This Week in DeFi – September 25th

https://defirate.com/this-week-in-defi-september-25th/

To the DeFi Community,

Ethereum continues to act as a gravity well for global financial assets. And Bitcoin and US Dollars are the first victims.

There’s now over $1B in tokenized BTC circulating the Ethereum economy. At the beginning of June, Ethereum featured over 5,000 BTC on the network. Fast forward to today and there’s over 107,000 BTC, an increase of over 2,000% in a few short months. It’s undeniable that Ethereum creates a gravitational pull for these assets to integrate themselves into the growing DeFi ecosystem. While OG protocols like Compound and Aave offered an enticing incentive to lend out your BTC to earn interest or leverage its value as collateral to borrow other assets, the introduction of yield farming drove this incentive to new heights. And it shows.

Today, we saw Three Arrows Capital execute the biggest mint in WBTC history, tokenizing over 2,300 BTC on Ethereum in a single transaction. The second and third highest were done by Alameda Research who minted 1,999 BTC and 1,799 BTC in two separate transactions just earlier this month. Both firms are well-known to be active DeFi participants, so we can only expect that this newly-minted Bitcoin will be put to work somewhere within the ecosystem over the coming days, weeks, and months.

And while DeFi still largely relies on the consortium-model BTC, we’re beginning to diversify our offerings. Ren Protocol‘s renBTC continues to see adoption as the protocol has now facilitated over $230M in tokenized Bitcoin since its launch in early June. Moreover, we finally saw the launch of Keep Network’s highly anticipated tBTC this week. In essence, tBTC is a trust-minimized version of Bitcoin collateralized by ETH. Since its launch a few days ago, the community has tokenized nearly $2M in tBTC – likely a small sign of what’s to come.

If anything, this is only the beginning of BTC on Ethereum as the network has attracted a mere 0.5% of all BTC in existence.

A significant number, but likely a glimpse of what’s to come.

– Lucas

P.S. DeFi crossed $10B in value locked. Another amazing milestone for the community. We’re on to $100B.


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Top Stories

Aave Launches Genesis Governance for AAVE Migration

Aave unveiled its first Aave Improvement Proposal to ratify the migration from LEND to AAVE with Aavenomics upgrades.

Keep Network Launches tBTC with KEEP liquidity Mining

Keep Network launched their trustless version of Bitcoin on Ethereum

Dune Analytics Closes $2M Seed Round

Blockchain data analytics startup announces a $2M seed round led by DragonFly Capital along with other leading DeFi investors

Set Protocol Automated UNI Yield Farming with USDAPY Set

The asset management protocol showcased its first automated yield farming strategy

Origin Releases Yield-Bearing OUSD Stablecoin

The P2P commerce protocol announced an interest-bearing stablecoin called OUSD

 


In Other News…


Stat Box

  • Total Value Locked: $10.7B (up +17% from last week)
  • DeFi Market Cap: $16,14B (up +8%)
  • DEX 7 Day volume: $4.76B (down -12%)
  • DAI supply: 897.7M (up 37%) 
  • Total DeFi users: 486K (up +6%)

Bonus Reads


Shoutout to Aave for supporting This Week in DeFi!

Aave is a leading lending protocol supporting dozens of the top DeFi tokens. Aave recently showcased an EMI license, giving them the ability to onboard new users directly into DeFi through their parent company – Aave Limited.

We’ve done an extensive amount of coverage on Aavenomics – a new suite of protocol upgrades that incentives protocol safety through AAVE rewards and protocol fees. The best part about Aavenomics is that all of its parameters – including the logistics of Aave yield farming – are governed by tokenholders. There’s a ton of good activity happening on the Aave governance forum and we’d definitely recommend checking it out if you fancy yourself to be an Aavenger.

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The post This Week in DeFi – September 25th appeared first on DeFi Rate.

Aave Launches Genesis Governance with AIP1 Token Migration

https://defirate.com/aave-aip1/

Aave – the sector leading lending protocol – has launched its first Aave Improvement Proposal to ratify the migration from LEND to AAVE.

This milestone comes as a huge next step for the project, with tokenholders voting to ratify a token migration that implements the Aavenomics changes including staking incentives, yield farming, and a backstop module on top of decentralized governance.

