DEFI

【Dapp Pocket】DeFi Weekly Report - Fourth Week of May

2020/5/26

Weekly Summary
In this week's news, the Maker Foundation has posed a question in a recent vote on whether to support a stable fee rate below 0; over the past few days, Dai's supply has reached near all-time highs due to its support for WBTC; UMA has introduced a new synthetic token: ETHBTC; Fuel Labs has released a demo version of Reddit Cash using optimistic rollup scaling technology. Insights from industry leaders include a poll initiated by Haseeb Qureshi in his tweet, where people are more optimistic about privacy pools or mixers. What are Rune Christensn's views on the significant amount of Dai minted from WBTC? And how does Ryan Sean Adams differ in his views on the future direction of DeFi this time?

DeFi experts visit in the sixth episode, and we are honored to have Anthony Sassano, a representative of Set Protocol and co-founder of EthHub, to chat with us about Set. In our discussion, we first delve into the privacy issues of transactions on the blockchain; and how Uniswap, Balancer, and Set provide various services in the DeFi space through "automatic rebalancing"?

DeFi (Decentralized Finance) refers to decentralized financial services. Simply put, it operates in a decentralized manner to address issues in traditional finance such as slow transaction speeds, high costs, vulnerability to hacking, and potential misuse by governments or organizations. The current DeFi ecosystem is already able to provide lending services with interest

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Table of Contents

Author Introduction

Raizel / Economics major at NCCU, got stuck with Bitcoin and turned to DeFi
Thomas / DeFi enthusiast in Boston working on chip design
Anderson / Founder of Dapp Pocket, believes in DeFi deposits over bank deposits

Major Events This Week

Maker Foundation Proposes Negative Stability Fee Rate

According to MakerDAO's blog, the Maker Foundation initiated a vote to adjust the stablecoin fee structure, proposing to set the base fee of the stable fee rate to a negative value. Another voting item is to increase the stable fee rate of USDC from 0% to 0.75%.

WBTC Growth Leads to Near Historical High in Dai Supply

Following Maker's recent support for WBTC as the fourth collateral asset to mint Dai, the rapid increase in newly minted WBTC over the past few weeks, most of which were immediately sent through Oasis Borrow and locked in Maker Vault, has brought the current Dai supply to nearly 116 million, approaching a historical high as of 5/22.

Synthetix Adopts IPFS and ENS to Further Reduce Centralized Infrastructure

Synthetix, the synthetic asset platform, announced in the latest update codenamed "Sulfur" that the applications Mintr and the exchange Synthetix.Exchange in the protocol have migrated to deploy using IPFS. Synthetix stated that this move will reduce centralized infrastructure. Both of Synthetix's applications use Ethereum Name Service (ENS), and the current domain names will continue for two more months before being abandoned.

UMA Launches New Synthetic Token Tracking ETH/BTC Ratio

Through UMA's Synthetic Token Builder, by collateralizing a certain amount of "Dai," you can create a synthetic currency tracking the price of the Renminbi, Tesla, or Facebook stock. On May 21, UMA introduced a new synthetic token: ETHBTC, which tracks the price ratio of Ethereum to Bitcoin. If ETH surpasses BTC, the token value will rise, and vice versa. UMA claims its mechanism does not rely on oracle prices, reducing potential single-point-of-failure risks.

Fuel Labs Releases Reddit Cash Beta Using Optimistic Rollup Scaling Technology

Fuel Labs announced the launch of Reddit Cash, a Burner Wallet supporting Fuel optimistic rollup, to expand the use of Reddit community points. In the current test, users of two subreddits can transfer Moons and Bricks points to the Fuel sidechain; transfer Moons and Bricks points to other users at lower costs immediately, supporting hundreds of transactions per second; and facilitate decentralized exchange transactions.

Other Updates:

Two Data Indicators

This week's data is collected from 5/19 to 5/25, with price snapshots taken around 6:30 PM. TVL refers to Total Value Locked, indicating how much value is locked in the platform. Data sources include DeFi Pulse, Maker's official website, Compound's official website, AAVE's official website, etc.

DeFi Lending Platform Scale

DEX Scale

Three Expert Views

Haseeb Qureshi: Mixer or Private Pool, Which Will Prevail in Protecting Blockchain Privacy?

Prominent crypto venture capitalist Dragonfly Capital's Managing Partner Haseeb Qureshi recently conducted a poll on Twitter asking which Ethereum privacy technology people think will prevail, Mixer like TornadoCash or Private Pool like Aztec? Private Pool can create native privacy coins but at a high cost, while Mixer has lower costs but can only be used when needed. The poll results were almost 50/50 split.

