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👩🏫 (Wednesday) Tutorial: How to Earn Yield on BTC & Take Out an Interest-Free Loan
Hello Defiers! Here’s what we’re covering today,
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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.
NEWS A testnet token created a full on mania at CoinDesk’s Consensus 2021 virtual conference last week, in one of the latest signs even valueless coins can spur engagement and help unite communities.
SO WHAT CoinDesk’s $DESK token had been claimed by more than 1,371 addresses by the end of the conference on May 27. Each wallet claimed an average of about 25 tokens and “purchased” three NFTs on average, meaning around 4,000 NFTs were acquired in total. While no money was exchanged and the coins could only be used within the conference’s ecosystem, it still inspired holders to band together in messaging app Discord, create memes and seek to collect as many tokens as possible.
SOMETHING NEW “We wanted to make the virtual event experience more fun and engaging for attendees,” said Aaron Stanley, managing director of events content at CoinDesk. “We realized that by the time Consensus rolled around, people would be pretty tired of Zoom webinars, so we needed something new that could make the experience more interesting for attendees, speakers and sponsors.”
TLDR First came the tweet, then countless discussions and debates followed. Within days, voila! A governance proposal materialized.
SWAPS This pattern is rapidly becoming the norm for DeFi protocols. This time the initiator was Sam Kazemian, the founder of Frax Finance, a protocol for a fractional-algorithmic stablecoin. His tweet suggested that Sushiswap, the automated market maker, should release a blockchain that facilitates swaps between assets on the other blockchains that run on its platform.
SO WHAT The idea is that such a move would address how Sushiswap’s liquidity is currently fractured across blockchains, said Dave Liebowitz, head of growth at smart contract automater Gelato, in the followup proposal. The value locked in Sushiswap deployments on the Ethereum, Polygon, and Fantom blockchains were at $4.3 billion, $649 million, and $65 million respectively at the time of writing.
TLDR DeFi is going to Washington. A group of influential Uniswap users are proposing the formation of a DeFi political defense fund to address government action aimed at cryptocurrencies. At the top of the list: the Biden administration’s 2020 budget proposal, which includes a potential expansion of cryptocurrency asset reporting requirements
LOBBYING FUNDS While many investors in the DeFi space are against centralized governments interfering with their crypto assets, the Uniswap governance proposal has been controversial, too. Not all agree that a single organization such as Uniswap, the decentralized finance protocol used to exchange digital tokens, should get to decide how to deploy lobbying funds and speak for the community.
FIRST MOVE That didn’t stop the Harvard Law School Blockchain and Fintech Initiative (HLSBFI), a student organization that promotes education and career development, from drafting a Uniswap governance proposal on May 27. Called “Funding a Political Defense of DeFi” the plan is known as a “temperature check”– a designation for Uniswap governance proposals seeking to gauge community sentiment and feedback. The pitch could be the first move in the political halls of power for the DeFi movement. Uniswap founder Hayden Adams also tweeted the proposal.
Liquity is a decentralized borrowing protocol that allows you to draw interest-free loans against Ether used as collateral. Loans are paid out in LUSD (a USD pegged stablecoin) and need to maintain a minimum collateral ratio of 110%. In addition to the collateral, the loans are secured by a Stability Pool containing LUSD and by fellow borrowers collectively acting as guarantors of last resort.
TUTORIAL Background on Protocol: For all the innovations in DeFi the last few years, few have garnered more love and adoration than vaults by Yearn Finance. Yearn created vaults like yUSD to offer exposure to automated strategies for stacking yield, often in the form of interest, trading fees, and pooled rewards sold for profits.
STABLECOIN HOLDINGS Two projects that drew inspiration from Yearn are DeFiDollar and Badger Finance. DeFiDollar is a multi-chain DeFi protocol building a range of products for including indexes, yield diversification, and how to enable capital efficient loans. DeFiDollar previously created a stablecoin index called DUSD to mitigate the risk of volatility and systemic failure in stablecoin holdings, which is very similar in its utility to yUSD.
LINEUP Badger Finance is a DAO self-described as “dedicated to building products and infrastructure to bring Bitcoin to DeFi.” Similar to vaults by Yearn, Badger Finance has introduced a lineup of products called Sett Vaults for automating strategies to provide liquidity, earn yield, and ultimately accrue more tokenized BTC on Ethereum.
🔗 Pods Demo Release: The options awaken. Live on Polygon
After 3 months of beta testing and improvements on Kovan and Mumbai, we’re moving to the next testing phase for Pods. We’d like to present the official demo release for Pods.
What to expect?
The system is live on Polygon with a TVL cap of 200,000 USD distributed among two options series:
LINK:USDC | Strike: 27| IV: 220% |Expiration: June 11th, 2021
MATIC:USDC | Strike: 1.70| IV: 275% | Expiration: June 11th, 2021
🔗 The merge is just around the corner. But what is the merge exactly?: @_jefflau
🔗 With the “meme coin” hype blowing up I thought it’d be nice to have a bit of a refresher, & go over some of the cool projects with real use cases that are ACTUALLY being built on $ETH: @CroissantEth
🧑💻 ✍️ Stories in this newsletter were written by Dan Kahan, Owen Fernau, and edited by Edward Robinson 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).