Detailed in the AIP is the implementation of new Safety Incentives, or rewards to be earned from staking AAVE via a Safety Module as a reserve in the event of shortfalls. The proposal suggests 400 AAVE in rewards per day, good for roughly $20k in rewards each day when taking the 100 LEND > 1 AAVE swap into account.

Outside of the 100:1 tokenswap, AIP1 adds a 3M token Aave Reserve to a community governed treasury, good for Safety and Ecosystem Incentives in tandem with a fortitude of other rewards programs to come.

In the event the proposal passes, the Safety Module will be introduced using a bootstrap period with no slashing, making staking completely risk free to early adopters. There is currently no deadline on when LEND would have to migrate, however, those who are the first to stake to the Safety Module stand to earn the largest portion of the first day’s 400 AAVE rewards.

100 unique participants have voted on the proposal in the first 48 hours of launch, with early support signaling the proposal will pass in spades.

What’s unique about Aave governance is that voting is built directly into the application, utilizing a custom dashboard and governance module built directly by the Aave core team.

Lending Governance Thrives

When it comes to DeFi governance, we’re seeing an ongoing trend of token distribution proposals have the highest engagement to date.

With Aave, governance marks the start of new trends like adding new assets, adjusting interest rate models, and adding new money markets in line with core protocol upgrades like the token migration.

If one thing is for sure, Aave has solidified as a crucial foundation of the DeFi ecosystem. The migration to AAVE is set to kick off Aave V2, adding in a suite of gas optimizations that are sure to take the sector-leading protocols to new highs in the coming months.

To stay up with Aave, follow them on Twitter!

 

The post Aave Launches Genesis Governance with AIP1 Token Migration appeared first on DeFi Rate.

Optimism Launches Layer 2 Testnet with Synthetix Partnership

https://defirate.com/optimism-testnet/

Optimism – a Layer 2 scaling solution for Ethereum – has announced the first phase of their limited testnet.

 

Instead of an instant release, the Optimism team is opting for a gradual release where they will be onboarding small cohorts of early adopters one at a time.

Currently, Synthetix is the only project in the Optimism Testnet. The permissionless synthetic-asset exchange will be rewarding testnet usage by giving out 200,000 SNX to participating users.

 

In Phase A, only SNX stakers that had already staked prior to the announcement will be able to participate as no new deposits or withdraws will be enabled. Deposits will be enabled in Phase B and SNX stakers can increase their deposit.

A security drill will then be conducted and the team will stress test the system by actively committing fraud. Once the security drill is complete, withdrawals will be enabled and rewards received on the testnet can be migrated to mainnet.

Chainlink and Uniswap are expected to follow after Synthetix while the Optimism team has requested that any projects interested in being an early adopter of Optimistic Rollups to sign up here.

A full roadmap of the launch was illustrated in the announcement post, adequately titled “not to scale”.

Who is Optimism?

Formerly known as the non-profit Plasma Group, the team rebranded to Optimism and restructured into a for-profit startup last year focused entirely on Ethereum scaling. Optimism has raised $3.5M from venture capital firms like Paradigm and IDEO CoLab.

Optimism has long been touted as a premiere scaling solution for DeFi, with Optimistic Rollups being teased by leading projects like Uniswap in their Unipig Layer 2 demo during last year’s Devcon.

The closer Optimism gets to mainnet, the closer DeFi gets to unlocking instantaneous, nearly gasless settlement. Granted, composability does take a hit but given the rate at which gas prices have climbed in recent months, this project is one which is well worth keeping an eye on.

To stay up with Optimism, follow them on Twitter!

The post Optimism Launches Layer 2 Testnet with Synthetix Partnership appeared first on DeFi Rate.

Gauntlet’s Tarun Chitra wants to de-risk DeFi with an automated governance platform

https://www.theblockcrypto.com/post/78863/gauntlets-tarun-chitra-wants-to-de-risk-defi-with-an-automated-governance-suite?utm_source=rss&utm_medium=rss

“A lot of it has just been putting a finger to the wind.”