Rune Christensen: One WBTC Trade Mints 4 Million Dai...DeFi Acts as an Economic Vacuum Cleaner

MakerDAO founder Rune Christensen tweeted about the significant amount of WBTC locked in Maker to mint Dai recently, indicating the potential demand for non-ETH assets and noting that this is just the beginning of DeFi attracting substantial value to the Ethereum blockchain.

Ryan Sean Adams: The Future of DeFi May Not Resemble Early Applications

Mythos founder Ryan Sean Adams responded to a tweet by Jesse Walden on Twitter. Walden mentioned that people pay for financial services not necessarily to make money but for peace of mind. Ryan believes that current DeFi mostly helps people think about their financial issues, suggesting the need for more non-financial DeFi applications as mainstream customers seem interested in this area. The focus should always be on contributing value, such as machines, liquidity, code, community, rather than just finances.

Four Expert Visit

DeFi Expert Visit Episode 6, we are honored to have a representative from Set Protocol, also the co-founder of EthHub, Anthony Sassano to talk about Set with us. Set is an Ethereum-based automated asset management protocol that abstracts various trading strategies into ERC20 tokens, allowing anyone to create such tokens. EthHub is a benchmark Ethereum education platform founded based on open-source collaboration on Github, offering abundant resources.

What is Set?

Anthony: Set was born during the ETHWaterloo hackathon at the end of 2017, with team members spanning San Francisco and Australia. Set Protocol is the core protocol contract, and TokenSets is the team's front-end interactive platform. Set tokenizes trading strategies into ERC20 tokens, allowing various index funds or ETF strategies to be created through Set contracts. Considering on-chain market depth, system stability, and trading history, the current whitelist of Set targets includes: ETH, WBTC, LINK, DAI, USDC. Creators can use combinations of these targets to create new Sets, known as social trading sets. Additionally, there are robot sets for automated trading based on contract design.

Explain Robo Set and Social Trading Set?

Anthony: Robo set are various automated trading strategy tokens created by the Set team in response to community demand, with all trades executed automatically by smart contracts. Price signals required for trading strategies are provided by oracles. Holders simply hold these Sets to benefit from the potential profits of these strategies. Two well-performing examples are:

ETH RSI series robo set, buying ETH when RSI exceeds 60 and selling when below 40.
ETH Moving Average series robo set.

Social trading set are managed portfolios by traders or their own trading programs, created by experienced traders applying to Set and collaborating with the team to launch. All trade histories of each set are recorded on-chain for public verification. Two well-performing examples are:

BTC Network Demand Set created by trader ByteTree, trading based on various signals to determine the health of the Bitcoin network.
LINK/ETH Price Action Candlestick Set created by Aaron Kruger.

How is the Creation and Revenue Sharing of Social Trading Set Designed?

Anthony: With over 500 applicants in the past few months wanting to create new Sets, once approved, the Set team collaborates with the applicant to create a new token, with the coding part completed by the Set team. Token design includes trading strategies and creator's fee conditions. Effective fee conditions are not a one-time purchase fee but actual performance fee and a small monthly streaming fee. Regarding the performance fee, as Set has designed a higher watermark mechanism, not all token profits are subject to the creator's fee; each time a fee is taken, the current profit performance becomes the latest watermark threshold, and the creator can only take the next fee when profits reach and exceed that threshold again, updating it once more. Creators can change fee rules, with each change taking effect five days after public announcement. These mechanisms are designed through long-term interactions with traders, investors, and market adjustments.

What is the Biggest Risk of Holding Set Launched Tokens?

Anthony: Errors in rebalancing trades. Set fetches asset prices from various oracles and calculates various trading signals. If an oracle is attacked, it may trigger rebalancing trades that should not happen, benefiting the attacker. Additionally, in case of Ethereum gas price spikes like the incident where MakerDAO was liquidated at extremely low prices, Set may face a situation where no rebalancing trades occur, causing significant deviation from the strategy's original design. Readers planning to use Set Protocol are advised to read Anthony's article.

Rapid Fire Questions

Q: Predictions on market acceptance of Ethereum 2.0 phase 0 launch?

Expecting a significant number of direct participants in phase 0, staking their Ethereum into the beacon chain for staking. Eth 2.0 staking differs from Tezos and Cosmos' delegation model, allowing everyone to directly stake on their computers on the chain.

Q: Most exciting DeFi trend for you?

Development of Layer 2. Advancements in Optimistic rollup and practical applications of rollup by Loopring and Synthetix.

Q: Most used DeFi platforms?

uniswap.org, dex.ag, 1inch.exchange.

Q: Top 3 tokens you hold the most?

Only hold ETH. Missed out on SNX like most people. Recommend https://www.tokenterminal.xyz/ to observe performance indicators of various token systems.

Q: Most admired DeFi pioneer?

Hayden Adams, founder of Uniswap Hayden Adams.