? Because of the success of this new DeFi wave of meme-based, community-owned and led, hacked overnight, unaudited projects. After seeing coins like YFI, YAM and MEME soar, everyone wants in on the next big thing.

This wouldn’t be an issue if those so eager to get rich off a DeFi experiment actually had the intention of producing something of value. The problem is when the only goal behind a token is for those who issued and own it, to shill it on Twitter and quickly sell it to others for a quick profit.

It’s unclear whether that was the intention of those involved in $FEW, but leaked chats have some in the DeFi and the Ethereum community speculating that to at least part of the group, it may have been.

Reverse Engineer MEME

So what actually happened: Yesterday someone started a Telegram group dubbed “The Experiment” and invited well-known crypto personalities. That someone might be a Telegram user who goes by the name of “Sam Mr.Boson,” as he appears to be the admin in leaked chat logs.

According to those screenshots, he created the group with the intention to “reverse engineer MEME,” which means: get a bunch of people in a Telegram group, airdrop a token, list it on Uniswap, ride the hype around that token to create an actual project around it, and hopefully see said token rally so everyone who held on to the airdrop has half a million dollars on paper a few weeks later.

Token Airdrop

Mr.Boson said the plan was to airdrop a token to the first 50 in the group. About an hour later, the 50-people target is reached and now conversation starts shifting to jokes about the “few understand” meme, some talk about what the project will actually do, while others are still trying to figure out what actually is going on.

The group grows to more than 500 people in less than four hours, according to Taylor Monahan’s play-by-play. By this time, many were asking about the token airdrop and sending their ETH addresses, while putting pressure for the token to be listed on Uniswap.

Promoting FEW

42k FEW tokens were created after that, and 40k were distributed among 52 addresses, with 769 going to each address, and 2k remaining, according to Etherscan.

Meanwhile, recognized and respected names like Alex Masmej and Anthony Sassano appeared to have been promoting the token on their Twitter feeds, while others like DeFi Dude said he was ready to start shilling the token in the chat. They have all since apologized for their statements, said it was all a joke and meant as fun, not as an effort to cash in.

Leaked Chat

It was around this point that screenshots of the chat were leaked, exposing what appeared to be a plan to create a worthless token, and pump and dump it. What was especially upsetting to some, was to see so many familiar names in the chat.

The original FEW token wasn’t listed on Uniswap, so it’s unlikely that the recipients had a chance to cash out (unless they did over-the-counter deals). Some of the addresses have also burned the tokens, according to Etherscan.

Fake FEW Scams

Still, others saw the opportunity to profit from the hype that was generated by widely followed and recognized crypto personalities, aka “influencers,” tweeting about it and at least two fake FEW tokens were added to Uniswap. One of them, which had $15k of liquidity, listed at over $80 and has since dumped to $35.

Others are taking advantage of the scandal to push yet another token: $MANY. *face-palm emoji.*

Reputations Hurt

In the end, we won’t know for sure whether the creators and promoters of the token had the intention to pump and dump it. Unfortunately, even if they weren’t, scammers were still able to take adavantage of the project and the reputations of those involved were hurt.

“For those involved, this experiment showed that years of hard work and reputation can be quickly challenged by a few poorly thought out Telegram messages,” said Cooper Turley, Audius community lead and Defiant contributor, who was invited to the group. “Despite never listing, FEW is an experiment around user safety and social responsibility that we should all learn from.”

One thing that can be concluded from all this is that speculation around DeFi is starting to shift from throwing money and creating protocols that are at least aiming to serve some financial function, to throwing money and creating tokens that serve no purpose at all.


Set Releases Yield Farming Strategy

By Cooper Turley

Set Protocol has rolled out the first of many automated yield farming strategies, starting with an ETH USD Yield Farm.

Comprised of ETH, DAI and ETH/DAI Uniswap LP tokens, the USDAPY Set puts idle assets to work as liquidity in Uniswap. This liquidity earns UNI tokens that are sold and normalized for more ETH/DAI LP tokens. The recursive farming cycle boosts the price of the Set, offering an annualized yield to holders. At the time of writing, the USDAPY Set is said to be offering a 66% APY.

While UNI is the first target, the USDAPY Set can support any other farming strategy, so long as it uses ETH or DAI as its primary fertilizer.

Cheaper Gas Fees

Underpinning the strategy is a new form of issuance where users can deposit any supported asset and receive the ETH USD Yield Farm Set in return. This means no exorbitant gas fees to provide liquidity, stake tokens or collect yield. All users pay a 0.35% premium when entering the strategy, good for covering gas costs and boosting the overall APY of the Set as a whole.

When redeeming, users also incur a 0.3% fee which is distributed back to the pool. As a stopgap, the Set is capped at 500 WETH or 200,000 DAI per redemption, ensuring the Set always remains sufficiently capitalized.

Passive Strategy

For Set enthusiasts, the introduction of the Yield Farm Set is exciting for two main reasons:

  1. Passive automated strategies like ETH USD open an entire new avenue of tokenized asset management strategies.

  2. The introduction of fees and premiums signals that Set Protocol will offer residual benefits to long-term Set holders.

As one of the few remaining DeFi projects without a native token, the launch of yield farming Sets with the V2 upgrade is a strong signal that the case for tokenization gets more attractive by the day.


On-Chain Markets Update by IntoTheBlock

This Week: Key Insights Behind UNI’s Distribution

Uniswap users received a pleasant surprise last Thursday when the popular DEX distributed 15% of their UNI governance tokens to all users that interacted with the protocol prior to September 1st. At an initial price of approximately $3, Uniswap airdropped $450 million worth of UNI tokens. 

While airdrops in crypto are nothing new, this has thus far been the airdrop where the largest dollar amount has been distributed. Another key difference versus airdrops that took place in 2017-18 is that UNI was distributed to existing users and supporters of Uniswap, whereas most airdrops simply reward holders of another token or users of a specific wallet. 

By analyzing on-chain data we can better understand the impact UNI has had on the Ethereum blockchain and on the protocol itself. With that in mind, here are three key insights that highlight the magnitude of Uniswap’s UNI distribution:

1. Ethereum Fees Approached $1M/Hour as ETH Transactions Soared

Ethereum fees have been on an uptrend in 2020, especially since yield farming took off in the summer. UNI’s distribution took this to a new level with Ethereum fees approaching $1 million per hour shortly after users were able to claim their free governance tokens. 

Source: IntoTheBlock 

Within 5 hours, hourly fees nearly went 10x from just over $100,000 to over $900,000. This is the highest Ethereum fees have been on a per hour basis all year.

The spike in fees is due to high demand for limited Ethereum blockspace. As a result gas fees stood between 500 to 700 Gwei for several hours, also one of the highest levels seen all year. 

Despite the high fees, Uniswap users still rushed to claim their UNI tokens. This is likely the main reason why the number of ETH transactions surpassed 1.3 million the day UNI was released.

Source: IntoTheBlock’s Ethereum transaction stats

The UNI distribution marked a new yearly high in terms of Ethereum transactions, and the second highest level seen all-time. Now let’s look into activity within the UNI token. 

2. UNI On-Chain Volume Surpassed $2 Billion While Exchange Inflows Rose

Given UNI’s high valuation, it made sense that transaction activity and fees spiked upon its release: the value of 400 UNI (~$1,200) was significantly higher than the $10-$20 in gas costs required to claim it. This is reflected in the high transactions volume UNI has processed since its inception:

Source: IntoTheBlock’s UNI transaction stats

Within 48 hours, UNI’s on-chain transaction volume had already surpassed $2 billion. Volume recorded off-chain was also massive with UNI 24-hour volume surpassing that of Bitcoin in Binance on September 18. 

With Coinbase and Binance listing UNI within hours, a significant amount of holders transferred their tokens into exchanges: 

Source: IntoTheBlock’s UNI Exchange Flows

Given that UNI’s price more than doubled on its second day, it may come as no surprise that inflow volumes also increased. This is likely an indication that many holders were looking to sell their UNI. 

3. UNI Becomes 2nd Most Held DeFi Token Despite Most Addresses Selling

By looking at the number of addresses holding UNI we observe that it instantly attained widespread distribution. With over 80,000 holders within 48 hours, UNI became the second most held DeFi token only behind LEND (excluding stablecoins and oracles).

Source: IntoTheBlock’s UNI Exchange Flows

Based on Uniswap’s official announcement, there were just over 250,000 user addresses eligible to claim their free UNI. Although some of these addresses have yet to claim their UNI, it appears that most simply sold. By looking at zero balance addresses — addresses that transferred out all of their tokens on a given day — we can confirm that most UNI claimers either sold or transferred all of their stake immediately.  

With $450 million worth of tokens freely distributed to previous users, it may come as no surprise that UNI sparked high Ethereum fees and transaction activity. Within a week of its inception, UNI has already amassed strong transaction activity and reached the second highest holder base out of DeFi tokens despite most users selling their tokens. Ultimately, though, Uniswap’s UNI release has been one of the most impactful events to occur in Ethereum in 2020.  


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 at $10/month or $100/year, while free signups get only part of the content.

About the founder: I’m Camila Russo, author of The Infinite Machine, the first book on the history of Ethereum. 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.

Hypebeast Culture Drives MEME Rally Amid Market Bloodbath

https://thedefiant.substack.com/p/hypebeast-culture-drives-meme-rally

Hello Defiers! Here’s what’s happenin in DeFi:

  • DeFi tokens sell off except for one coin

  • YAM Finance gets new life

  • tBTC launches for a second time

and more 🙂

The open economy is taking over the old one. Subscribe to keep up with this revolution. Click here to pay with DAI.

Subscribe now

🎙Listen to this week’s podcast episode with Jihoz from Axie Infinity:

📺 Watch New Video on The Defiant’s YouTube Channel and Subscribe

We’ll be talking about MEME so check out the epic video we made about it. The video was produced in partnership with Robin Schmidt of Harmony Protocol.


🙌 Together with Zerion, a simple interface to access and use decentralized finance,  Perpetual Protocol, which provides decentralized perpetual contracts for any asset, and HackAtom V, a two-week virtual hackathon organized by Cosmos.


Here’s Why a Meme Coin Rallies Amid a Market Sell-Off

By Matty – DCLBlogger

It was a sea of red in the market yesterday. But while Ether slid by almost 10% and all DeFi tokens plunged even deeper, one project astonished the crypto world accelerating the 10x increase it had seen in the last seven days:

$MEME

A ticker most would pass off as a pump and dump. But is there more than meets the eye? The concept follows the road of coin pairings on DEX protocols like Uniswap, which allow traders to park funds and earn a part of the trading fees generated from volume on the pair. In this case, you would provide ETH-MEME liquidity on Uniswap.

But there’s one big difference.

Along with fees, you can earn ‘points’ for staking in the Meme protocol, which are redeemable for Meme NFTs, or scarce non-fungible tokens, tied to unique, crypto-based designs. The release of these rare, exclusive items generate a frenzy similar to that seen in streetware’s hypebeast culture.

This changes the game.

Increased Demand

The proposition of fees alone is strong but adding an arbitrary asset that has a limited supply, (there are only 10 of some cards, and 100’s or 1,000’s of others), gets people fighting for it, which increases the value of these NFTs.

Increased interest in these unique tokens in the past week, with Yearn Finance founder Andre Cronje buying an NFT based on himself and the project’s collaboration with emerging digital artist Sven Eberwein, drove demand and pushed MEME past $1k on Sunday. Crypto exchange Poloniex listed the token Monday, spurring further gains, even as the broader market dumped.  

Backstory

It all started five weeks ago with a tweet from Jordan Lyall, product lead at ConsenSys, making fun of how quick you can copy-paste a DeFi protocol.

Suddenly the community assembled, made a Telegram group, claimed the $MEME ticker and airdropped 26,000/28,000 supply to 73 members there via a Google form. A cool 355.5 $MEME tokens each, or over $600k at the time of writing.

The rest of the 2,000 $MEME tokens were split between the contract creator and the initial liquidity pool on Uniswap to kickstart trading, with the LP tokens sent to Vitalik Buterin’s wallet, effectively burning the keys to claim those 1,000 MEME tokens back. 

Strong Hands

There are currently around 2,200 token holders of $MEME. The core community, which calls itself the “Citadel,” isn’t looking to sell.

“The citadel has strong hands,” MEME holder Gabriel Frank said. “Most believe we’re on to something great and so no one is selling.”

Blockbuster Sales

A scarce card, called “Legendary,” depicting Andre Cronje sold for 48 ETH, for example, while a Legendary Sergey Nazarov sold for 78 ETH on the secondary market.

How’s that for a bonus within 15-20 days of staking?

Cronje said he was “amazed” by the project. 

Temporary Hype?

Some will say this is all due to temporary hype. In most cases a project does extremely well, sells out its initial phase of NFTs and people move on to the next shiny thing.

The MEME Community is hoping to prevent that by collaborating with renowned artists, generating a lasting stream of high-quality, desirable digital art.