Tarun Chitra, a former programmer at D.E. Shaw, is talking about the nature of decentralized finance (DeFi) governance. For much of the young market’s history, vital protocol decisions — ranging from changes to stability rates to interest rates — have been made through Zoom calls with the loudest voices often seeing their recommended changes see the light of day. In many ways, it reflects the scrappy nature of the burgeoning market, but it is also un-scientific, says Chitra. That’s the problem his company Gauntlet Network is trying to solve. 

The firm, which launched in 2018 as a ratings agency-like company for the crypto market, has pivoted to offer a platform that makes it easier for market participants to make governance decisions in an automated fashion. The shake-up comes as decentralized entities in crypto are picking up steam. Non-custodial exchanges are now seeing hundred of millions of dollars in trading volumes, whilst trading of DeFi coins are making up an increasing percentage of trading volumes on centralized exchanges.

DeFi projects are governed by a community of governance token holder with varied structures, the most common of which is a multi-sig one in which a set of private key holders execute votes on behalf of token holders.

“Shareholder advocacy is going to exist more seriously in crypto but currently it is difficult for investors to think about these projects and the things they would need to vote on, such as interest rates,” Chitra said. 

At a high-level, Gauntlet monitors various DeFi protocols, running various simulations of certain governance decisions such as the parameters around what would trigger a pay-out for a decentralized credit default swap to the addition of new collateral types for Maker DAI. After examining these various simulation, Gauntlet submits what conditions would translate into the best performance for a given asset to the platform — which users can then automatically submit to the protocol. 

“Compound might want to increase collateral in the event of a March 12-like event,” Chitra said, explaining:

“So Gauntlet would be listening to the on-chain activity and then automatically say, “hey look BTC is very scary right now, so we are submitting code to the blockchain to make the collateral limit a lot lower and we generate a dashboard that shows the reasons why you can vote for this. They are still choosing but we are monitoring and generating proposals.”

“We are trying to automate as much as possible, taking these best in class financial models and measuring risk in all these protocols and acting as an alert system for investors,” he added.

 In a sense, it is also helping introduce less risk to the system. Indeed, Chitra says the platform takes a leaf from the page of hedge fund risk systems. “On Wall Street, you have a risk desk at a hedge fund they are running similar simulations and if certain conditions are met the systems will shut down a trading strategy,” Chitra said.

Already the firm has lined up “most of the big COMP/UNI holders,”according to Chitra.
 
One observer of the DeFi market said “this is actually very similar to e.g. delegating tokens in Proof-of-Stake—only their expertise extends to other protocols.”
 
“I think this is clear & useful though,” the person added. 

“Automated Governance acts as an immune system for a DeFi contract, providing the community with an off-chain risk monitoring system,” a blog post by Gauntlet reads. “Investors can rest assured, knowing that their assets are monitored for safety even in the rockiest conditions, much like a hedge fund’s risk management system or application performance monitoring.”

Underpinning Gauntlet’s monitoring system are new models purposely built for DeFi. In a way, Chitra said the firm had to go to the drawing board, devising new types of financial models that look different from Wall Street’s due to the unique nature of these markets.

“In crypto, it is a lot more crazy because there are unique dynamics between participants. It is possible for a third party to see you trade and pull liquidity,” he said, adding:

“It feels like the 1980s when the unique dynamics in options and derivatives gave birth to models like Black-Scholes.”

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Ethereum Users Now Have More Than $10 Billion at Play in DeFi

https://decrypt.co/42976/ethereum-10-billion-total-value-locked-defi

The decentralized finance sector within the cryptocurrency industry has been on fire in 2020, and today, DeFi has broken through another major threshold.

DeFi users have now locked more than $10 billion in digital assets, including cryptocurrencies such as Ethereum and dollar-pegged stablecoins, into DeFi applications, according to data aggregator DeFi Pulse. This figure stood at just above $1 billion a mere three months ago.

Nearly all of that $10 billion total is in Ethereum, and more than half comes from just three protocols, as the biggest names in DeFi begin to capture outsized market share and attention while batting away copycat projects in a rapidly expanding marketplace.

Metrics site DeFi Pulse gathers data from different DeFi protocols through blockchain analysis to determine the value of all assets deposited by users, known as total value locked (TVL). The metric is widely used as a way to measure the current popularity of DeFi products in the market among users. 

DeFi protocols allow users to deposit digital assets into automatic financial applications, with all but a few running on the Ethereum blockchain. The DeFi protocols, powered by automated code known as smart contracts, allow users to take loans or earn interest using their assets as collateral as they would at a bank. 

