Coinbase is considering adding 19 new assets, the SEC tapped CipherTrace for its Binance-specific tracing tools and 132% of Ether wallets are in profit.
Reason senior editor Elizabeth Nolan Brown has done extensive research and coverage on the topic of sex work and joins us in this episode to talk about it from a liberty-minded perspective.
She also takes the time to define sex work vs. sex trafficking and explains how authoritarians use the latter term to punish and harm people who engage in sex work without coercion. She also details how inaccurate studies have led to paranoia about child sex trafficking.
There's conversation about how radical feminism colluded with social conservatives to blur the definitions between consensual prostitution and sex trafficking, how criminalization of sex work protects rapists & abusers, whether there's such a thing as "safe" sex work, as well as the rise of webcamming and web galleries as a way for sex workers to avoid exploitation.
There's talk about the recent Wayfair "scandal," as well as the "happy ending" massage parlor phenomenon and how it has become the #1 way for law enforcement to make themselves look like they are effectively fighting trafficking.
You can't miss this incredibly compelling episode of Proof Of Love!
About the Guest:
Elizabeth Nolan Brown is a senior editor at Reason, where she writes regularly on the intersections of sex, speech, tech, crime, politics, panic, and civil liberties, and president ofthe libertarian feminist group Feminists for Liberty. Her writing has also appeared in publications such as The New York Times, the Los Angeles Times, The Daily Beast, Buzzfeed, Playboy, Fox News, Politico, and Libertarianism.org. She lives in Washington, D.C.
Remember, this is a new show, so if you like it, please be sure to tell 3 friends! Leave a good review on Itunes, and be sure to follow us on our socials!
*You have been listening to Proof of Love. This show may contain adult content, language, and humor and is intended for mature audiences. If that's not you, please stop listening. Nothing you hear on Proof of Love is intended as financial advice, legal advice, therapy or really, anything other than entertainment. Take everything you hear with a grain of salt. Oh, and if you're hearing us on an affiliate network, the ideas and views expressed on this show, are not necessarily those of the network you are listening on, or of any sponsors or any affiliate products you may hear about on the show.
The advisory regarding cybercriminals exploiting the Covid-19 pandemic asks firms to be especially vigilant regarding their dealings with virtual currencies.
We are continuing to explore the addition of new assets for customers around the world.
Coinbase’s goal is to offer support for all assets that meet our technical standards and which comply with applicable laws. Over time we expect our customers around the world will have access through Coinbase platforms to at least 90% of the aggregate market cap of all digital assets in circulation.
We will continue to evaluate prospective assets against our Digital Asset Framework to assess factors like security, compliance, and the project’s alignment with our mission of creating an open financial system for the world. To apply for listing, fill out an application here.
Digital Assets Under Review
Today we’re announcing that we are exploring the addition of a range of new assets. As part of the exploratory process customers may see public-facing APIs and other signs that we are conducting engineering work to potentially support these assets.
Our decision to support any asset requires significant technical and compliance review and may be subject to regulatory approval in some jurisdictions. We therefore cannot guarantee whether or when any above-listed asset will be listed on a Coinbase product in any jurisdiction. As per our listing process, we will add new assets on a jurisdiction-by-jurisdiction basis, subject to applicable review and authorizations. The omission of assets from this publication does not disqualify any such asset from active review and potential listing.
Our customers can expect Coinbase to make future, similar announcements as we continue to explore the addition of numerous assets across the platform.
This website contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of Coinbase, Inc., and its affiliates (“Coinbase”), and Coinbase is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. Coinbase is not responsible for webcasting or any other form of transmission received from any Third-Party Site. Coinbase is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by Coinbase of the site or any association with its operators.
All images provided herein are by Coinbase. All trademarks are property of their respective owners.
Five years later, Ethereum is still chugging along as a decentralized platform for self-executing code. Eth 2.0 is quite close, but for real this time.
The central bank's most senior economist now runs the department responsible for the digital currency task force and working group with other central banks.
