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🧑🏫 Tuesday Tutorials: DeFi Simulator & Yield Farming the Crypto Market Cap
Hello Defiers, here’s what we’re covering today,
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🙌 Together with:
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, a capitalization-weighted index that tracks the performance of selected DeFi assets across the market.
TLDR ETH broke through the $3k milestone on Sunday and reached a new all-time high above $3,300 on Monday with its market cap just under $3.8B. The massive price surge hasn’t been fueled on hype alone. From NFTs to DeFi to the fee market update EIP-1559, the Ethereum ecosystem is going through massive innovations that are making everyone from institutional investors to celebrities turn their heads.
NFT EXPLOSION Q1 NFT sales for 2021 topped $2B, compared to $93M during the previous quarter. The pandemic has led to large-scale interest in digital assets that drew many newcomers to the broader crypto space. Then, a number of high-profile NFT sales in late 2020 and early 2021, like Beeple’s “The Complete MF Collection” and the 140 ETH Ape Punk, drew significant attention to the market.
INSTITUTIONAL INTEREST In April, major banking companies including JP Morgan, Mastercard, and UBS invested $65M into the Ethereum software development firm ConsenSys. And the European Investment Bank, the publicly owned lending arm of the European Union, recently sold a 100M euro bond registered on the Ethereum blockchain.
In February the largest digital currency investment group, Grayscale, purchased 15,521 ETH over a 24 hour period. Currently, their Ethereum Trust holdings include $10B in assets, and they plan to launch an ETH ETF in the coming months.
DEFI At the beginning of 2021, there was $16.1B Total Value Locked (TVL) in DeFi on the Ethereum blockchain, according to data from DeFi Pulse. At the time of writing on May 4, TVL is up to $77B, a 378% increase. This suggests that, unlike Bitcoin, people aren’t just HODLing ETH. They’re actually using it, which helps to justify ETH’s ever-rallying price.
EIP-1559 EIP 1559, a proposal to standardize Ethereum gas fees for both users and miners, is scheduled to be implemented during Ethereum’s London hard fork in July. The upgrade transforms the fee mechanism and has the potential to essentially decrease the total amount of ETH available, which would make ETH a deflationary asset. Many Ethereum community members view this as a major improvement for user-experience and also believe it will push the ETH price up.
The 0xHack is a two-week-long hackathon organized by ETHWorks, Golem, Matic, that’s open to hackers from all over the world. We'll provide workshops, demos, and more in order to facilitate onboarding into blockchain and fine-tuned documentation and world-class tech support for crypto veterans and blockchain beginners alike.
The hackathon starts on May 14th and will end on June 2nd.
There’s up to $35k in prizes:
Golem Network: Open Internet: $10,000
Polygon: Layer 2: $10,000
EthWorks: Infrastructure: $10,000
Ramp Network: FinTech: $5,000
With support from: Ethereum Foundation, DevCon, Starkware, ENS
Build the tech stack of tomorrow mentored by some of the biggest thinking brains in the Ethereum ecosystem.
Help blockchain beginner developers build their first crypto project.
Work on a myriad of use-cases and different technologies
Learn from the greatest minds behind the Ethereum ecosystem.
We'll provide workshops, demos, and more in order to facilitate onboarding into blockchain and fine-tuned documentation and world-class tech support for crypto veterans and blockchain beginners alike.
Using InstaDapp's built-in DeFi simulator you can get a feel of how lending, borrowing, and liquidity providing works in DeFi, without spending the fees.
We will be hosting a weekly tutorial on the most compelling opportunities to consider yield farming, written by our friend DeFi Dad, an advisor to the Defiant and the Chief DeFi Officer of Zapper. The goal is to expose more Defiant readers to new DeFi applications and their associated liquidity mining programs.
Background on Protocol: Over the years, you’ve probably heard friends and family call you both a degenerate and a genius for being in crypto. While the ups and downs of bull and bear cycles create very different market conditions, one truth we all tend to agree upon is that over the long run, crypto will grow! It doesn’t matter what maximalist tribe you belong to, we all fall under the larger umbrella that is crypto.
