Donation-Based Funding for Public Goods on Ethereum Launches Sixth Round

Hello Defiers, here’s what’s going on in decentralized finance,

  • If Ethereum is a nation, its public goods are funded with voluntary donations

  • MKR holders vote on whether to add KNC and ZRX as new collateral types

  • The LAO announced its first investment will be on privacy solution Tornado.sash

  • PieDAO launches stablecoin portfolio

and more 🙂

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New Round of Gitcoin Grants Program Starts This Week

By Cooper Turley

The sixth version of Ethereum’s public goods funding initiative launched Monday. 

The Ethereum community has been rallying to support projects in the open-source economy every quarter for the past 16 months. The Gitcoin-led Grants CLR program has helped aggregate ~$639k in donations plus an additional $625k in matching.

This time $175k in matching is up for grabs, down from $250k in the previous round. The system used to calculate how much crypto is matched, called quadratic funding, favors smaller donations from a higher number of donors. This means that even 1 Dai can yield more than 100 times in matched funds.

MORE: Ethereans are Disrupting Donations in a Literally Radical Way

Gitcoin is a marketplace where developers and projects can find each other; those in need of talent set up a specific job and developers complete it in exchange for pay, or a so-called “bounty.” The goal is to end up with a jobs mesh for the open source ecosystem. But grants have started to outpace bounties after Gitcoin implemented quadratic funding.

In Round 6, the matching pool is broken down as follows:

  • $100,000 to Ethereum tech like ETH 2.0 and DeFi.

  • $50,000 to community initiatives including media and marketing projects (like The Defiant!)

  • $25,000 to support initiatives regarding Black Lives Matter with campaigns around education, policy change, and funding against systemic racism and for continued growth in African American communities.

The new round also comes with a suite of new (and the removal of old) features including:

  • Bulk checkouts to save on tx costs

  • Re-contribution flows to donate to past projects again

  • Matching boosts for identity verification to fight collusion

  • Removal of the negative voting feature

Gitcoin’s introduction of SMS verification was contentious as some community members raised concerns regarding security, anonymity and opsec. Gitcoin responded by offering extra matching weight to those who undergo KYC without making it mandatory to participate.

As our frequent readers are aware, The Defiant fielded its first Gitcoin Grant last round. These funds have helped bring on new contributors (like the author of the post you’re reading right now), and we’d like to expand this effort in Round 6.

The Defiant’s new grant request will be used to create a highly requested data dashboard to track usage across the wider DeFi ecosystem. If you’ve got an idea for a metric you’d like to see added, please leave a comment on your donation. Until then, we’ll be keeping a close eye on Gitcoin Grants and reporting on all the top projects.

Maker Polls to Add KNC and ZRX as Collateral

By Cooper Turley

MKR holders are voting on whether to add Kyber Network’s KNC and 0x Protocol’s ZRX as new collateral types. 

So far 92% of 5,150 MKR put towards the KNC vote has voted to add the token, while 100% of the 5,143 MKR has voted in favor of adding ZRX. The votes end on Thursday, June 18th at noon EST and the executive decision will be made shortly thereafter. 

ZRX and KNC are sitting at third and fourth place on the DeFiMarketCap leaderboards, respectively. Both collateral types will feature a 5 Million Dai debt ceiling with a 4% Risk Premium and 175% Liquidation Ratios.

While WBTC quickly hit its 10M Dai debt ceiling and the supply of Dai continues to reach all-time highs, there’s been meager demand to lock up the other two collateral types, BAT and USDC. BAT in the protocol is only backing over 500k of Dai  (16% of its ceiling), while USDC is backing just 1.7M Dai (9% of its ceiling).

Dai’s market cap of $117M has a long way to go relative to USDT’s $9.5B and USDC’s $771M. MakerDAO will seek to continue adding collateral types to make sure there’s enough liquidity to back the decentralized stablecoin and allow it to grow. 

The LAO’s First Investment is in Tornado.Cash

The LAO, one of the first for-profit DAOs since The DAO, announced its first investment will be on privacy solution Tornado.Cash. The LAO, which has raised $900k (3.8k ETH), in funding since its April 28 launch, didn’t disclose terms of the investment. The fund plans to raise up to 12k ETH. While The LAO is a Delaware limited liability company, its legal paperwork also lives in smart contracts powered by the OpenLaw system, and members hold tokens which allow them to vote on investment decisions.

MORE: Third Time’s the Charm? First Came ICOs, Then Came The DAO, and Today It’s The LAO

PieDAO Introduces USD++

By Cooper Turley

PieDAO, a DAO for decentralized market-weighted portfolio allocations, launched USD++, its second tokenized portfolio, or “Pie.” USDC++ is made up of four different Ethereum stablecoins weights – USDC (47.22%), TUSD (28.58%), DAI (20.42%), and sUSD (3.78%). The USD++ Pie diversifies cash positions to mitigate the risk of any one particular stablecoin failing. Additionally, USD++ can adjust its weights and supported assets to meet changing metrics and trends.

Structured as a Balancer Pool, USD++ provides contributors with a return in trading fees and in BAL liquidity mining. The USD++ Pie is estimated to be one of the more profitable BAL farming Pools with an estimated 22.76% ROI. Paired with the BTC++ Pool, PieDAO is creating a strong foundation for investors looking to hedge risk against niche currencies through vetted portfolios.

