YAM, Spaghetti and Shrimp; DeFi Traders Still Hungry for Yield

YAM refuses to die, $200M in spaghetti money, xTokens' plans to make SNX staking easier.

Hello Defiers! Here’s what’s going on in decentralized finance:

  • YAM getting a second life

  • There’s +$200M in Spaghetti Money

  • xTokens launched SNX staking with a hiccup

  • dYdX to join Layer 2 club

and more :)

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Yam Prepares for Second Life

By Cooper Turley

Yam Finance, the yield farming sensation which aggregated $600M in assets in less than 48 hours before being shut down, is set to see a second life.

The team that became instantly DeFi (in)famous for its brash launch, is now moving more carefully. After receiving $115k in donations to seed a security audit, Yam presented a two-phase rollout in which the protocol transitions to a fully audited system.

More on YAM here

Migration

In the great DeFi migration, YAMv1 holders will migrate to YAM2 - a 1:1 match of YAMv1 with no rebases in place. YAM expands and contracts (or rebases) its supply twice a day to keep its $1 peg. 

Once the results of the audit have been implemented, YAM2 will undergo a migration to YAM3 - the final form of the protocol (for now) which incorporates all code updates and re-enables both rebases and community governance of Yam’s treasury in Curve Finance’s liquidity pool yCRV.

Farmers Still Farming

Despite V1 marked as a failure, optimistic farmers have continued to farm YAM, with roughly $175M in DeFi tokens still staked in the protocol.

And while new food coins like PASTA, SHRIMP and TACO are coming to eat YAMs lunch, the protocol’s team is doing its best to compensate those who banded together to save V1.

Quick History

As a quick refresher, Yam held its first (and only) governance proposal to try and save the YAM treasury from a bug which caused infinite rebasing. A minimum of 160,000 YAM was needed in a governance vote to issue a proposal for a fix, and YAM holders had to delegate their tokens to reach this threshold. 

Despite reaching the target, the infinite rebases made it impossible to reach quorum , rendering the proposal useless and V1 being shut down.

YAMthusiasts

Now, those who acted to save YAM by delegating (as dictated by this snapshot) stand to earn 1:1 matching rewards in future iterations of the protocol subject to a community vote.

For YAMthusiasts, the next week will show whether or not YAM can continue to aggregate its dominant standing among yield farmers.


There’s Now +$200M in Spaghetti Money

Just when you thought DeFi couldn’t get any crazier, there’s $PASTA.

Yield farmers have poured more than $200M in the new Spaghetti Money protocol, which went live less than 48hrs ago, with no audits or known team.

“Why have spaghetti code when you can have spaghetti money?” they asked in their Medium post.

Image source: Medium

Users will be able to stake COMP, MKR, SNX, WBTC, yaLINK, LEND, WETH and YFI in exchange for PASTA tokens —1 million tokens will be distributed per pool and the total supply will be 15 million. The pools will be live for 7 days.

The protocol will then offer staking rewards for a yyCRV/PASTA Uniswap pool, which will last for 21 days. After this, there will be no more tokens distributed and will be impossible to mint additional tokens.

PASTA is a deflationary ERC20 which burns 1% of the value spent in every transaction and the protocol has no governance.

“Frankly, we didn’t feel comfortable trying after YAM,” the team wrote.


xTokens Launches xSNX with a Hiccup

By Cooper Turley

Staking on synthetic assets protocol Synthetix could become easier —the solution is there. Now it needs to fix a bug in its code.

xTokens, which are tokenized representations of staking strategies, yesterday released xSNX for staking SNX in Synthetix.

With Synthetix, users can stake SNX to mint a native stablecoin - sUSD - in exchange for SNX inflation and a portion of trading fees. With current gas prices, minting and claiming staking rewards have averaged between $50-100 per transaction, boxing many small stakers out.

Set-and-Forget

Now, users can use ETH or SNX to mint xSNX - a set-and-forget token requiring no active participation from holders while capturing all staking rewards and trading fees.

xSNX uses newly minted sUSD to target a 75% exposure to the ETHRSI6040 TokenSet and 25% in vanilla ETH. This lets holders stay long ETH while combating downside volatility when the TokenSet rebalances to USDC.

Samczsun to the Rescue

Shortly after deployment, DeFi’s unsung hero Samczsun brought a vulnerability on xSNX to light. Minting was immediately disabled and all collateral was removed before any exploits could occur. 

While all funds are SAFU, xTokens will have to regain community trust upon redeployment.

For context, xToken’s first token xKNC has been running smoothly since its launch two months ago, with just over $250k in AUM voting on behalf of users in the KyberDAO. xToken’s will soon look to deploy a wrapper for BNT, allowing users to capture Bancor V2’s highly lucrative trading fees with xBNT.


dYdX Joins Layer 2 Club

By Sebastian Aldasoro

dYdX, the 6th DEX by trading volume, is planning to use  Layer 2 scaling solution StarkWare to provide a faster and more efficient platform to investors. 

Faster Trading

dYdX will power its perpetual contracts with StarkWare’s STARKEx solution, by the end of the year. Investors will be able to trade the BTC-USD and ETH-USD perpetual contracts at a similar speed than what centralized exchanges offer. dYdX plans to eventually add more trading pairs. dYdX will join DeversiFi (also powered by STRAKEx) and Loopring in using ZK-Rollups technology.

ZK-Rollups

ZK-Rollups technology provided by STARKEx allows matching trades offline, which are later submitted onchain on the Ethereum blockchain. This reduces the amount of gas required for trading and since trades are matched off-chain, users are protected from front-running.

The upgrade will also allow traders to use one single margin account for different trading pairs. Finally, since prices will be attested by STARK-compatible oracles that won’t need to wait for block validations to be used in the system, flash crashes and exploits should be reduced. 


Tether Integration is Live on OMG Network

OMG Network, a Layer-2 scaling solution for transferring value on Ethereum, said Tether is live on its value transfer layer. The move aims to help reduce Ethereum congestion and gas fees, and improve transaction speeds.

The integration allows traders to transfer, deposit and withdraw USDt orders with cryptocurrency exchanges including Bitfinex, faster and at a lower cost than on the Ethereum Network.

Why YAM is a Nakamoto Scheme: Hasu for Deribit

“I think the first aspect of YAM’s success was how it did the fair launch that has been popularized by Bitcoin. The main property of a fair launch is “no free lunch,” meaning that everyone has the same opportunity to acquire the token. The only way to do this reliably is to make everyone work for it, and have that work be provably costly.”


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 at $10/month or $100/year, while free signups get only part of the content.

About the founder: I’m Camila Russo, author of The Infinite Machine, the first book on the history of Ethereum. I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.