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🦄 Recap: DeFi Week of July 26
You all thought this bull run was all about dog coins? Well, this week cats took their rightful place as internet kings. We’re talking about Stoner Cats, the animated show with big names like Ashton Kutcher, Mila Kunis and Vitalik Buterin that was financed with NFTs. Demand for those NFTs made Ethereum gas prices skyrocket while over $700k was lost in failed transaction fees. And for those of you looking to either dip your toes into NFTs or go after the latest one in your gallery, we have a comprehensive guide of NFT avatars.
As if we needed more indication that the NFT space remains red hot, Yield Guild Games, an investment DAO focused on the use of NFTs in virtual worlds and blockchain games, raised $12.5M in 31 seconds.
SEC chair Gary Gensler said synthetic tokens and derivatives could be considered securities, which prompted Uniswap Labs to remove synthetic tokens from the front end of the protocol. The move sparked debate over how decentralized Uniswap actually is. We had the founders of the biggest synthetic asset platforms discuss all of this in our third Jam Session.
The bottom line is that in order for DeFi to become more censorship-resistant, it needs to be actually decentralized, which is what ETH2 staking provider Lido is aiming for. The decentralization spectrum is what we discussed with Chris Blec on this week’s podcast.
Meanwhile, Wall Street continues to eye DeFi, with Goldman Sachs launching a DeFi ETF — except it apparently holds only Boomer tech like Nokia and Microsoft. Crypto firms are trying to make it easier for mainstream users to make the jump instead of relying on TradFi indexes, with Binance building a bridge to Polygon and DeBank launching a user-friendly wallet. Masha Prusso’s opinion column focused on all the novel use cases for crypto, while Blake West believes that crypto is on the cusp of a major shift towards more real-world interactions and the utilization of on-chain reputations.
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Aave, an open-source and non-custodial liquidity protocol where users can earn interest on deposits and borrow assets.
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🎙 "I'm Not an Enemy of DeFi; I Want People to Know About Anything That Goes Against DeFi as a Tool for Financial Liberty:" Chris Blec
In this week’s episode, I interview Chris Blec, a researcher advocating for transparency in DeFi. He was first drawn to cryptocurrencies through Bitcoin. He decided to go into crypto full time, first consulting with a token project in the ICO days, and later, in late 2019, by creating a YouTube channel where he aimed to educate users on how DeFi projects work under the hood. Here is where he came across what has become his focus since; the actual centralization behind supposedly decentralized protocols.All these questions and what appears to be constant criticism inspired some in the DeFi community to try to raise $50M for him to quit crypto. Meanwhile, Cointelegraph wrote a feature piece calling him maybe the most annoying man in DeFi. Chris seems unphased. To him, he’s just doing his part so that we don’t waste this opportunity to make a new, better financial system.
Inbox Dump #19
For paid subscribers only — The Inbox Dump is where we include the updates and announcements that flood our DMs each week and didn’t make it to The Defiant’s content platforms. We also include a compilation of DeFi and crypto funding rounds in the past week so you have these in one handy place.
Opinion & Analysis
By Blake West of Goldfinch
In his famous 2018 talk, The End of The Beginning, Benedict Evans laid out his view on the large-scale phases of the internet. See if you can spot some analogues with crypto:
If we think about the first 20 years of the internet, we really did, kind of, the easy things. It didn’t feel terribly easy at the time… but what we did was things that worked with low penetration [ie. low % of society using the internet] and low amounts of capital. It would work with consumers who weren’t comfortable buying online so they were kind of low-touch goods, things you didn’t have to hold in your hand. We tended to build tools rather than build entire stacks. We tended to build information arbitrage. We did sort of price comparison, and plane tickets. Now we do things that need high penetration and lots of capital. We invert all of these assumptions.
If you’re familiar with the “S-curve of innovation”, we are cresting the top of “Crypto 1.0”, and simultaneously starting the bottom of “Crypto 2.0”
By Masha Prusso
The main reason for the extreme volatility in crypto is that cryptocurrencies only give a return on investment when sold. You might consider APY and staking rewards. On one hand, it’s great that the blockchain puts the power of the banks in the hands of the people. We provide liquidity for each other and facilitate our own transactions. On the other hand, if the price of the currency drops below the value gained through these interactions, then those gains are not relevant.
