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💰DeFi Fixed Lending Might Get Big Backer
Also, Ethereum transactions vs Bitcoin, Alpha Homora token is flying
Hello Defiers! Here’s what we’re covering today:
Ethereum transactions are highest since 2017 as price hovers near record
MakerDAO proposal has potential to boost DeFi fixed-rate loans market
Alpha Homora TVL and token are soaring
Binance introduces CRV staking
and more :)
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TLDR Transactions on the Ethereum network continue to outpace Bitcoin’s as momentum for decentralized finance protocols snowballs. ETH is testing all-time highs, but has yet to double in price from its record, like BTC did.
🔢 BY THE NUMBERS Ethereum transactions are soaring near the high reached at the top of the 2017/2018 crypto rally, at around 8.2M weekly transactions, up from 3.5M a year ago, while Bitcoin transactions have been hovering around 2M weekly transactions since 2017, according to Glassnode data as of December.
BUT WHY Ethereum network has gained ground relative to Bitcoin in large part due to the thousands of applications making use of the Ethereum blockchain. As a store of value, transactions on the bitcoin network are more linear, whereas a platform that hosts dApps, protocols and various other projects would naturally have more activity.
🪜 ETH TICKLING ATH Ether is trading below $1,300, having once again tested the upper price limit at $1,480 on Monday. For the better part of a month, Ether traded within a range, forming an ascending channel not dissimilar to what happened in the month of December.
WEN BREAKOUT A breakout could happen in the beginning of February, just in time for the Chicago Mercantile Exchange Ethereum Futures launch on the 8th, if history is any guide.
TLDR Fixed-rate lending has been slow to take off in DeFi. That’s what one of the latest MakerDAO proposals is seeking to change.
Maker Improvement Proposal 43, which is now in the request for comment stage, would enable MakerDAO to buy fixed-rate loans. The goal is that having DeFi’s largest protocol buying tokenized loans issued by other protocols, at more favorable terms, will boost that market.
“The TLM will permit Maker governance to encourage liquidity/target lower rates for fixed-term Dai loans by providing a standing offer to buy loans at a target interest rate,” the proposal says. TLM refers to Term Lending Module.
🤔 WHAT’S IN IT FOR MAKER The proposal argues it would:
Help Dai scale, as new stablecoin would be minted to buy the tokenized loans
Increase protocol revenue from the interest payout on the loans
And improve the Dai peg, by diversifying its collateral
YIELD PROTOCOL The proposal was raised by Yield Protocol founder, Allan Niemerg. Yield Protocol is one of the DeFi projects offering fixed rate loans. Yield is already tightly integrated with Maker, as it uses Maker’s vaults to mint Dai borrowed by its users. The loans are represented by “fixed yield tokens” or fyTokens, which work similar to zero-coupon bonds, and provide a fixed payout at a set maturity date. MIP43 wouldn’t limit MakerDAO to only being able to buy Yield Protocol loans.
NEW DEFI PROJECT ALERT
TLDR Alpha Homora is one of the latest DeFi lending protocols. Its token and TVL are soaring, with ALPHA climbing to join the top 100 coins by market cap, while it has attracted $600M of assets in just four months.
🐦 BIG JUMP ON SMALL NEWS ALPHA jumped by almost 50% to the highest since its launch in October after the DeFi project tweeted on Monday that 0.39% of ETH supply is locked in its smart contracts. That’s $600M, or 11th in DeFi Pulse’s leaderboard.
THEN THERE WERE BIGGER NEWS More substantial news —the announcement of its v2— gave fuel to the rally through Tuesday, with the price soaring from $0.94 at the start of the week to as high as $1.73. ALPHA is now trading at $1.5.
TLDR Binance is offering a new high-yield staking option for CRV holders. Locked CRV staking will be offered on a first-come, first-served basis, and is available for 15, 30, and 60- day durations. Lenders can stake anywhere from one to 5,000 CRV, and earn up to 13.42% APY for a 60-day locked stake.
HIGH YIELD Currently, CRV’s 13.42% APY over a 60-day period is among the higher potential APY options offered by Binance for locked staking. The highest currently available is 24.49% for SUSHI over a 30-day period.
“The crypto community gets a lot of flak from “professional” investors in general, but nothing draws so much ire as crypto's 2017 ICO mania. In hindsight, that ‘froth’ wasn't too crazy. The market corrected significantly in 2018 and 2019, but today, buy and hold ICO investors have absolutely destroyed the S&P,” Messari’s Ryan Selkis wrote.
“We’ve made the difficult decision to hold off on reuniting for a bit longer rather than pushing ahead with our August target. While nothing is guaranteed given the ongoing pandemic, we’re hopeful that a new date announcement is possible soon with the availability of COVID-19 vaccines ramping up now, and updated pandemic-related trends improving. Still, we want to make sure we do this responsibly and that as many people as possible are able to make the trip from all around the world, which seems unlikely by early August,” the EF said in a post.
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🧑💻 ✍️ Stories in this newsletter were written by Daniel Kahan, Owen Fernau, Sydney Lai and Christopher Attard, and edited by Camila Russo. Video was produced by Robin Schmidt and Alp Gasimov.
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 ($10/mo, $100/yr).