Eberwein, who has sold pieces for 6-8ETH on Superrare was the first Artist drop.

You can stake your MEME to this pool and claim these Art NFTs.

CoinArtist, one of the famous and early artists in the crypto-art scene who’s also the CEO of blockade games, signaled a potential collab.

These multiple cards and collectibles encourage more locking up of $MEME effectively taking them out of circulation.

Tie this with the fact the value of some of these cards can rise due to the scarcity, you get a frenzy of people trying to buy and stake $MEME to claim these before others do.

Which is exactly what’s been happening over the last week.

Rewards Portal

Will this sustain?

In my opinion, it has the potential to.

The key is to provide a strong enough ‘rewards portal’ ie, famous artist collabs, rare NFTs, or they can even partner up with projects outside of the digital art world and provide virtual land or game assets.

The possibilities are endless.

Remember these NFTs are in most cases BONUS assets being claimed along with staking fees. If you replace the $MEME ticker with something like $REWARD, then it becomes a little clearer. It’s basically a reward portal for those who provide value to the ecosystem.

Risks

What are the risks?

Traditionally we’ve seen new projects boom and fall flat.

Usually it’s due to a bug in the contract or a ‘rug pull’, ie, the founder quickly cashes out the initial share of Community tokens, similar to what happened with Sushiswap.

But for MEME, 93% of tokens are distributed equally across the Community. The rest are locked in a liquidity pool with keys thrown away. So there is no way to rug pool. Considering all this is happening within the Uniswap protocol, there being a bug in the process is highly unlikely.

The only risks I can think of is if the supply of these NFTs becomes more than the demand and people find a better asset to put their money in, effectively moving out of the $MEME token.

There’s also not much incentive currently for the smaller fish who will find it hard to earn points quickly enough to compete with larger players and thus get the spoils.

Fluctuations

The project will probably see huge fluctuations, big green days, big red days, just like any other 0-hero project.

But as long as the team, who are highly motivated, energized and well respected in their fields continue to build and fine-tune the project, (I believe they will), we should see continued growth. 

Art + DeFi + NFTs are reaching an epic intersection.

Add some meme culture and you have a product that’s almost a perfect mix of buzz and incentivization to break through the noise.


YAM Finally Finds Fertile Ground After Succesful Rebase

Yam Finance’s first successful monetary exercise yesterday marks a new start to DeFi’s original food-based token

YAM is an experiment in rebasing cryptocurrencies, plus token incentives (aka yield farming) to drive liquidity, plus full on-chain governance, plus a DAO-like treasury managed by token holders. It’s also testing the power of the emoji 🍠.

Image source: YAM Medium

Its Aug. 11 launch immediately attracted hundreds of millions of dollars and a fierce community rallying around the project. But a bug which rendered governance impossible was found in the unaudited code two days later, prompting it to raise funds for an audit and relaunch an improved version. Yesterday, it passed its first test.

Target Peg

It targets a peg of 1 yUSD (Yearn Finance’s stablecoin) which it tries to achieve by adjusting, or “rebasing,” its supply. Whenever the price of YAM is above 1.05 yUSD, supply expands to lower the price, and when the price is below 0.95, supply contracts to raise it.

When supply expands, Yam’s treasury mints 10% of the rebase amount and sells it to the YAM/yUSD pool in Uniswap. In other words, it buys yUSD, which gets deposited in the treasury, and is managed by token holders. The project also directs 1% of inflows into the treasury to Gitcoin grants funding Ethereum public goods.

Rebase

Monday was YAM’s first successful rebase. Since the YAM price was way above the peg at almost $20, supply expanded and $571k in yUSD was added to the treasury, while $5.71k was contributed to Gitcoin.

The price dropped to below $7, but YAM holders’ wallet balance increased by 2.49x. The rebase happens every 12 hours and is meant to gradually push the price back to 1 yUSD.

The future of Yam Finance is now in the power of YAM holders, who can vote to change anything from protocol parameters, to treasure management to contributors’ compensation.


Bitcoin-on-Ethereum Token tBTC Launches Once More

Bitcoin-backed Ethereum token tBTC shut down four months ago because of a bug. Today, it announced the protocol (tbtc.network) is ready to be used again by BTC holders who want to access Ethereum applications.

The project is relajunching amid surging interest from Bitcoiners to use DeFi. There is now 100k Bitcoin, or $1.1B locked up to be used in Ethereum, most via wBTC, another Bitcoin-backed Ethereum token.

Image source: https://btconethereum.com/

tBTC wants to differentiate itself from wBTC and others, by claiming to be fully permissionless. While users have to trust custodians with their Bitcoin to use wBTC, tBTC says it’s trustless and uses a system which selects random “signers” who have responsibility for the deposited BTC.

“You can convert TBTC to BTC, and vice-versa, whenever you want, with no intermediary needed to sign off. And it’s simple: it only takes three easy steps for people to mint TBTC on tbtc.network and track their Bitcoin,” according to the release.


DeFi Yield Farming Aggregator APY.Finance Raises $3.6M: CoinDesk

APY.Finance, a yet-to-launch decentralized finance (DeFi) yield farming aggregator, announced Monday that it has completed a $3.6M seed funding round joined by investors including Arrington XRP Capital, Alameda Research, Cluster Capital and CoinGecko, CoinDesk reported.

U.S. Banks Can Hold Reserve Funds for Stablecoin Issuers: The Block

National banks and federal savings associations can now hold reserve funds for stablecoin issuers, according to new guidance from the U.S. Office of the Comptroller of the Currency. Monday’s development notably follows the OCC’s decision to allow federally chartered banks to hold custody of cryptocurrencies, The Block reported.


Kain Warwick hints Synthetix is moving to a Layer 2 sclaing solution.


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 at $10/month or $100/year, while free signups get only part of the content.

About the founder: I’m Camila Russo, author of The Infinite Machine, the first book on the history of Ethereum. 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.

Detecting Ownership Takeovers Using Mythril

https://diligence.consensys.net/blog/2020/09/detecting-ownership-takeovers-using-mythril/

Mythril is an analysis tool which uses symbolic execution to find vulnerabilities in smart contracts. Mythril even generates exploits for the vulnerabilities that it finds 🚀. In a previous article, I wrote about Mythril internals and symbolic execution. In this article, I’ll show how I use Mythril to detect Ownership takeover vulnerabilities. I’ll also use Mythril’s new plugin system install and release plugins with ease!
Introduction Out of the box, Mythril comes with several zero-setup detection modules.

UNI and the Summer of DeFi

https://doseofdefi.substack.com/p/uni-and-the-summer-of-defi

In the US, Memorial Day is the unofficial start of summer and Labor Day the unofficial end. According to the sun and the earth’s tilt, however, summer starts on the solstice on June 20 and ends tomorrow on September 22.

There should be no confusion for the DeFi Summer of 2020; it kicked off with the launch of COMP on June 15 and ended with the surprise launch of UNI, a governance token for Uniswap, last Wednesday.

It has been a dizzying summer. To recap, the last three months has seen the launch of COMP, BAL, bZrx, MTA, YFI, CRV, YAM and of course, YFII, Swerve, Sushi – all with liquidity mining campaigns.

Broadly speaking, there are three ways to look at these launch strategies:

  • Platform usage incentives

  • Whether it is an existing product, fork or community piggyback

  • Importance of Governance distribution.

DeFi Summer 2020

Platform Usage Incentives

At its core, yield farming is a way to distribute tokens to encourage more usage of a product or platform. Synthetix was the first to offer token rewards for on-chain activity. It gave SNX to any address that supplied liquidity to the sETH/ETH Uniswap pool.

Compound took this model but distributed tokens based protocol usage, while simultaneously launching COMP. It has adjusted its liquidity mining parameters several time, and still provides a consistent subsidy for borrowing/lending.

Balancer had a similar concept but BAL rewards starting accruing several weeks before the launch of BAL (just as things started to heat up). Balancer has just under $500m deposited in its pools. Its liquidity mining campaign distributed rewards based on trade fees and Balancer’s flexibility is farmer friendly.

Curve was closer to Compound in that it had an existing protocol with assets, but unlike Compound, CRV was given retroactively to liquidity providers since the launch of Curve. This made LPs happy, but Curve has run into other problems.

Curve may have hoped to get the reception that Uniswap received when it retroactively rewarded early Uniswap users with free UNI. Anyone that interacted with the protocol – including addresses with only failed transactions – received 400 UNI and liquidity providers going back to v1 were rewarded commensurate with liquidity supplied. This dividend created good will in the community.

Uniswap’s usage incentives are unique in two ways. 1. Reward traders, rather just liquidity providers 2. Their incentivized pools are targeted and strategic to Uniswap’s future.

Forks and Community Piggybacks

COMP, BAL, UNI, YFI and CRV were distributed to liquidity providers because deposits enhanced the capability of the underlying platforms they govern. Many other launches, meanwhile, distributed new tokens to those who just staked tokens. These are not used for borrowing/lending of exchanging assets, but simply a proof-of-asset to a new community trying to get off the ground.

Essentially, a new project piggybacks off of another community by offering free money for staking its token.

YAM is perhaps the best example of piggybacking (yes, I’m going to make it stick). YAM was a surprise launch, a modified version of rebasing currency AMPL along with community governance (a fork of Compound). Bolted on top this was a token distribution scheme that used the Synthetix staking contracts. Anyone who staked one of 8 tokens would receive YAMs in 1000% APYs.

It was a fun game, particularly for the communities of the 8 tokens it selected. Free money will make enthusiastic supporters out of these communities. This boost gives the project momentum and broader positioning in the Twittersphere.

SushiSwap actually started as a fork of YAM. Instead of staking regular tokens, SushiSwap got users to stake Uniswap LP tokens in order to farm the newly launched SUSHI. Initially, the “hundreds of millions of dollars of assets locked up in SushiSwap” were only staked to farm SUHI, with the underlying tokens still in Uniswap.

Then, of course, Chef Nomi, SBF and company actually forked Uniswap and migrated over a good chunk of the liquidity and are now paying SUSHI rewards to SushiSwap LPs. In just a month since launch, SushiSwap has $240k in 24 hr on-chain fees, ahead of Compound and Balancer and only behind Uniswap, according to Token Terminal.

CREAM and YFII (now DFI.Money) were also successful forks of Compound and YFI respectively. Cream has been more aggressive about listing assets while DFI.Money is concentrated on the Chinese community. Total market cap of forks from the DeFi Summer: $332m.

Governance importance

All of these tokens have been launched under the “governance” banner, which is either a clever legal trick or due to the rise of decentralized coordination around an on-chain treasury or smart contract admin, but there were varying degrees to as how important governance was to their distribution strategy.

YFI has the highest circulating market cap of any token launch in the DeFi Summer, in part because all the YFI ever to exist has been distributed, whereas there are still years of reward distributions and investor/team lockups for other protocols. To borrow from a prior Dose:

More important than the subsidy for Yearn.finance products, YFI yield farming subsidized the creation of a governance community. Many of the most eager DeFi farmers participated early, instantly creating a small army of token holders financial invested in the long-term success of the platform and willing to shill the project endlessly on Twitter.

The lack of a sale or pre-mine for YFI underscores point #3 above: token distribution is the most important thing for a token launch. Typically, this was done to the team, investors and then in a crowd sale or ICO to disseminate widely, but moving forward, projects should use token launches to pick their token holders, because they will ultimately determine a project’s governance and long-term success.

YFI governance was selected entirely during its distribution. COMP and BZRX come with governance rights, but the development path and primary stakeholders did not change during the token launch. These projects did succeed in moving governance of their protocol to token holders on-chain.

Other projects, most notably Uniswap and Balancer, have limited governance capabilities. Their primary role is the management of the liquidity mining campaigns and could be closer to loyalty tokens. Of course, this is kind of by design. Both protocols have no upgradeability.

UNI token holders can turn on the protocol fee, but that’s it. It’s no secret that the Uniswap team is working on a V3. It’s not clear what role UNI token holders will have in V3 or their role in migrating liquidity.

As this DeFi summer draws to an end, will this be the Eternal September?

Tweet of the Week: Money Lego Yield Farm

Interesting proposal from Staked’s Cole Kennelly about adding the WETH-WBTC and WETH-USDT to MakerDAO as collateral. Maker had previously considered the DAI-ETH pair as collateral but as so far not added any LP tokens. Of course, WBTC and ETH are already accepted collateral, so the risk would hinge on the liquidation capability. It could open up a significant new market for collateral for Maker in its quest to meet increased demand for Dai.

Chart of the Week: UNI volume

A mashup of the CoinGecko UNI page, which shows a staggering $1bn in 24hr trading volume for UNI. This may be a little inflated but not by much. The volumes on Binance and elsewhere show how far DeFi needs to go to tap into the larger institutional market. Regardless, it’s impressive for UNI to reach these volumes less than a week after its launch.

