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【Dapp Pocket】DeFi Weekly Report - Week of August 4th: Is 1inch also joining liquidity mining?

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【Dapp Pocket】DeFi Weekly Report - Week of August 4th: Is 1inch also joining liquidity mining?

Dear DeFi enthusiasts,

This week, Yearn's total value locked continues to rise, ranking fourth, while Yam smoothly transitions to v2 and is moving towards v3. Compound may consider developing new projects on other chains. DEX aggregator 1inch also joins the trend by releasing its token 1INCH, offering liquidity mining. The disproportionate token distribution has attracted much attention, which we will discuss this week.

On Twitter, we see Andre Cronje questioning the 71% voting power control by Curve's founder, while 1inch challenges Yearn, claiming it is controlled by whales. CeFi giant Binance's founder CZ reminds everyone that more DeFi projects in the future may face the same fate as Yam.

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Our View | Will DEX Aggregator 1inch Also Launch Liquidity Mining?

1inch announced on 8/22 that they will issue the 1INCH token and offer liquidity mining. Wait, isn't 1inch a DEX aggregator for decentralized exchanges (DEX)? Why would they also do mining? Some may have this question, but in fact, 1inch launched their own AMM - Mooniswap earlier this month, so the mining refers to providing liquidity to Mooniswap.

Let's first examine what the 1INCH token can actually do. In the official 1inch article, it is referred to as a utility token, which is important to note because most liquidity mining offers governance tokens that allow holders to vote on protocol developments, similar to stocks, and therefore have value. While 1inch did mention governance in their article, they stated that it is "potential governance of specific network functionalities," which sounds less assured.

Another key point is token distribution, which is the most controversial part of this release. According to the official statement, 2% will be allocated to Mooniswap liquidity providers. Yes, an unbelievably low 2%, compared to Curve, another AMM that offers 62% to liquidity providers, not to mention Yearn, which offers 100%. This announcement led to many questions on Twitter, and later, 1inch clarified that 21% will also be provided to the community, making a total of 23%, slightly more than the team's 22.5%, but still far from half.

There are many factors to consider whether a token/liquidity mining is worth investing in. However, based on the information released by 1inch, we believe it lacks sincerity. The essence of liquidity mining should be to make early users become part owners of the protocol to reward their support. However, the 1INCH token not only lacks clear governance functions, but also has a very low community ownership percentage. Therefore, at this stage, we do not support joining its liquidity mining and look forward to 1inch releasing a new token economic model in the future.

Weekly Highlights

Yearn.finance Total Value Locked Set to Exceed $1 Billion, Climbing to Fourth Place

According to data released by yearn.finance, the system's total value locked reached $998 million at one point, ranking fourth in locked value, surpassing Synthetix and Compound. The top three are Maker, Lend, and Curve. As of the time of this article, yearn.finance's total value locked ranks fifth.

YAM Finance Completes Migration from YAM v1 to v2, Launches Governance Forum

DeFi project Yam Finance (YAM) completed the migration from YAM v1 to YAM v2 in the early hours of the 23rd. The final supply of YAM v2 is approximately 3.72 million. They also launched a governance forum on the 24th to carry out the community decision-making process required for the release of v3. Last Thursday, Yam Finance initiated a migration plan to put the community in control of the project. In the first phase, the YAM deployment address will establish a migration contract address, and YAM holders will burn the previous tokens and mint new YAMv2 tokens within a certain period. In the second phase, the complete YAM system is expected to be audited and redeployed as YAM v3.

Compound Considers Developing Projects on Other Public Chains Due to High Ethereum Gas Fees

David Kajpust, developer of blockchain data indexing project The Graph and blockchain blogger, stated on Twitter that due to high fees on Ethereum, DeFi lending protocol Compound is considering developing the project on different public chains or Layer2 blockchains. This could be the biggest catalyst for DeFi to enter new public chains and develop further. He listed projects like NEAR, Solana, Polkadot, and Cosmos as potential choices for Compound.

DEX Aggregator Platform 1inch Announces Token Issuance Plan and Launches Liquidity Mining

Decentralized exchange aggregator platform 1inch announced the issuance of the 1INCH token and the launch of a liquidity mining program. According to 1inch's token economic model, 30% of the total token supply will be used to ensure network security and maintain its functions (4-year unlock), 22.5% of tokens will be distributed to the 1inch core team and future employees (4-year unlock), 21% will be used for ecosystem construction (4-year unlock, with some tokens allocated to future liquidity mining programs), 19.5% of tokens will be distributed to investors and shareholders (2.5-year unlock), 5% will be allocated to advisors (4-year unlock), and 2% will be allocated to early liquidity providers of its automated market maker product Mooniswap (1-year unlock).

And More

Key Data Points

The data for this week is from 8/18 to 8/24, with price data collected around 2:30 pm. TVL stands for Total Value Locked, indicating how much value is locked in that platform. Data source: DeFi Pulse, CoinGecko.

Lending Platform Scale

DEX Scale

DeFi Coin Prices (Farmer's Zone)

Expert Opinions

1inch: It Looks Like iearn is Controlled by Whales

AC: Curve Founder Holds 71% of Voting Rights

https://twitter.com/AndreCronjeTech/status/1297536932063457281

CZ: There Will Be Many DeFi Projects Like YAM in the Future, Let's Not Follow Blindly