DeFi, liquidity farming, new ICO bubble
In Weekly Blockchain Insights, we share the most interesting Blockchain Tweets, discussions about crypto from all blockchain ecosystems and various research and use case insights from the past week. Make sure to sign up for the newsletter below and get all blockchain insights to your inbox.
This week’s blockchain insights focus largely on DeFi since it started to heat up last week with Compound’s COMP governance token release and a few other projects following up with governance token issuances. In fact, the FOMO reminded us already of ICOs in 2017.
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Blockchain Market Overview
Electric Capital shared a great overview of the crypto market. Due to the crypto bear market and Covid 19, some companies and projects are struggling but many more are joining and thriving.
1/ I'm excited to share a brand new version of our Crypto Market Map, now including over 700 projects and companies!
We've added over 200 entries, mostly in the Applications, Dev Infrastructure, and Financial Services categories.
— Ken Deeter (@puntium) June 25, 2020
The derivatives market has been very small in DeFi even though it’s among the biggest in traditional finance. With a growing DeFi market, it might be worth checking out. Ryan Tian and Nicholas Krapels shared a good comparison of decentralized options platforms and introduced 8 projects.
Excited to begin a community-wide convo about #DeFi #OptionsTrading @rainiefield & I put together this research as an overview of 8 projects now tackling this issue incl. what we're doing at @fin_nexus
If considering investing here, take a look 👀https://t.co/Oca0uQ5eEW
— Nicholas K🅡apels (Pᚱof K) (@shanghaipreneur) June 25, 2020
The blockchain industry has significantly changed over the past years. The ICO hype decreased while serious businesses and regulators have become much more active. The progress can also be seen in the financial opportunities: Early-on you could only invest but now you can replicate traditional finance through (decentralized) protocols & there are even a few crypto-specific solutions.
1⃣ 2009-2014: Mine, buy, #HODL
2⃣ 2015-2018: Fundraising, speculation
3⃣ 2019+ All financial services
🔈All: Hold, spend, tip, borrow, lend, earn, bet
🔉Investors: Hedge, rebalance, market-making, margin trading, liquidity, derivatives
— Blockchain-Comparison.com (@BCComparison) June 16, 2020
General blockchain insights
A nice and simple introduction to blockchain “A Beginner’s Guide to Crypto” was issued by Women in Blockchain Boston (WiBB) and she256. It’s a decent collection of introductory blockchain content.
The number one question we receive from people new to crypto is “Where do I start?”. With the wealth of resources out there, it can often be overwhelming.
— she256 (@she_256) June 23, 2020
A never-ending story is maximalism in crypto. Maximalism in the crypto industry creates confusion and unnecessary barriers to entry for outsiders. At the same time, it’s important to mention that there are definitely projects that one should stay away from.
Maximalists see only Bitcoin and Shitcoin. In reality, there are 4 categories:
3. Other Valuable Coins, and
Maximalists think 2 and 3 are 4, because they are insecure about 1. In reality, 2 and 3 make 1 much better. Remain wary of 4. 😜
— Erik Voorhees (@ErikVoorhees) June 17, 2020
Countries are competing for the best talent, finance and tech. Many countries have already been working on central bank digital currencies (CBDC) for 3+ years. Now, we are witnessing more and more experts that urge their governments to step up the game in the EU & in the US.
Blockchain is poised to play an integral role in our next-gen global financial system. Unfortunately, the U.S. is currently ceding control in this arena to China, partly by only providing regulatory clarity to the two cryptos dominated by miners based in China. https://t.co/3sDsSbnBSy
— Chris Larsen (@chrislarsensf) June 24, 2020
A good community that is aligned around the core values and supporting the growth of an ecosystem is just as important as the core technology. In fact, open-source technology can be copied but an ecosystem with supporters not that easily.
Building a community around the technology is just as important as building the technology itself.