Odds and Ends:

  • DEXs rake in the retail volume while institutions stay on the sidelines Link

  • Yield farming aggregator APY.Finance raises $3.6M in seed funding Link

  • NFT market heats up Link

  • Gnosis partners with xDai, plans Layer 2 migration Link

  • DEX aggregator Paradex raises $2.7m in seed funding Link

  • Algorithmic credit risk & lending protocol Teller announces launch Link

Thoughts and Prognostications:

That’s it! Feedback appreciated. Just hit reply. Written in Brooklyn at the equinox. I need a haircut.

Dose of DeFi is written by Chris Powers. Opinions expressed are my own. I spend most of my time contributing to DXdao. All content is for informational purposes and is not intended as investment advice.

YFI’s yETH Vaults – Explained

https://defiweekly.substack.com/p/yfis-yeth-vaults-explained

Hey everyone, I’ve started a DeFi Weekly Youtube Channel which has hand drawn videos of me explaining complex DeFi/crypto topics! They’re highly detailed and the perfect thing for if you want someone to sit down, and tell you how DeFi works.

Like usual, please don’t hesitate to reach out and let me know what you think or if you have any specific requests for future videos!

“After DeFi, it’s NFTs and DAOs. We’re Gathering Tinder:” Jihoz of Axie Infinity

https://thedefiant.substack.com/p/after-defi-its-nfts-and-daos-were

Hello Defiers! This week’s interview is with Jeff Zirlin, aka Jihoz, growth lead at Axie Infinity. Axie is a digital game built on Ethereum, which involves cute animals going to battle against each other and allowing gamers to take control of their digital assets. Jihoz got into blockchain-based games with CryptoKitties after he was banned from his Worl…


Read more

DeFi and the Gifts from Pricey Gas: Jeff Garzik

https://thedefiant.substack.com/p/defi-and-the-gifts-from-pricey-gas

Hello Defiers! Yesterday many felt the pain of a congested and expensive Ethereum network as on top of all the usual craziness in DeFi, everyone was rushing to redeem their UNI, and Ethereum became almost unusable. It’s been that way for the past couple of months, so much so, that only whales are able to access the more sophisticated and complex applica…


Read more

Uniswap’s UNI Instantly Becomes One of DeFi’s Most Widely Held Tokens

https://thedefiant.substack.com/p/uniswaps-uni-instantly-becomes-one

Hello Defiers! Of course, the big news today is the launch of Uniswap’s UNI token.

DeFi’s largest DEX, the Etheruem dapp that’s processing more fees than Bitcoin itself, and the first decentralized exchange to beat a major centralized counterpart in daily volume, today airdropped 400 UNI directly into the wallets of anyone who had interacted with the protocol at any time, no matter the size of the transaction. More than 50k addresses are holding UNI less than a day after launch, already higher than addresses holding MKR and COMP. With the move, Uniswap proved this retroactive airdrop model can result in decentralized ownership, and provided the DeFi community with a taste of what universal basic income feels like as most in the space woke up with (at least) an additional ~$1k in their wallets.

The open economy is taking over the old one. Subscribe to keep up with this revolution. Click here to pay with DAI (for 70 Dai/yr vs $100/yr).

Subscribe now

🎙Listen to this week’s podcast episode with musician RAC here:

📺 Watch New Video on The Defiant’s YouTube Channel and Subscribe

Check out the just-released video on The Defiant’s YouTube channel! The amazing story of SushiSwap. The video was produced in partnership with Robin Schmidt of Harmony Protocol.


🙌 Together with Zerion, a simple interface to access and use decentralized finance,  Perpetual Protocol, which provides decentralized perpetual contracts for any asset, and HackAtom V, a two-week virtual hackathon organized by Cosmos.


UNI Instantly Becomes DeFi’s Third Most Decentralized Token Less than 24hrs After Launch

By Cooper Turley

Uniswap dropped the mic with the surprise launch of its native governance token – UNI.

Uniswap,  the leading DeFi DEX averaging more than  $350M in daily volume over the past month, airdropped 15% of the total 1 billion UNI minted at genesis, to anyone who had ever interacted with the protocol since its inception.

UNI is now held by more than 50k Ethereum addresses, making it instantly one of the most decentralized tokens in DeFi, only trailing Dai and LEND among the top 10 by market cap, according to Etherscan.

Uniswap has become a cornerstone of DeFi, the basic building block for other dapps and likely the first DEX most newcomers use, and all of them today are waking up with an extra $1.2k in UNI in their wallets, in a move that feels similar to a DeFi stimulus check or to a universal basic income, at least in this niche within crypto. Each trader who used Uniswap V1 or V2 received 400 UNI, currently valued at around $1,200, regardless of the historical volume transacted.

For historical liquidity providers, that bounty was even sweeter. Uniswap made sure to track liquidity from inception, meaning the earliest LPs stood to earn a larger portion of rewards for their early commitments. For the 220 traders holding at least 1 $SOCKS, or community-favorite tokenized Uniswap merch, 1000 UNI was (not so) quietly available for claim yesterday evening.

Here’s how the tokens are split among three distinct user groups:

  • Historical Liquidity Providers – ~49k addresses (4.92%)

  • Uniswap Traders – ~251k addresses (10.06%)

  • $SOCKS Holders – 220 holders (0.02%)

UNI Records

UNI is shaping up to be DeFi’s biggest token launch to date, with gas prices soaring to over 500 gwei per transaction, the highest it’s ever been in recorded history. Both Binance and Coinbase Pro listed UNI in under 4 hours, the fastest listing of any token on Coinbase.

The UNI/ETH pool has already aggregated nearly $500k in trading fees, putting it on par to have the highest 24h volume of any Uniswap pair to date.

Liquidity Mining

The UNI airdrop precedes a liquidity mining campaign set to go live Sept. 18 at 12:00am UTC. Of the 1B total genesis supply, 5M UNI will be allocated to the USDT, USDC, DAI and WBTC pools over the next two months. Users can provide liquidity and stake their positions via the new UNI mining dashboard to earn a pro-rata claim of the 54 UNI allocated to each pool per block.

A community treasury will retain  43% of the supply to be allocated for future incentives including contributor grants, community initiatives, and liquidity mining, as seen fit by governance. Here’s how the rest of the supply breaks down. 

Token Supply

The 1 billion UNI supply will be put in circulation over the next four years, with 60% going to users, 21.51% to team members and future employees, 17.80% to investors and .069% to advisors. Team, investor and advisor tokens are subject to four-year continuous lockups, meaning their positions become liquid in real-time. 

After the four-year genesis supply is distributed, a perpetual inflation rate of 2% will start, to incentivize participation in the protocol over passive ownership.

More than an Airdrop

The stories underpinning the airdrop is what makes this launch truly unique. From children testing Ethereum for the first time to marginalized individuals in third world countries receiving enough token to feed their families for months, this global wealth distribution event is one which shuts down all indicators that DeFi has lost its way.

VC Backed Narrative

UNI comes in the wake of a rising narrative which painted VC-backed projects as misaligned with their communities, while fully community-owned projects were hailed as the new gold standard. In this context, Uniswap was criticized for raising $11M in its latest round from big Silicon Valley funds and SushiSwap leveraged this sentiment to fork the project and try to lure away liquidity providers with its SUSHI token. 

UNI’s rollout following the vampire mining attack from SushiSwap shows that the most well-respected team in DeFi can pack a punch and that “VC-backed=bad” was a gross oversimplification.

Path to Decentralization

If DeFi teams can learn anything, retroactive incentives to value-added actors is a clear path to decentralization. While it was widely speculated that Uniswap would launch a token, the timing and distribution mechanics were unknown, which means nobody could prepare for the drop, a fact that has been met with high praise in the DeFi community.

Best shown by the price of UNI, the token given away for free is now trading at $3, up 300% from its first liquid market price of $1.

UNI holders will have the power to govern key protocol decisions from day one, except for control over the treasury, which will be delayed until October 17. One change UNI holders are likely to consider is to turn on Uniswap V2’s 0.05% protocol fee (which is now disabled), good for ~1/5th of the protocols $438M project annualized revenue according to Token Terminal following a 180 day timelock.

While it’s still early days for UNI, it’s safe to say that food coins just got served.


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 at $10/month or $100/year, while free signups get only part of the content.

About the founder: I’m Camila Russo, author of The Infinite Machine, the first book on the history of Ethereum. 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.

“Be Greedy in Private,” Urges DeFi Investor Riding Fair Launch Trend

https://thedefiant.substack.com/p/be-greedy-in-private-urges-defi-investor

Hello Defiers, here’s what’s happening,

  • SAFE shows DeFi hunger for righteous founders can backfire

  • Zerion integrates with Uniswap

  • Kraken becomes first US regulated crypto bank

  • YFI holders want to cap supply at 30k

The open economy is taking over the old one. Subscribe to keep up with this revolution. Click here to pay with DAI (for 70 Dai/yr vs $100/yr).

Subscribe now

🎙Listen to this week’s podcast episode with musician RAC here:

📺 Watch New Video on The Defiant’s YouTube Channel and Subscribe

Check out the just-released video on The Defiant’s YouTube channel! The amazing story of SushiSwap. The video was produced in partnership with Robin Schmidt of Harmony Protocol.


🙌 Together with Zerion, a simple interface to access and use decentralized finance,  Perpetual Protocol, which provides decentralized perpetual contracts for any asset, and HackAtom V, a two-week virtual hackathon organized by Cosmos.


SAFE Shows Toxic Undercurrent to Fair Launch Trend

In the latest DeFi drama a developer and investor behind a token called SAFE made a mistake when deploying a piece of code and now they’re both calling each other out and publishing their private chats, as the token tanks.

But this petty squabble points at a bigger problem: the latest DeFi trend of community-owned projects and fair launches has raised the bar to a level of virtuosity that most can’t or won’t reach.

Greed is good, Gordon Gekko said. But just… quietly.

Setting the Stage

Projects will do everything possible to look like they’re abiding by the new unwritten DeFi rules (no pre-mine, no VC money, 100% community-owned “valueless” token, decentralized governance). Once they’ve set the stage, they’ll look for ways to make a quick profit as soon as the project gains steam. Chef Nomi is one example with SushiSwap, Chef Insurance of SAFE is another.

YieldFarming.Insure launched with the commendable stated goal to incentivize DeFi traders to protect their investments with insurance instruments. Yield farmers who buy cover on their assets on Yearn Finance’s yinsure.finance, can stake the yNFTs tokens they get in exchange, on YieldFarming.Insure. Stakers would then receive $SAFE tokens in return.

The first three token pools added were for yNFT-ETH, yNFT-DAI and yNFT-WNXM. WNXM is insurance provider Nexus Mutual’s token.

The project had good initial traction with SAFE soaring by more than 10x to over $4k in just one day.

Raking in Millions

In the very early days of the project, Chef Insurance, who also goes by the name Alan, was approached by Azeem Ahmed, an investor who had been one of the first to farm SAFE thanks to an “accidental degen bet on NFTs,” and made “millions” by selling near the top, according to a leaked chat.

The problems started with the deployment of the fourth liquidity pool, a DAI-SAFE liquidity pool on Balancer. The pool would provide additional incentives for SAFE liquidity providers.

Chef Insurance asked Ahmed if he could help to deploy the pool by adding SAFE tokens. Ahmed, who was staking in all pools and earning SAFE, agreed, according to Chef’s and Ahmed’s leaked chats.

Rushing to Deploy

Ahmed started pushing the developer to start offering incentives for the fourth pool immediately. Ahmed’s concern was that if there were no incentives to stake SAFE, traders would “farm and dump” the token, and he’d be stuck holding SAFE in the pool. Chef Insurance was reticent as he didn’t want to blind-side other investors, but he finally agreed.

Amid the flurry of messages, Ahmed ended up opening the Balancer pool ahead of time, and in a panicked move, immediately removed the liquidity he had added. When he removed tokens, the pool locked up and left 10k SAFE inside.

Blame Game

Next, the blame game started between Ahmed and Chef, with both criticizing the other publicly and privately. The messages leaked are not a good look for either.

Beyond the pool deployment mess, it also transpired that the developer had been asking Ahmed for a $500k salary to take a gap year to develop the project, which would cover his living expenses and student debt payments.

Ahmed had agreed to this payment but was concerned that the agreement stays between them: publicly he should say he’s taking a $9k/month salary in line with what Yearn’s Andre Cronje is paid.

Be Greedy

“Be greedy privately,” Ahmed said. “You must look like a saint. Privately I’ll make sure you cash in hard.”

“Ok that’s a good idea,” the developer said.

If this expectation that open source developers and teams need to work for free, this private scheming will continue. There need to be better and transparent incentives for DeFi builders, or else they’ll either find some backhanded way to get paid market rates or go to another industry.


Zerion Integrates Uniswap for Seamless Token Trading

By Cooper Turley

Zerion unveiled a new Uniswap integration, allowing users to buy and sell 170+ tokens directly from a sleek asset management dashboard.

Outside of adjusting gas prices and executing orders, Zerion’s portfolio tracks token performance and trade history in USD value, an aspect not currently displayed on Uniswap’s trade history. There will be no additional fees to trade on Zerion.

