DEFI MARKET

【Dapp Pocket】DeFi Weekly Report - Week 3 of September: Is Now the Best Time for New Blockchain?

2020/9/17

Dear DeFi enthusiasts,

Apologies for the delay this week! The biggest news of the week is the relaunch of SushiSwap. With the support of FTX CEO Sam Bankman-Fried, the new version of SushiSwap immediately claimed the top spot in DEX liquidity upon its launch, sparking anticipation for its future developments on the Solana blockchain. Let's dive into this topic in this week's perspective.

Other headlines this week include Aave's release of a preliminary proposal for staking rewards; the YFI community's proposal for an Ethereum options strategy yETH-PUT Vault; Andre Cronje's upcoming decentralized stablecoin lending protocol, StableCredit; and the emergence of another Uniswap fork project, SashimiSwap.

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This week's notable viewpoints include Andre Cronje from Yearn calling out SushiSwap for embarrassing DeFi; Aave's Marc explaining why DeFi is not a game for whales; and our good friend Ryan asking if everyone in the cryptocurrency community is just a fair-weather friend?

Table of Contents

1. Our Perspective | Is Now the Best Time for Blockchain?

Why is Ethereum Dominant

In the past, despite the existence of many powerful programmable blockchains worldwide, the only one widely used is Ethereum. Why? Does Ethereum possess some patented technology that others cannot replicate? Quite the contrary. In this era of open-source code, not only can Ethereum developers easily reference and integrate others' code, but other engineers can also easily "move" Ethereum code to other chains. Ethereum's biggest advantage is still the so-called "first-mover advantage": Ethereum was launched as early as 2015, attracting many developers to the Ethereum ecosystem, with numerous Dapp/DeFi projects built on Ethereum. Additionally, new liquidity in the market almost always flows into Ethereum projects first, creating a very strong "network effect," making it difficult for smaller chains to compete even if they have stronger functionality than Ethereum.

Rapid Establishment of Super Popular DeFi Projects

However, SushiSwap has opened a new path. Through open-source DeFi protocols on Ethereum, anyone can fork and replicate well-known protocols, just like SushiSwap copying Uniswap. By issuing a token, SUSHI, for liquidity mining, there is a strong incentive for people to put money into the protocol you copied. All it takes is to set up another website, which can even use someone else's open-source code. From copying protocols, issuing tokens, to setting up websites, the cost is relatively low and very fast, allowing you to establish a super popular DeFi project in a short time. While we are still contemplating whether this is fair competition or a greedy act, some have already thought of the next step, which is to bring this project to another blockchain, enabling that blockchain to immediately have a super popular project and users, with faster speed and lower costs, thus competing with Ethereum. This is what SushiSwap and Solana blockchain aim to do.

Increasing Cross-chain Demand

For a new blockchain to move a project from Ethereum to another chain, cross-chain asset transfer is required. Additionally, if one wants to operate in the long term, relying solely on copying is not sustainable. It is necessary to provide Ethereum users with a convenient way to transfer assets to the chain. Thus, the demand for cross-chain solutions is increasing, but there is currently no mature solution. Platforms like Solana offer centralized cross-chain solutions, where you can deposit Ethereum tokens into the FTX exchange and withdraw Solana tokens. However, decentralized cross-chain solutions are anticipated. Solana is implementing this through its wallet, sollet.io, while protocols like Polkadot and Cosmos can achieve cross-chain asset transfers between multiple blockchains, which we believe are projects worth paying more attention to.

The Best Time for New Blockchains

It is well known that Ethereum 2.0 ETH 2.0 will significantly increase its transaction speed and reduce fees, but its launch date continues to be delayed, creating an opportunity for other blockchains. With the threshold for establishing popular projects now lowered, if the cross-chain issue is resolved, it is highly likely that blockchains competing with Ethereum will emerge. Apart from Solana, we believe that Algorand and Binance Smart Chain (BSC) are potential candidates. Both have fast transaction speeds, with the former supported by stablecoin USDC and enhanced blockchain security, and the latter boasting a large user base, existing Ethereum DeFi projects like Cream or their developed BurgerSwap support, and being more developer-friendly. We believe that now is the best or perhaps the last opportunity for new blockchains.