Audius, a streaming service built on Ethereum, has raised $3.1 million from Multicoin Capital, Blockchange Ventures, Pantera Capital and Coinbase Ventures.
Cardano is now running as a proof-of-stake network, the Marines banned crypto mining and crypto reacts to the congressional inquiry into Big Tech's market dominance.
With the price of bitcoin hovering near recent highs and some wondering whether we're poised for a pullback, CoinDesk's Markets Daily is back for your latest news roundup.
It didn't really matter to bitcoin traders that the Federal Reserve's meeting this week was so anticlimactic. The real action is ongoing – in the form of more money injections.
"Imagine a world without counterparty risk..." - Chainlink's co-founder Sergey Nazarov shares why the move from brand-based contracts to math-based contracts is inevitable.
Coinbase is an exciting and unique company and as we continue growing, it’s important that we create a strong culture. A few years ago, I wrote in the Coinbase culture doc:
Hire builders We hire people who are passionate about creating new products with technology. We look for entrepreneurs who are comfortable with ambiguity. We prefer to work with people who actually execute toward ideas, instead of just coming up with them. When the creative moment strikes, we try not to let big company process get in the way or slow them down.
Today, I want to expand on this concept, and flesh out what it means to hire builders, so that people thinking of joining Coinbase can make an informed decision.
What do I mean when I say we want to hire builders?
At the root, builders create value in the world instead of taking or destroying it. They help build companies and make products, because they want to improve the world. When builders make things people want, not only do they solve customer problems, they also create jobs, grow the economy, and generate wealth in society.
Builders love working on important and ambitious missions. They know that the only way to accomplish a mission like this is with relentless focus. They try to ignore all of the other things that can distract a company, and keep the team united toward this goal, with everyone rowing in the same direction. They want to know how their work connects to the mission, and try to maximize the percent of their time that goes to delivering customer value.
Builders are pro technology. They recognize that science and engineering are some of the best levers we have to improve the world. In every industry, including education, financial services, healthcare, entertainment, energy, and more, the greatest improvements we’re seeing are coming from technology. Technology is what can help solve the world’s biggest problems, from climate change to improving education. Technology also drives down costs, making expensive initial prototypes eventually cheap enough for everyone. Builders are technological progressives: they believe that by investing in science, engineering, and technology we can create a better world.
Builders are inherent optimists. They believe the future will be better, and they have a plan to get there. They recognize that, over the arc of history, the human condition has improved dramatically, and that this trend can continue, when smart, dedicated people come together to build solutions. They recognize that “a small group of thoughtful, committed citizens can change the world….[and] indeed, it is the only thing that ever has.”
Builders are supportive of others who are trying to improve the world. They recognize that it’s easy to be a critic, but it’s hard to build something new that really helps people. They celebrate people who attempt the impossible and stumble, instead of trying to tear them down or belittle them, because they know how difficult it is to build.
Builders are unusually resilient and determined. They move from one setback to the next with enthusiasm. They know that it took Thomas Edison many attempts to create the light bulb, the Wright Brothers many attempts to achieve the first powered flight, and NASA many attempts (and human lives) to reach the moon. They have the audacity to believe they can achieve the impossible, and pick themselves up, even after repeated failure. They manage their own psychology to keep morale high, especially when the going gets tough.
Builders work hard. They want to join winning teams where sustained high performance is expected from everyone, because they recognize this improves their chances of building something great. And they also work hard because they love it. They find it incredibly fulfilling to work on something that matters. At the same time, they know how to rest and avoid burnout, to improve their productivity and creativity over the long term.
Builders care about profit because a company without profit is less likely to accomplish its mission. More capital means a company can hire more builders to come join the team, and it is an important measure of whether customer value is really being created. They also want to own a piece of the businesses they help create, not only so they can create wealth for themselves and their families, but also so they can invest it in the future.
Builders care about responsibility to society. They only want to build products that are good for humanity, and minimize negative externalities. But they recognize that this is complex: the things people want are not always what is good for them, and any tool can be used for good or bad purposes. They know that they always have to be able to look themselves in the mirror, and believe they are net contributing to society. They don’t believe in taking shortcuts that would temporarily increase profitability. They optimize for the long term goal.
