Also, Synthetix adds ETH as collateral, decentralized insurance protects bZx users, Ripple creates bridge to Ethereum.
|Camila Russo||20 hr|| 1|
Hello Defiers and happy Friday! Here’s what’s going on in decentralized finance:
Land sales on Decentraland spike as virtual city launches
Synthetix adds ether as collateral
Nexus Mutual pays out bZx claims
and more :)
$180K of Digital Land Sold as Virtual City Gates Open
Decentraland, the virtual world built on the Ethereum blockchain, launched yesterday after three years of private development.
The first plots of land were sold after the project’s initial coin offering, which raised $26 million in 30 seconds in 2017. For the past three years, users have been trading their digital land and building out this city, making everything from art galleries where they can display actual copies of digital art, to castles and casinos.
Now the world they’ve created is open for anyone to see. You can go to this link right now, create an avatar, and start exploring. I did it myself (my avatar is pretty cute!)
Decentraland Cami. Image source: https://play.decentraland.org/
I’ll have to spend some more time there though, because to be honest, other than walking around and looking at the very nice-looking graphics, I wasn’t sure what else to do! I wasn’t the only one.
But clearly many people do know what they’re doing. More than $180,000 of non-fungible tokens representing land on Decentraland have been sold this week, according to NonFungible. There have been 467 sales totaling over $550,000 in the past month.
Image source: nonfungible.com
The digital city has fixed dimensions, where 90,000 plots of 10 meters by 10 meters give it roughly the size of a virtual Washington DC. There are “districts,” where developments of the same category, like art or fashion, come together, and property near the main square goes for higher prices. The Decentraland marketplace is already starting to look like traditional real estate portal, with advertisements that say things like, “Top location surrounded by road >>Commercial Development *roof terrace.”
Land parcel being sold on Decentraland. Image source: market.decentraland.org
But unlike in the real world, anyone, anywhere can access and build on this city, and no single government or corporation can suddenly change the rules. A Decentralized Autonomous Organization, or DAO, governed by users, decides on things like policy updates and land auctions. Land owners are free to build whatever they want on their land —and this got easier. Previously, coding skills were required to build these fantastical worlds, but the team recently released drag-and-drop 3D editor.
Cryptovoxels is a similar project, which has seen volume of $19,000 in the past week and almost $400,000 in the past month. Their value proposition is being a lower-fidelity version of Decentraland, that’s easier to build.
Same as with the fantasy football cards I wrote about yesterday, Decentraland and Cryptovoxels are unlike other virtual reality games in that users actually own the non-fungible tokens representing land and other items, and they’re free to trade them in secondary markets.
Virtual Mortgages for Virtual Land
As with most things on Ethereum, Decentraland is getting sucked into DeFi. One day after the launch, Rocket, which is building a platform to offer loans against NFTs, is already offering mortgages for virtual land.
Some are taking things even further, speculating whether there’s a way to use flash loans to profit from virtual real estate. —In case you haven’t been keeping track of the DeFi world this week, flash loans, which allow traders to take out loans of any size without collateral as long as they pay them back within the same Ethereum transaction, are wrecking havoc. They minimize the risk of market manipulation and people are taking advantage. [Read more here.] But I digress, back to Decentraland.
There’s a four-day treasure hunt going on in the digital city right now, with prizes totaling $100,000 in value, so go check it out.
Synthetix Adds Ether as Collateral
Synthetix, a platform to mint and trade synthetic digital tokens, is adding ether as collateral in its Achernar release.
There will be a three-month trial period, with a planned initial total cap of 5,000 ETH, collateral requirement of 150 percent, a minting fee of 50bps, and an interest rate of 5 percent APR. ETH stakers won’t receive sUSD (synthetic USD) trading fees or SNX staking rewards, as they won’t take on risk of debt pool fluctuations.
The goal of adding ether as collateral is to increase the system’s scalability, as there will now be more liquidity available upon which to issue synthetic assets. It would also make the system more stable, as ether would diversify collateral held from only SNX currently, and protect it from the token’s price volatility. It will also make it easier for a newcomer to start trading on the exchange.
Nexus Mutual Paid Out bZx Insurance Claims
One silver lining from the bZx exploits was proof that Nexus Mutual’s decentralized insurance system works.
Three of six Nexus Mutual members with bZX cover submitted claims after the exploits, and they all got repaid. The first claim was rejected, as claim assessors initially concluded the bZx contracts worked as intended, and Nexus Mutual protects only against smart contract failures. The user was able to resubmit their claim and get paid after the bZx post-mortem made it clear that there was bug in the code.
Claim assessors, which is any member of the mutual willing to stake their NXM tokens, vote on whether to pay out claims.
[Read my interview with Nexus Mutual founder: Open Finance Can Protect Those Who Legacy Insurers Can't Serve]
Ripple says it’s looking to build a financial bridge with Ethereum. The company launched a series of challenges at ETH Denver to pay coders who can connect the two cryptocurrencies on the Interledger Protocol (ILP).
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About the author: 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.