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【Dapp Pocket】DeFi Weekly Report - Week 1 of August: Is HODLing Ethereum a Huge Mistake?

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【Dapp Pocket】DeFi Weekly Report - Week 1 of August: Is HODLing Ethereum a Huge Mistake?

Dear DeFi enthusiasts,

Last week, the price of Ether briefly surpassed $400, a development that likely did not come as a surprise to us and our readers.

This week brings news of Aavenomics, where the AAVE token will replace the original LEND token and grant holders governance rights; the Ethereum 2.0 testnet Medalla has met its node requirements, with people eagerly awaiting the test launch on 8/4; AMPL experienced significant volatility this week, with its market cap dropping by 70% in just three days; additionally, Circle secured a $25 million investment from DCG, further expanding the influence of USDC.

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This week, our esteemed contributors have selected insights from Aave's Marc, who reveals his "triple yield" strategy; Dharma's Brendan, who suggests that DeFi is engulfing CeFi; and Token Set's Anthony, who speculates whether Ethereum is poised to dethrone Bitcoin this time?

One Our View | So, HODLing Ether Was a Huge Mistake?

Don't rush to sell! This is definitely not bearish on Ether. With the rapid development of DeFi applications and the gradual unveiling of Ethereum 2.0, we believe that ETH's price still has enormous growth potential. But why is HODLing not the best choice? It's not about holding, but if you're just keeping your Ether on an exchange or in your wallet, then every minute, you're missing out on the profit feast of DeFi liquidity mining. It's like staying at home while it's raining coins outside.

So, what should I do? There are many ways to Rome, but first, we need to buy a ticket called Dai. To say "buy," it's actually going to Maker to create a CDP to borrow Dai. Of course, if you prefer the interfaces of DeFi Saver or InstaDapp, you can also operate there. The reason for borrowing Dai first is that most DeFi platforms provide better liquidity rewards for stablecoins than for ETH. Collateralizing Dai stablecoin with Maker will bring you three major advantages: capital appreciation from holding ETH, freely participating in numerous liquidity mining parties with stablecoins, and best of all, collateralizing ETH to borrow Dai without stable fees. Borrowing interest is 0%.

Next, you can freely choose according to your preferences, risk tolerance, and understanding of each platform. Marc Zeller's "Triple Yield Strategy" is to first convert this Dai into USDC for arbitrage (because Dai's price is currently higher), then invest the USDC in Curve Y Pool to earn interest from curve, yearn, and Aave; or for higher profits, you can deposit in the Curve sUSD pool to earn interest and also receive SNX tokens, with an APR of over 20%.

Other Strategies

If you're worried about the rapid rise of new DeFi platforms, you can simply deposit Dai into the established DeFi protocol Compound to earn over 4% annual returns plus about 5% liquidity mining rewards in COMP, totaling about 9% APR.

If you want higher returns, there are many pools on Balancer with APRs over 20% where you can deposit funds to earn interest and also receive BAL rewards from liquidity mining. Depositing in pools with lower transaction fees will yield higher mining rewards, with an overall APR of over 40%.

If you find the above strategies too complex and liquidity mining difficult to understand, you can refer to this article to use Balancer step by step, or consider swapping Dai for the aggregated stablecoin mUSD on the mStable platform and directly deposit it to earn about 30% APR.

Even if you doubt floating interest rates, there are options like DMM offering a fixed 6.25% APR, and Idle which automatically finds the highest-yielding deposit platform through smart contracts, currently providing about 9% APR.

It is important to note that the above APRs are variable interest rates, and the actual rates can be calculated based on data from Prediction Exchange and the information provided by various platforms.

Don't Forget the Risks

Don't just HODL mindlessly! But also remember, always research and understand the risks before depositing in any platform. If you borrow Dai from Maker, pay attention to your collateralization ratio, as if it falls below 150%, your collateralized ETH may be liquidated. You can refer to Oasis for recommended collateralization ratios, around 250% is safer.

For risk assessment of lending platforms, you can refer to DeFi platform ratings provided by Consensys Codefi or check the profiles and TVL data of various platforms on DeFi Pulse. Never rush to invest your funds in newly emerged platforms and protocols out of fear of missing out; "Do Your Own Research" is the eternal truth in this space.