Builders believe in creative disruption and free markets. They want the best product at the lowest price to win, as determined by the customer, to accelerate progress in society. They don’t want any handouts and they don’t want entrenched incumbents to have an unfair advantage. They want their product to survive solely based on whether customers vote for it with their dollars.
Builders take a global perspective because they want to improve the lives of as many people as possible. They know that focusing on the largest market, say the U.S., may only allow them to reach 4.3% of the global population. With technology improving distribution and lowering costs, builders are increasingly able to have a global reach.
With this understanding of builders, my hope is that people can make a more informed decision about whether Coinbase is the right place for them. It takes a wide variety of people to come together and make a company like Coinbase work. We have many roles and opportunities, but we all share some of these values around how to make a contribution to the world.
The mission of Coinbase is to create an open financial system for the world. This is no small task. It’s going to require dedicated focus for many years to come, and there will be many milestones and setbacks along the way. For those who join the team, they will know that they put a dent in the universe, and helped create economic freedom for millions of people around the world. Please check out our open roles here.
The Federal Reserve said Wednesday it would hold benchmark U.S. interest rates close to zero and continue buying Treasury bonds to support the coronavirus-devastated economy.
According to a cybersecurity report by Microsoft, among countries in Asia-Pacific, Sri Lanka faces the highest rate of encounter with such attacks with neighboring India in second place.
Coinbase launches Dai Rewards for customers in the US, UK, Netherlands, Spain, France, and Australia
At Coinbase, we want to offer more ways for customers to earn rewards with their crypto. Last year, for example, we began offering stablecoin rewards to US customers for every USD Coin (USDC) held on Coinbase. We also launched Dai on Coinbase Earn, where customers can earn crypto by watching videos and taking quizzes about different cryptocurrencies.
Today, we’re introducing Dai Rewards, with 2% APY* for customers in the US, UK, Netherlands, Spain, France, and Australia. With yields on savings accounts and government bonds at record lows, earning rewards on stablecoins like Dai and USDC stands out as an alternative way to passively generate income using crypto held on Coinbase.
Stablecoins that aim to maintain a stable value of $1, like USDC and Dai, can be useful because they are not subject to the same volatility as many other cryptocurrencies. This is one reason stablecoins have grown to a market cap of more than $12 billion, as people use them to hold funds without volatility, transfer funds quickly and cheaply, and gain exposure to the US dollar.
Eligible customers will begin earning rewards automatically once they have $1 of Dai in their Coinbase accounts. Initial rewards will be distributed within five business days, then every day following, which means customers can use or withdraw their rewards as soon as they receive them. Customers always maintain control of their funds — their Dai stays in their accounts and can be withdrawn instantly at any time.
To get started with Dai Rewards, customers can simply buy Dai on Coinbase or send Dai to their Coinbase accounts from an external wallet.
*Learn more about eligibility and APY on oursupport centerand our Dai Rewards terms.
Aave will transfer ownership of the protocol to a “genesis governance” built and approved by LEND token holders. It will also swap LEND tokens for AAVE.
With the battle for CBDC dominance in the East heating up and smart contract use skyrocketing as Ethereum turns five, CoinDesk's Markets Daily is back with another news roundup.
CoinDesk has discovered Binance Australia is operated by InvestbyBit, a company that shares directors with tourist crypto payments provider, TravelbyBit.
Bitcoin's rally looks overstretched, according to a technical indicator, but short-term price consolidation looks more likely than a drop, say analysts.
As the dollar faces a diluted world status, cryptocurrencies like ether and bitcoin are soaring, with a popular sentiment index now registering "greed."
An unknown hacker gained access to the wallet maker's marketing database, stealing a million email addresses as well as personal information for 9,000 customers.
Following a recent Supreme Court decision, India's crypto industry is optimistic about the future. But miners still don't know if what they do is illegal.