DeFi users can typically receive better interest rates than they would at traditional financial institutions thanks to lower overhead costs enabled by operating on an automated decentralized network.

Uniswap, a token swap platform that automatically processes token trades without an order book, previously held the top spot for total value locked. This was largely thanks to a surge of interest following the release of the exchange’s UNI governance token last week. The new token allows its holders to vote on the future development and direction of the Uniswap platform. But Uniswap no longer holds that stop spot in the rankings.

Ethereum Locked in Uniswap Soars to $1.6 Billion After UNI Launch

Maker is another very popular service among DeFi users. It allows crypto enthusiasts to lock up digital assets such as Ethereum, Bitcoin, and other tokens for use as loan collateral paid in dollar-pegged DAI stablecoins. It has now narrowly edged out Uniswap in total value locked—$1.9 billion to Uniswap’s $1.89 billion.

The third-most popular DeFi product out there right now is Aave, with approximately $1.4 billion in total value locked. Aave is a DeFi service offering both crypto-backed loans and interest earning deposits, as well as pioneering functionality like unsecured loans using delegated collateral from other users, known as credit delegation loans.

With so many billions now flowing, it’s easy to lose sight of the fact that $10 billion in TVL represents 400% growth in DeFi since the beginning of July. It’s the sort of ultra-fast growth only possible in the world of cryptocurrencies—and one that, at this rate, might seem like a small and distant memory soon enough.

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.

📣 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…


Read more

Akash Network Integrating With Kava to Launch Cross-Blockchain DeFi Platform

https://insidebitcoins.com/news/akash-network-integrating-with-kava-to-launch-cross-blockchain-defi-platform

The Akash Network, the self-described “world’s first decentralized cloud computing marketplace and the first DeCloud for DeFi,” has revealed it is integrating with Kava, “the first cross-blockchain DeFi platform,” to “enable Kava’s stablecoin USDX as the first coin for fee settlement on Akash’s DeCloud platform,” according to a press release from the group.

Akash will be the first decentralized cloud platform to have a stablecoin, the release continues, “allowing cloud providers to avoid the market volatility of cryptocurrency, and developers to pay for cloud computing using USDX. This integration strengthens AKT’s liquidity and provides Akash users with a stable medium of exchange, while achieving greater adoption for Kava’s stablecoin and an increased debt ceiling from AKT collateral.”

Speaking on the matter is Greg Osuri, the CEO at Akash Network, who said:

We built Akash to give developers and companies faster, lower cost, and more flexible access to cloud computing with multi-currency settlement. We’re excited to partner with Kava Labs to integrate the first stablecoin in the Cosmos ecosystem, bringing dollar denominated payments to Akash.”

Also sharing some thoughts is Brian Kerr, the CEO of Kava Labs, who said:

“Akash’s promise to provide decentralized compute resources at significantly lower costs than leading providers like Amazon makes it one of the most promising projects in the blockchain space today. Akash’s technology will transform the compute industry and be a critical foundation for decentralized projects and Web 3 applications going forward.”

Israeli Draft Bill Proposes Bitcoin be Defined as Currency to Cut Down the Hefty Capital Gain Tax

https://bitcoinexchangeguide.com/israeli-draft-bill-proposes-bitcoin-be-defined-as-currency-to-cut-down-the-hefty-capital-gain-tax/

Four members of the Knesset, Israel’s legislative body, from the Yisrael Beiteinu faction, the secular nationalist political party, have submitted a private member’s bill seeking to amend the taxation of crypto-related activities so that the sale of bitcoin and crypto-assets isn’t subject to 25% capital gains tax, as per local media reports.

The private member’s bill, submitted by MKs Oded Forer, Yevgeny Soba, Yulia Malinowski Kunin, and Alex Kushnir, was tabled earlier this week on Tuesday that seeks to amend the way digital assets activities are taxed under the Income Tax Ordinance.

Under the ordinance, digital currency is considered an asset; as such, its sale and conversion in fiat currency are subject to capital gains tax. Currently, the tax on most capital gains in the country is 25%.