The integration marks the first of many native trading and yield farming opportunities set to make its way to Zerion, offering a trusted platform (also supported on mobile) to track holdings with native onramps to DeFi’s top yield opportunities. It’s also a sign of DeFi portfolio managers’ efforts to start to become a one-stop-shop to track and also execute investments. 

As hinted in the Tweet, Uniswap is the first of many DEXs to be integrated into the platform with SushiSwap and Matcha being next on the docket.


Kraken Wins Bank Charter Approval

The State of Wyoming approved Kraken’s application to become the world’s first Special Purpose Depository Institution (SPDI). The new banking model allows Kraken to maintain custody and transact in both fiat and digital assets.

“Kraken Financial is the first digital asset company in U.S. history to receive a bank charter recognized under federal and state law, and will be the first regulated, U.S. bank to provide comprehensive deposit-taking, custody and fiduciary services for digital assets,” the release said.

The entity, tentatively called Kraken Financial, will enable clients to bank seamlessly between digital assets and national currencies, including paying bills and receiving salaries in crypto, as well as incorporate digital assets into investment and trading portfolios.


YFI Holders Vote to Make Sure No More Tokens Are Minted

Almost 92% of poll participants want to eliminate Yearn Finance’s ability to issue more of its YFI governance token so that total supply is capped at the current 30k.

“Burn the timelock on the YFI token so that no minting can ever take place again,” the proposal says.

The proposal could become the first governance decision that’s enforced when Yearn’s on-chain governance is deployed in the next two weeks, pending audits.


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 at $10/month or $100/year, while free signups get only part of the content.

About the founder: I’m Camila Russo, author of The Infinite Machine, the first book on the history of Ethereum. 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.

Bitcoin & Tether and DeFi’s Next Growth Drivers

https://doseofdefi.substack.com/p/bitcoin-and-tether-and-defis-next

DeFi has grown considerably in 2020, to say the least. It’s been 3 months since the launch of COMP set off a never-ending stream of farms, forks, crashes and heists. The growth in the space has been hard to keep track of with new launches weekly, as is calculating market sizing with asset rehypothecation through the system.

Roughly speaking, the DeFi market has at least 6x’ed in the past 3 months with DeFi Pulse’s latest industry TVL at $9.1bn USD – up from $1.27bn the day before COMP launch.

While some of this increase is from asset appreciation, not all of the growth can be attributed to Twitter’s speculative echo chamber. New assets and investors have poured into the space, increasing usage of DeFi platforms and the amount of collateral and liquidity supplied.

At the beginning of the year, I said that Bitcoin and Tether were the two most important assets to DeFi growth in 2020. Yield farming has been the catalyst, but BTC and USDT inflows have been the largest source of fresh capital.

Tether has long dominated the centralized world but had little presence in DeFi, where Dai and USDC proliferated, but in the last three months, USDT usage in DeFi has exploded with almost $900m locked up on-chain. Tether’s DeFi journey was jumpstarted by Compound, hundreds of millions of USDT flowed into Compound after it approved USDT borrowing and made Tether the crop of choice to farm COMP.

Tether moved on from Compound but stayed in DeFi and now has a larger presence than Dai and competing with USDC.

The DeFi inflows were from Tether’s base in Asia and its prevalence amongst traders – both segments hopped on the yield farming hayride in full force over the summer. With the further gamification of DeFi, Tether could see increased usage in the degenerate gambling space, if sUSD doesn’t beat it there.

In addition to Tether, Bitcoin synthetics have been the other asset with strong organic inflows into DeFi. It remains most useful as another source of collateral, and Bitcoiners are perhaps the most hospitable market because so many are already using it as collateral to take out loans in the centralized world.

The Bitcoin on Ethereum market has also exploded, growing from $45m in mid-June to almost $1bn in synthetic BTC today. WBTC, a custodied BTC wrapper, is the largest with renBTC providing the first non-KYC’d bridge for Bitcoin to Ethereum.

Amidst the summer’s farming craze, a consistent flow of Bitcoin has flowed onto Ethereum. About half of it is used as collateral for on-chain loans, while most of the rest is farming CRV. Synthetix’s sBTC and Huobi’s hBTC have tried to attract investors with attractive farming yields, but they have not gotten much liquidity outside of subsidized pools.

CREAM, a Compound fork, accepts renBTC as collateral but has only $3m in renBTC deposits. WBTC is far ahead on the BTC as collateral in DeFi – largely in Aave and Maker.

Altogether, almost $1.5bn of Tether and synthetic Bitcoin has flowed into DeFi over the last 3 months. Looking forward, Bitcoin and Tether still has room to grow in DeFi and should remain top targets for any DeFi product.

Investors: new players for DeFi games

Tether and Bitcoin powered the organic inflows that drove the farming craze and new value creation from token launches, but who was driving these flows? And who are the next group to fall under the DeFi spell

The DeFi Curious. Something clicked in May and June. Perhaps it was the quarantine, Balancer and Uniswap v2 launch, the efficiency of Curve, or the COMP distribution, but DeFi started appearing outside of core DeFi fanatics and creeped into adjacent crypto communities.

DeFi has an obvious appeal to the crypto trader crowd. Bitmex CEO Arthur Hayes loves $YFI but is also willing to jump on whatever new food coin emerges. Three Arrows Capital is a more buttoned-up outfit that has gone heavy into DeFi – and quite successfully. And of course, perhaps no one has gone more DeFi than FTX CEO and SushiSwap maestro Sam Bankman-Fried. Luckily for him, the DeFi label is self-applied.

The counterpart to the crypto trader is the crypto VC. VCs are not exactly new to DeFi, but activity has increased and their role has moved on-chain with the rise of fair launches. There is a growing rivalry between VCs and traders centered on DeFi – is it a consumer product with network effects or a complex financial instrument (why not both? Gauntlet CEO Tarun Chitra said it was “reminiscent of the previous talent ‘war’ between HFT and online ads”.

The Crypto Center. If the DeFi Curious hope to get in on a rocket ship taking off, the Crypto Center pride themselves on driving the crypto topic du jour. The most obvious place to start is Laura Shin’s Unchained Podcast. The last three podcasts have been DeFi-focused, featuring Yearn.Finance’s Andre Cronje, Polychain’s Olaf Carlson-Wee and a joint appearance with Dragonfly’s Haseeb Qureshi and Paradigm’s Dan Robinson.

Epicenter, a more technical podcast, has featured a DeFi-heavy lineup throughout 2020, including episdodes on Aave, Opyn, Nexus Mutual, UMA, Balancer and Loopring.

And of course, no one represents the Crypto Center like Mike Dudas, founder of the Block. Dudas has gone full DeFi degen, months after begrudgingly allocating some of his precious BTC into ETH. Just this weekend, he tweeted, “DeFi is the most interest thing happening in cryptocurrency and digital assets today”. The link is presumably broken since Dudas auto-deletes his tweets.

Who’s Next?

To be clear, there is still ample room for DeFi growth from these existing crypto communities – just as Bitcoin and Tether remain attractive targets for DeFi projects, but the question is who catches the DeFi bug next and what will they bring? A couple groups:

  • Fintech – Dudas also has a foot in what could be an adjacent source of talent, capital and compliance. The decade life cycle of fintech is coming to an end with big exits and companies with large user-bases. Some of the venture funding chasing fintech could shift over to DeFi, but the bigger opportunity is DeFi integrations with existing, popular consumer products. Robinhood and the Cash App allow easy BTC & ETH purchases, but one of the large fintech’s could integrate Compound or allow easy Uniswap/Balancer liquidity provisioning.

  • Wall Street – Wall Street is slowly embracing an institutional approach to Bitcoin, and presumably ETH is next, but traditional financial institutions seem far away from building and using blockchain-based financial products and services, outside of hodling. Still, Wall St traders could become a strong source of flow from their personal capital and institutions will make venture and equity investments. The one area to watch is the on-chain derivative space. There is a lot of interest and experimentation now, but it could benefit from outside expertise (or directed investor flow)

  • Gaming (and sports) – Perhaps this distinction is moot now because so much of DeFi has been gamified (is this a financial product?) but DeFi protocols could find inflows from a larger, entertainment-first mainstream audience. Sports are the most popular way to gamble; maybe prediction markets can see this flow. Perhaps growth from such a market is dependent on layer 2 scaling and lower transaction costs.

  • Geographies – DeFi’s promise is a digitally native, globally accessible financial system, but adoption is likely to occur country by country. Tether, of course, is primarily an Asian phenomenon, as is all of the DeFi Curious (Arthur Hayes, Sam Bankman-Fried, Three Arrows Capital). Country-level restrictions could drive larger flows into DeFi, or alternatively, a central bank digital currency could create an easy on-ramp into the DeFi world. Given the infrastructure already in place, any project with a local banking relationship and fiat on-ramp, could reach scale through the retail market. No-loss lottery PoolTogether’s largest market is reportedly Indonesia.

Chart of the Week: DAI > MKR

Beautiful, if depressing chart from Makerburn.com. Dai supply has shot up over the last few months, almost entirely due to the yield farming craze, where Dai is crop of choice – on Compound at least – because it has the least overhang over borrows. Maker has onboarded new collateral types and raised debt ceilings to deal with the strong Dai demand. Unfortunately, MKR has not been able to participate in that growth. With fees at 0 since March, no MKR has been burned, despite the fact that MKR’s risk profile goes up with the supply of Dai, since it’s the ultimate backstop in the event of default. Dai demand remains strong as does its integration into DeFi, but the larger concern is teams building now for USDC and Tether, eroding Dai’s “DeFi’s default stablecoin” status. With another price rise in Dai over the last week, there is currently an on-chain poll for a “Quantitative Easing” initiative, while there is a renewed push to onboard real world assets as collateral. In a Maker forum poll, 56% estimated 200-500m more Dai will need to be printed to meet current demand; 21% said 700m-1bn.

Tweet of the Week:

Perpetual Protocol launched PERP last week using a Balancer Liquidity Bootsrapping Pool (LBP), becoming the first to use the token distribution method. LBPs automatically adjust the weight between a new token and a listing token, in this case PERP and USDC. At launch, the weight is set at 90/10 PERP/USDC, creating a very high price and then automatically adjusts the weight down to deter front-running and whales. Parsec Finance founder Will Sheehan approves, arguing that it creates a smoother price discovery. Market cap does seem a bit high still ($255m), and it appears to have raised $8.5m? Curious as to why USDC and not USDT as Perpetual Protocol is backed by top trading firms (2/3 of DeFi Curious).

Odds and Ends

  • DeFi Pulse and Set team up to launch DeFi Pulse Index (DPI) Link

  • Hacker drains $8.5m out of BZX again (and returns it?) Link

  • Gitcoin Matching Grants Round 7 is live Link

  • YAM replanting and launch Link

  • Grand opening of SushiSwap Link

  • Hegic Launches Initial Bonding Curve Offering Link

Thoughts and Prognostications

That’s it! Feedback appreciated. Just hit reply. Written in Brooklyn, where I’m kind of excited for fall. Long-ish post to distract from the daily farms. May switch to Tuesday delivery :-/

Dose of DeFi is written by Chris Powers. Opinions expressed are my own. I spend most of my time contributing to DXdao. All content is for informational purposes and is not intended as investment advice.

$PICKLE

https://defiweekly.substack.com/p/pickle

After SushiSwap I think most people (including myself), have been put off by fruit/meme coins. However, that doesn’t mean that all of them are terrible. I came across pickle a few weeks ago and wanted to share some of my thoughts on it. I was personally debating whether to post this up due to the numerous things that could go wrong with these kinds of projects (rug pulls etc). To make sure I can keep writing about what I find interesting and being as responsible as I can, I’d like to make a few things 100% clear before carrying on.

Things You Should Know:

Before you carry on reading this, please note that pickle is a highly experimental project that carries the following risks:

  1. Anonymous founders that have chosen not to reveal themselves

  2. Unaudited code where even one wrong line can cause catastrophic failure in the system

  3. Unintended economic effects. Pickle is a play on incentives of stable coins and could cause major problems if anything goes wrong

  4. Farmers dumping their entire stash on users causing the price of PICKLE to tank entirely and you losing all your money

  5. I personally hold PICKLE and encourage you to do your own research since I have a set of opinions that could be entirely wrong

    I can’t get enough of $PICKLE memes.


The Idea

Okay boring stuff aside, what I love about pickle is that it solves a clear problem through the use of token incentives. So what is the big idea as described in the “pico paper”?

What if you give people $PICKLE for bringing stable coins to their peg?

It sounds ridiculous on the surface but the idea actually has a lot of merit to it given that stable coins trading at a premium is a good arb business but nobody has really had the incentive to take the risk to do it – until $PICKLE.

Here’s the entire paper (viewable here https://pickle.finance/pickle-pico-paper-en.pdf):

1. Introduction

Too many farming projects don’t actually do anything for the community. Pickle is an experiment that actually gives a shit. Specifically, Pickle brings the ​four largest stablecoins​ (DAI, USDC, USDT, sUSD) closer to their peg by using the power of farming and pVaults.