A new hardware provider is entering the Bitcoin fray with the launch of a cold storage wallet and some ambitious plans to serve Bitcoiners with a full stack of sovereignty tools.
The Boston-based Foundation Devices announced today its new Passport hardware wallet, an air-gapped device that sports a camera for scanning QR codes, a physical keypad, open-source software and a screen with circuitry etched into the glass — all in the name of creating the most secure solution on the market that is also easy for newbies to use.
“Hardware wallets are the most established consumer hardware market in the Bitcoin space, with an assortment of companies competing for market share,” Zach Herbert, the CEO of Foundation Devices, told Bitcoin Magazine. “But in our opinion, none of these incumbents have made a product that, one: strikes the right balance between security and design and, two: makes it easy for new Bitcoiners to self-custody their coins.”
On the security front, perhaps the most notable feature is the Passport’s complete lack of USB or wireless communication, minimizing the attack vectors through which malicious actors might try and access the device. The only ways that data breaches the wallet is through its built-in camera or via a microSD card. This puts the Passport in the same league as the Cobo Vault, which is also air gapped.
On the usability front, the Passport does not ask users to maintain a 12- or 24-word recovery seed in case they need to recover their wallet. Foundation instead stores the recovery seed on a microSD card and encrypts this with a password. This means that users can more easily recover their bitcoin, by simply inserting the card and entering the password, but that this recovery is still relatively secure, as an attacker would need to access both the card and the password to steal funds. Foundation Devices includes two microSD cards with every wallet.
“We believe that the recovery seed is a challenging concept for new Bitcoiners and also represents a significant attack vector — no matter how secure a user’s hardware wallet, if an attacker finds the recovery seed, then it is game over,” Herbert explained. “We feel strongly that this will enable a better user experience and reduce user error.”
But Foundation Devices doesn’t want to stop at offering an intuitive and secure hardware wallet. Herbert envisions the company as a full stack provider for those who hope to achieve sovereignty through technology that protects their privacy. He said that he hopes to add phones and computers to its roster by the end of this decade, but will be focusing on more Bitcoin-specific hardware next.
“Our next product will be a Bitcoin full node that’s elegant, easy to use and more functional than existing offerings,” he said. “We are also interested in open-source security chips and meshnet hardware.”
As it continues down this path toward a suite of hardware offerings, the Foundation Devices team emphasizes its domestic manufacturing. Not only does this mean the company can maintain tighter control over its supply chain, but this makes it fairly unique in the hardware wallet space and Herbert pointed out that users may leverage that fact to gain a new level of multisig security.
“Multisig users may want to protect against supply chain risk by purchasing hardware wallets made in different geographic locations,” he said. “For example, a Coldcard made in Canada, a Trezor made in Europe and a Passport made in the U.S.A. could make for a more secure multisig setup.”
Foundation Devices is offering the first 1,000 unit run of Passport wallets for reserve on its website. It expects to launch the device for preorder in August and to ship them by the upcoming holiday season.
There are now many ways to obtain bitcoin and join the growing revolution in sovereign digital wealth. Among them, you can mine bitcoin, you can earn bitcoin in exchange for goods or services and you can buy bitcoin for fiat currency through a credit card or bank account on an online exchange.
But perhaps no other vehicle for gaining bitcoin is as frictionless for the underbanked and unbanked around the world than Bitcoin ATMs.
As their name implies, Bitcoin ATMs are automatic teller machines that are quite similar to traditional ATMs, except that they allow users to buy and sell bitcoin, rather than withdraw fiat currency from their bank accounts. They serve those around the world who want to onboard to Bitcoin — a system designed to remove the financial gatekeepers that create inequality in the traditional economic system — by providing all of the interfacing needed to convert cash in hand into the world’s preeminent digital currency.
CoinFlip, which operates 750 Bitcoin ATMs across the United States as the highest-volume provider in the space, maintains some of the lowest barriers to buying bitcoin for those who could use it most.
In addition to a bitcoin wallet and any fiat cash they are hoping to convert, users can begin buying bitcoin at a CoinFlip ATM with as little as a mobile phone number and a name.
