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⚔️ DeFi is a "War Zone" for Devs
Builders empathize with Cronje’s recent post. Also, EIP-1559 rumblings, LINK on exchanges, new SEC head.
Hello Defiers! Here’s what we’re covering today,
Founders empathize with Andre Cronje’s “Building in DeFi Sucks” post
Leaked chat saying EIP-1559 (which would improve gas management on Ethereum and has the potential to reduce ETH inflation) is ready, has Ethereans riled up
LINK supply on exchanges is near a 1-year low
We might get a blockchain expert leading the SEC
and more :)
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🙌 Together with Zerion, a simple interface to access and use decentralized finance, Neutrino, an algorithmic price-stable protocol that enables the creation of stablecoins tied to real-world assets, Value DeFi Protocol, a suite of DeFi products including the Value Liquid AMM, which allows anyone to create trading pools with flexible ratio pairs, and Cartesi, an optimistic roll-ups solution that aims to revolutionize smart contracts by allowing developers to code with mainstream software stacks, has just launched CTSI Reserve Mining.
TLDR Yearn Finance founder and prolific DeFi builder Andre Cronje posted a part two to his initial post “Building in #DeFi sucks.”
We asked other DeFi founders what they thought, and they tended to agree. Not with the “it sucks” part. But with the fact that pressure is intense when building open source platforms.
😩 GIST OF THE POST Development takes time, it’s expensive, and real users are scarce; they will only go wherever they are getting the highest yield. “Community is bullshit,” Cronje said, as users will blame you if the project gets hacked, but attribute it to the community if the project succeeds.
Cronje regrets not keeping part of the YFI token he gave away entirely to the Yearn community, sparking the “fair launch,” movement. He wrote, “ I still have all the responsibility and expectation, except I have 0 of the reward or upside. Don’t do this, I was an idiot.”
🥵 THE PRESSURE IS ON Cronje’s post offered a glimpse into the intense pressure that’s put on developers, especially in decentralized finance, as they are building in public for users who are also economically aligned with the project via a token.
Aave’s Stani Kulechov: The days of “economical moats” which businesses used “to protect their user-base from competition” are over, even for traditional businesses. “Only the rate of constant innovation matters, once the innovation stops, deflation starts,” Kulechov stated.
“DeFi builders are just experiencing this (pressure to innovate) 100x since anyone can innovate on Ethereum, from any part of the world. That innovation is exposed to all liquidity that exists in DeFi. DeFi is a war-zone and we're all in war-mode. It keeps the adrenaline and excitement flowing.”
Dharma’s Brendan Forster: “open-source competition has always been fierce,” and “all users are fickle,” pointing to people’s willingness to switch between Uber and Lyft as an example of the latter.
Synthetix’s Kain Warwick: “You are always going to have pressure from stakeholders,” he said. “It’s important to filter it though. And one of the best ways is establishing good community norms early.”
TLDR Ethereum Improvement Proposal 1559, a long-awaited update to Ethereum’s core codebase, was rumored to be ready for deployment, according to a leaked Discord conversation on Twitter.
📖 EXPLAIN PLEASE EIP-1550 aims to change Ethereum’s transaction fee mechanism to improve user experience and reduce ether inflation. It proposes to introduce a “base fee”, which, like the current mechanism, will protect against spam on the Ethereum network.
📈 Crucially though, the fee would be burned instead of sent to miners. If the proposal reduces the inflation rate, with constant demand, it should become more valuable.
It’s viewed as one of the most significant proposals to be implemented, so rumors that it is ready to be deployed made waves.
SO IT’S READY? In the Discord screenshots, Ethereum creator Vitaik Buterin asks developer Micah Zoltu to confirm whether he meant to say in a previous message that EIP 1559 is ready and should be deployed, to which Zoltu responded, “Yeah, essentially.”
WHAT’S THE HOLD-UP? Tim Beiko, Ethereum core developer responded on Twitter, saying “I disagree 1559 is ready to ship now,” and followed up by posting an EIP-1559 Mainnet Readiness Checklist, which shows, as Beiko said on Twitter, no Ethereum clients had a final version of the proposal implemented. Also, any pieces of software that signs transactions will need to make upgrades if the proposal ships.
TLDR Chainlinlink has fallen out of favor in the last few months, possibly due to the parabolic run-up it enjoyed in mid-2020, but the worst may be over. LINK’s supply has been transitioning off exchanges ever since it reached a peak price of $20 in early August, on-chain market analytics firm Santiment revealed.
WHAT DOES THAT MEAN Investors tend to accumulate LINK tokens off exchanges. Conversely, when tokens on exchanges increase, it’s a sign investors are getting ready to sell.
📉 PRICE ACTION The token hit a high of $18.5 on Jan. 10, before plunging by +30% straight into a pivotal order block where buyers stepped back in.
Currently, the 6-hour LINK/USD pair remains in bullish territory. The money-flow-index (a volume-weighted RSI) has chartered a course towards the over-sold region just over the 20 point level.
FLOOR AND TOP The $12 range has previously acted as an interim buffer before price proceeded to trade between the single-digit $7.57 floor and the highest daily close ($20).
TLDR President-elect Joe Biden will be appointing MIT professor Gary Gensler as chair of the U.S. Securities and Exchange Commission, Reuters reported. Gensler is a Professor of the Practice of Global Economics and Management at MIT’s Sloan School of Management, and his faculty profile says that he “conducts research and teaches on blockchain technology, digital currencies, financial technology, and public policy.”
WHAT DOES THAT MEAN It’s impossible to say what the next few years will look like, but an incoming SEC chair who is both educated on blockchain technology and willing to stand up against mainstream banks bodes well for increased adoption of DeFi.
TLDR Ledger, which makes hardware wallets for digital assets, said it has been targeted by rogue Shopify team members who exported over 200 merchants’ customer databases in April and June of 2020.
BY THE NUMBERS 292,000 Ledger customers have been affected. Ledger says that while 93% of the leaked data is similar to the previous hack, around 20,000 new customers have been compromised.
“FinCEN is extending the public comment period on its proposed rule by 45 days, citing ‘the robust responses’ provided so far. This doesn't guarantee the rule won't go through, but takes us well past January 20 & into the Biden administration,” tweeted Compound Finance lawyer Jake Chernivsky.
Grammy Award-winning Portugal. The Man launched their very own cryptocurrency on Rally, a social token network built on an Ethereum sidechain. Those who buy their tokens, called PTM coins, can spend them on merch, unreleased footage from the band’s gigs, a livestream party, and video and text chats with the band, Decrypt reported.
🧑💻 ✍️ Stories in this newsletter were written by Daniel Kahan, Owen Fernau, and Christopher Attard, and edited by Camila Russo. Video was produced by Robin Schmidt and Alp Gasimov. The podcast was led by Camila Russo and edited by Alp Gasimov.
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, while free signups get only part of the content. Click here to pay with DAI (for $100/yr) or sub with fiat by clicking on the button above ($10/mo, $100/yr).