2. Farming

The idea is simple, we give $PICKLEs to liquidity providers of four stablecoin pools:
DAI/ETH USDC/ETH USDT/ETH sUSD/ETH
More rewards are given to below-peg stablecoin pools and fewer rewards are given to above-peg stablecoin pools. This gets people to sell above-peg stablecoins and buy below-peg stablecoins.

Pickle will also give rewards to an ETH-PICKLE pool. This takes care of the case where all stablecoins are above peg. There will likely be other pools as well.


3. pVaults

We realize that we can’t just print $PICKLEs forever, there needs to be a reason (beyond the typical “governance” bullshit) to hold $PICKLEs. pVaults will come a few weeks after farming and will use flash loans to leverage up and arb between stablecoins, further bringing stablecoins to their pegs while generating return for $PICKLE holders. More details to follow.

The Bull Case

So now that you’ve got the run down of what $PICKLE is, the next question is what the bull case around it. Let’s do some quick number crunching. The protocol currently has the following numbers:

Quick maths:

278,220 * $50 = $13.9m current circulating supply valuation

“But there’s going to be an infinite amount of pickle being printed” I hear you say. Well luckily there’s already a proposal that sets out to reduce this through a halving schedule:

https://snapshot.page/#/pickle/proposal/QmcEsb4oUBtYbPRk6hTFNzhBRFFs6M7FtRVgRfRAWFzXAn

There’s currently ~5760 blocks per day, meaning 40,000 blocks per week meaning an additional 360,000 pickle coming out after the first week giving a fully diluted valuation of ~$40m at current prices ($50 a pic).

Depending on how you look at it, for $250m locked up a $40m FDV is pretty decent. Furthermore, when you start thinking about the possibilities of what happens when you have an on-chain stable coin hedge fund arb-ing stable coins that trade at a premium you end up with some crazy cool possibilities.

The more I think about $PICKLE, the more similar it feels to YFI but just for stable coins. To but it more bluntly, it’s like stable coin farming that can generate massive cash flows through arbitrage opportunities available on-chain regardless of whether yield farming is in-season or not.

I wrote about a similar situation of high risk, very high upside during the initial stages of YFI at $2,000: https://defiweekly.substack.com/p/yfi-and-the-acceleration-of-crypto

Whatever money you put into $YFI, truly assume you’ll lose all of it since the risks are extraordinarily high. If you think about $YFI in the context of a limited liability company, it seems like a pre-seed investment which has a very high number of risks but if all the factors go right, represents a very high upside.

I sense the same aspect over here as well, there’s downside risk for sure although it’s capped to $PICKLE going to $0. However the upside potential here is magnitudes larger. What if $PICKLE is actually the largest stable coin liquidity pool that can arb things back and takes a profit that can be returned to token holders? Who knows.

In addition, I did some additional snooping through the Github and was happy to find out that all the contracts are not only owned by a multisig but also behind a timelock.

In simple english, any proposal takes 2 days to be executed on-chain so many factors that would result in a rug-pull would need to take 2 days to come into effect. Maybe this could be sneaked in but highly unlikely given that some large whales are probably farming this out like crazy and have professional auditors who audit these before anyone else.

Do your own due diligence here: https://github.com/pickle-finance/contracts

PickleToken's owner = Masterchef

MasterChef's owner = Timelock

Timelock's owner = Gnosis Multisig

PickleJar's governance = Gnosis Multisig

Controller's governance = Gnosis Multisig

Controller's strategist = Gnosis Multisig

Controller's rewards = Gnosis Multisig

StrategyCurveSCRVv1's governance = Gnosis Multisig

StrategyCurveSCRVv1's strategist = Gnosis Multisig

The Bear Case

While the bull case sounds great, it’s probably worth spending some time thinking through what are the potential things that could go wrong here as well. In my mind these are some of the key factors that could endanger $PICKLE:

  1. The rewards dry up to the point where all the capital which came in suddenly cycles out and moves onto the next things. Having $250m locked up is great but not so great if things revert back quickly.

  2. I think the bigger risk at play here is if $PICKLE fails to generate any intrinsic cash flows and everyone is just left holding a meme coin. Not that meme coins can’t be valuable but only if $PICKLE’s generate cash flow can this become a serious automated on-chain stable coin hedge fund (who knew that would ever be a thing).

  3. Things get a bit chaotic within the team or some sushi-level politics start playing out and what once turned out to be something special, gets corrupted due to external interests and pressures. I hope this doesn’t happen but you can expect anything in DeFi these days.

I wish I had a longer list here but that’s really all I can think of right now except for the ones listed at the start and here.


Closing

Once again, this isn’t investment advice and you should do your own research before getting involved with any of this. If you don’t understand this please do not get involved either.

I personally don’t pay enough attention to most things going on the yield farming space as they aren’t fundamentally new or are too frothy with farmers trying to exit scam each other first. If this experiment fails, I’ll be glad to have learned something new but given the past few weeks of events the planning and execution around $PICKLE is a few notches higher with an experienced dev team (evident through the codebase and management of contract ownership structures).

I’m also really interested in PICKLE from the perspective since it can help projects like ARC to help bring stable coins to parity through external incentive alignment. We’re reaching escape velocity with DeFi and keeping your eye out and taking learnings from each experiment is more crucial than ever.

Pickle Finance Sounds Like a Joke But it Wants to Bring Stability to DeFi

https://thedefiant.substack.com/p/pickle-finance-sounds-like-a-joke

Hello Defiers! Here’s what’s happening in decentralized finance,

  • The latest crazy DeFi project is called Pickle Finance, and it actually might be providing value beyond lining farmers’ pockets

  • SushiSwap’s numbers are slumping across the board as Uniswap recovers its place as the top DEX

  • DeFi Pulse and Set Protocol team up to offer a “more Chad” DeFi index

The open economy is taking over the old one. Subscribe to keep up with this revolution. Click here to pay with DAI (for 70 Dai/yr vs $100/yr).

Subscribe now

🎙Listen to this week’s podcast episode with musician RAC here:

📺 Watch New Video on The Defiant’s YouTube Channel and Subscribe

Check out the just-released video on The Defiant’s YouTube channel! The amazing story of SushiSwap. The video was produced in partnership with Robin Schmidt of Harmony Protocol.


🙌 Together with Zerion, a simple interface to access and use decentralized finance,  Perpetual Protocol, which provides decentralized perpetual contracts for any asset, and HackAtom V, a two-week virtual hackathon organized by Cosmos.


Stablecoin Volatility Got You in a Pickle?

By Cooper Turley

Just when farmers thought food coins had run their course, perhaps the most absurd project yet is leveraging pickle memes to help mitigate stablecoin volatility.

Pickle Finance, a project incentivizing liquidity on the four largest DeFi stablecoins, saw $53M in 24 hour volume this weekend as its native governance token, PICKLE, traded as high as $85, according to CoinGecko.

Touting the tagline ‘Off-peg bad. On-peg good’, Pickle Finance offers more rewards to below-peg stablecoin pools and fewer rewards to above-peg stablecoin pools. As illustrated in the Pickle PicoPaper, the aim is to get people to sell above-peg stablecoins and buy below-peg stablecoins.

“Too many farming projects don’t actually do anything for the community,” the project’s whitepaper reads. “Pickle is an experiment that actually gives a shit.”

Pickle’s token liquidity pools are boasting what have become the typical returns for DeFi; 4,000% annualized yields for ‘Pool 2’ PICKLE/ETH LPs, for example.

Pickle Governance

As is all but required for new DeFi projects, PICKLE token holders can vote in a governance process. Pickle is innovating in this area by using quadratic voting — which takes the square root of each vote instead of counting it nominally— to prevent whales from having too much influence. The project’s governance structure prompted a response from Vitalik Buterin himself.

Dai Proposal

Two days after its hyped-up launch, and seeing that DAI was trading significantly above $1, Pickle governance voted to shift incentives to try to bring MakerDAO’s stablecoin closer to its peg. 

It’s unclear whether it was Pickle or something else, but Dai is now trading at $1.02, from as high as $1.05 yesterday, according to CoinGecko. 

Stablecoin Arb

But, Pickle’s ambitions don’t stop there. In the coming weeks, Pickle Finance will seek to deploy pVaults, a way to stake PICKLE and earn profits from flash loan arbitrage opportunities on stablecoins trading off their peg.

Backed by a unique quadratic voting implementation, thousand-percent yields, and top-tier memes, it’s no wonder farmers are flocking to the latest absurdity. In a world of foodsanity, projects like Pickle are somehow finding ways to add ‘value’ to a sleepless DeFi sector.


SushiSwap Slumps as Uniswap Rides Into the Sunset

SushiSwap’s token is plunging along with the project’s liquidity and volume after SUSHI rewards were slashed. Not even a token buyback could spur a rebound.

SushiSwap was able to successfully migrate around $800M of Uniswap’s liquidity, but the slump that has followed across most of its metrics is proving that it’s harder than it initially seemed for a copycat protocol to beat the original.

SUSHI token is down 24% today to $1.87 amid a green crypto market, even after the project spent $14M of its treasury’s funds — the entire amount that founder Chef Nomi returned— to buy back the token yesterday.

SushiChef @SushiSwap

The SUSHI buyback has finished!

etherscan.io/address/0xD575…

SushiChef @SushiSwap

Buyback starting now! https://t.co/qCqvZ2wNGv

The token had traded as high as $10 four days after SushiSwap was announced, and then it started to slide. The drop accelerated after founder Chef Nomi sold all his SUSHI, and while it bounced back after the anonymous developer returned his stash, it has yet to fully recover.

Assets Slide Below Uniswap’s

Value locked in SushiSwap, which briefly became the largest DEX by assets, is also sliding after the fork of Uniswap reduced tokens rewards from 1,000 SUSHI per block for liquidity providers, to 100 three days ago, as planned.

SushiSwap’s assets have dropped to $760M from as high as $1.1B on Sept. 9, when it performed its “vampire attack” and migrated tokens from Uniswap. Assets had climbed to as high as $1.46B on Sept 11, the day before rewards were slashed.

Image source: sushiswap.vision

That compares with $1B deposited in Uniswap’s liquidity pools, which makes the tokenless DEX the biggest by assets once more. Uniswap is also beating the upstart in daily trading volume, with $276M traded so far today, versus $152M on SushiSwap.

Image source: uniswap.info

The SushiSwap saga is proving that traders will flock to where the yield is, but once rewards taper out, they’ll just as quickly move on.


New DeFi Index Includes Farming-Craze Era Tokens

By Cooper Turley

DeFi Pulse – the creator of the widely-followed TVL leaderboard – is teaming up with Set Protocol, which provides access to non-custodial and automated crypto strategies,  to launch an index tracking major DeFi tokens, called the DeFi Pulse Index. 

The index is aimed at providing a one-click, single-asset vehicle for investors to gain exposure to the booming DeFi sector, similar to index funds or ETFs in traditional finance.

DPI Set attracted $700K of assets in the first 24hrs after its launch. It includes 10 of the top DeFi tokens, with weights which are not assigned by market cap, as in most index baskets, but rather according to a long list of requirements. It is comprised of the following assets and weights:

  • YFI – 25.22%

  • LEND – 18.16%

  • SNX – 13.40%

  • COMP – 11.18%

  • MKR – 9.48%

  • LRC – 6.65%

  • REN – 6.08%

  • BAL – 3.51

  • REP – 1.42%

Synthetix’s sDEFI

DPI Set is the first major index after Synthetix’s sDEFI Synth, giving users flexibility to choose from a number of passive baskets each containing different weighings.

sDEFI can only be accessed through the Synthetix Exchange using sUSD while the DeFi Pulse Index can be purchased directly through the TokenSet platform and Uniswap using ETH and top stablecoins like DAI and USDC.

Trendy Tokens

The biggest difference between the two indexes is that in the case of sDEFI, the biggest weighted tokens are MakerDAO’s MKR, and Chainlink’s LINK, with 25% of the index each, while Set’s DPI gives 25% of its basket to Yearn Finance’s YFI.

DPI includes some of the more recently launched tokens, like BAL and COMP, while sDEFI includes tokens longer-standing names like REP, ZRX and BNT. 

This Set is the first to use the platform’s new V2 smart contracts built to accommodate yield farming and aid in gas optimizations. 

As the first major partnership between a DeFi data analytics firm and an asset management platform, it will be interesting to watch how platforms leverage their following to drive traffic towards web3 primitives like passive indexes.


Coinbase Pro adds YFI-USD trading, two months after the token launched.


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 at $10/month or $100/year, while free signups get only part of the content.

About the founder: I’m Camila Russo, author of The Infinite Machine, the first book on the history of Ethereum. 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.

Introducing The DeFi Pulse Index

https://defipulse.com/blog/defi-pulse-index/

DeFi Pulse Index is a capitalization weighted index built on Set Protocol’s new V2 infrastructure consisting of 10 of the most popular DeFi tokens available on Ethereum.