“Bitcoin ATMs are general tools for banking the unbanked because unlike other cryptocurrency onramps, people are able to get access to bitcoin with cash and do not require a bank account,” Dustin Wei, CoinFlip’s head of business development, said. “While many other cryptocurrency onramps claim they want to foster the idea of banking the unbanked, an unbanked customer would not actually be able to use their services.”
CoinFlip has found that a significant portion of its Bitcoin ATM user base is comprised of underbanked and low-income individuals who want to transact primarily in cash. By accessing bitcoin, they have a brand new avenue for paying bills, transferring money seamlessly around the world, investing in a new asset, and more.
“There is no other way to buy cryptocurrency that’s nearly as inclusive and straightforward as a Bitcoin ATM,” Wei explained. “CoinFlip provides financial access to those who have been failed by traditional banks and also features 24/7 customer service to make the process less daunting. Satoshi would be proud.”
Ultimately, it’s this type of grassroots effort — making bitcoin accessible where it’s needed the most with as little barrier to entry as possible — that will help CoinFlip push bitcoin adoption far and wide. More so than with any other portal to bitcoin, this propulsion is the real narrative of Bitcoin ATMs.
CoinFlip recognizes bitcoin as a tool that’s increasingly helping people around the world send funds to their relatives overseas, which can be accomplished in minutes through its machines. To build on this, CoinFlip operates a trading desk (called CoinFlip Preferred) that can process wire transfers for cryptocurrency and handle credit card transfers on its website.
“CoinFlip hopes to create a global ecosystem of kiosks in order to push adoption,” said Wei. “CoinFlip also hopes to continue its mission to get crypto into as many people’s hands as possible. We are fast becoming a crypto conglomerate.”
As the U.S. dollar’s value slides, prices are suddenly rising for just about everything priced in dollars. That includes bitcoin, which shot up some 13% on Monday for its biggest gain in almost three months. Prices soared past levels reached in February, prior to the pandemic-induced sell-off, reaching a new 2020 high of $11,180. You’re reading First […]
DeFi is an overnight success years in the making. From "The DAO" hack to $3.6 billion in total value locked, here's the history of decentralized finance.
The new blockchain platform can facilitate peer-to-peer trading and allow the securities lending market to reach its full potential, the exchange said.
iframe: Host Jose Maria Macedo sits down with economist Laurence Kotlikoff, professor of economics at Boston University, president of Economic Security Planning, New York Times best-selling author and 2x presidential candidate. We discuss the US's fiscal state, $200T in off balance sheet liabilities, MMT as well as Laurence's solutions to the problems facing the US. We also spend some time discussing digital assets and the role they may play in this.
Thank you to our sponsor Crypto.com for making this happen! Visit bit.ly/cryptodelphi for more information!
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Disclosures: This podcast is strictly informational and educational and is not investment advice or a solicitation to buy or sell any tokens or securities or to make any financial decisions. Do not trade or invest in any project, tokens, or securities based upon this podcast episode. The host may personally own tokens that are mentioned on the podcast. Tom Shaughnessy owns tokens in ETH, BTC, STX, SNX, RUNE, sUSD and HNT. Let's Talk Bitcoin is a distribution partner for the Chain Reaction Podcast, and our current show features paid sponsorships which may be featured at the start, middle and/or the end of the episode. These sponsorships are for informational purposes only and are not a solicitation to use any product or service. Guest host Kevin Kelly holds tokens in BTC, ETH, RUNE, and LEO.
BitFarms used high-interest-rate debt with large balloon payments to expand operations. Now it may struggle to pay off its debt, according to CoinDesk Research.
A1 Telekom Austria announced cryptocurrencies will now be available to use in its cashless payment app, allowing over 2,500 merchants to accept bitcoin, ether and dash.
The likelihood of bitcoin challenging 2017's record high by the end of this year may have just nudged up – but don't raise your hopes too high just yet.
If blockchain technology is used within a regulated financial system, Wirecard-esque scandals can be a thing of the past, writes BRD CEO Adam Traidman.
