Discover more from WE'VE MOVED TO thedefiant.io
🦄 Recap: DeFi Week of Oct. 3
Hello Defiers! Happy weekend!
Scoops & exclusives. There’s few things sweeter in the media game and The Defiant brought you a nice run of news this week on many of the most important players in the space. The ever industrious Owen Fernau broke news on the DeFi Alliance’s big new hires and then followed that with a story on how Abracadabra’s stablecoin raced past $1B and spurred talk that it could overtake mighty MakerDAO. If all that wasn’t enough, Owen also reported on the Cryptotoadz explosion (Snoop Dogg in the mix) and how Avalanche’s Rush incentive program won over the likes of Curve and Aave. And at the end of the week, yyctrader fired in with a report on how Polygon raised its gas price by 30 times to combat scammer. Whoa.
Speaking of MakerDAO, Brady Dale dug deeper into the lending deal it inked with French investment bank Société Générale last week. The transaction involves MakerDAO financing real-world assets like bonds, and the experiment may augur major ramifications for the DAO and DeFi at large. It’s a deep dive you won’t find anywhere else.
The Defiant also published an important two-part call to action by Connor Spelliscy and Holmes Wilson on the crypto community’s looming struggle in Washington. The authors posit that the industry faces an “existential threat” from unwise and unjustified regulation, and they lay out a clear-eyed and thorough analysis of the road ahead, and a how-to-fight-back primer chock full of useful organizations, links, and strategies. It’s a crypto advocacy kit for the battles to come.
Meantime, The Defiant itself made news with the launch of our waiting list for The Defiant Terminal, a DeFi data dashboard that will work in tandem with our content. Naturally, we are giddy at the prospect of bringing order to the unruly sea of numbers that sloshes around the DeFi scene these days, and we can’t wait to unveil the product itself. Stay tuned!
One of the core values our terminal will leverage is collective intelligence. In this week’s podcast, Camila Russo delves into that very topic with Jamie Rogozinski, the founder of Wall Street Bets, the outfit that epitomizes a new era in the capital markets. And Robin Schmidt concentrates his formidable intelligence on exploring the strange and beautiful world of Pak, the renown crypto artist, in a two-part feature on The Defiant’s YouTube channel.
On the research side of the house, we have two reports this week: DappRadar surveys the state of play in NFTs with an eye on that most important question: Is this all just a bubble? And our partner Global Digital Finance looks at the institutional mojo in the crypto markets, with a focus on giants Fidelity and HSBC. As always, you can find links to all these pieces of content below. Enjoy!
The open economy is taking over the old one. Subscribe to keep up with this revolution. Click here to pay with DAI (for $100/yr) or sub with fiat by clicking on the button below ($15/mo, $150/yr).
🙌 Together with:
Balancer, one of the leading DeFi automated market makers (AMM) for multiple tokens. Dive into their pools at https://balancer.finance/
Kraken, consistently rated the best and most secure cryptocurrency exchange, which can get you from fiat to DeFi
Aave, an open-source and non-custodial liquidity protocol where users can earn interest on deposits and borrow assets.
The DeFi Pulse Index, by Index Coop - DPI is the easiest way to capture the upside of DeFi with the benefit of diversification. Buy DPI today on your favorite DEX.
We’re excited. We’re getting ready to launch The Defiant Terminal, a platform for investors and analysts to track all DeFi data in one place. Join the waitlist today to be notified as soon as it’s live. You’ll want to be the first to get your eyes on that alpha.
In this week’s episode, I interview Jaime Rogozinski, founder of Wall Street Bets, the famous Reddit trading group which earlier this year organized to push up the price of heavily shorted stocks like Gamestop and AMC to create a short squeeze, which had the double benefit of amplifying the group’s gains and screwing over big hedge funds. Jaime goes over what led him to create the subreddit back in 2012 and how it grew into several thousands and then millions of members.
🎙 "Wall Street Bets Taught Me to Have Faith in the Collective Intelligence:" WSB Founder Jaime Rogozinski
📬 Inbox Dump #27
Hello Defiers! Welcome to Inbox Dump where we include the updates and announcements that flood our DMs each week and didn’t make it to The Defiant’s content platforms. Sometimes announcements here didn’t meet the bar to become a news story, sometimes they may have slipped through the cracks, or they came late and we haven’t had a chance to cover.