Section 91 of the Income Tax Ordinance, however, provides relief in the taxation of capital gains from short-term lenders or non-CPI linked bonds — they are taxed at only 15%.

“The regulatory reality in Israel is not adapted to the existing reality in the field,” claims the memorandum of the proposal.

The bill also seeks to add a section in the Ordinance, which deals with the “determination of distributed digital currency.” Under this proposed section, the Minister of Finance may prescribe provisions under which the digital assets shall be determined as a distributed digital currency.

The purpose of the bill is that Bitcoin and other digital assets are considered a currency for the taxation purpose.

“The State of Israel has the ability to be among the leaders in the field of digital currencies, if only it recognizes the use of the blockchain as a currency for everything. It is precisely in this period, when the economic future is unclear It is possible to promote digital payment options due to the social distance that has been forced on us,” said K Forer after the bill was submitted.

The same day another bill was tabled in the Knesset that seeks to allow reporting on digital asset trading once every six months or year.

Currently, those who sell digital currencies are required to submit a report to the tax authority within 30 days of the sale, along with paying an advance on the tax rate applicable to the capital gain arising from the transaction.

“The two bills passed last night by MKs Oded Forer and Sharan Hashakel are an infrastructure on which Israel can be developed as a global financial center and a leader in the field of digital currencies,” said Manny Rosenfeld, chairman of the Israeli Bitcoin Association.

Related Reading:

Breaking: European Commission Proposes Legislation to Turn Crypto-Assets into Regulated Financial Instruments

More Reading: US Lawmakers Propose Two New Bills to Streamline Digital Asset And Crypto Exchange Regulation

Also Read: Russia’s Ministry of Finance Tells Traders to Disclose Crypto Wallets Or Face Fines And Jail

The post Israeli Draft Bill Proposes Bitcoin be Defined as Currency to Cut Down the Hefty Capital Gain Tax first appeared on BitcoinExchangeGuide.

Fintech enabler Plaid offers full support for DeFi

https://insidebitcoins.com/news/fintech-enabler-plaid-offers-full-support-for-defi

Plaid, a fintech enabler owned by Visa, is currently working with no less than two decentralized finance (DeFi) startups, according to a recent report.

Keith Grose, head of Plaid UK, has always been an advocate of the evolution currently playing out in the cryptocurrency industry and how fintech firms can tap into that trend.

Presently, the company has a partnership with Uniswap-centered DeFi wallet Dharma, with the integration drawing support from Coinbase and other crypto exchanges. It is also partnering with Teller Finance, which is trying to introduce unsecured lending in Ethereum blockchain.

DeFi grows in popularity despite challenges

Although DeFi and open banking are operating on different levels of digital evolution, Grose says both can have an intertwined relationship where they can benefit from each other in terms of the access and use of financial assets.

He said DeFi is still far behind when it comes to standing in as the major financial route, but there are strong indications that it is getting there.

Salary Payments In Cryptocurrency Become More Popular Across The Globe

The main problem for DeFi’s use in Fintech firms is the fact that systems are entirely accessible to anyone, and the identities of the participants are usually hidden behind their wallet address. According to Grose, this makes it a difficult scenario in the digital world, where transaction security is of utmost interest.

DeFi moving in the right direction

Equipped with a massive $5.3 billion exit and a widely-used API, Plaid has played a big role in expanding consumer finance, as transaction data is easily shared with third-party fintech platforms.

But Grose, who thinks crypto is the way forward, says persuading banks and the mainstream financial players to do business with fintech is the right step. He also acknowledges that there are many more things to go right to conclude that DeFi is having the desired impact. Open banking can do a lot of things for fintech and Defi, he noted. The main goal is to enable people to easily use their crypto assets in combination with traditional payment and budgeting applications.

Grose is also excited about the prospect of decentralized derivatives exchange such as Andreessen Horowitz-backed dYdX.

Plaid provides an expansive view of all user assets with real-time data, which is different from DeFi, with the decentralized finance combining crypto lending with decentralized exchange. However, Plaid could have a more important role to play in the future, as it can make access to DeFi less daunting.

Gemini Adds Uniswap’s UNI and 14 Other DeFi tokens

https://decrypt.co/42955/gemini-adds-uniswaps-uni-and-14-other-defi-tokens

American crypto exchange Gemini has announced the addition of 15 new decentralized finance (DeFi) tokens today, including DeFi darlings such as Uniswap (UNI) and Yearn.finance (YFI).

