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Newsletter #9

Six months since the World Health Organization declared coronavirus as a pandemic, the global economy continues to feel the fallout. September is historically bad for Bitcoin and stock markets, worried investors are preparing for another March-like 30% drop. Will history repeat itself? Meanwhile, things keep happening in DeFi!

Yearn Finance Introduces StableCredit and YFI Price Surges

Yearn Finance, one of the DeFi giants, continues to innovate the space and release new products. Its latest product, called StableCredit, is a new protocol aimed at decentralized lending, stablecoins, and automated market makers. And YFI holders enjoyed a huge 60% pump from a Coinbase Pro listing.

StableCredit - how can I keep up?

Yearn propelled itself to the fifth largest DeFi platform in a matter of weeks, in terms of total value locked up. It has left many crypto enthusiasts scratching their heads, by the time you understand one product or clone, the team will have released two more.

Confused? Start here:
StableCredit enables users to deposit any asset and create a tokenized credit in a fiat base such as USD, EUR, or JPY. It then goes into an automated market maker, letting you use the StableCredit USD to borrow any asset in the AMM.

Just another lending protocol… while the design of this new protocol seems quite complicated and confusing (hopefully this will be cleared up before launch!). The key thing to note here is that this lending protocol has no governance, it is truly 100% decentralized. There are no token voters trying to extract rent from users, meaning it could become the most competitive platform yet.
  • Yearn's native token YFI has already seen an all time high of $39,000 on August 31st. And some traders are making thousands trading the copycat clones of Yearn Finance.
Meanwhile YFI goes parabolic… a Coinbase Pro listing has moved YFI token back into bullish territory. After a correction down to $27,000 on September 10th, the new listing caused the price to pump up to $35,000 in the same day.

What is Kava? A Cross-Chain DeFi Platform

Kava has set its sights on becoming the default DeFi platform by enabling an easy cross-chain experience. The project aims to provide decentralized lending against all major crypto assets in the form of stablecoins. At its core, Kava feels very similar to MakerDAO with CDPs. However, where Maker limits itself to Ethereum ecosystem Kava plans to leverage the interoperability of the Cosmos blockchain.

Meaning that it can support independent networks such as Bitcoin or BinanceChain natively. There is no need to wrap assets and use bridges to move tokens from one network to another.

How does Kava DeFi platform work?

As a cross-chain DeFi platform, Kava offers collateralized loans and stablecoins to holders of major crypto assets such as BTC, XRP, BNB, or ATOM. Users can mint USDX Kava’s stablecoin in exchange for collateralizing their crypto assets.
what is kava? cross chain defi platform

Quick Bite

The value of the protocol is the ability to create synthetic leverage for any supported crypto asset. For example, you can lock up BNB as collateral and mint USDX to buy more BNB. Now you have a leveraged long position on BNB.
  • Binance exchange has integrated Kava for BNB DeFi staking programs, offering up to 25% APY for staking BNB.

Deep Dive

Kava follows a Proof-of-Stake (PoS) consensus model where the governance token KAVA is a network validator through staking. As a result, holders can stake to earn more tokens in the form of block rewards or transaction fees. The token also gives voting power, such as deciding which type of crypto assets are used as collateral. Furthermore, KAVA is the protocol’s reserve currency if ever the system is under-collateralized. In this scenario, new tokens are minted to buy USDX off the market until the system is safe.

Looking to the future... for the platform to integrate with more wallets, exchanges, and financial services the Kava lending platform needs more USDX minted. To become a global financial system and DeFi giant, there needs to be enough USDX liquidity. As a result, we recommend watching their announcements. As there will surely be more incentive programs offering generous rewards for minting the USDX stablecoin.

bZx Protocol is back with BZRX Yield Farming

It’s just been a week since bZx Protocol announced their re-launch, and they have already smashed through previous all-time high. There is now over $20M worth of assets locked up in the protocol, which shows the community trusts their relaunch. The decision to pause all products to focus on audits and smart contract security was a tough one. However, it appears to have paid off heavily. As the industry is plagued by DeFi scams, the community will migrate back to known players such as bZx or Aave.

What is bZx Protocol?

At its core bZx is a decentralized lending and margin protocol, offering two main products:
  • Torque - fixed-rate loan backed by crypto collateral.
  • Fulcrum - tokenized lending and margin trading.
Now, these products have not been changed since their initial launch, though smart contracts have been audited heavily. With bZx 2.0, the front-end has been completely revamped to streamline the onboarding process. Along with a range of new features such as flash loans, collateral management, and gas optimization.
what is bzx protocol?
Understanding the value… bZx can provide DeFi participants a trading experience more in line with the fluid margin trading found on a centralized exchange. This is because leveraged trading and lending have been combined into one protocol. Furthermore, the protocol has an inbuilt rebates model where 50% of paid fees are refunded in BZRX token.