Host Piers Kicks sits down with Ryan Gill the Founder and CEO of Crucible for Episode 02 of Metaverse Musings. Both Ryan and his Co-Founder Toby Tremayne have been hard at work laying the foundations for an exciting chapter in the evolution metaverse. Keep an eye on Crucible as more information comes online in the coming weeks as the company officially moves out of stealth. We talk through Ryan's White Mirror philosophy, their blueprints for the open metaverse, and the worlds of tomorrow. Stay tuned for Part 2 which will feature Toby for a more granular technical exploration of the themes covered. https://crucible.network/
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To sponsor this top crypto research podcast, email Tom@DelphiDigital.io
Disclosures: This podcast is strictly informational and educational and is not investment advice or a solicitation to buy or sell any tokens or securities or to make any financial decisions. Do not trade or invest in any project, tokens, or securities based upon this podcast episode. The host may personally own tokens that are mentioned on the podcast. Tom Shaughnessy owns tokens in ETH, BTC, STX, SNX, RUNE, sUSD and HNT. Let's Talk Bitcoin is a distribution partner for the Chain Reaction Podcast, and our current show features paid sponsorships which may be featured at the start, middle and/or the end of the episode. These sponsorships are for informational purposes only and are not a solicitation to use any product or service. Guest host Kevin Kelly holds tokens in BTC, ETH, RUNE, and LEO.
CoinbaseAround the Block, sheds light on key issues in the crypto space. In this edition,Justin Martexplores the rapidly evolving DeFi landscape and the emergence of “yield farming”, as well as other notable news in the space.
DeFi and the Yield Farming Phenomenon
DeFi protocols exploded in all metrics over the last month, passing $3B in Total Value Locked (TVL), triggered by the launch of the Compound governance token ($COMP) and subsequent “yield farming.”
What is Yield Farming?
Most crypto protocols are designed to be decentralized. For base-level networks (like Bitcoin and Ethereum), this is achieved through Proof of Work, where anyone can be a miner and earn some BTC or ETH in exchange for helping secure the network. In so doing, control of the network is more or less democratic (one CPU one vote).
But how do projects built on Ethereum achieve decentralization? One path is to hand over governance in the form of tokens to the users of a protocol, effectively turning users into stakeholders. This is precisely what Compound (an autonomous borrow/lend protocol) pioneered. They are releasing $COMP tokens, which provides governance rights over the Compound protocol, to the users of the network, distributed pro-rata according to how much they use the protocol.
Sounds good, right? Two observations:
$COMP governance tokens hold value. Compound is the leading DeFi borrow/lend protocol, and governance rights over this network are powerful.
Distributing $COMP pro-rata to users of the protocol is free yield. It’s an added bonus just for using Compound.
When $COMP was released, the token quickly appreciated in value owing to Compound’s leading position in the DeFi ecosystem. The community quickly realized that adding assets to Compound and/or borrowing against them resulted in significant interest rates due to the additional $COMP being distributed (topping 100% APY at some points).
Ergo, the practice of using a protocol to earn native platform tokens is known as “yield farming.”
What Happened with Compound
Yield farming drove a flood of capital into Compound — in a single week in mid-June nearly half a billion dollars was added to Compound, driving total value locked (TVL) from $100M to over $1.7 B at the peak. $COMP similarly opened trading around $80 and exploded to over $300.
However, not all metrics are as honest as they appear. With Compound, it’s possible to recursively invest your capital, multiplying your yield. It goes like this:
Add 100 USDC as collateral to Compound (earning interest + $COMP)
Borrow 70 DAI against your 100 USDC collateral (paying interest but earning $COMP)
DeFi composability adds another dimension, where it’s also possible to stack your yield across different protocols. For example, you could lock DAI in Compound, and deposit your compound-DAI tokens into Balancer for additional yield farming.
Popular DeFi tracker defipulse.com does some cleaning on reported TVL to account for these effects. As of July 23, 2020 they report Compound’s TVL at $550M.