DeFi Pulse has always been proud to be many user’s first steps into DeFi. It often starts with a google search or tweet which leads you down a long, exciting and sometimes treacherous path of learning the ins and outs of the world of decentralized finance. For some, this path is simply too much; there are so many concepts, terms, and protocols to learn that it can be far too easy to hit a wall or stumble along the path. New users want a safe and reliable shortcut into DeFi that they feel safe placing their trust in. The DeFi Pulse Index is a novel blockchain financial product that lowers the barrier to entry for new users who lack the expertise to gain exposure to DeFi, and provides experienced users with exposure to DeFi through one single asset.

A new DeFi standard the community can stand behind

DeFi Pulse Index is the first of its kind, an index of decentralized finance that isn’t synthetic or a derivative but rather you own the tokens that comprise the capitalization weighted index. Built on Set Protocol’s new v2 infrastructure, DeFi Pulse Index tokens are directly redeemable for its DeFi tokens. Much like our Total Value Locked (TVL) metrics, DeFi Pulse Index is a standard the community can stand behind. Total Value Locked was created to help the community interpret the value locked within the DeFi ecosystem. We see DeFi Pulse Index as a natural progression of what we have to offer to the wider community.

What was the inclusion criteria for DeFi Pulse Index?

The index’s criteria to determine which DeFi tokens are included takes into account many factors. The index utilizes a capitalization weighted index where the value weight is based on a DeFi project’s market cap.

As previously mentioned, DeFi Pulse Index’s goal is to establish a standard that empowers the reputable DeFi projects that make up our community. And so, tokens and their dApps are required to embrace common security and decentralization standards.

As such, any included token and its associated dApp and founding team must be widely considered legitimate. It goes without saying that qualifying tokens and their dApps must follow best practices concerning the security and safety of the protocol and post-incident management.

In order to qualify, tokens must be related to DeFi and be bearer assets listed on Ethereum. Tokens held by the index may not be wrapped or synthetic tokens nor can they represent options, futures, physical world assets, or claims to other tokens on blockchains other than Ethereum. Additionally, projects associated with included tokens must be listed on DeFi Pulse and must be launched and functional for a minimum period of time before it may be included in the index. Additionally, the token must have a minimum circulating supply as well as a reasonably predictable total supply.

We will be publishing more extensive documentation on the criteria used in the near future.

What is the initial weighting criteria?

The index utilizes a capitalization weighted index where the value weight is based off of a DeFi projects market cap. The price per token and circulating supply were taken on September 8th, 2020 from CoinGecko. Then, the price per token was multiplied by the circulating supply to determine the circulating market cap. Each position is weighted by its relative circulating market cap to other positions in the index.  The following tokens are included in the index at launch:

  • YFI
  • LEND
  • SNX
  • COMP
  • MKR
  • LRC
  • REN
  • KNC
  • BAL
  • REPv2

Money Legos work better together

It’s no coincidence that nearly all the projects and protocols behind the tokens included in the DeFi Pulse Index interact in some way or another. This entire industry was built through collaborative innovation with each new protocol and smart contract system, or money lego, building on the next. We have plans to onboard further integration partners (wallets, DeFi dashboards, CEXs etc) over time to broaden access to the DeFi Pulse Index and its underlying tokens. The smooth experience of one-click exposure to 10 of DeFi’s top tokens is a vast improvement over having to perform 10 transactions or more and truly makes you feel living in the future.

The post Introducing The DeFi Pulse Index appeared first on DeFi Pulse.

bZx’s $8M Hack is Third This Year and Two Weeks after Security-Focused Relaunch

https://thedefiant.substack.com/p/bzxs-8m-hack-is-third-this-year-and

Hello Defiers, here’s what’s going on in DeFi:

  • bZx was hacked once more

  • Cream Finance assets are soaring

  • Forensics into the recent ETH slump

The open economy is taking over the old one. Subscribe to keep up with this revolution. Click here to pay with DAI (for 70 Dai/yr vs $100/yr).

Subscribe now

🎙Listen to this week’s podcast episode with musician RAC here:

📺 Watch New Video on The Defiant’s YouTube Channel and Subscribe

Check out the just-released video on The Defiant’s YouTube channel! The amazing story of SushiSwap. The video was produced in partnership with Robin Schmidt of Harmony Protocol.


🙌 Together with Zerion, a simple interface to access and use decentralized finance, &  Perpetual Protocol, which provides decentralized perpetual contracts for any asset.


bZx Hacked for $8M After Security-Focused Relaunch

bZx had relaunched just two weeks ago, highlighting its increased focus on security after attackers were able to make $900k in two exploits earlier this year. Last night, it was exploited once more.

The hacker was able to duplicate tokens received in exchange for deposits in the protocol, called iTokens, and then use those iTokens to withdraw more funds than they had initially deposited. The attack yielded about 219k LINK, 4.5k ETH, 1.8M USDT, 1.4M USDC, and 668k DAI, or about $8M in tokens.

[READ HERE for more on the February exploits]

The bZx team was able to cover the stolen funds with its own insurance fund, which is made up of the project’s token treasury and cash flows, and in a statement said “the protocol will move forward unimpeded.”

Image source: bZx blog

The BZRX token is up 3.8% from yesterday, in line with the rest of the crypto market, but it’s lost more than 60% in the past two weeks, according to CoinGecko.

“We are grateful that our precautions and system design are capable of resolving incidents like this without issue,” the blog post said.

No Big Deal

Some in the Ethereum community were perplexed by the team’s apparently nonchalant attitude after losing around 30% of total value locked in its smart contracts to yet another hack. Additionally, Bitcoin.com engineer Marc Thalen said in a tweet he alerted the team to the hack hours before they responded.

“Please, please pause operations until this can be re-audited and thoroughly analyzed--instead of saying ‘no big deal,” Compound Finance founder Robert Leshner said in a tweet.

Harder to Secure

bZx, which upgraded its protocol after the February hacks, had security firms Peckshield and Certix audit the code and it also performed “extensive automated testing,” according to its post mortem. The post also said the scope and ambition of the protocol make it harder to secure than others.

And yet, “all the diligence does not guarantee safety,” Aave’s Stani Kulechov said. “Something that every DeFi user should understand.”


Cream Finance Crosses $300M in Deposits

By Cooper Turley

What happens when you fork Compound and add lending pools for DeFi’s most degen assets? You get Cream Finance.

In under a month since launch, Cream has aggregated more than $300M in TVL, according to DeFi Pulse, largely thanks to CREAM liquidity mining rewards.

Image source: DeFi Pulse

What started as a lending protocol for trendy DeFi tokens like SUSHI, yETH, and yyCRV has quickly blossomed into a vibrant market of 19 assets and counting, many of which are only available for lending on Cream. 

Governed by CREAM, a token boasting a fully diluted market cap of $2.5B, the YOLO protocol is undergoing a suite of proposals to further lock (or even burn) a vast majority of the outstanding supply to fall more in line with its circulating market cap of $100M.

More than Lending

Last week, Cream unveiled C.R.E.A.M Swap, a native AMM allowing traders to enter and exit convoluted DeFi strategies without having to unwrap, unstake and sell positions composed of numerous assets across a multitude of protocols.

For example, users can go from yyCRV, a liquidity provision in Curve staked via a yEarn yVault, directly to USDC, rather than having to unstake and withdraw for ~$100 in gas.

As to be expected, liquidity providers in select pools are now earning CREAM rewards, currently averaging ~1000% APY at the time of writing. To note: Annual yields often exaggerate actual earnings, as it’s unlikely returns will remain stable.

As DeFi continues to get more and more degen, Cream appears to be the protocol of choice for lending and borrowing the most sophisticated positions one could imagine.

What keeps the project afloat is an extremely active communication channel, with team members sharing updates on all CREAM and liquidity mining-related topics almost daily. While it’s unclear how long this cadence will last, the Compound-fork is quickly aggregating a trusted following of yield farmers living life on the edge.


On-Chain Markets Update by IntoTheBlock

This Week: Whales Cashed Out After Short-Term Traders Drove ETH Rally  

Following a remarkable rally, cryptocurrency prices slumped over the past two weeks. DeFi tokens saw high selling pressure during this market-wide crash, following some of the largest returns since the March bottom. ETH which had also outperformed the market saw a drop of over 20% last week.

Leveraging Ethereum’s permissionless nature, IntoTheBlock is able to extract key data and formulate valuable insights about the recent market crash.  With the price of ETH reaching levels not seen in over two years, on-chain data suggests traders ‘fomoed’ into buying throughout July and August. This is evidenced by the number of short-term ETH holders reaching yearly highs and by examining addresses’ profitability. 

Moreover, it appears that institutional players and whales have been the ones driving the recent volatility. This may come as no surprise following the exuberant price action and the recent risk-off sentiment echoed in traditional markets. 

Here are a few key insights analyzing patterns that had been emerging prior to the recent crash in ETH prices: 

1. Ethereum Short-Term Traders Spiked Chasing the Rally

IntoTheBlock categorizes as traders those addresses that have been holding a crypto-asset for less than 30 days. As demand for Ethereum and DeFi protocols has risen significantly over the past few months, the number of ETH traders has been hitting yearly highs for three consecutive months. This trend broke in September as prices incurred a sharp correction. 

Source: IntoTheBlock’s ETH ownership metrics

While the number of addresses with a holding period of under one month hit a yearly high by the end of July, the volume of ETH held by traders continued to rise into August. With 14.59 million ETH being held by traders, approximately 13% of the circulating supply changed hands within thirty days, the highest in over two years. This would suggest that speculative activity had been rising along with ETH’s price. 

2. 30% More Addresses are Losing Money at $340 than a Month Ago

By analyzing addresses’ profitability, we can corroborate that addresses bought heavily following ETH’s breakout. IntoTheBlock’s Historical In/Out of the Money (HIOM) indicator analyzes investors’ on-chain positions based on addresses’ average cost for a token, in this case ETH. Based on this, the HIOM calculates the percentage and the total number of addresses that are in the money, or profiting on their positions, and out of the money or losing money on paper. By comparing variations in the HIOM over time, we can determine buying/selling activity based on the number of addresses profiting at a specific price level. 

Source: IntoTheBlock’s ETH financial metrics

As can be seen in the graph above, 31% of ETH addresses are currently at a loss (out of the money) compared to 25% on July 31st. This means that nearly 3.5 million addresses bought ETH at higher levels during August, indicating that buying activity during this time period might have gotten overheated. 

Similarly, the number of addresses profiting (in the money) dropped significantly since the last time prices were at this range. This points to 1.5 million addresses realizing their profits and selling their ETH prior to or during the recent crash. Overall, this drop in address profitability would suggest that a substantial number of holders rushed into buying at higher prices, while others looked to realize profits. Using other on-chain indicators, we can have a better understanding of who has been leading the recent market crash. 

3. Whale Activity Spiked as Prices Peaked

IntoTheBlock classifies as large transactions those that have a value above $100,000. These act as a proxy for transactions coming from institutional investors and whales. These had peaked during the March crash with $1.5 billion in ETH large transactions taking place in Black Thursday, but this has been overshadowed with multiple days hitting $3.0 billion in September. 

Source: IntoTheBlock’s ETH financial metrics

As prices peaked on September 1st, $3.63 billion in ETH large transactions took place within 24 hours. This is the highest volume in ETH large transactions since January 2018, pointing to a considerable number of institutional investors taking profits as prices began to crash. 

4. ETH Exchange Inflows Precede the Crash, but Drop Sharply Afterward

Exchange net flows subtract the volume of ETH entering exchanges minus the amount leaving exchanges. In general, inflows into exchanges should be taken as a precaution of holders potentially looking to sell. 

In this case, significantly more ETH had been flowing into exchanges than out of them before the crash. As a matter of fact, $326 million more ETH flowed into top exchanges than out of them in the week between August 25 and September 1st. This was the highest weekly net inflow of ETH in 2020, even surpassing the one seen when traders panicked in mid March. 

Source: IntoTheBlock’s ETH exchanges analytics

This trend reversed sharply shortly after, with a net $221 million in ETH leaving exchanges on September 5. On that same day, large transactions also spiked to $3.39 billion, pointing to whales likely withdrawing ETH from exchanges. This could potentially signal accumulation by large players following the 20% drop. However, it does not necessarily indicate that prices have reached a bottom. 

Overall, on-chain data suggests that ETH holders had been overconfident throughout August as short-term traders reached their highest levels in years. At the same time, approximately 1.5 million addresses appeared to have taken profits since the last time ETH was at approximately $340. Spikes in large transactions and exchange inflows point to institutional investors and whales having sold prior to ETH crashing, but the sudden drop in outflows may point to many of them buying back following the drop of over 20%.


Jack Purdy of Messari has a great chart comparing AMM earnings, and how that compares to their token price.


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 at $10/month or $100/year, while free signups get only part of the content.

About the founder: I’m Camila Russo, author of The Infinite Machine, the first book on the history of Ethereum. 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.