What is BZRX token?

So far the re-launch has been going perfectly, no doubt due to the new DeFi tokenomics of BZRX token. The reworked token, BZRX, is a governance token and also used for rewards to create a sustainable yield farming experience. Stakers can earn fees from bZx’s ecosystem which can be cashed out in DAI, USDC, ETH, or any other supported ERC20 token.
BZRX yield farming
Entering Yield Farming… another great choice by the team is that stakers can choose between staking BZRX token directly or a 80/20 BZRX-ETH Balancer pool token. This means there is now an extra incentive for providing BZRX on Balancer liquidity pools. As stakers can also receive BAL governance tokens.

What about the future?

With Torque and Fulcrum, bZx was one of the first movers into the DeFi lending space. They have been able to come back successfully after the setbacks of being hacked, with an immense focus on security and audits. In this current landscape, where DeFi enthusiasts are starting to grow weary of the millions of food-themed copy paste protocols, a team with proper security audits will stand out.

When DeFi users are chasing down the best yields for their assets, the differentiator could be that bZx has higher security. Furthermore, earning BZRX tokens in the form of rebates just for using the protocol is very attractive. Will bZx end up toppling the big dogs such as MakerDAO or Aave? We can’t know the future, but you should be watching them closely.

Vampire Bite: SushiSwap leaves Uniswap behind

SushiSwap has taken its large vampire bite out of Uniswap, holding 225% more in Total Value Locked post-migration. Essentially, SushiSwap successfully migrated the liquidity away from Uniswap and into its protocol. And the numbers show wonders!

Looking at the data, there is currently $1.3 billion of liquidity locked up in SushiSwap. Whereas, Uniswap is far behind with only about $400 million.

SushiSwap Leaves Uniswap Behind

SushiSwap, the forked Uniswap protocol, is now operating entirely on its own. Meaning there is no longer any need to stake Uniswap LP tokens. Liquidity providers wishing to join the new platform, simply deposit their assets directly into SushiSwap. And then stake the native Sushi LP tokens to earn rewards.
Amazingly the migration process went smoothly and only took a couple of hours. All of this was overseen by CEO of the popular cryptocurrency exchange FTX, Sam Bankman-Fried. SBF recently took over the project from the controversial anonymous developer Chef Nomi.

It's an amazing milestone for the DeFi project that has been blazing through the industry since day 1. Looking at the new website for interacting directly with SushiSwap, it appears to be a carbon copy of the Uniswap website with some small color changes. But, that is not a surprise as nearly everyone forks Uniswap’s UI.

Similar Flavor:

What do the numbers say?

Analytics website sushiswap.vision, reports that total liquidity locked is roughly $1.32 billion. Compared to Uniswap’s mere $400 million, it appears as if SushiSwap has left Uniswap behind in the dust. However, this is not the only metric we should judge, Uniswap’s volume and the overall token count is still much higher than the fork.

This could be simply due to Uniswap vast integrations into Ethereum wallets and dApps. Developers will undoubtedly start to integrate SushiSwap to ensure they offer their users the best rates. Interestingly, 1inch, the founders of Mooniswap reported they were already ready.

What remains to be seen is if liquidity providers will stick around once the generous SUSHI rewards slow down. Especially, given the recent dumping of top DeFi tokens where SUSHI saw heavy losses. Though the project may already have figured out the answer to this dilemma.

2 Million SUSHI Airdrop

People who stayed loyal to the project and held during the migration, are going to enjoy an incoming airdrop of 2 million SUSHI tokens. With 1 million of these SUSHI tokens coming from SBF’s own holdings. The community then started a proposal to add an additional 1 million SUSHI tokens from the development fund.

Other key figures in the DeFi space believe that this may just be a trend. Andre Cronje, the founder of the popular Yearn Finance DeFi protocol, pointed out that liquidity providers have no loyalty at all.

He describes them as locusts, stating that right now Sushiswap’s success is subsidized. Time will tell.

Also take note

  • Acala Network: Polkadot’s implementation of MakerDAO is now fully compatible with Ethereum.
  • Elrond Network: EGLD trading is live on Bitfinex and the team has just announced a new listing on Indodax.
  • Ocean Protocol: with dexFreight, Ocean have launched the first Web3 marketplace for the logistics industry. Founder Bruce Pon will also be speaking at AsiaBerlin on 21st September.
  • Coinbase Pro: Loopring LRC and Yearn Finance YFI token will both be listed on Coinbase Pro next week.

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