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🔥 DeFi Stories of the Year: Layer 1s, Layer 2s, EIP 1559 and Ultra-Sound Money
Hello Defiers! Welcome to our special edition newsletters chronicling the best, worst, and strangest events in DeFi in 2021.
For the next week, we’ll be counting down to New Year’s Day with a load of special content. We have Big Stories of 2021, Top Defiers of 2021, Worst Rug Pulls, Best Airdrops, and much more.
Today we open things up with two of our 10 top stories of 2021, and four of our Defiers of the year.
DeFi 2021, Top Stories:
DeFi 2021, Defiers of the Year:
Do Kwon, Innovator & Ecosystem Builder
Daniele Sestagalli, Serial Founder
Banteg, Hacker Extraordinaire
Elon Musk, the Shitposter Par Excellence
DeFi 2021, Video:
Previously in the DeFi 2021 Series:
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The Defiant has compiled the top stories that defined the year for DeFi and web3 — we’ll be dropping them here throughout the week!
Big Story 2021: This article is part of our Year in Review series.
PLOTLINE The contest between non-ETH Layer 1s vs. Ethereum and its Layer 2s, was a major plotline in 2021.
NON-ETH LAYER 1S Non-ETH Layer 1s are, like Ethereum, smart contract platforms that developers use to deploy DeFi protocols, NFTs, and games. Examples include Solana, Avalanche and Terra, all of which offer faster transactions with lower fees than Ethereum, albeit sometimes making concessions in security and or decentralization.
ETH LAYER 2S Layer 2s also offer similar benefits to non-ETH Layer 1s, namely cheap and fast transactions. Unlike the likes of Solana, Avalanche, and Terra, Layer 2s inherit their security from Ethereum, instead of having to establish it independently as non-ETH Layer 1s do.
Big Story 2021: This article is part of our Year in Review series.
BURNED ETH Ethereum Improvement Proposal (EIP) 1559 was perhaps the most anticipated update in the history of the world’s most valuable smart contract platform. The main reason: EIP 1559’s “base fee,” which is burned as a part of every Ethereum transaction.
DEFLATIONARY PRESSURE In other words, the base fee, paid in ETH, is permanently removed from the cryptocurrency’s circulating supply. This reduction in supply is called deflationary pressure, which, with everything else being equal, drives up prices while inflationary pressure drives down prices.
ULTRA-SOUND MONEY EIP 1559 gave rise to the possibility of ETH becoming a currency whose supply decreases over time. Ethereum developer Justin Drake joked on Twitter that if Bitcoin was sound money, EIP 1559 made ETH “ultrasound money.” The concept was then championed by the Bankless content platform and thus the meme was born.
The Defiant has compiled a list of the personalities that defined the year for DeFi and web3 — we’ll be dropping the names here throughout the week!
✊ Do Kwon, Innovator & Ecosystem Builder
Do Kwon is the co-founder of Terraform Labs, which is building the Terra ecosystem, a fully-fledged, self-contained, alternative financial system. At the core of this network sits UST, a stablecoins that has managed to largely maintain a peg to the US dollar relying on a system of incentives and algorithms bolstered by the LUNA token, and without actually holding any fiat. This has been a major feat, which no other algorithmic stablecoin has managed for as long and as successfully, with UST recently crossing the $10B market cap mark.
Beyond its stabelcoin, the Terra ecosystem also includes the money markets platform Anchor; Mirror, which allows users to trade synthetic versions of stocks and other assets; Astroport, a decentralized exchange; and still other projects making up this DeFi galaxy, inhabited by self-described LUNAtics. Terraform Labs has grown big enough to be noticed by the SEC, which is investigating the Mirror protocol. Kwon seemed unphased though, with Terraform suing the SEC back for “failure to follow its own rules.”
✊ Daniele Sestagalli, Serial Founder
Few DeFi entrepreneurs are as prolific and outspoken as Daniele Sestagalli. An early Bitcoin devotee, Sesta, as he likes to be known, maintained must-read Twitter discourse even as he co-founded a trio of headline-grabbing projects: Wonderland, which forked from OlympusDAO, is a treasury-backed stablecoin play; Abracadabra a DeFi debt venture; and Popsicle Finance, a yield optimization platform. The latter suffered a $25M hack in August but Sesta reimbursed the victims, and distributed a 20% bonus to those who held onto all their ICE tokens.
His projects, together with Olympus DAO, were responsible for the movement dubbed DeFi 2.0, which intends to better align incentives between project teams and users.
✊ Banteg, Hacker Extraordinaire
Banteg embodies the ultimate DeFi hacker. An anonymous dev with a bunny avatar whose skills led him to become a core member of the Yearn Finance team. Under Banteg’s watch, Yearn has consistently been among the largest DeFi protocols by TVL and has continued to innovate in its quest to deliver the best yields possible to its users.
Banteg has also demonstrated a passion towards supporting the broader ecosystem, proposing that a percentage of fees for Yearn treasury go to fund Ethereum public goods via Gitcoin grants, and more recently, advocating for the protocol to contribute to a new DAO dedicated to legal advocacy for DeFi.
✊ Elon Musk, the Shitposter Par Excellence
Elon Musk, wears many hats – or crowns, to some – Technoking of Tesla, CEO of Dogecoin, co-founder of SpaceX, and the richest person in the world. Still, to Crypto Twitter, Musk is above all, its most powerful shitposter.
Early in the year he sent Bitcoin soaring 14% when he said Tesla would accept BTC as payment and hold the token on its balance sheet. Then he sent Dogecoin soaring when he tweeted it was his favorite crypto. He changed his tune in June when he tweeted his apparent break up with Bitcoin, complete with broken-heart emoji; BTC dropped 7%. Shibu Inu tumbled in October when Musk tweeted he didn’t own any. He appears to relish his influencer powers, but for investors his whims are a white-knuckle ride.
🧑💻 ✍️ Stories in The Defiant are written by Brady Dale, Owen Fernau, Samuel Haig, DeFiDad, and yyctrader, and edited by Edward Robinson, yyctrader, and Camila Russo. Videos are produced by Robin Schmidt, Alp Gasimov and Daniel Flynn. Podcast is led by Camila, edited by Alp.
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 ($15/mo, $150/yr)