At The Defiant we cover the most important DeFi-related news and developments but we know many of you are hunting for projects before they are fully developed and before they are newsworthy. Our goal with this installment of the newsletter is to help you find them. Look at this as the starting point to DYOR.
We also include a compilation of DeFi and crypto funding rounds in the past week so you have these in one handy place.
Keep in mind these have been unedited. With that —here we go!
[This post is exclusive to subscribers]
After reporting on Société Générale’s experimental lending deal with MakerDAO last week, Brady Dale got curious about its mechanics and the broader ramifications of the TradFi-DeFi hookup. In this feature, Brady pulls back the curtain on the opportunities and challenges of bringing real world assets on-chain.
REAL WORLD DEALS Société Générale’s request for a $20M loan from MakerDAO is just one of several real-world deals that the DeFi protocol has coming soon. The O.G. decentralized finance protocol is on the move to fund projects that will make tangible differences in the world. That potentially includes MakerDAO founder Rune Christensen’s push for the organization to help combat climate change.
SOLAR ARRAY The organization has seven deals involving traditional assets in the works, including SocGen’s, according to Sébastien Derivaux, an economist in Maker’s decentralized autonomous organization (DAO) focused on real world assets. In an interview he said other transactions would contribute to financing farmland in Iowa, a film, and a solar array in New York state.
DEAL FLOW MakerDAO has already closed five deals for loans collateralized with real world assets, starting with those backed by real estate for New Silver. Three of the deals aren’t live yet. The fact that an upstart DAO is getting deal flow with Europe’s seventh biggest bank is an important moment in the development of DeFi. Unpacking how MakerDAO is using real world assets shows the rest of DeFi the pitfalls and opportunities on the road ahead.
The Defiant Essay Part 1
Call it a manifesto, a warning, or a polemic… The truth is, this remarkable two-part essay by Connor Speliscy and Holmes Wilson is all of those things and more — a cri de coeur as DeFi faces an inflection point and a Cartesian analysis of the challenges, and opportunities, before us…In Part 1 , they argue that DeFi is confronting an existential crisis. The cause: unwise and unjustified regulation that could thwart the promise of the crypto movement.
INFORMATION EMPIRE Smart contracts may be unstoppable, but the crypto industry is not. The U.S. government’s blessing has been crucial to every modern information empire. While states have no master key that can shut down crypto, they can make it so expensive and high-risk for users to interact with crypto that the vast majority of their populations, and all of their institutions, will abandon it.
ROBUST ENFORCEMENT This is particularly true in countries like the U.S., where the government has robust enforcement arms. The implications of an anti-crypto regulatory consensus would be far worse than the value of your entire crypto portfolio dropping through the floor.
ANTAGONISM Don’t let the limited government intervention so far lull you into a false sense of security. While good actors in the crypto industry have had a great run with negligible antagonism from Western governments, that appears to be changing quickly under the new U.S. administration. There is hope for the industry but only if we all take action.
Where we are now: the crypto industry as we know it is on course for destruction
THREAT The crypto industry is facing an existential threat, one that can only be neutralized by collective community action. Western governments are accelerating their regulation of crypto. Recent examples include the expansion of the definition of broker in the U.S. to potentially include many stakeholders in crypto; the ratcheting up of enforcement efforts by US regulatory agencies targeting the crypto industry; and the European Union’s development of the Markets in Crypto-assets (MiCA) proposal.
REDUCE FUD Regulation is not necessarily problematic — governments play an important role in supporting and overseeing most industries. But antagonistic and draconian regulations will slow the development of the industry or much worse, cripple it, while clear and reasonable regulations would reduce FUD and stimulate further innovation. The crypto industry is at an inflection point.
The Defiant Essay Part 2
Call it a manifesto, a warning, or a polemic… The truth is, this remarkable two-part essay by Connor Speliscy and Holmes Wilson is all of those things and more — a cri de coeur as DeFi faces an inflection point. In Part 2, they issue a call to action and lay out a primer for mobilizing the community to rescue the movement from regulation that could significantly impede, or even cripple, the crypto industry.
ADVOCACY The crypto industry has huge advantages over other information technology industries. Our organizational tools, capital, and passionate grassroots support (from highly connected retail investors and early adopters) enable us to run substantial education and advocacy campaigns. Historically, new entrants were nowhere near as well-equipped to advocate for their technology and were overwhelmingly outmatched by incumbents.