2. This Week's Highlights

✨ Headlines This Week

SushiSwap Completes Migration and Officially Launches

After going through turmoil, SushiSwap's migration project has been completed and launched. Users can now earn a 0.05% fee from Sushiswap trades by staking SUSHI. The two million USD worth of SUSH tokens as rewards during the migration period began distribution on September 11th.
In addition, the nine elected multisig wallet holders include FTX founder Sam Bankman-Fried (SBF), Compound founder Robert Leshner, community contributor 0xMaki, The Block's research director Larry Cermak, and others.
Furthermore, SushiSwap's anonymous founder, Chef Nomi, announced on Twitter the return of 14 million USD worth of ETH by selling their unlocked SUSHI tokens and letting the community governance decide on their deserved reward.

Decentralized lending protocol Aave to release preliminary proposal for staking rewards

Aave is set to release the preliminary implementation of staking rewards for the protocol. Yield farming rewards will be activated after the staking feature goes live. In the staking reward measures, the release amount of AAVE tokens will be reevaluated quarterly. In the past few weeks, the daily release amount of AAVE tokens was 400. The specific deployment process includes: 1. Deployment and activation of staking rewards; 2. Balancer pool staking and initiation of Aave/ETH rewards; 3. Activation of the safety module, including penalty measures, etc.

Yearn community introduces Ethereum options strategy yETH-PUT Vault proposal, seeking alternative strategies for high-yield liquidity mining

Yearn Finance (YFI) community member ramaruro has proposed the yETH-PUT Vault, an Ethereum options strategy product, on the forum. In addition to considering self-developed strategies, the proposal also considers using existing DeFi options platforms such as Opyn or Hegic.

Yearn founder Andre Cronje to launch decentralized stablecoin lending protocol StableCredit

Andre Cronje, founder of Yearn Finance, announced the upcoming launch of a decentralized lending protocol, StableCredit. The protocol combines tokenized debt stablecoins, lending, AMM, and one-sided AMM risk to create a fully decentralized loan protocol, allowing tokenized credit assets to be created based on any asset, such as StableCredit USD, EUR, JPY, etc. Specifically, users can provide a certain amount of USDC to generate StableCredit USD tokens, with the AMM providing liquidity for USDC and StableCredit USD at a 50:50 ratio automatically. The AMM can calculate the system's utilization rate, reaching up to 75%. Based on the total system utilization rate, users can determine their credit limit, i.e., the amount of StableCredit USD obtained.

New project SashimiSwap drives Uniswap lock-up to $1.1 billion, almost on par with SushiSwap

Another Uniswap fork project, SashimiSwap, is born! Initiated by the Aelf blockchain, it will later integrate with its AESwap on-chain. SashimiSwap is essentially the same as SushiSwap, with almost identical interfaces, a Uniswap clone, allowing for liquidity mining by staking Uniswap LP Tokens. As of the deadline, SashimiSwap has driven Uniswap TVL to $1.04B, making it the top DEX currently.

🚀 DeFi Protocols

🤝 Blockchain

3. Data Indicators

The data for this week is from 2020/9/8 to 9/15. TVL (Total Value Locked) indicates how much value (in USD) is stored on the platform; IPY (Interest Per Year) is the current lend out funds * annual interest rate, i.e., the platform's annual interest income. Data source: DeFi Pulse, CoinGecko. (Unit: million USD)

Total DeFi Indicators

Lending Platform Scale

DEX Scale

DeFi Coin Prices (Farmer's Zone)

4. Expert Opinions

Andre Cronje: Sushi Makes DeFi a Joke Again

In response to recent actions by Sushi, Yearn founder Andre Cronje shared his views on Twitter. He mentioned the actions reminiscent of 2017 ICO scams: shorting, buybacks, high salaries, large team allocations, team scapegoating, mere whitepapers, forking from Ethereum projects... SushiSwap has done them all. "Thank you for making DeFi a joke again."

Marc Zeller: Is DeFi Just for Whales Like Traditional Finance? I Don't Think So...

Aave's Marc Zeller recently tweeted his thoughts on the advantages and disadvantages between whales, mid-sized fish, and small shrimps in the DeFi