Week in Review | #38 | 2020
The week in DeFi looked like a poker sequence when you get a three-bet from under the gun than a reraise from middle position and a bunch of calls on the tail end. We haven’t even seen the flop and the pot is massive.
While previous weeks were dominated by upstarts, this one was all about the big-name players. While one often hears that the industry is growing, and there is room for everyone, projects are starting to behave like it is winner take all.
In a seemingly surprising move, Uniswap announced the launch of its own governance token, UNI. Through the summer Uniswap remained one of the few “old” DeFi projects to refrain from launching a native token. Yet, as competitors like SushiSwap tried to exploit this conservatism to steal away liquidity, the project decided to respond.
The distribution is very community-focused, with past users getting rewarded. There will be a Genesis and an Inflation based distribution, with the community slotted to receive over 67% of the total supply.
While the announcement appears to be “out of the blue”, the quick listing by major exchanges reveals that many in the industry were likely in the know about the upcoming announcement.
Binance shows an appetite for DeFi
It feels like the food puns will never end, and there is a big new
restaurant chain opening on the DeFi block. Binance Smart Chain is starting to see its own food menu forming with the likes of BurgerSwap and BakerySwap choosing it over Ethereum.
This does not look like a casual foray into the DeFi space for Binance. The giant announced a $100M fund to support DeFi project development on the new chain. Given its brand, and wide-spreading infrastructure and resources, Binance can make a lot of noise in the space and make team building on Ethereum think twice about suffering through gas fee perils.
As noted by Bounce.finance, which recently announced that it will be launching on Binance Smart Chain after already having launched on Ethereum:
It looks like Ethereum finally has something to worry about.
Where does that leave the rest of the buffet?
It remains to be seen if the launch of the UNI token will deflate the food-token rally. SushiSwap saw the end of the dev fund saga come to a happy conclusion when the capital was returned. Proposals have been voted on, and TVL, despite retreating its highs, at over $700M is still high.
YAM is looking to stage a comeback. This time around, it looks like there was an audit by PeckShield. It remains to be seen if the community will give the project a second chance.
Other projects are also looking for the moment in the spotlight. Some appear to want to address inefficiencies in the space. For example, Pickle is looking to incentivize users to better maintain stablecoins at their intended exchange level. However, with gems like these in its documentation: “Pickle is an experiment that actually gives a shit”, it will be interesting to see if the project can gain trust and deliver.
Tron’s efforts delivering mixed results
There appears to be a blueprint that networks try to follow to establish their DeFi ecosystems. It seems simple:
- build a MakerDAO clone (algorithmic stable coin and loans);
- build a Uniswap clone (AAM for trading and launching new projects);
- build an oracle (dapps need data);
- sprinkle everything with governance tokens.
Tron already has the first two covered with JUST and JustSwap. This has been further strengthened by the announced partnership with Mooniswap.
Now, Cell Protocol may take care of the third one. Chainlink has become the number one brand when it comes to decentralized oracles, but it is very Ethereum centric. Band Protocol looks to be taking up the void on Tendermnit, so it is about time that Tron finds its decentralized oracle solution.
Still, going too quickly could be dangerous. With such a large number of DeFi projects springing up all over the place, it is not always easy to tell the honest ones from potential scams. Tron may have gotten into a bit of trouble, as the Just Foundation whitelisted a project that now looks like one, which may result in nearly $2M in losses for users.
Stumbling towards a security blanket
bZx suffered from yet another attack on its protocol. This one was valued at nearly $8M. However, it looks the team was able to track down the funds and reclaim them from the hacker. Interestingly enough, it looks like PeckShield, which audited YAM’s new version, was one of the auditing firms that missed the vulnerability that enabled the attack.
Cream Finance, also suffered from a coding error, eliciting flashbacks of the YAM disaster. While the aftereffect looks to be less serious, it still highlights how risky all of these new dapps are.
So, it is no surprise that insurance is gaining some interest in the community. For whales pouring millions into DeFi projects, getting some peace of mind may be worth the price of the fee.
Rarible started supporting yInsure insurance as NFTs. With a secondary market now open for protocol insurance, one may wonder how long before there are derivatives being built off of these.
Still, even insurance may not be safe. As yield farming ensued around insurance tokens through the yieldfarming.insure protocol the community briefly saw the rise of the SAFE token. Then a mistake(s) and internal controversy left the project in bad shape.
It looks like FOMO has serious side effects.
More fun and games
Games and NFTs are demanding more and more attention from the industry. With NFT weekly sales volume approaching $1M, NFTs are becoming more than just a niche curiosity.
Games are also branching out. Now CipSoft brings gaming to Lightcoin with LightBriger. One of the key benefits of blockchain for gaming is in-game item ownership, and now this will appear on one of Bitcoin’s forks.
Turner Sports wants to bring NFTs to golf enthusiasts with Blocklete Golf. By introducing NFTs as collectibles in a traditional gaming setting companies may find success in bridging the gap with the retail users.
Regulators offer mixed signals
The $6.1M fine from the SEC on Unikrn may scare some in the industry, as it is still unclear how regulators view the IDOs that have been taking place throughout the summer. Despite the decentralized nature of these distribution token ownership and project management is still highly centralized, and a harsh stance by the regulators could be very damaging for the ecosystem.
On the bright side, the fact that Kraken has been able to obtain a banking charter gives crypto a much-needed foothold in the traditional financial infrastructure. The road to adoption is not simple, but the industry is taking steps in the right direction.
NB: The information provided here is for reference and informational purposes only. This is not investment advice and should not be treated as such.