Yield Farming is Not Without Risk
In efficient markets, increased yield is reflective of increased risk. While DeFi is a largely inefficient market today, outsized DeFi yields are still indicative of additional risk:
Smart Contract risk: Smart contracts are prone to exploits, with several examples just this year (bZx, Curve, lendf.me). The surge in DeFi has led to millions in value being slammed into nascent protocols, increasing the incentive for attackers to find exploits.
System design risk: Many protocols are nascent and the incentives can be gamed. (E.g., Balancer, where FTX was able to capture >50% of the yield due to a simple flaw)
Liquidation risk: Collateral is subject to volatility, and debt positions are at risk of becoming undercollateralized in market swings. Liquidation mechanisms may not be efficient, and could be subject to further loss.
Bubble risk: The price dynamics of the underlying network tokens (like $COMP) are reflexive because expected future value follows usage, and usage is incentivized by expected future value.
In general, DeFi protocols with significant capital are honeypots for exploits. In just one week, the Balancer protocol was gamed by an exchange, changed its protocol rules, got hacked, and saw the token price go up 3x! In some ways DeFi is still the wild west — be careful out there.
Downstream effects: A Look at the Broader DeFi Ecosystem
DEX Volume explodes, begins to rival Centralized Exchange volumes
DEX volume rocketed upwards over the last month, and has begun to rival some centralized exchanges.
This is a direct result of yield farming, especially when recursively borrowing and lending requires swapping between two different ERC-20 tokens. Stablecoins have been most preferred (as in the example above), which led to Curve’s rise to dominance (a stablecoin-specific DEX).
DEXs are also following a similar and proven growth strategy that gave rise to popular exchanges in early 2017: access to the long-tail of tokens / assets not listed on other exchanges. In this case, DEXs provide liquidity for all DeFi tokens and projects. Token creation will likely outpace how quickly centralized exchanges can add them, making DEXs the natural playground for novel new assets and the long-tail of smaller assets.
DEXs have done over $1B in total DEX volume over the last 7 days, over 3x of total 2019 DEX volume! More volume than ever is flowing through DEXs. See a prior Around the Block analysis on DEXs and their coming potential for more.
DeFi Stablecoins see strong Q2 growth
Stablecoins used within DeFi (notably Dai and USDC) saw record Q2 growth, as these are preferred yield-farming assets owing to their low volatility which prevents liquidation risk. Both USDC and Dai market caps saw >50% growth, moving from $700M to $1.1B, and $100M to $150M respectively since the launch of $COMP.
Market Cap of All ETH Tokens Surpasses ETH
The market cap of all ETH tokens recently surpassed the market cap of ETH itself. While driven mostly by a few assets (LINK and CRO), this is still an intriguing flip showing how the ETH ecosystem is expanding in value faster than the base native asset.
If you believe in the fat protocol thesis, then it may indicate ETH is undervalued, as growth in the utility layer would eventually accrue to the base layer. But if you don’t, it could raise questions around Ethereum’s long-term security model, where it might be economically rational to attack Ethereum in order to extract value from assets sitting on top.
Ethereum Suffers Periods of Congestion; Highlighting Scaling Challenges
Predictably, DeFi activity produced a rise in median gas prices, ranging between 40 and 70 Gwei today. A single ETH transfer costs ~$0.35, but more complex operations like swapping assets on a DEX or entering and exiting multiple yield-farming positions can be substantially more expensive (at times >$10 per transaction).
High gas fees are sneakily insidious because they restrict access to DeFi to only those with sufficient capital. When it costs $10 to enter and exit yield farming positions, the subset of users with limited balances are cut off.
High gas fees are a direct consequence of scaling challenges. While still a drag today, efforts around ETH 2.0 and Layer-2 solutions show meaningful progress, but we’ll have to wait and see how those efforts play out.
