Happy Wednesday colleague DeFi degens!
I expected to spend much of this edition of Finance Redefined analyzes Aave’s liquidity extraction program. Investors had some concerns that the issue of $ 2,200 AAVE per day (which would translate into about 5% of the ecosystem reserve fund of 2.8 million AAVE per year) could end with the withdrawal of the token price as farmers earn and landfill.
I would feel very uncomfortable holding an asset if a very important protocol management token ended up in the hands of people who only think about short-term profits.
– Yellow (@ eip1559) April 26, 2021
It turned out to be useless: the program is a complete success. The AAVE token has risen nearly 15% since the start of liquidity extraction to $ 462, and the total value of the locked protocol has climbed to $ 11.8 billion – compared to just $ 7 billion since the start of liquidity extraction.
Well-researched work on liquidity extraction. The only question now is, if the program is interrupted, how much of that TVL will be sticky?
Other stories to watch out for:
Lego money is made up
At the beginning of the year, it was speculated that in 2021, DeFi would see something new: one protocol was acquired by another, probably through the purchase of management tokens. Synthetix 2021 road map in particular, it opened the door to such a possibility, likening it to acquisitions at TradFi and seeking inspiration / acquisition / cooperation from Yearn for inspiration.
However, large-scale mergers and acquisitions have yet to take place. There are a few minor examples of cooking – Inverse Finance does currently for example, they want to buy Tonic for about $ 1.6 million – but instead we see a boom in deep integration of protocols and front-end layers.
On Monday, Badger DAO and RenVM launched the Badger Bridge, a new interface for storing native BTC in Badger safes with a few clicks. Integration excels for two reasons. One is that this is clearly beneficial to both parties: the idiotic way of earning BTC is attractive to hodlers, which means that Ren will see an increase in activity on his bridge (and therefore protocol fees), while Badger will also receive support on TVL. .
The second angle, however, is the willingness with which Ren subordinated his brand and left Badger – who, I would say, has a stronger community – assume landing page. Were it not for the absurd valuations of the tokens, one could be the target of the acquisition for the other, given the obvious needs that everyone meets – but thanks to Ren’s cooperation, he gets everything they want from a protocol like Badger, and the same goes for Badger and Ren.
This begs the question: why bother taking over when friendly integration can achieve the same effects?
Another example is today’s announcement of the Balancer-Gnosis protocol. You can see the details in my workBut effectively Balancer v2 brings some net innovation to AMM ‘s liquidity and Gnosis’ CowSwap is a liquidity aggregator and batch processing protocol for out – of – chain transactions that is said to reduce recoverable value. The combination of these two will make DEX significantly richer in DEX from the LP’s and trader’s point of view – perhaps even placing the Balancer-Gnosis-Protocol as a competitor to Uniswap v3.
In a statement to Cointelegraph, Balancer CEO Fernando Martinelli said that such deep cooperation would be impossible in the traditional world of finance:
“Each of these two protocols would not be possible to implement in the traditional financial world simply because there is nothing like mistrust (you always need an intermediary).” Even if it were possible, combining the two protocols would be as challenging as integrating Fidelity Index Funds (Balancer) with Nasdaq (Gnosis) under a single platform. “
Acquisitions can be an outdated model. Interoperability and compositability mean that protocols can benefit each other without hostile takeovers.
It is possible that branding will still need to be discovered – Balancer-Gnosis-Protocol is not the best name.
Do you speak my language
As organic activity begins to spread to other chains, the goal posts move constantly for etherealists.
For example, on the Solana platform, $ COPE and $ STEP have attracted significant community tracking and investment from major players (including funds other than well-known SOL Alameda Research supporters!), And this morning announced a hackathon to launch the “solanaszn” hashtag. Other people around “Solana Summer” were similar to last year’s DeFi Summer, but no matter what your preferred nickname is, the competition is real.
The success – perhaps predictably – has led some observers to try to punch holes in SOL’s growth thesis. Although, as in any chain, there are plenty of offensive areas, one criticism is that Solana’s flag language, Rust, is difficult and exotic.
1 / In my humble and naive opinion, Rust may be the initial problem of adopting Solana dev, because it’s just a little easier than learning C ++ and it will take some time for people to pick it up.
– 10 points (@ 10 points) April 24, 2021
In his statement to the Cointelegraph, this view was rejected by the founder of Solana and the current president of the Solana Foundation, Anatoly Yakovenko.
“Rust is a modern, widely used language suitable for writing high-performance secure code.” It has ranked on Stack Overflow as one of the most popular programming languages of the 65,000 people who code, so we believe it plays a key role in driving the organic growth of our development community to date, ”he said.
He also noted that the foundation counted 2,000 developers who were building in Solana (he did not mention the methodology or definitions used to determine the number, and that this seems excessive to the touch, given that a 2019 study by ConsenSys found that there are approximately 1,300 developers of Ethereum and in 2020 Electric Capital hung up total number of ETH developers around 2300) and that Solana developers are not interested in “copying / pasting” Ethereum projects.
He is also right about the stack overflow studies, although the year 2018 survey from the Rust blog showed that more than 20% of developers working with this language felt unproductive after a year of use.
Whatever you have on Rust, it is likely that money will solve the problem. And to that end, Solana is pushing the pedal: the hackathon will include “up to $ 1 million” in pricing and / or initial funding. I think I could learn hard language for that.