FUNDING The following are some ways to mobilize these inherent advantages to achieve political safety:
Fund Crypto Public Goods Tech
Funding and promoting initiatives that highlight the crypto industry’s potential for good helps improve the narrative for crypto among policymakers and regulators. That increases the likelihood they will progressively adopt a more favorable outlook for crypto and provide support for crypto advocacy organizations.
These initiatives should also be demonstrably helpful for the non-crypto public.
Potential Next Steps
Support existing public good grants programs
Create your own public goods grants program
SUPPORT Create a dedicated grants program that funds projects that accelerate crypto public goods technology. This is likely more appropriate for an organization with more resources, but groups like Uniswap, Compound, Aave, the Interchain Foundation, and the Ethereum Foundation have grants programs which, at least in part, support these initiatives. For instance, your grants program could support projects that are providing public goods that could not be provided without crypto.
Special Report: The Future of NFTs
n this special research report for The Defiant, DaapRadar goes deep on the state of play in the runaway NFT scene and unpacks what will separate the truly innovative applications from the fluff. Check it out:
TLDR Are NFTs a bubble? That’s been the burning question ever since the first specimens of this breakthrough application on the Ethereum blockchain captured the imaginations of crypto heads and non-crypto fans alike. In this research piece for The Defiant, we will unpack this query as definitively as possible. And what better place to start than with definitions themselves.
2021 – The year of the NFT
EXPERIMENT NFTs (short for Non-Fungible Tokens) are not something new. The idea of tokenizing an asset in a manner that each representation is unique, has been around for quite some time. NFTs have their origins in 2013 with Colored Coins, a colorful representation of bitcoin coins. However, these tokens presented technical flaws and were just an experiment. Yet the foundations for a future revolution were set.
CRYPTOPUNKS In June 2017, Matt Hall and John Watkinson created 10,000 unique characters generated on the Ethereum blockchain. The number of these characters could never change and no two items would be identical. The two creators let anyone with access to the Etherum network claim their creations for free and the CryptoPunks were officially born.
FLASH FORWARD A few months later, CryptoKitties, a game that consists in trading and breeding digital was brought to the light, paving the way for NFTs to be recognized beyond the blockchain sphere. Flash forward four years and you will find a market that attracts 108,000 Unique Active Wallets per day whilst generating $5.2 billion in a single month.
EVOLUTION By 2021, the blockchain industry was showing clear signs of a sustained evolution. The movement called DeFi, short for Decentralized Finance, was in full flower. The environment surrounding the industry was no longer just about trading cryptocurrency and embedding blockchain technologies into real business models. The real sensation of getting rid of the middleman was truly ground-breaking and managed to capture the attention of thousands.
The latest installment of GDF’s research focuses on one of the team favorite topics — institutional embrace of DeFi. Lots of good nuggets here!
TLDR In 2017, the ICO boom helped propel crypto assets to record levels only to fall almost as precipitously. With that history it is perhaps only natural that 2020-21’s extraordinary increase in activity has been greeted by mainstream attention, albeit with some hesitancy from media commentators who are yet to be convinced that the crypto-sphere is anything more than hype.
KEY THEME However, as The Economist’s recent cover story analysis of DeFi shows us, the tide is turning on this narrative, perhaps reflecting the sustained interest from institutional players, which has become a key theme for Digital Assets in 2021.
CONVERGENCE Fidelity Digital Assets released research this month showing that US and European interest in digital asset investment products had increased by 12 percentage points year on year. In the US, the survey revealed that investors prefer accessing products through traditional financial firms, reflecting the current convergence between institutions and crypto.
PORTFOLIOS “The interest expressed in both owning digital assets directly or through a variety of investment products is yet another indicator of the maturation of digital asset markets, the diversity of participants and progress in how these investors are viewing digital assets’ role in portfolios,” said Tom Jessop, president of Fidelity Digital Assets.
👨🏻🏫 Defiant Degens: Killing 2 Birds with 1 Farm: How to LP and Earn a Possible Future Arbitrum or Hop Token
This is a weekly tutorial on the most compelling opportunities in yield farming, written by our friend DeFi Dad, an advisor to The Defiant and Head of Portfolio Support at Fourth Revolution Capital (4RC).