The solution to this volatility is to attach crypto to real-world goods and services that people need or use on a daily basis. Crypto isn’t just about simple financial tools anymore. Any project can be a DeFi project and some are breaking the mold in fields ranging from tokenized equities, litigation finance, solar energy and more.
A Comprehensive Guide to the Top NFT Avatars: If you’re looking to get into NFT Avatars, you might be suffering from decision paralysis. After all, there are so many projects out there and new ones launching nearly weekly. It’s hard to keep track — Well we make the job a little easier by listing some of the top projects and their stats in one tidy post.
Ethereum Activity Heats Up Ahead of EIP-1559: Following the market’s crash in May, on-chain activity on Ethereum slowed down as demand for dog-themed tokens and opportunities for yield diminished. Over the past few days, this trend has reversed as demand for NFT and gaming projects picks up.
Binance Supports Direct Polygon Withdrawals and Deposits: DeFi is getting easier for CeFi users. Crypto’s largest centralized exchange, Binance, now allows users to withdraw and deposit Polygon’s MATIC token directly from and onto the protocol’s proof-of-stake mainnet.
Paradigm Team Outline Efficient AMM Design for Large Trades: Paradigm researcher partners Dave White, Dan Robinson and Uniswap founder Hayden Adams have cooked up another trading protocol.
ETH Staking Service Lido Aims To Go Fully Decentralized: The Ethereum staking-as-a-service company Lido is aiming to become more decentralized. The project has implemented a skeleton upgradable smart contract for making new withdrawals and new deposits fully non-custodial, according to a blog post. Lido is still seeking an optimal solution to become a trustless node operator.
DeBank Launches DeFi Browser Extension Wallet With “Human-Readable” Features: Competition is heating up in the DeFi browser extension wallet category. DeBank, previously known primarily as a data provider, is the latest to announce a browser extension wallet geared especially for DeFi users.
There’s Still a Chance the Goldman Sachs DeFi ETF Won’t Track a Boomer Tech Index: Goldman Sachs’s proposed DeFi ETF has sparked speculation that the fund has more to do with boomer tech than DeFi — but there’s still a chance the banking giant may redeem itself.
Stoner Cats NFT Drop Sells Out But Would-be Buyers Bite Back Over Failed Transactions: Stoner Cats, the NFT project backed by Hollywood heavyweights Ashton Kutcher and Mila Kunis, released 10K NFTs on July 27 in a much-anticipated drop — but not everyone who participated ended up cool as a cat.
Yield Guild Games Raises $12.5M in 31 Seconds on Token Sale: Yield Guild Games, an investment DAO focused on the use of NFTs in virtual worlds and blockchain games, raised $12.5M in 31 seconds on July 27.
Senate Committee Calls for Crypto Regulations, Labeling Decentralization “Phony”: On July 27, the U.S. Senate Committee on Banking, Housing and Urban Affairs conducted a hearing to explore potential regulation needs for the cryptocurrency sector. The hearing, titled “Cryptocurrencies: What are they good for?,” largely centered around whether or not the industry’s claims of “decentralization” actually hold up to scrutiny.
Decentralized or Not? The Uniswap Protocol and Interface Are Different Beasts: Uniswap is one of the few DeFi protocols that runs fully permissionlessly, without interruptions or possible human intervention. It’s considered to be the gold standard for the space, which is why it was so jarring when management behind the decentralized exchange decided to remove 100 tokens from its interface.
Robinhood Plans to Bolster Crypto Post-IPO: Retail investor-focused stock trading app Robinhood plans to bolster its crypto functionality.
Are the Bulls Back? Crypto Markets Were Whipsawed With Amazon News: Crypto markets were showing impressive strength to start the week, on track for a sixth straight day of gains —until news headlined caused prices to trip mid-run.
Thanking all the amazing Defiers for the support and love this week (and always)!
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)