Wednesday, September 22, 2021

Money Legos keep stacking! Finance Redefined 4/21-4/28

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Pleased Wednesday fellow DeFi degens! 

I used to be anticipating to spend a big portion of this version of Finance Redefined analyzing Aave’s liquidity mining program. There was some anxiousness from traders that the emission of two,200 $AAVE per day (which might translate to roughly 5% of the ecosystem reserve fund of two.8 million AAVE per 12 months) would possibly find yourself dragging down the token’s worth as farmers earn and dump.  

Seems, it is pointless: this system’s an unmitigated success. The AAVE token is up almost 15% for the reason that launch of liquidity mining to $462, and the protocol’s complete worth locked determine has surged to $11.8 billion — up from simply over $7 billion since liquidity mining started.

Effectively-researched liquidity mining works. Solely query now could be, if this system is discontinued, how a lot of that TVL will probably be sticky? 

Different narratives to regulate: 

Cash legos hold stacking

At the beginning of the 12 months there was hypothesis that in 2021 DeFi would see one thing of a novelty: one protocol buying one other, doubtless by way of a governance token buyout. The Synthetix 2021 roadmap particularly opened the door to such a risk, evaluating it to acquisitions in TradFi and trying to Yearn’s merger/acquisition/collaboration spree for inspiration. 

Giant-scale mergers and acquisitions have but to play out, nevertheless. There are some smaller examples brewing — Inverse Finance is currently trying to purchase out Tonic for some $1.6 million, for example — however as an alternative what we’re seeing is a increase in deep integrations on the protocol and frontend layers.

On Monday, Badger DAO and RenVM launched the Badger Bridge, a brand new interface for depositing native BTC into Badger vaults with just some clicks. The mixing stands out for 2 causes. One is that it’s so clearly useful for each events: an idiot-proof solution to earn yield on BTC is enticing for hodlers, that means Ren will see an uptick in exercise on its bridge (and due to this fact protocol charges), whereas Badger likewise will get a lift in TVL.

The opposite angle, nevertheless, is the willingness with which Ren subordinated its branding, letting Badger — which, I’d argue, has the stronger neighborhood — take over the touchdown web page. Have been it not for absurd token valuations, one might need been an acquisition goal for the opposite, given the apparent wants every fills — however by working collectively Ren will get every thing they’d need from a protocol like Badger, and the identical applies to Badger and Ren.

This raises the query: why trouble with takeovers when a pleasant integration can accomplish the identical results?

One other prime instance is in the present day’s Balancer-Gnosis Protocol announcement. You can see the details in my piece, however successfully Balancer v2 is bringing some neat improvements to AMM liquidity provision and Gnosis’ CowSwap is a liquidity aggregator and offchain transaction batching protocol that can reportedly reduce on miner extractable worth. The mix of the 2 will make for a considerably extra feature-rich DEX from each a LP and dealer’s perspective — probably even positioning the Balancer-Gnosis-Protocol as a Uniswap v3 competitor.

In an announcement to Cointelegraph, Balancer CEO Fernando Martinelli famous that such a deep collaboration could be unimaginable within the conventional finance world:

“Every of the 2 protocols could be unimaginable to implement within the conventional finance world just because there isn’t a such factor as trustlessness there (you all the time want an middleman). Even when that had been doable, combining these two protocols could be as a lot of a problem as it might be to combine Constancy Index Funds (Balancer) with Nasdaq (Gnosis) beneath one single platform.”

Acquisitions could also be an outdated mannequin — or at the very least one that does not apply to DeFi. Interoperability and composability signifies that protocols can profit from each other with out hostile takeovers.

The branding would possibly nonetheless have to get discovered in sure cases, nevertheless — Balancer-Gnosis-Protocol isn’t precisely the most effective identify.

Are you talking my language? 

The goalposts hold shifting for Ethereum maximalists as natural exercise begins to unfold to different chains. 

On Solana, for example, $COPE and $STEP have attracted important neighborhood following and funding from main gamers (together with from funds apart from famous SOL supporters Alameda Analysis!), and this morning introduced a hackathon aiming to kick off the hashtag “solanaszn.” Other people have bandied round “Solana Summer time” within the mould of final 12 months’s DeFi Summer time, however no matter your most popular sobriquet the competitors is for actual — nobody can cry “present me one developer constructing an actual XYZ” anymore. 

The success has — maybe predictably — led some observers to attempt to poke holes in SOL’s progress thesis. Whereas, like every chain, there’s loads of assault floor, one rising criticism is that Solana’s flagship language, Rust, is each tough and unique.

In an announcement to Cointelegraph, Solana founder and present Solana Basis president Anatoly Yakovenko rejected that view. 

“Rust is a contemporary language with huge adoption appropriate for writing excessive efficiency safe code. It has ranked on Stack Overflow as one of the liked programming language by 65,000 individuals who code, so we’re assured this performs a key function in driving the natural progress in our developer neighborhood up to now,” he mentioned.

He additionally famous that the Basis has counted 2,000 builders constructing on Solana (he didn’t point out methodology or definitions used to reach on the determine, and it appears maybe a contact inflated given {that a} 2019 examine from ConsenSys found that there’s about 1,300 Ethereum builders, and in 2020 Electrical Capital pegged the overall variety of ETH devs round 2,300), and that Solana devs aren’t taken with “copy/pastes” of Ethereum tasks.

He’s additionally proper in regards to the Stack Overflow study, although a 2018 survey from the Rust Weblog confirmed that over 20% of builders working with the language felt unproductive after a 12 months of use.

No matter you are feeling about Rust, nevertheless, crypto is all about incentives — which implies it is an issue that cash can repair. And to that finish Solana is urgent the pedal: the hackathon will characteristic “as much as $1 million” in prizes and/or seed funding. I feel I may study a tricky language for that.

Different tales this week:

Uranium Finance loses $50 million, likely rug

ETH cracks all-time highs

Aave’s liquidity mining program a success out of the gate

NYSE president bullish on DeFi