If you were ever asked “will the total crypto market cap go up over time?” you’d probably say yes. Up until now, making that bet has meant patiently DCAing into tokens over the long haul and hodling through the worst of bear markets, but what if an index gave you real-time price exposure to total cryptocurrency market cap?
TCAP by Cryptex Finance has tokenized that bet! TCAP is a fully decentralized ERC-20 compatible smart contract that tokenizes real-time Total Market Capitalization from all cryptocurrencies and tokens listed on the largest crypto data providers in the world. It’s a new, 200% fully backed, fully collateralized asset that’s both audited and accurately representative of the entire cryptocurrency complex by total market capitalization.
The team behind TCAP, Cryptex Finance, was cofounded by Preston Van Loon, the Founder of the notable Eth2 research team Prysmatic Labs. TCAP provides a unique product for investors to gain exposure to the entire cryptocurrency market. You might even consider TCAP the S&P of crypto. Investors now have an option to gain the exposure to thousands of cryptocurrencies without the risk associated with any one of those particular currencies.
Opportunity: To bootstrap TCAP liquidity, Cryptex offers yield farming rewards with their governance token CTX, currently at a rate of 65% APY for staking the SushiSwap LP from the TCAP/ETH pool. You end up with 50% TCAP exposure and 50% ETH.
Time to Complete: 5 mins if paying the recommended FAST gas price on gasnow.org
Gas + Protocol Fees: Based on the FAST gas price on gasnow.org currently between 40-80 Gwei with ETH at $3200-$3400, I would estimate paying the following gas fees.
Adding liquidity to TCAP/ETH LP = $60 to $130
Staking LP = $30-$50
TLDR The Maker Foundation is sending 84K MKR tokens, worth $512M at the time of writing, to its DAO’s Treasury. The move is a major step towards further decentralizing the protocol. MKR holders will now decide via governance how the 84K tokens will be spent. Tokenholder governance will also oversee employees who were previously supported by the Maker Foundation.
SO WHAT Most DeFi projects hold decentralization as a north star, setting out a path to progressively get there. MakerDAO, one of the foundational DeFi projects, following through, will likely help set a standard to follow. The Foundation’s dissolution also minimized regulatory risk, as the DAO isn’t a legal entity. On the flip side, Maker will now be more accountable to its community as all decisions will come under MKR holders’ jurisdiction.
“Big big news for us in the Maker Community, everything has been done with one objective, decentralization,” Nadia Alvarez, who does Latin America-facing business development for Maker, said of the change. “The Foundation is getting dissolved, various core units are starting their business thanks to the support of the Maker Governance, and we are seeing how this has an incredibly positive impact on the community, making it stronger.”
MKR GAINS The market apparently responded well to the news, as MKR hit an all-time high of $6,292 yesterday, at one point the second biggest 24-hour gainer among the top 100 tokens in CoinGecko. It has since retraced some of those gains and is now trading at $5,306.
CORE UNITS In order to receive support from the DAO instead of the Maker Foundation, “core units,” the divisions of business which support the Maker protocol need to go through the “Core Unit Framework.” At least ten teams have created proposals to continue operations under MakerDAO’s supervision, including Alvarez’s Growth Core Unit, which will be starting to work for the DAO this month along with the Protocol Engineering Unit, said Sébastien Derivaux, who works on the Real-World Finance Unit.
“Bankless DAO is a decentralized community to coordinate and propagate bankless media, culture, and education. It’s goal is to drive adoption and awareness of truely bankless money systems like Ethereum, DeFi, and Bitcoin. It achieves this goal through the collective participation of its community.”
✊ Head to THEDEFIANT.IO for more DeFi news 📰
🧑💻 ✍️ Stories in this newsletter were written by Dan Kahan, Owen Fernau and DeFiDad, and edited by 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).