To the DeFi community,
The price of Bitcoin broke into uncharted territory this week, pushing the DeFi TVL to new heights and setting off a wave of excitement among the crypto faithful. DeFi got a closer look from US regulators at the CFTC as one of the most rapidly growing financial service sectors on record. Coinbase added new DeFi tokens and is gearing up for a future IPO, while cross-chain wrapped tokens are picking up speed on Ethereum and among competitors.
As ETH follows, DeFi seems to have lit the fuse on a massive bull run that could put intense pressure on the traditional finance industry, especially as cross-chain swaps do away with transaction costs as throughput concerns and synthetic and derivative assets become increasingly common on-chain.
People saying Bitcoin is just replacing gold, total miss the big mark.
This is ALL about bonds.
Good luck convince the people owning 100 trillion in bonds – which yield nothing – to keep holding when their future face value & coupons are locked in fixed fiat “value”.
— Preston Pysh (@PrestonPysh) December 17, 2020
Perhaps the biggest news this week was the debut of The Graph and their curation token GRT, currently trading at a nearly $3B valuation just 48 hours after launch. This comes on the back of Tornado Cash announced its own governance token with a retroactive airdrop, yet another sign that it pays to be a power user in DeFi.
Coinbase listed Aave (AAVE), Bancor (BNT), and Synthetix (SNX). The addition of protocols offering lending, decentralized exchange, and derivative assets covers a large swathe of the DeFi landscape, giving Coinbase users potential for additional exposure to many sectors of the cutting edge industry. The new listings join tokens from projects like Compound (COMP), UMA, Balancer (BAL), and Maker (MKR) already available on Coinbase, which now offers more than a dozen DeFi assets.
The US Commodities Futures Trading Commission’s Technical Advisory Committee heard an in-depth presentation on all things DeFi from the Virtual Currencies Subcommittee, including an exploration of how the emerging financial technology will fit into US regulations on liability and compliance with anti-fraud and money-laundering statutes.
The VC Subcommittee, including Aaron Wright, cofounder of the OpenLaw digital contract platform, recommended caution against stifling DeFi innovation that reduces costs and increases access to financial tools around the world, while still needing to hold bad actors accountable and prevent fraud. Wright noted that a ‘safe harbor’ provision, where following a predetermined set of guidelines would shield DeFi protocol users and developers from liability, could offer a good medium-term solution.
After a vote in November by veCRV token holders, pTokens’s pBTC has been added to a new Curve Finance Bitcoin trading pool. Curve Finance is optimized to minimize losses when trading between stablecoins and alike synthetic asset pairs, like pBTC and renBTC or WBTC, and Bitcoin holders can mint pBTC using the pTokens dapp. pNetwork DAO members also voted to approve a new liquidity mining incentive program for pBTC locked in Curve, distributing 50,000 PNT tokens worth nearly $20,000 on a weekly basis. CurveDAO members will also soon vote on a CRV incentive distribution that could further increase returns on pBTC staking.
Tezos, an Ethereum competitor with greater transaction capacity but chided for being overly centralized, launched wrapped ETHtz tokens on the Tezos blockchain, creating an alternative destination for traders looking to deal in ETH without high fees when network demand spikes. StableTech, a Tezos-focused DeFi consortium, will soon deliver wrapped Bitcoin on Tezos, and plans to launch lending and borrowing DeFi services through Tezos Finance in the first quarter of 2021.
Finally, Compound Labs released a whitepaper outlining Compound Chain, a stand-alone distributed ledger that connects assets and value across different blockchains, including Ethereum, Polkadot, Teozs, and more. Users will control an account on the Compound Chain that support both native assets like ETH and DOT as well as wrapped and other derivative assets like WBTC and Synthetix sBTC. The Compound Chain will also introduce a native unit of account, CASH, to simplify lending and borrowing between cross-chain assets.
Ethereum is undeniably the dominant DeFi platform for now, players like Tezos and Compound are working under the radar to bring more variety to your DeFi diet and achieve true cross-chain compatibility. Meanwhile, financial regulators are just getting introduced to what DeFi is in the first place. Along with rising crypto prices, it could be a recipe for industry growth in 2021 that makes 2020 look like the minor leagues.
And a few notes to end the week…
- Union Finance Raises $3 Million to Bring Credit to Ethereum for those who don’t have collateral assets to put up for a loan in a funding round led by Placeholder.
- Paxos, the company powering PayPal’s Bitcoin functionality and a custodian for many other large BTC holders raised more than $140 million in Series C funding in a round lead by Declaration Partners.
- Coinbase submitted documents to register with the SEC for an IPO that could launch in 2021, opening the door to massive growth opportunities – and much closer scrutiny – through public financing.
- Melon Protocol is rebranding to Enzyme Finance to better reflect the brand — and settle concerns over confusion raised by BNY Mellon investment bank.
Highest Yields: Bitfinex at 11.03% APY, Fulcrum at 8.81% APY
DAI Savings Rate: 0.00%
Base Fee: 0.00%
ETH Stability Fee: 2.00%
USDC Stability Fee: 4.00%
WBTC Stability Fee: 4.00%
The Graph is decentralizing its blockchain data query open API that underpins dozens of DeFi protocols.
Perpetual Protocol is bringing gas free trading to perpetual contracts with its progressive mainnet rollout.
Compound governance voters rejected a proposal to distribute COMP reimbursements to liquidated positions.
The Bitwise Crypto Index Fund saw $76 million in trading volume during its first three days on OTC markets.
Aave token holders approved the next evolution of Aave governance, splitting proposal and voting rights.
Total Value Locked: $15.82B (up 12.36% since last week)
DeFi Market Cap: $19.52B (up 16.54%)
DEX Weekly Volume: $5.17B (up 25.18%)
Total DeFi Users: 1,112,700 (up 8.2%)
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[Ryan Adams – Bankless] 6 Bull Run Tax Tips for 2020
[Chris Powers – Dose of DeFi] DeFi Tries Governance
[Cooper Tulrey – The Defiant] Compound Chain Foreshadows Cross-Chain DeFi Lending
[Ryan Adams – Bankless] How to Analyze Crypto Assets
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