Starting today, Balancer (BAL), Curve (CRV), Ren Network (REN), Synthetix Network (SNX), Uma (UMA), Uniswap (UNI) and Yearn.finance (YFI) will be supported for both trading and custody on Gemini, according to the announcement.

“With these new token additions, we now offer trading and custody support for a total of 24 cryptos and custody support for another 10 cryptos,” said Gemini.

As Decrypt reported, Ethereum-based decentralized exchange Uniswap has launched its governance token UNI just over a week ago, and it already became one of the most widely distributed tokens in DeFi. Just a day after its launch, Ethereum locked in Uniswap surged to $1.6 billion.

In its turn, YFI, the governance token of yield farming protocol Yearn.finance, has recently peaked at $38,682—reaching almost four times the price of Bitcoin ($11,596 at the time) and nearly doubling Bitcoin’s all-time high of roughly $20,000.

Another five tokens that were previously supported only for Gemini custody are now also available for trading: Decentraland (MANA), Kyber Network (KNC), Maker (MKR), Storj (STORJ) and 0x (ZRX).

Etherum Fees Double In a Week As DeFi Heats Up

Finally, the exchange added three entirely new DeFi tokens—Keep Network (KEEP), Wrapped Bitcoin (wBTC) and tBTC (tBTC)—to its custody service (but not for trading).

However, there are concerns with supporting DeFi assets. Crypto exchange Binance makes it clear to its users that any tokens they trade may lose 50% of more of their value. But clearly, crypto exchanges think it’s worth the risk.

‘DeFi was vaporware from its onset’ says known crypto bear Roubini

https://cointelegraph.com/news/defi-was-vaporware-from-its-onset-says-known-crypto-bear-roubini

He’s been dismissive of all things crypto for years, but does he have a point this time?

Known for his previous comments criticizing the crypto industry, economist Nouriel Roubini recently posted fresh negativity against the digital asset sector.

“DeFi was vaporware from its onset,” he said in a Sept. 24 tweet. “Now totally faltering as blockchain was always the most over-hyped technology in human history.” A slang term, Vaporware essentially refers to a highly touted product, service, etc. that holds no actual value or technology behind it. 

Roubini’s tweet came in response to a post from crypto and blockchain industry author David Gerard. “DeFi is out of fashion, finance CryptoKitties are the new hotness for the basement pink wojaks,” Gerard said, referencing a meme illustrating “crushing regret and self-hatred among those who invested heavily in cryptocurrency and may be facing an impending crash,” according to a blog post from the IDEX crypto exchange.

CryptoKitties surfaced near the height of crypto’s last major bull run in 2017, when people payed obscene amounts of money for online cats built on the Ethereum blockchain. The fad largely faded in subsequent months, though the project continues to adopt new means of kindling intrigue amongst its core user base.

To some, today’s DeFi craze resembles CryptoKitties and other passing fads. Some industry participants have posted comments seemingly in line with this school of thought. A number of those comments, however, compare DeFi to other bubbles in hype, but not necessarily in actual structure. They believe that DeFi’s decentralized tech and ideals hold great future potential

Roubini has expressed a number negative comments on crypto over the past couple of years, including claims of BitMEX violating regulations.   

Why does DeFi in 2020 have echoes of 2017’s market?

https://eng.ambcrypto.com/defi-and-yield-farming-bubble-as-we-live-and-breath/
DeFi is the latest hype machine in the crypto-market. It has evolved from simply earning interest by locking crypto to Governance tokens and being able to trade these derivatives. As of 01 January 2020, the total value locked [TVL] in DeFi was just around $675 million. However, as DeFi, governance tokens, and yield farming mania […]

Optimistic On Rollups – The Daily Gwei #82

https://thedailygwei.substack.com/p/optimistic-on-rollups-the-daily-gwei


So it finally happened – the first phase of the Optimistic Ethereum Testnet went live today with a partnership between Optimism and Synthetix. This partnership will allow Optimism to test out their technology in real-world scenarios by leveraging Synthetix as a test-case.

This is the Ethereum Scaling War Effort in action.