Two This Week's Highlights

Aave Introduces "Aavenomics," Will Launch New Token AAVE to Replace LEND

Decentralized lending protocol Aave has released a governance token economic model, introducing the new token AAVE to replace the native token LEND, with key highlights:

1. The native token LEND will be converted to the new token AAVE at a ratio of 100:1

2. Aave's total supply is 16 million, with 13 million allocated to LEND holders at the above ratio and the additional 3 million allocated to the Aave Ecosystem Reserve

3. Users staking AAVE in the safety module will receive security rewards from the reserve. Additionally, the Balancer AAVE/ETH pool will provide liquidity rewards.

4. AAVE holders will be able to vote on the protocol and submit Aave Improvement Proposals (AIPs) to make changes to the Aave protocol.

Stablecoin "AMPL" with Unique Scarcity Design Sees Total Market Value Drop 70% in Three Days

The token AMPL from the Ampleforth protocol saw its total market value drop from $719 million last Monday to a low of $240 million, with the market value as of August 3rd at around $350 million. Unlike stablecoins like USDC and USDT, the Ampleforth protocol has a unique elastic supply mechanism, where when the price of AMPL changes, the protocol implements "expanding" or "contracting" actions on all AMPL holders to achieve a new price equilibrium.

Andre Cronje Initiates Forum Poll: Should YFI Earnings Be Distributed to Other Forked Tokens?

Andre Cronje posted a notice on the YFI governance forum to survey whether the YFI community is willing to distribute yearn.finance earnings to other forked tokens that provide yield farming for YFI, including pink YFI tokens (YFII) and other forked tokens issued by different communities.

Ethereum 2.0 Testnet Validator Participation Reaches Original Requirement

As of last Saturday, over 56,000 ETH has been sent to the Ethereum 2.0 testnet for staking, meeting the requirement for 16,384 validator nodes in the multi-client testnet Medalla. Medalla is the multi-client testnet scheduled to launch on August 4th. Previous multi-client testnets were mainly run by client teams and Ethereum Foundation members. With the launch of the Medalla testnet, Ethereum's stability and health will be almost entirely in the hands of the community.

DeFi Governance Solution Project Boardroom to Release Alpha Version on August 6th

DeFi governance solution Boardroom, supported by decentralized autonomous investment firm MetaCartel Ventures, announced the release of its Alpha version on August 6th. Boardroom aims to provide a decentralized governance solution that allows token holders to easily participate in the governance of various DeFi protocols and enables token issuers or projects to present governance processes easily.

Circle Receives $25 Million Strategic Investment from DCG to Advance USDC Applications

Cryptocurrency financial services company Circle announced a strategic partnership with digital asset brokerage firm Genesis to promote the mainstream application of the stablecoin USD Coin (USDC). Genesis' parent company Digital Currency Group (DCG) made a $25 million strategic investment in Circle, which will be used to accelerate the development of Circle's new business and expand the applications of USDC.

Others Include:

Three Data Indicators

This week's data is from 7/28 to 8/3, with price captured around 5:30 PM. TVL stands for Total Value Locked, indicating how much value is locked in the platform. Data sources: DeFi Pulse, CoinMarketCap.

Lending Platform Scale

DEX Scale

DeFi Coin Prices (Farmer's Zone)

Four Expert Opinions

Marc Zeller: Just Holding Ether, Are You a Noob?

Aave's Marc Zeller expressed in a tweet: "If you're not using DeFiSaver to convert your Ether to Dai, then swapping to USDC for arbitrage, and then depositing in the Y pool to earn Yearn and Aave returns, I really don't know what you're doing."

Brendan Forster: DeFi is Devouring CeFi

Dharma co-founder Brendan Forster shared in a tweet the trading volume of DEXes during this mini bull market. Data shows that DEXes' trading volume in July has already surpassed three times that of June. He said, "DeFi is devouring CeFi."

Anthony Sassano: It's the Endgame Now!

Anthony Sassano of DeFi protocol Set Protocol shared a metaphor in a tweet. He likened 2017 to Avengers: Infinity War, where Ethereum tried to defeat Bitcoin but failed; and 2020 to Endgame, this time Ethereum is aiming for the head.

Five Meme of the Week