Recap: DeFi Week of Sept. 7 🦄

https://thedefiant.substack.com/p/recap-defi-week-of-sept-7-

Hello Defiers, hope you’re having a great weekend!

Summing up: SushiSwap continues to make headlines this week, first with a successful migration of liquidity, where it was able to take about half of Uniswap’s assets, and next when founder Chef Nomi returned the full $14M he has taken from the project. yEarn launched yet another DeFi lego with StableCredit, Perpetual Protocol and Hegic tested new token distribution mechanisms, and UMA teamed up with Ren to create a Bitcoin-backed stablecoin.

Ian Lee of IDEO CoLab wrote a great guest column showing hoe DeFi is disrupting the entire finance stack. This week’s podcast episode is with Grammy-award winning DJ RAC, who talks about how crypto and blockchain technology can reduce intermediaries in the music industry, and help artists capture more of the value their work produces.

That was just one week. Subscribe to get the latest DeFi news and analysis straight to your inbox and you don’t miss a thing. Free-signups get partial content, paid subscribers (only $10/month, $100/year) get everything. Click here to pay with DAI ($70/year).

Subscribe now


🙌 Together with Perpetual Protocol, which provides decentralized perpetual contracts for any asset, and Zapper, the ultimate hub for managing DeFi assets & liabilities.


Interview

“It Turns Out Music Does Have Value. We’ve Been Pricing It Incorrectly For 20 Years:” RAC

In this week’s interview, we chatted with Grammy Award-winning DJ Andre Anjos, aka RAC. Many have seen cryptocurrencies as a way to decentralize the financial system, thanks to the innovation of digital scarcity. RAC says that digital scarcity can also help disrupt the music industry. His experiments have so far showed how distributed networks can be the underlying infrastructure that helps artists can sell their creations directly to fans; how tokens on open markets can help more accurately price goods and help them benefit from secondary trading of their products; and now how digital assets can help strengthen communities.

🎙Listen to the interview in this week’s podcast episode here:


Op-ed

We’re the Architects of a More Open, Free and Fair Financial System: IDEO CoLab’s Ian Lee

IDEO CoLab’s Ian Lee takes us through the evolution of finance, from the pre-internet days to DeFi. He breaks down the full stack for money, showing how, despite sleek-looking applications, fintechs have only innovated on the surface, while the core had remained the same for hundreds of years —until the advent of cryptocurrencies. Public blockchains like Bitcoin and Ethereum have enabled a better infrastructure layer, while the application layer had remained centralized. With DeFi, decentralization is moving up the stack for the first time, revolutionizing finance from the ground up.


📺 Watch New Video on The Defiant’s YouTube Channel and Subscribe

Check out the just-released video on The Defiant’s YouTube channel! The amazing story of SushiSwap. The video was produced in partnership with Robin Schmidt of Harmony Protocol.


Friday

Dives

  • “I F*cked Up. And I am Sorry:” Chef Nomi Returns $14M of ETH to SushiSwap: The founder behind the Uniswap fork SushiSwap, an anonymous developer going by the name of Chef Nomi who had run off with about $14M worth of ETH and prompted accusations the project was an exit scam, today returned his stash.

Bytes

  • yEarn Unveils StableCredit Loans: yEarn Finance said it’s preparing to release a new decentralized lending protocol and automated market maker. 

  • Aavegotchi Showcases GHST Governance Token: Aavegotchi, an NFT x DeFi crossover, released details for a new governance token, giving players the ability to dictate key parameters of the forthcoming digital pet universe.

Wednesday

Dives

  • SushiSwap Drains Uniswap Liquidity. Still, Everyone Won: SushiSwap, a fork of Uniswap, successfully migrated Uniswap liquidity into its own protocol. It was the first time the scheme that has come to be known as Vampire Mining had ever been attempted.

Bytes

  • UMA & REN Team up for Bitcoin-Based Yield Dollar: UMA and Ren Protocol are teaming up to offer a Bitcoin-backed stablecoin. The price of UMA’s uUSD stablecoin will tend towards  $1 as it approaches its maturity date, and will be redeemable for $1 of the collateral asset at expiry.

  • DeFi Protocols Are Testing New Token Sale Mechanisms: DeFi protocols Perpetual and Hegic are listing their tokens with new distribution mechanisms aimed at reducing front running and price speculation.

Tuesday

  • SushiSwap Migration is Hours Away With $1.3B at Stake: In less than 48 hours, a two-week upstart will attempt to drain liquidity from DeFi’s largest exchange, in a never-before-attempted vampire-like attack, which right now has $1.3B in tokens at stake. This is the definitive SushiSwap saga story.


💜Community Love💜

Thanking all the amazing Defiers for the support and love this week (and always)!

Richard Chen @richardchen39

Bought my first digital art on @SuperRare_co from @sven_eberwein!

The @SushiSwap and @UniswapProtocol liquidity war was interesting to watch and glad to now own this memorabilia. Hope it will age well.

Thanks to @CamiRusso for first showing me this art.

superrare.co/rchen8

SvenEberwein @sven_eberwein

1/
🍣 vs. 🦄

The story is unfolding….

-$CRV/$ETH pool migrated

-$YAMv2 is live

-$REN next

Crypto-History in the making!
@SushiSwapLegacy <> @UniswapProtocol

(follow @SBF_Alameda / @CamiRusso for live updates) https://t.co/yAD5RFV9MT


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 at $10/month or $100/year, while free signups get only part of the content.

About the founder: I’m Camila Russo, author of The Infinite Machine, the first book on the history of Ethereum. 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.

The Next Generation of Token Sale Mechanics

https://defiweekly.substack.com/p/the-next-generation-of-token-sale

Introduction

As we’ve started seeing the run up of the DeFi Bull Market, the old age question of what’s the best way to raise capital online has come up again. What’s fascinating about this current run up is that ICOs are the secondary focus and yield farming is the primary focus. While everyone’s been watching yield farming stories go crazy, it’s starti…


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“It Turns Out Music Does Have Value. We’ve Been Pricing It Incorrectly For 20 Years:” RAC

https://thedefiant.substack.com/p/it-turns-out-music-does-have-value

Hello Defiers! In this week’s interview, we chatted with Grammy Award-winning DJ Andre Anjos, aka RAC. RAC, who makes electronic and dance music, has been involved in crypto in one way or another since 2016. Most recently, he tokenized his latest album and sold it on digital goods market place ZORA. The token, which has the ticker TAPE, is linked to a p…


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“I F*cked Up. And I am Sorry:” Chef Nomi Returns $14M of ETH to SushiSwap

https://thedefiant.substack.com/p/i-fcked-up-and-i-am-sorry-chef-nomi

Hello Defiers! Another crazy day in DeFi,

  • SushiSwap founder Chef Nomi returned the $14M in ETH he had withdrawn

  • Exclusive interview with SushiSwap co-founder 0xMaki, and his impressions before and after Chef Maki’s change of heart

  • yEarn Finance launches generalized decenrlized lending protocol

and more 🙂

The open economy is taking over the old one. Subscribe to keep up with this revolution. Click here to pay with DAI (for 70 Dai/yr vs $100/yr).

Subscribe now

📺 Watch New Video on The Defiant’s YouTube Channel and Subscribe

Check out the just-released video on The Defiant’s YouTube channel! The amazing story of SushiSwap. The video was produced in partnership with Robin Schmidt of Harmony Protocol.


🙌 Together with Perpetual Protocol, which provides decentralized perpetual contracts for any asset, and Zapper, the ultimate hub for managing DeFi assets & liabilities.


So, Was He a Good Guy After All?

There’s yet another twist to this California Roll.

The founder behind the Uniswap fork SushiSwap, an anonymous developer going by the name of Chef Nomi who had run off with about $14M worth of ETH and prompted accusations the project was an exit scam, today returned his stash.

“To everyone. I f*cked up. And I am sorry,” Nomi said in a Twitter thread today. “I was emotional, I was greedy, I was afraid.”

Community Decides Payout

Nomi said the community should decide how much the anonymous dev deserves for founding SushiSwap, and that he will continue to participate in the technical implementation of SushiSwap but won’t have any control or be of the governance process.

Nomi also apologized to early believers in the project and “degen friends,” including 0xMaki, Sushi Ninja, Scott Lewis, Degen Spartan and Andre Cronje, and “most importantly,” Sam Bankman-Fried and others who took control of the protocol, for their “help getting SushiSwap back when (he) almost destroyed it.”

Did the Right Thing

“He did the right thing and should be rewarded by the community accordingly,” 0xMaki told The Defiant, adding that while he expected Nomi would return part of the funds (“only 33/50%, my share”), he didn’t expect he would return all of it.

As with any new twist in this DeFi soap opera, it didn’t take long for conspiracy theories to pop up: he probably went long SUSHI before his tweet, or he only did it because he was doxxed and his family was threatened, crypto Twitter theorized.

Re-Buy SUSHI

Regardless, the SUSHI community was swift to react and Adam Cochran, one of the signers on the SUSHI multisig, proposed to use some of the returned funds to re-buy SUSHI.

Image source: snapshot.page

The end result from this would be to prop up the SUSHI price after it took a 70% hit following Chef Nomi’s dump. Surely it’s with that in mind that so far, over 70% of participants are voting in favor of using 100% of the funds returned to buy back SUSHI(other options are 50%, 75% or none, which has less than 1% of the vote).

SUSHI Rebounds

But SUSHI is already rebounding, even before the proposal is approved. The token jumped as much as 28% and is now retracing some of those gains. The increase hasn’t made a dent on the post-dump sell-off though.

Image source: CoinGecko

SushiSwap yesterday successfully migrated Uniswap’s liquidity pools into its own protocol and is now the largest decentralized exchange by assets held in its smart contracts, with $1.4B of total value locked, compared with $650M in Uniswap. Uniswao is still leading by trading volume, with the double the value trading hands on the platform, compared with volume on SushiSwap.

For more on the successful migration, aka Vampire Mining, READ HERE, for an overview of the SushiSwap saga, READ HERE.


0xMaki Had Expected Nomi to Return Part of The Funds

0xMaki felt stupid and betrayed when Chef Nomi took all the money in the SushiSwap developers’ fund, but as the following Sept. 9 interview with The Defiant shows, he was holding on to the belief Nomi would return at least part of the funds. Today he was proven right.

What was the ambition for Sushiswap and how did you originally get involved? 

The ambition for SushiSwap and what made me join the project was to create a community-led project where everyone could have a say in the direction of the project no matter the amount of funds you own, who you are, Experience level, background, etc. A project where you could be rewarded by participating and contributing no matter what are your skills or ambitions.

I got involved when I read the medium post and was one of the first 9 persons in the Discord. I started to engage with Chef Nomi and SushiSwap (2nd dev) to dig into what they were trying to accomplish here.. I was fascinated by the vision and their point of view decided to implicate myself from the get go was promoted to “General Manager” of the restaurant almost immediately started to grow it, make connection with DeFi projects to partner on some key features that will be coming up, participated in some intro with Audit firms. Engaged with the community and answered questions !

Were you surprised to see it do as well as it did? 

I was blown away never expected it to reach a few millions of TVL so quickly.. first billion was something crazy because we were still unaudited Anons with no reputation (I did reveal my identity to some people so we could have some audits done and engage in more thoughtful conversations)

“I was blown away never expected it to reach a few millions of TVL so quickly.. first billion was something crazy because we were still unaudited Anons with no reputation”

What was your feeling about Chef Nomi, was there any sign that he might be ill-intentioned? 

I always had some worries while doing my Due Diligence the fact that there was no-timelock or multisig at first was very off putting… then Nomi announced they were going to implement a 48h timelock so I saw that he wanted to make things right. The wrestling on Twitter to say he wasn’t in it for a quick money and all of that.

It was a true hit when I witnessed him draining the funds and basically giving me no communication… He did reach out to me following an ultimatum I posted on Twitter he felt guilty and knew he had made a considerable mistake. I believe truthfully that he made mistakes and perhaps he will return some of the funds. We will only knows when he does. The project is bigger than just Nomi or I so it should be an issue in the end !

“I believe truthfully that he made mistakes and perhaps he will return some of the funds.”

How did you feel once you realized what Nomi had done? 

Stupid ? Betrayed ? Devasted ? Lost ? Why would someone that understood what we were fighting give up and do something so dishonest? From what I understood he wasn’t poor nor in need of the money.. What happened is that I feel he somehow lost it. He was informed of the bug they found when migrating, didn’t want to fix it, saw the honeypot which is lifesaving amount of money, was pressured by a lot of strong voice in the community telling him he was a scammer and opportunistic and just told himself.. F*ck these people I deserve that money for I built… Is it the right thing to do ? No. Did it happen? Yes. Can we recover from it? Hell yeah!

“Stupid ? Betrayed ? Devasted ? Lost ? Why would someone that understood what we were fighting give up and do something so dishonest?”

Do you believe SBF will be able to take the project forward successfully?