First, a short recap on who and what Optimism is. The Optimism team was formerly known as Plasma Group and has been working on Ethereum layer 2 scaling solutions for as long as I can remember (since 2017 I think). They, as their original name suggests, started off working on Plasma but then as time progressed Optimistic Rollups became the spiritual successor to Plasma and it was widely agreed by many in the industry that it was the better technology. The main difference between Plasma and Optimistic Rollups (OR’s) is that OR’s can run virtual machines – so-called Optimistic Virtual Machines (OVMs) – which allows for the execution of smart contracts on layer 2. I don’t think I need to explain why this is such a big deal!

Now we come to the exciting news announced today – Optimism is working with Synthetix to address a real pain-point for their user-base – that is, the pain that small SNX holders face when trying to stake and claim rewards each week. For those that don’t know, Synthetix currently runs a program where you can stake your SNX by minting sUSD and then earn some SNX-denominated rewards each week based on your collateralization ratio (you earn some sUSD-denominated fee revenue as well).

The problem with the current system is that at gas prices of around 100 gwei (the new normal), both staking and claiming incur significant fees (a total of about $100 for both transactions). The reward APY is about 43% at the moment so even if you have 2000 SNX ($9000), your rewards will be ~16 SNX a week or ~$72 which obviously isn’t even worth staking/claiming for due to the gas fees (unless you believe the SNX price will go way higher in the future). The solution to this is to use Optimism’s layer 2 tech to allow smaller stakers (those with <2500 SNX) to partake in the rewards program.

Synthetix isn’t the only one that will be getting the Optimism treatment – as the team continues their rollout plan, they have plans to work with Uniswap and Chainlink to bring their services to layer 2. Obviously having these 2 projects adopt this technology in addition to Synthetix is a huge deal and speaks to what I wrote about in my ‘Adopting Layer 2’ piece – that is, once a few big projects adopt a specific technology and it’s shown to be working well in the wild, the rest will most likely adopt it as the “standard” scaling tech on Ethereum.

How awesome is this? More and more of the large and most widely used Ethereum-based apps are adopting layer 2 technology instead of the other options (such as migrating to another blockchain) – this is extremely bullish for the Ethereum ecosystem. There are of course many open questions and issues to work through when it comes to layer 2 – the biggest being what does composability look like in a layer 2 world – but I’m optimistic that these issues will be ironed out over time.

Have a great weekend everyone,
Anthony Sassano


If you’d like to support my on-going work to bring you a fresh Ethereum-packed newsletter every week day, feel free to make a donation on Gitcoin here (during the current matching round your donations are quadratically matched).


All information presented above is for educational purposes only and should not be taken as investment advice.


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Gemini lists seven new DeFi tokens, including UNI and YFI

https://www.theblockcrypto.com/linked/78838/gemini-lists-seven-defi-tokens-uni-yfi?utm_source=rss&utm_medium=rss

Crypto exchange and custodian Gemini has added support for seven new decentralized finance (DeFi) tokens.

These are Balancer (BAL), Curve (CRV), Ren Network (REN), Synthetix Network (SNX), Uma (UMA), Uniswap (UNI), and Yearn.finance (YFI), Gemini announced Friday.

“We believe in the potential of DeFi and are here to help usher in this next wave of growth and financial innovation for the world,” said Cameron and Tyler Winklevoss, founders of Gemini. “DeFi promises greater choice, independence, and opportunity for all.”

Gemini is also adding trading support for five more tokens: Decentraland (MANA), Kyber Network (KNC), Maker (MKR), Storj (STORJ), and 0x (ZRX). These are already supported for custody.

Additionally, Gemini is supporting three new tokens for its custody service: Keep Network (KEEP), Wrapped Bitcoin (wBTC), and tBTC (tBTC).

Gemini said deposits for these tokens began at 8 am ET today, and trading will start at 11 am ET via limit orders on Gemini’s API and ActiveTrader solution. On the website and mobile applications, trading will open on a rolling, token-by-token basis as liquidity builds, said Gemini.

With today’s additions, Gemini now supports a total of 24 tokens for trading and 34 tokens for custody.

Notably, New York residents are allowed to trade in DeFi tokens on Gemini. Rival Coinbase blocks residents of the state from trading in DeFi tokens on its platform.

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