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【Dapp Pocket】DeFi Weekly Report - April Week 2

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【Dapp Pocket】DeFi Weekly Report - April Week 2

Weekly Summary
This week saw the halving of two major forked coins of Bitcoin. So far, the trend of coin value has been weaker due to the news of FED's investment in small and medium-sized enterprises on Thursday. International hot money tends towards the stock market, which may also be related to the general decline in Total Value Locked (TVL) of DeFi platforms this week. On the other hand, this week saw the newcomer-oriented dPiggy joining the Dapp market. According to DappReview data, the performance of DeFi this quarter is still very impressive, with trading volume even exceeding 800 times that of the same period last year. In this week's selected viewpoints, we see Vitalik Buterin praising "decentralized moderation"; the Coinbase CEO's perspective on cryptocurrency and financial privacy; and Ryan's latest remarks: this time, is the entire financial system a Ponzi scheme?

DeFi (Decentralized Finance) refers to decentralized financial services. In simple terms, it operates in a decentralized manner to solve issues in the traditional financial industry such as slow transaction speeds, high costs, susceptibility to hacking, and potential misuse by countries or organizations. The current DeFi ecosystem can provide services such as lending with interest, shorting assets, high leverage trading, and even unique flash loan services.

1 Weekly Highlights

Ethereum DeFi Trading Volume Surges Nearly 800% Compared to Same Period Last Year

DappReview, a decentralized application (Dapp) evaluation institution, released its latest market report stating that the total Dapp transaction volume in the first quarter of 2020 reached $7.9 billion, an increase of over 82% compared to the same period last year. DappReview mentioned that the leading smart contract blockchains in the market are Ethereum, EOS, and TRON, which collectively account for 99% of all Dapp transactions. However, only Ethereum showed growth, while TRON and EOS experienced a decline in users and transaction volume.

The report indicated that Ethereum Dapp's total transaction volume in the first quarter of this year was $5.64 billion, a 652% increase from the previous quarter's $743 million. This growth was primarily driven by DeFi projects, with a transaction volume of $2.95 billion, a 778% increase from the same period last year, followed by exchange Dapps with a transaction volume of $2.34 billion.

Source: https://blockcast.it/2020/04/09/report-ethereum-based-defi-projects-volume-growth-by-778percent-compared-to-2019-q1/

New Dapp Allows Users to Earn Dai Interest "Safely"

A new DeFi application, dPiggy, is integrating two key elements of decentralized finance: risk management and enabling novice users to easily enter the ecosystem and start earning returns.

dPiggy, built on the Compound and UniSwap protocols, was released yesterday. It provides users with a simple interface to earn Dai deposit interest and automatically uses their earnings to purchase various cryptocurrencies at the end of each month. Overall, dPiggy offers users a way to accumulate cryptocurrencies "safely," and its user-friendly interface is expected to attract new users and funds into the DeFi system.

Source: https://decrypt.co/25004/defi-newest-dapp-helps-users-buy-crypto-with-interest-from-dai

Compound Hits $1.5 Billion in Total Deposits

Due to the significantly higher interest rates offered by lending protocols compared to traditional markets, the value locked in DeFi lending has been on the rise. Currently, out of the $7.43 billion locked in DeFi, loans account for 76% of the total value. While most of this is provided by Maker as an uncollateralized banking role, other competitors like Compound, Aave, and dYdX have been competitive, offering better rates and leverage opportunities.

Compound, in particular, has shown steady growth since its inception, with total deposits exceeding $1.5 billion and loans reaching $300 million. Despite stablecoin dominance in the total deposits, it is noteworthy that ETH leads the total supply on Compound. While ETH deposits have lower rates, the driving force behind the significant amount of ETH deposits on Compound largely comes from users needing collateral to borrow stablecoins for leverage. Users may not necessarily care about rates but are more concerned about having enough collateral.

With Compound introducing its governance token COMP, it is anticipated to see what changes the protocol will undergo. Perhaps one of the first steps for COMP holders will be to vote in favor of expanding the supported assets on Compound, such as other well-known governance tokens like KNC, LINK, SNX, or mainstream stablecoins like USDT or sUSD.

Source: https://defirate.com/compound-research/

BlockFi Partners with Hedge Fund Three Arrows Capital to Develop Asian Market from Singapore Base

Cryptocurrency lending platform BlockFi announced a partnership with the Singapore-based hedge fund Three Arrows Capital. The two companies did not disclose the financial details behind the deal but stated that their primary goal is to expand BlockFi into Asia.