SBF will have no implication moving forward he was asked to help us do the migration and multisig transition his role in the project is over. He is welcome to make proposals – vote – engage with the community but as far as I am concerned he won’t be involve in the day to day of SushiSwap going forward he was generous enough with his time and put up a very generous grant to build on Serum-Solana. I encourage any devs willing to work on Solana to take it but I will be building for Ethereum first and foremost.

“I encourage any devs willing to work on Solana to take it but I will be building for Ethereum first and foremost.”

What are your thoughts on criticism that the project is now centralized around SBF?

Without Sam we wouldn’t have been able to make the migration possible. He understands the power of community, believe that this project could be something with huge potential. He has a massive amount of Sushis, did he do anything special to earn it ? No he put capital at risk.

Maybe we should we had some sort of cap per wallet with something similar to ARCx is doing with a KYF (Know your farmer) where wallets needs a 6 months history of interacting with various dApp to be allowed until a certain cap. But this is a new project, we are walking in the unknown we are learning everyday and I am sure next projects will make sure that defense lines are in place for whales. I believe we can always tweak stuff in the governance to make the impact of large holders a bit more even for everyone, with quadratic voting or something involving BrightID with individual voters.

“I am sure next projects will make sure that defense lines are in place for whales. I believe we can always tweak stuff in the governance to make the impact of large holders a bit more even for everyone.”

What are you hopes for the future of SushiSwap?

Being something more than just a copy-paste of Yam – Uniswap, pushing the ecosystem forward by making other projects more fair for everyone, integrating DeFi dApps, Funky UI’s for various usecase without forgetting about our communities in Asia and around the globe, empowering indie dApp devs to buidl on our project and be rewarded by generous grants, funding public goods in particular ETH 2.0 projects – DeFi newcomers. Listen to our community members and showcasing that we have good intentions.


yEarn Unveils StableCredit Loans

By Cooper Turley

yEarn Finance said it’s preparing to release a new decentralized lending protocol and automated market maker. 

The product, called StableCredit, is akin to MakerDAO in that borrowers deposit collateral to mint a digital asset, with the difference that any token can be provided as collateral and that a stablecoin called  StableCredit USD is minted,  instead of DAI.

“Provide any asset and create tokenized credit called StableCredit USD (can also support EUR, JPY, etc),” founder Andre Cronje wrote in a blog post yesterday.

Users deposit assets to mint StableUSD. The amount of StableUSD minted is correlated to the market value of the collateral (as determined by an oracle) and the system utilization, up to a 75% max. 

ySwap AMM

Depending on the utilization, users can mint more or less StableUSD using a forthcoming AMM called ySwap.

All collateral is deposited to liquidity pools composed of 50% collateral and 50% StableUSD. The pools are used to monitor and unlock debt as StableUSD is paid back by a borrower. The AMM is described as being “single-sided,” as it allows users to deposit liquidity for just one token, their collateral. 

With the system utilization ratio defining the amount of credit a user can borrow alongside an AMM which automatically sets premiums, StableCredit aims to be a generalized decentralized lending protocol.

yEarn is trying to create similar, generalized platforms for other financial applications, including  yVaults for aggregated yield opportunities and yInsure for smart contract protection.

There is currently no front-end available for StableCredit, with the product expected to go live in the coming weeks.


Aavegotchi Showcases GHST Governance Token

By Cooper Turley

Aavegotchi, an NFT x DeFi crossover, released details for a new governance token, giving players the ability to dictate key parameters of the forthcoming digital pet universe.

With Aavegotchi, users purchase Tomogotchi like avatars of different rarities which are leveled up to equip new merchandise and compete in different tournaments. Each Aavegotchi is backed by interest-earning aTokens, meaning all characters earn a yield in real-time.

Over the past two months, Aavegotchi hosted community-centric marketing campaigns, allowing Aavegotchi ‘Aagents’ to level up by completing tasks like inviting friends to the Discord channel and providing feedback on collateral.

Those Aagents are now set to enjoy the fruit of their labor thanks to the forthcoming DAICO offering for GHST tokens.

Using Aragon’s Fundraising Template, all capital collected from the sale will be routed directly to a community-governed DAO, giving the project a liquid treasury from day one. Aavegotchi will set its initial tap at 50,000 DAI, meaning that the community can vote on whether or not the GHST Vault (controlled by the core team at inception) deserves to be funded for future proposals, campaigns and growth opportunities.

Level 6 Aagents

Instead of making GHST available to anyone who KYC’s out of the gate, Aavegotchi will offer 500,000 tokens (valued at $50,000) exclusively to Level 6 Aagents, the highest rank at the time of writing.

“The Aagent ranks have also helped us discern who is most invested in the project at least in terms of time and thought spent.” Aavegotchi founder Jesse Johnson told The Defiant. “This has significantly helped us achieve our fair distribution goals for the GHST token”

This period will be followed by public bonding curve trading, with token price starting at 0.2 DAI (100% above the presale price) and increasing with each purchase that is made.

All things considered, Aavegotchi’s navigation of key principles in the DeFi, NFT and DAO ecosystems comes as a strong testament to the Aave-grant incubated fledgling set to take flight this week.


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 at $10/month or $100/year, while free signups get only part of the content.

About the founder: I’m Camila Russo, author of The Infinite Machine, the first book on the history of Ethereum. 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.

Explaining ARC Liquidations & Farming

https://defiweekly.substack.com/p/explaining-arc-liquidations-and-farming

Hey everyone, I’ve started a DeFi Weekly Youtube Channel which has hand drawn videos of me explaining complex DeFi/crypto topics! They’re highly detailed and the perfect thing for if you want someone to sit down, and tell you how DeFi works.

Here’s the next video in the series explaining how certain aspects around how ARC works and hopefully answers your questions around it.

Like usual, please don’t hesitate to reach out and let me know what you think or if you have any specific requests for future videos!

We’re the Architects of a More Open, Free and Fair Financial System: IDEO CoLab’s Ian Lee

https://thedefiant.substack.com/p/were-the-architects-of-a-more-open

Hello Defiers! Today IDEO CoLab’s Ian Lee takes us through the evolution of finance, from the pre-internet days to DeFi. He breaks down the full stack for money, showing how, despite sleek-looking applications, fintechs have only innovated on the surface, while the core had remained the same for hundreds of years —until the advent of cryptocurrencies. P…


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SushiSwap Pulls Off $800M+ Uniswap Vampire Scheme

https://thedefiant.substack.com/p/sushiswap-pulls-off-800m-uniswap

Hello Defiers! Here’s what’s going on in decentralized finance:

  • SushiSwap completed the migration of liquidity from Uniswap successfully

  • UMA and Ren team up to offer a Bitcoin-backed stablecoin

  • Perpetual Protocol and HEGIC test new token distribution mechanisms today

and more 🙂

The open economy is taking over the old one. Subscribe to keep up with this revolution. Click here to pay with DAI (for 70 Dai/yr vs $100/yr).

Subscribe now

📺 Watch New Video on The Defiant’s YouTube Channel and Subscribe

Check out the just-released video on The Defiant’s YouTube channel. The video was produced in partnership with Robin Schmidt of Harmony Protocol.


🙌 Together with Perpetual Protocol, which provides decentralized perpetual contracts for any asset, and Zapper, the ultimate hub for managing DeFi assets & liabilities.


SushiSwap Drains Uniswap Liquidity. Still, Everyone Won

DeFi experienced what seemed like its first-ever hostile takeover today, except instead of stock buyouts and management shakedowns, it was driven by users switching platforms following their own economic incentives.

Crypto capitalism at its finest.

SushiSwap, a fork of Uniswap, successfully migrated Uniswap liquidity into its own protocol. It was the first time the scheme that has come to be known as Vampire Mining (thanks to crypto analyst Martin Krung and Defiant contributor Cooper Turley), had ever been attempted.

Half of Uniswap

There was about $810M of tokens in SushiSwap, or 55% of Uniswap liquidity, when the migration started earlier today. By the end of the process, value in SushiSwap had increased to about $860M, according to DeBank. Total value locked in Uniswap has more than halved since yesterday to $430M, today according to DeFi Pulse.

Still, Uniswap has hugely benefited from SushiSwap; total value in the protocol is up by 50% from $285M, before SushiSwap launched. Thanks to the SushiSwap frenzy, it was able to overtake Coinbase Pro volume two weeks ago.

For background, traders poured tokens representing deposits in Uniswap liquidity pools into SushiSwap to get SUSHI token rewards, and those who kept them there through the migration got extra tokens. The migration consisted of swapping Uniswap LP tokens for their underlying asset, and taking those tokens to SushiSwap.

Net Positive

SushiSwap was able to pack many seasons worth of soap opera drama in the two weeks since it launched (read The Defiant’s take on HERE and HERE), but the takeaway so far is that it’s been a net positive for DeFi.

It hasn’t fragmented liquidity, like some had feared. Instead, it grew the pie, drawing more people into both Uniswap and SushiSwap. Users also won: they have another choice of AMM. The biggest losers so far are SUSHI holders who founder Chef Nomi dumped his/her tokens on.

SUSHI price signals the market is becoming more bullish on the Uniswap spinoff. It continues to rebound from its $1.2 low, up more than 20% today to around $3.

Image source: CoinGecko


UMA & REN Team up for Bitcoin-Based Yield Dollar

By Cooper Turley

UMA and Ren Protocol are teaming up to offer a Bitcoin-backed stablecoin.

The price of UMA’s uUSD stablecoin will tend towards  $1 as it approaches its maturity date, and will be redeemable for $1 of the collateral asset at expiry. In the meantime, the asset fluctuates in value in line with market demand. In the case of uUSDrBTC-OCT, the derivative will expire on October 1st.

With this new partnership, users can mint uUSD depositing Ren Protocol’s permissionless Bitcoin-wrapper, renBTC, at a 125% collateralization ratio. 

Those who mint yUSD and provide liquidity to this Balancer pool stand to earn a weekly allocation of 10,000 UMA and 25,000 REN.

UMA, whose $900M market cap token was recently listed on Coinbase, is doubling down on its innovative priceless synthetics. It’s the synthetic assets protocol’s second liquidity mining opportunity, following the ETH yUSD campaign which started last month and continues today. 

The move makes renBTC the second Bitcoin wrapper to be used as collateral on a major DeFi protocol after wBTC, and should continue to bolster demand for Ren Protocol’s trustless bridge, which has ported $171M in BTC to Ethereum since it’s inception less than half a year ago.


DeFi Protocols Are Testing New Token Sale Mechanisms

DeFi protocols Perpetual and Hegic are listing their tokens with new distribution mechanisms aimed at reducing front running and price speculation.

Perpetual Protocol, a decentralized perpetual contract trading protocol that allows up to 20X leverage on long and short positions, will be the first DeFi project to list its token via a Balancer Labs-based Liquidity Bootstrapping Pools. Balancer’s LBPs have a high starting price so that there’s no benefit in rushing into the pool before others. The PERP token distribution starts today.

HEGIC, a decentralized options platform, is using what it calls an Initial Bonding Curve Offering, for its sale today. Every HEGIC IBCO participant will have the same price of 0.0000057 ETH / HEGIC (~$0.0027) for HEGIC tokens. During the IBCO contributors’ liquidity will be pooled and settled, and tokens will be claimed after the sale ends. That means there will be no difference in settlement prices for the contributors. 


NFT Platform Rarible Closes Seed Round With CoinFund

Rarible, a digital art-focused NFT platform, has raised an undisclosed amount in a pre-seed round closed by crypto investment firm CoinFund.

“The investment will help Rarible develop a community-governed, blockchain-based NFT marketplace that enables a direct relationship between digital content creators and buyers,” Rarible’s announcement said.

CoinFund supports its investment with the view that blockchains and NFTS will enable ownership over digital assets, founder Jake Brukhman wrote in a blog post.

“We can view NFTs as liquid intellectual property (“liquid IP”) [18] for all forms of digital content, a marketplace which is measured in trillions of units that is about to be tokenized,” the blog post said.


Ethereum’s DeFi Dominance is here to Stay Say the Top DeFi Players: CryptoCompare

CryptoCompare reached out to several high-profile decentralized finance projects and asked them about the future of the space, potential use cases, and more. One answer quickly stood out: they all believe Ethereum (ETH) won’t be replaced as the go-to blockchain network for DeFi. The following data and responses come from some of the leading decentralized financed protocols, including Augur, Argent, DDEX, Balancer, Nexus Mutual, Kyber Network, Loopring and Staked.

DeFi Protocol Linear Finance Raises $1.8 million For Cross-Chain Synthetic Asset Exchange: The Block

Linear Finance, a decentralized finance (DeFi) protocol based in Hong Kong, has raised $1.8 million to build and launch synthetic asset exchange, the block reported. The financing round was led by NGC Ventures, Alameda Research, Hashed, and CMS Holdings, among others. Soul Capital, Moonrock Capital, and PANONY also participated in the round.


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 at $10/month or $100/year, while free signups get only part of the content.

About the founder: I’m Camila Russo, author of The Infinite Machine, the first book on the history of Ethereum. 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.