— Roger Ver (@rogerkver) June 27, 2020
Bitcoin is still the dominant leader in crypto – a niche industry. The Bitcoin community and other crypto communities need to create awareness, interest, and desire which should consequently lead to actions. The term “Bitcoin” is already well-known in society and many Bitcoin people provide in-depth insights. However, there remains a large gap between “normal people”, crypto & technology.
Just listened to @danheld on @PeterMcCormack What Bitcoin Did. They touched upon a good point, we do have tons of quality content on the bottom of the funnel for people to dive deep into #Bitcoin – however the top part of the funnel is rather light. Thoughts & recommendations ? pic.twitter.com/eA8r2e6hYD
— Bitcoin Meme Hub 🔞 (@BitcoinMemeHub) June 26, 2020
DeFi is a niche industry in this niche industry. It’s growing but people look for ways to accelerate this.
For a category that was unnamed and barely existed ~2yrs ago, growth in #DeFi is incredibly impressive.
But within the crypto community its not controversial that DeFi is primarily used by insiders for speculation.
— Jesse Walden (@jessewldn) June 17, 2020
DeFi & Liquidity farming
Compound released the COMP token to decentralize the protocol and enable people to engage in the governance process. Each day a specified number of COMP tokens is released to active users of the protocol. The more funds a users adds either directly or through other protocols, the higher is the share of the rewards. This can be called “liquidity farming”.
All Compound protocol users are now receiving $COMP – marking the beginning of community governance.
— Compound Labs (@compoundfinance) June 15, 2020
DeFi insiders and supporters shared decent guides to enable others to join the new DeFi gold digger movement – “liquidity farming”. The improved UX could indeed help non-crypto people get into DeFi and start earning interest by using one of the lending protocols out of an easy-to-use mobile wallet.
You can earn 100% annual interest rate using USD in multiple places on Ethereum right now. How?
Thread you can share with normies.
— Tony Sheng 🦉 (@tonysheng) June 20, 2020
Dan Elitzer is one of the DeFi pioneers. He shared a great insight into what’s going on currently and what might be coming next in DeFi. Assets in DeFi can be used for multiple purposes that are symbiotic at the same time: “Aquaponic systems provide farmers with two sources of revenue, both increasing and diversifying their potential income.”
Welcome to the dawn of Aquaponic Yield Farming, the Rise of Symbiotic DeFi Protocols, and perhaps someday the evolution of Prime Brokerage Protocols.https://t.co/dKHnsUJ0Zk
— Dan Elitzer (@delitzer) June 24, 2020
Soon, all in DeFi have started talking about the best short-term yield opportunities and how the yield could be optimized through the use of multiple protocols, leverage, flash loans and more. No matter how sustainable liquidity farming is, these token issuances and clever economics are a great growth hack.
It’s very easy to misinterpret yield farming as a financial innovation. It’s not. It’s an innovation in user acquisition / growth hacking.
As a result, we will see many centralized businesses apply these techniques. BNB is a great example. But it doesn’t have to be in crypto.
— Qiao Wang (@QWQiao) June 24, 2020
DEXs are a central part of DeFi. Their usage and volume levels have been rising significantly. The annualized liquidity provider fees are also growing substantially.
📶 A bit lost in the noise, decentralized trading is *exploding* right now
🦄 @UniswapProtocol volume alone is on track for ~$400M this month, more than all of 2019 combined
💸 Annualized, that's ~$4.8B in trading volume and ~$14.4M in liquidity provider fees pic.twitter.com/aOaRyaNgzB
— Hayden Adams 🦄 (@haydenzadams) June 25, 2020
Investing is becoming much easier. However, it is an incredibly complex topic, risks are not fully understood and, admittedly, mainstream is still years away from adopting this.
Building for mainstream is kind of overrated (for now).
If the economics make sense for power users, that will eventually be scaled to a wider audience.
Before DeFi, "existing crypto users" weren't actually users of anything really. They just held tokens somewhere. https://t.co/gIdKrGf0ex
— Predictions Exchange (@PredictionsExch) June 27, 2020