Other DeFi projects surge
Wrapped BTC Projects: Wrapped BTC projects create an Ethereum ERC-20 token that is redeemable 1:1 for BTC on the Bitcoin blockchain, thus marrying the BTC and ETH chains and bringing BTC’s balance sheet into DeFi. These projects rose substantially as users sought out more capital for yield farming. BitGo’s wBTC and Ren’s rBTC are notable standouts, with ~$140M BTC locked between them (and wBTC the clear leader with $130M).
Balancer: A liquidity provider and DEX similar to Uniswap launches with a yield farming governance token, and quickly grows to over $200M TVL.
Aave: A borrow / lend protocol similar to Compound, but with added flash-loan capabilities, a native $LEND governance token, and differentiating loan products. $LEND value has increased significantly following $COMP’s rapid rise, and Aave’s TVL has similarly exploded to over $450M.
Synthetix: A synthetic-asset protocol on Ethereum with similar yield-farming mechanics, Synthetix has also seen incredible growth. Their synthetic dollar sUSD has captured volume amidst the stablecoin explosion.
yEarn Finance: A suite of DeFi products, including a robo advisor that allocates your deposits to the highest-yielding protocols. They released a governance token over the weekend ($YFI) with unique properties in that it has no previous owners and no outside funding, a fixed supply, and is earned through yield farming. Upon launch, capital rushed toward farming and yields went as high as 1,000% APR.
Infrastructure:Chainlink, aiming to become the oracle bridge powering the suite of crypto and DeFi Dapps, surges to ATH above $8 and cracks top-10 by market cap; InstaDapp surges to nearly $200M in TVL as a simple platform to easily manage yield farming positions.
Others: Ampleforth’s unique “uncorrelated token” surges; UMA releases a synthetic COMP token (yCOMP) to enable shorts, and a yield-dollar for fixed-interest loans; mStable holds token sale for their stablecoin protocol standard; bZx jumps on with uniswap offering of their governance token.
Implications: Is this activity genuine?
For all the impressive metrics, the rise in asset valuations, and meteoric growth in value locked, is it really genuine activity?
We noted earlier that value locked can be gamed, where assets can be recursively deposited or stacked across other protocols. This has certainly led to some strange results. Consider Compound’s accounting for DAI, where they list more DAI in Compound’s supply than DAI that exists! This can only be possible when the same DAI is supplied, borrowed, and re-supplied in a recursive loop.
So if we can’t take TVL at face value, what can we say about the number of users accessing DeFi?
Numbers are low relative to traction enjoyed by mainstream exchanges (like Coinbase with 35M+ accounts), but the DeFi trend has still driven strong growth, over 100% YTD. Note that there are no “accounts” in DeFi, just unique addresses, so numbers should be taken with a grain of salt.
It’s relatively clear that the DeFi phenomenon is still refined to the sophisticated crypto user, able to navigate the world of self-custodial wallets and understand the risks and opportunities that lie within.
And yet, the metrics still cannot be ignored. Even accounting for recursive yield mechanisms, $3B in TVL across all of DeFi is hard to argue against. The traction and usage is on a clear upwards trajectory, and DeFi is the prominent narrative within crypto today.
Are the valuations and returns sustainable?
Taking a step back, we can see a clear cycle:
Protocols add yield-farming governance tokens
Total Value Locked (TVL) increases as users farm governance tokens
Governance token valuations increase on the back of skyrocketing TVL and metrics
Such cycles are usually indicative of valuations divorced from fundamentals.
However, this is how crypto historically bootstraps growth. Outsized financial incentives drive increased user awareness, and people run through brick walls to participate. Over time, the onramps become smoother, the revenue models more refined, and the products get more user-friendly.
So this looks similar to what was happening with Bitcoin in 2013. Only a select few were able to get ahold of Bitcoin back then, but price movements drove awareness and growth. The destinations were a bit sketchy (Mt. Gox), but got much better over time.
Today, DeFi returns are sparking similar levels of awareness, but only the crypto-sophisticated are running through hoops to capitalize. There is some fuzziness in the numbers, but the trend is hard to argue against, and the products and experience will get better over time.
Where the markets and interest rates move from here is speculation, but for more see this insightful Twitter thread.
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