Defi Farm #14 - July 24th Weekly Update

ABY - always be yielding

Author

Andy Page
July 24, 2022

Hi everyone,

It's been another 🔼 week for crypto and ETH seems to be continuing to drive the market. Let's dive in 🤿Over the past 7 days:SPY: +1.7%BTC: +7.2% ETH: +17.8%

Major L1's:SOL: +3.1%AVAX: +12.7%Near: +21.6%Algo: +0.7%FTM: +34.9%Today I'll go over:- Defi protocol convergence- Interesting news from this week- Cool projects and protocols I came across this week- A new defi farming strategy of the week

Defi protocol convergence

Something I've been thinking about a lot recently is the convergence of "blue-chip" defi protocols and their services.

Curve (a stableswap decentralized exchange) is now launching its own over-collateralized stablecoin. Aave (a decentralized borrowing and lending protocol) is doing the same thing.

TraderJoe announced that it is moving to concentrated liquidity pools (similar to Uniswap V3).

TraderJoe is marketing their NFT exchange product, JoePegs, incredibly hard. Uniswap just acquired Genie (NFT marketplace aggregator).

About a year ago, I thought that defi would stay pretty fragmented. Aave would do borrowing/lending, Curve would do efficient stableswaps, Maker would create decentralized stablecoins, and there would be one big native DEX for each L1. I could see a future (5-10 years out) where traditional banks would just start using some of these protocols in the backend and start operating off crypto rails.

However, now that all the major defi protocols seem to be focusing on expanding their "services", my prediction is starting to change. I'm now starting to wonder if, in 10 years, the Uniswaps, Curve, Maker, Aave's of defi will become the traditional financial firms, instead of just providing the smart contract rails for existing institutions.

I think one really important observation to notice is that during the last few months, as crazy as the market has been, Defi has worked without error. Liquidations happened flawlessly and efficiently, no defi protocol froze or paused transactions, it all just worked.

That's a lot more than can be said for some web2, centralized, crypto companies: Celsius, Blockfi, Voyager, etc.

All of this is going to be extremely fun to watch over the next few years.

Interesting news and things from this week

Interesting protocols/projects I found this week

NextRound (link) - allows you to invest in startup equity through NFTs. This is done via SAF3 NFTs (a web3 version of a SAFE). After a liquidity event (acquisition or IPO) holders of the SAF3 get paid out automatically via smart contracts. More info here. Before you get too excited, yes - this still requires you to be an accredited investor.)

ICHI (link) - I talked to one of my former students this past week who is a dev at ICHI. I was impressed at some of the features they're building for DAOs and protocols. ICHI allows any community, protocol, DAO with their own token to launch a branded token. They're also making a number of vaults that allow DAOs to provide liquidity to their tokens (Uniswap V3) and not have to worry about managing concentrated liquidity positions. I'm honestly still trying to wrap my head around all of the cool things that can come from the tools they're building.

Interesting farm of the week

Velodrome is an AMM DEX on Optimism and has had some decent yields on a lot of their pools throughout the week. Bankless did an interview with the team here.

You can earn 18-22% on different stablecoin pools.If you want ETH exposure, you can also try their USDC/ETH pool (32% APR) or their ETH/sETH pool (19% APR).

Farming rewards are paid out in VELO. I personally, will likely sell VELO into a stable or ETH but you could also choose to vest your VELO (lock it) to start accruing veVELO which allows you to vote on which pools receive the most rewards.

As always, know the risks of farming. In defi, there's always smart contract risk.

That's all I have for this week! Stay safe out there and as always, stay yielding!- Andy