Defi Farm #16 - August 14th Weekly Update

ABY - always be yielding

Author

Andy Page
August 14, 2022

Hi everyone,

I missed sending a newsletter last week, breaking my 15-week streak 😔 A lot has happened in the past 14 days, especially during the past 2 days. Let's dive in 🤿Over the past 7 days:SPY: +2.86%BTC: +5.7% ETH: +13.7%

Major L1's:SOL: +12.0%AVAX: +5.4%Near: +13.9%Algo: +3.8%FTM: +4.9%Today I'll go over:- The crazy stuff going on with Tornado Cash- Interesting news from this week- Cool projects and protocols I came across this week- A new defi farming strategy of the week

Tornado Cash - Chaotic Good, Lawful Evil, True Neutral?

On Monday, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash.

What is Tornado Cash? Tornado is a tool used to anonymize crypto transactions. When you're on-chain, everything is trackable. For people making specific transactions that's not always ideal. I won't go into detail about how Tornado actually works, but this video gives a good high-level overview.

Tornado Cash has infamously been used in most crypto hacks and exploits to help the exploiter move funds to new, fresh wallets and eventually cash out.

However, Tornado Cash has also been used for good. Many people who donated crypto to Ukraine or Canadian truckers used Tornado to protect both their and the receiver's address. A lot of Russian citizens self-reportedly used Tornado to donate to Ukraine so that there would be no way for the Russian government to track their support. Vitalik himself used Tornado Cash for this.

What does being sanctioned do?

Turns out a lot.

  • Many developers who contributed to the open source software of Tornado had their Github accounts suspended

  • The tornado website was taken down

  • A core developer was arrested

  • Circle (issuer of the USDC stablecoin) blacklisted all ETH addresses associated with Tornado

  • Many defi protocols (Aave, Uniswap, etc) started blocking frontend access to these addresses as well.

I think the craziest part of this is that some people started sending well-known addresses 0.1 ETH from Tornado Cash so that their addresses would be blacklisted. Sassal, Justin Sun, Jimmy Fallon, and Brian Armstrong were all reportedly affected.

What does all of this mean for defi? Is it really decentralized?

I don't really know what to think about Tornado itself and the topic can get pretty philosophical if you let it. Can a tool/software/protocol be bad? Or is a tool completely neatural and the responsibility is with the users and their actions. If tech is neutral, can developers be held responsible if their tech aids crime? These are all Big quetions and ones that not everyone will have the same opinions on.

In regards to the decentralized part of defi - I do think that things will work themselves out eventually. It may take some time but I do think that core defi infrastructure will find a way to be uncensorable through open source code, protocol access via multiple front-ends, etc.

Interesting news and things from this week

Interesting protocol I found this week

Credix (link) - is bringing global credit markets on chain. KYC and AC status is required.

Ivy Protocol (link) - Ivy is tokenizing the underlying value of future carbon credits by allowing individuals to purchase future carbon credits and providing project owners with upfront/early-stage capital to support the offset project.

Interesting farm of the week

Vector Finance has some respectable yield on stable coins. I usually compare Vector to Convex but on Avalanche.

As always - it's important to DYOR on these protocols and the assets that you're interacting with. They all have different risk levels and you should be know what you're getting into.

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

- Andy