AIRDROP One of the biggest windfalls in DeFi portfolios is an airdrop. It’s “Uptober” and aside from green candles, we’re seeing Ethereum L2s just beginning to take off with the recent anticipated Arbitrum launch in September. With L2s, we also see a demand for fast and reliable bridges. Hop Protocol has been one of the few new leaders to step up in this surge of DeFi interoperability.
AVOID HIGH FEES Hop provides a scalable rollup-to-rollup general token bridge, allowing users to send tokens from one rollup (ie Optimism, Arbitrum) or sidechain to another almost immediately without having to wait for the network’s challenge period. Why’s that such a big deal? Because the average DeFi user is not going to wait 7 days to withdraw assets from Optimism or 4.5 hours from Arbitrum to get back to Ethereum L1. Even more promising is Hop’s bridge between L2s, which shows us a future where we avoid the congestion and high fees on Ethereum L1.
NATIVE TOKEN In order for Hop to work, the protocol requires market makers, called Bonders, who front the liquidity at the destination chain in exchange for a small fee. This credit is extended by the Bonder in the form of hTokens, which are then swapped for their corresponding native token in an AMM.
Polygon Hikes its Minimum Gas Price by 30x in Bid to Foil Spammers Polygon, the sixth-largest blockchain by assets locked, is increasing the minimum gas price for transactions on its network by a factor of 30.
Fei Protocol is Still Swinging After Rocky Start and Launches v2 Fei Protocol is fighting to make a comeback. Back in April, the project’s stablecoin, meant to maintain a $1 peg, dropped as low as $0.92 after raising 639,000 ETH, worth $1.3B, in its highly anticipated launch.
Yearn Finance Launches on Red Hot Fantom and Goes Multichain The yield aggregator, Yearn Finance announced last night that it has gone live on Fantom and incorporated the blockchain into the new version of its user interface.
RBN Airdrop Holders Hit Jackpot as Ribbon’s Token Becomes Transferable First DYDX, now RBN. After governance rejected a proposal to make RBN transferable in June, a second go-round passed, garnering over 99% support from voters. The unlock happened at 12pm UTC on Oct. 7 and was a windfall for investors who received tokens in an airdrop because they could finally sell them.
DeFi Powerhouses Curve and Aave Deploy on Avalanche to Profit from Incentives Incentives work. Or at least they do in terms of wooing DeFi protocols to deploy on other blockchains. Case and point, Curve Finance, the automated market maker, and Aave, the leading DeFi lending project, have each deployed their offerings on Avalanche as a part of the blockchain’s $180M incentive program called Avalanche Rush.
Abracadabra’s Stablecoin Races Past $1B and Sparks Talk of Overtaking MakerDAO New collateralized stablecoin, Magic Internet Money (MIM) is challenging MakerDAO, the grandaddy protocol of DeFi. MIM, issued by lending protocol Abracadabra, broke $1B in supply on Oct. 5, placing it seventh overall in terms of stablecoin market cap, according to CoinGecko.
Vibe! Cryptoadz Floor Price Soars as Snoop Dogg and Other NFT Buyers Pile In If someone types “!vibe” into Cryptoadz’s Discord, a bot prints out what looks strangely like five turtles bobbing their heads. Why turtles? Who knows, and maybe who cares for holders of Cryptoadz.
Exclusive: DeFi Alliance Announces New Hires as Web3 Continues to Attract Talent Web3’s growing market cap continues to serve as a magnet to bring talent into the blockchain-enabled space. DeFi Alliance, the startup accelerator akin to Y Combinator but for DeFi, has poached three superstars who hail from Blackrock, Facebook and Lambda School.
Rune Christensen Makes Rallying Cry for MakerDAO to Help Fix Climate Change Climate change is the unifying challenge of the era and the biggest problem humanity is running out of time to solve — and MakerDAO can help.
Wintermute Wants to Become MKR Market-Maker Via Governance Vote Market-making deals are usually sorted out in private, but DeFi might be making headway for transparency. Wintermute proposed a market-making deal with MakerDAO on Friday via the MakerDAO governance forum.
Thanking all the amazing Defiers for the support and love this week (and always)!
🧑💻 ✍️ Stories in The Defiant are written by Brady Dale, Owen Fernau, Bailey Reutzel, and yyctrader, and edited by Edward Robinson, Bailey Reutzel, and Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was 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.