Su Zhu, Co-Founder of Three Arrows Capital, commented, "BlockFi is growing at an astonishing rate, and we look forward to helping drive the company's expansion in global markets." BlockFi recently increased the interest rates on its platform, offering an annual return of 6% for depositing Bitcoin and 8.6% for savings in stablecoins like USDC or GUSD. Additionally, BlockFi secured a $30 million funding round earlier this year led by Peter Thiel's Valar Ventures, with other investors including Morgan Creek Digital, Avon Ventures, Winklevoss Capital, and HashKey.

Source: https://decrypt.co/25124/crypto-lender-blockfi-lands-institutional-investor-for-asia-expansion

Bitcoin Halving Approaching, BCH and BSV First to Complete Halving

The third Bitcoin halving is expected to occur in May this year, reducing miner rewards from 12.5 BTC per block to 6.25 BTC. Bitcoin's two largest forks, BCH and BSV, have already completed their first halving this week. BCH completed its halving first on Wednesday night, reducing block rewards to 6.25 BCH per block, while BSV also completed the halving on Friday morning, reducing rewards to 6.25 BSV per block.

Historically, Bitcoin halvings have often been catalysts for new bull markets. The first and second halvings saw price increases of over 12,000% to 13,000% in the following year. Following BCH's halving, a significant number of miners have exited. Within less than half a day after BCH's halving, network hash rate dropped by over 14%, and BCH whale Roger Ver's hash rate decreased by over 90%. The mass exodus of miners has increased the likelihood of a 51% attack on the network, with approximately only 1 BTC needed to carry out a 51% attack on the BCH network for up to an hour. In comparison, the cost of a 51% attack on the Bitcoin network for an hour is as high as $500,000.

Source: https://decrypt.co/25163/you-can-now-51-percent-attack-bitcoin-cash-for-single-bitcoin

Card Spending Can Earn Bitcoin Rewards with Fold and VISA's Co-Branded Financial Card

The Bitcoin payment app Fold recently announced that it has joined Visa's Fintech Fast-Track Program and will issue a unique financial card (Debit Card) based on Visa's global network, allowing users to earn Bitcoin rewards while spending in USD.

Fold is the first crypto company to be included in the Fast-Track Program. The program aims to accelerate the integration of fintech startups with Visa's network and has been piloted globally, expanding to the US last July. Terry Angelos, Senior Vice President of Visa and Global Head of Fintech, stated in a release that Fold was an early company to allow users to spend Bitcoin in the real world. As Bitcoin continues to evolve, the relationship between Visa and it is also changing. To highlight the true value of Bitcoin, reforms and optimizations are inevitable. Now, users can easily hold, accumulate Bitcoin, and even send Bitcoin directly to a designated wallet address without going through cumbersome KYC processes to acquire Bitcoin.

Source: https://blockcast.it/2020/04/10/bitcoin-payments-app-fold-will-soon-launch-a-visa-debit-card-with-bitcoin-cashback-rewards/

2 Data Indicators

The data for this week is collected from 4/6 to 4/13, with price extracted around 2:00 PM as a guideline. TVL refers to Total Value Locked, indicating how much value is locked in that platform, serving as a good indicator of platform scale. Data sources include: DeFi Pulse, CoinMarketCap, Maker Official Website, Compound Official Website, AAVE Official Website.

DeFi Lending Platform Scale

DEX Scale

Dai APR

Coin & Token Value

3 Expert Perspectives

Vitalik Buterin: Benefits of Deliberately Engineered "Bounded" Centralization

Ethereum founder Vitalik Buterin recently tweeted about the benefits of a "carefully designed limited degree of centralization system." He discussed the advantages of centralization mechanisms in providing better incentives and the arguments against it typically revolve around doubts about its vulnerability to abuse of power, risks, and a lower bus index.

In a series of comments, he pointed out that blockchain has successfully integrated the benefits of both centralization and decentralization. Exploring the block production mechanism: every 15 seconds, a "dictator" is randomly selected to decide which transactions to record in the block. Economically speaking, this person is the full marginal claimant. This system actually has many benefits and is the best means we know of to combat bribery and secret payments.

Bus index refers to the number of team members in a team who, if hit by a bus (accident), would prevent the team from functioning normally. The higher the bus index, the more capable team members are to cover the parts left unfinished due to unfortunate events, demonstrating the team's ability to withstand risks.

vitalik.eth @VitalikButerin

Yesterday I talked about the benefits of total decentralization. Today I’ll talk about the benefits of deliberately engineered *bounded* centralization. Thread:

April 8th 2020

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