No-Loss Lottery PoolTogether Now Takes Apple Pay

PoolTogether users can now buy lottery tickets with Apple Pay and debit cards, making the no-loss lottery application more accessible for those who don’t own crypto. Tickets sold are still pooled together and lent as Dai on Compound Finance to earn interest, which the lottery winner earns after the lockup period ends.

Ethereum App To Let Employees Prove They’ve Been Vaccinated Available on Apple And Google Stores: Forbes

Civic Technologies, a San Francisco-based startup that raised $43 million in a 2017 ICO, has formed a partnership with Circle Medical, an affiliate of UCSF Health, a San Francisco hospital, that will let employees prove to their employers the results of their most recent Covid-19 tests, and when a vaccine is developed, whether or not they’ve received it. Civic’s own token is available today on both Apple’s App Store and Google Play. With more than 100,000 people signed up on the waiting list, the app, which quietly went live Monday has already been downloaded more than 12,000 times.

Sender of $5M Ethereum Txs Fees Has Revealed Itself: The Block

A little-known South Korean peer-to-peer crypto exchange Good Cycle is behind the last week’s high-fee Ethereum transactions, the Block reported citing blockchain analytics and security firm PeckShield.

The Death (And Rebirth) of Privacy: Daniel Veenstra

We all know that our privacy os being violated, but GridPlus data engineer Daniel Veenstra makes an especially compelling case for the need to end with surveillance capitalism, and how Web3 can help. “End-to-end encryption can make it technically impossible for service providers or governments to access your private data in any way (…) The future of technology is bound to be one where people are empowered, not productized, as the nascent Web 3.0 movement picks up steam.”

On-Chain Markets Update by IntoTheBlock

This Week: The DeFi Rally

It’s been a volatile year even by crypto’s standards, mirroring the price swings seen in traditional markets. Despite the volatility, there are noticeable signs of increasing risk-appetite in certain sectors of both crypto and traditional markets. One sector within the crypto space that has benefited disproportionately from this is DeFi as evidenced by protocols’ tokens. While large cap tokens have remained below their February highs, DeFi tokens have led the way reaching new yearly highs after the drop incurred during Black Thursday. 

While total value locked in DeFi protocols has struggled to surpass the $1 billion mark, the valuations of their tokens have managed to keep increasing in recent months. Part of this growth could be attributed to recent and upcoming protocol upgrades that boost token holders’ incentives.

This proved to be the case with Compound’s release of its governance token, COMP, which incentivized users to lock tokens in the protocol in order to earn COMP tokens granting them voting rights. Within 24 hours of the COMP token launch, total value locked in the protocol increased by 45% according to DeFi Pulse and at one point reached a market cap of over $1 billion. Asides from governance rights, upcoming protocol upgrades from other notable DeFi projects such as Kyber and Aave will be compensating users through staking rewards similar to how Synthetix currently does. 

While there has been a wave of enthusiasm regarding such upgrades, another factor that may have led DeFi tokens’ appreciation is the listing (or potential listing) of many of them in Coinbase, known as the “Coinbase effect”. This has certainly also played a role in the excitement and increased speculation surrounding DeFi tokens as evidenced by their price increases. Furthermore, by analyzing key on-chain indicators from IntoTheBlock we can better grasp the behavior of users surrounding the DeFi Rally seen since the March bottom. Before diving into the blockchain metrics though, let’s compare how DeFi tokens have been performing since bottoming on March 13. 

1. DeFi Tokens are Outperforming the Market

As seen in the chart above, prices of DeFi tokens in the top 100 tokens have increased significantly more than the market in the past three months. While the price of Bitcoin, Ether and other large caps have remained sideways or moved slightly lower throughout June, DeFi tokens have appreciated an average of 31% month-to-date. 

Leveraging IntoTheBlock’s on-chain indicators we can observe how the DeFi rally has affected indicators of usage and adoption. 

2. Daily Active Addresses at Multi-Year Highs

As DeFi tokens have grown in price through the past quarter, so have their number of users. Out of the list of DeFi tokens in the top 100, all but Augur’s REP have reached multi-year highs in daily active addresses following Black Thursday. The graph below shows this trend for the Kyber Network Crystal (KNC): 

Tokens such as KNC, LEND, OMG, LRC and NMR reached numbers of daily active addresses not seen since 2018. MakerDAO’s MKR token also recently hit an all-time high for this metric following the Coinbase listing. While daily active addresses show a strong correlation with price as shown in the graph above, this growth is seen as positive development in the ecosystem of these tokens as they draw in an increasing amount of interest that leads to a next wave of innovation as highlighted in a16z’s price-innovation cycle.

Moreover, by taking a deeper dive into other on-chain indicators we can get a better idea of the extent to which these addresses are driven by short-term speculation or longer-term investment or support of these protocols. 

3. Holders of DeFi Protocols are at All-Time Highs

The number of addresses with a balance of DeFi tokens is also on the rise. The number of holders for DeFi tokens is currently at an all-time high, with Aave’s LEND being the only exception within those listed in the top 100 by market cap. Furthermore, the rate of growth in holders has accelerated in many of these tokens throughout the second quarter of 2020 as can be seen in the example below for REN: 

With optimism towards protocol upgrades and an increasing risk-appetite, DeFi protocols’ tokens have outperformed the market since the March bottom. Analyzing IntoTheBlock’s on-chain indicators we can see overall growth in adoption and usage of tokens in the decentralized finance space. While it is uncertain how long The DeFi Rally will last, the wave of enthusiasm and development in the industry is likely to persist.

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 founder: 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.

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