Hello Defiers! Here’s what’s going on in decentralized finance,
bZx about to jump on the yield farming bandwagon
Kyber announces KNC makeover launch date
The Graph raises $5M
Synthetix launches binary options
and more 🙂
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bZx About to Jump on Yield Farming Bandwagon
bZx protocol announced two new proposals to update the tokenomics of BZRX, its governance token, on Monday. They include a fee-sharing mechanism that leverages Balancer pools and a distribution program by which protocol users will start receiving token rewards. If approved, bZX will jump on the yield farming bandwagon in search of increasing the total value locked (TVL) in its protocol, which is currently near its record low, just over $700k.
Today, we share two exciting additional proposals to align the incentives of stakers and users. The blog is posted here:bzx.network/blog/bzrx-token #stakingThe BZRX Token Model v3We have been working to continuously improve and refine the protocol and its governance. Over the years, the BZRX token model has evolved along with the industry, presenting fresh new ideas in the processbzx.network
June 29th 2020
5 Retweets14 Likes
BZRX Initial Design
BZRX tokens were designed to be locked and non-transferable, except when used inside the protocol to pay for relay fees. So the tokens were never listed on any exchange. Before the current proposal, bZx had introduced two updates to its governance token.
The first update introduced a mechanism that allowed BZRX holders to redeem their assets for a proportional piece of the insurance fund that the protocol collects to pay lenders when a borrower gets liquidated (it collects the funds by charging a 10% of all interest earned by lenders).
The second update introduced an incentive for users to participate in protocol governance. The bZxDAO was created and allows users who stake BZRX holdings to a representative of the DAO to receive token rewards through inflation and a share of protocol fees. The inflation rewards were later removed.
The new governance proposals introduce fee-sharing and a protocol disbursement program. Fees that are collected by the protocol (an origination fee of 0.09%, a trading fee of 0.15%, and the 10% interest fee) are later allocated to Balancer pools to create an extra incentive for users to stake their BZRX tokens.
Each time the fees are assigned, the pools rebalance and mint a liquidity provider (LP) token that represents ownership of the pool. Users receive LP tokens and can redeem them at any time for any asset in the pool. Ultimately, users receive Balancer fees and BAL rewards (which are reinvested in the pool) in addition to protocol fees collected during their staking period. bZx has also proposed that the LP tokens of the most liquid pool be eligible for staking to earn fees.
Protocol Disbursement Program
The protocol disbursement program proposal seeks to distribute 20% of the total token supply to the protocol users. 17% will be allocated to users that pay protocol fees by reimbursing 50% of their spending with BZRX tokens. 3% of the remaining tokens will be disbursed on a weekly basis to users based on the number of fees generated in that week.
As bZx gets ready to unlock the first set of BZRX tokens in the coming weeks, one trend becomes apparent. As yield farming keeps getting traction, and we get ready for a new cycle in the evolution of the Ethereum network, more protocols will seek to increase liquidity and activity on their systems by leveraging money legos and creating incentive mechanisms.
Kyber Announces KNC Makeover Launch Date
The token for the third-largest DEX is about to get a makeover.
Kyber’s Katalyst upgrade, which is going live on July 7, aims to bolster the DEX’s depth and ecosystem integrations by introducing voting incentives, rebates for liquidity and the ability for partners to set their own spreads.
The upgrade also introduces KyberDAO, which allows holders of Kyber’s native KNC to stake their token to participate in governance and earn ETH voting rewards. KyberDAO is used as a proxy to vote on major protocol decisions like protocol fees, supported assets and fee distribution.
We are thrilled to announce that Katalyst and @KyberDAO will go live on the 7th of July, 7am GMT! This will usher in an exciting new era for Kyber, with technical improvements that will help enhance liquidity for #DeFi !
Join us: discord.gg/NfFMVz6
June 29th 2020
152 Retweets373 Likes
Trading Fee Distributiom
Kyber conducted a Pre-DAO Poll to set the parameters for the most important aspect of KyberDAO —fee distribution. Upon the launch of Katalyst, Kyber’s 0.2% trading fees will be allocated as follows:
65% to Staking Rewards such as Voting
30% to Reserve Rebates for LPs
5% to KNC token burns
Kyber, which collects the most trading fees compared with peers, is set to draw $3.25M in annualized earnings. With this new model, $2.12M in annual rewards will be distributed among token holders to incentivize governance.
Notably, the community opted to favor staking rewards instead of burning KNC tokens with use, a sign that KNC holders seek to encourage active governance participants rather than rewarding passive holders by reducing token supply.
The ability to delegate staking with Pools Masters such as DeFi Dude’s Kyber Community Pool has lowered the barrier to entry for those who want to participate in governance. As an added aside, those who hold 2k or more KNC (currently ~$2.3k) will also be able to trade on KyberSwap with no protocol fees.
Synthetix Launches Binary Options
Synthetix, which offers long and short exposure to crypto, fiat currencies and indexes through synthetic tokens, is adding binary options to its exchange.
Binary options pay out on a certain date if the price of a chosen asset is above or below the level specified at the creation of the option. They allow traders to bet on a yes/no outcome, for example, a market could be created on the following statement: BTC will be above 10k USD on 31st December 2020. Yes, or True, is represented by “long” options and No, or False, is represented by “short” options. Each side of the market pays out the other side.
Image source: blog.synthetix.io
Traders pay 1% of the total market volume in fees, where 0.2% goes to the market creator, and 0.8% goes to SNX stakers. Traders also pay a 5% fee to withdraw a bid. This is the first trading feature that is always net-positive for SNX stakers — they receive fees for enabling this feature, and don’t take on debt risk as they do with the spot market Synths.
The Graph Raises $5M to Build the Web3 Query Layer
The Graph, an indexing protocol which enables developers to access data from blockchain apps, raised $5M from crypto funds including Framework, ParaFi Capital, Coinbase Ventures, and Digital Currency Group, with continued participation from Multicoin Capital and DTC Capital.
Investors bought the right to receive tokens when the The Graphs network launches, in a so-called SAFT agreement. The company previously raised a $2.5M seed round led by Multicoin in January 2019, bringing its total funding to date to $7.5M. Additional funding will be used to build and launch The Graph’s decentralized network. It’s currently receiving 1B queries per month on its hosted services from hundreds of applications.
Careful Out There Farmers; Balancer Exploited Again
Shortly after a hacker was able to withdraw $500k from Balancer pools exploiting deflationary tokens (which Balancer reimbursed), another trader drained unclaimed COMP tokens in several Balancer pools.
Apparently this happened an hour ago, someone used dydx flashloan(again) and drained unclaimed COMP in several balancer pool, making 10.8 ETH profit in the process. Thread incoming.
June 29th 2020
72 Retweets228 Likes
All it will take is for them to play with DeFi for a few minutes to realize this is the internet of money.
Mainstream retail and institutional investors haven’t yet realized $ETH is computational money. Watch out when they do 👀
June 30th 2020
40 Retweets177 Likes
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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.
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About the editor: I’m Camila Russo, a financial journalist writing a book on Ethereum with Harper Collins. (Pre-order The Infinite Machine here). I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.