Money Legos keep piling up! Finance redefined 4 / 21-4 / 28


Have a nice Wednesday DeFi Degens!

I was expecting to spend a large portion of this issue of Finance Redefined on analyzing Aave’s liquidity mining program. Investors feared that issuing 2,200 AAVE a day (which is roughly 5% of the Ecosystem Reserve Fund’s 2.8 million AAVE a year) could push the price of the token down as farmers earn and discard.

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It turns out to be unnecessary: ​​the program is a complete success. The AAVE token has risen nearly 15% since liquidity mining began, to $ 462, and the total value of the log has grown to $ 11.8 billion – up from just over $ 7 billion since liquidity mining began.

Well-researched liquidity mining work. The only question is, when the program is discontinued, how much of this TVL will be sticky?

Other narratives to keep an eye on:

Money legos continue to pile up

Earlier in the year, there was speculation that DeFi would see some sort of novelty in 2021: one protocol acquires another, likely via a governance token buyout. In particular, the roadmap for Synthetix 2021 opened the door to such an opportunity, compared it with acquisitions in TradFi and was inspired by Yearn’s merger / acquisition / collaboration Spree.

However, large-scale mergers and acquisitions have yet to be carried out. There are some minor examples of brewing – Inverse Finance currently plans to buy Tonic for around $ 1.6 million – but instead we’re seeing a boom in deep integrations at the protocol and front-end levels.

On Monday, Badger DAO and RenVM launched the Badger Bridge, a new interface that allows native BTC to be stored in Badger vaults with just a few clicks. The integration is characterized for two reasons. One thing is that it’s clearly mutually beneficial: a foolproof way of making returns on BTC is attractive to Hodler, which means Ren will see an increase in activity on his bridge (and therefore in log fees) while Badger also gets a boost in TVL.

The other aspect, however, is the willingness with which Ren subordinated his branding and let Badger – who I think has the stronger community – take over the landing page. Had it not been for absurd token reviews, one would have been an acquisition target for the other, given the obvious needs each one meets – but by working together, Ren gets everything they would want from a protocol like Badger, and the same applies to Badger and Ren.

This begs the question: why bother with takeovers when friendly integration can produce the same effects?

Another prime example is today’s announcement of the Balancer Gnosis Protocol. You can see the details in my article, but Balancer v2 is effectively bringing some nice innovations to AMM liquidity delivery, and Gnosis’ CowSwap is a liquidity aggregator and offchain transaction batching log that is reported to decrease the miner’s extractable value . The combination of the two will lead to a significantly more feature-rich DEX from both an LP and a trader’s point of view – possibly even positioning the Balancer Gnosis protocol as a Uniswap v3 competitor.

In a statement to Cointelegraph, Balancer CEO Fernando Martinelli stated that such deep collaboration would be impossible in the traditional financial world:

“Either of the two protocols would be impossible to implement in the traditional financial world just because there is no trustworthiness there (you always need an intermediary). Even if this were possible, combining these two protocols would be just as challenging as integrating Fidelity Index Funds (Balancer) with Nasdaq (Gnosis) under a single platform. “

Acquisitions can be an outdated model. Interoperability and composability mean that protocols can benefit from each other without hostile takeovers.

The branding may still need to be figured out, however – the Balancer Gnosis Protocol isn’t exactly the best name.

Do you speak my language

The goal posts for Ethereum maximalists keep moving as organic activity spreads to other chains.

On Solana, for example, $ COPE and $ STEP have attracted significant community followers and investment from key players (including funds other than well-known SOL backers, Alameda Research!), And a hackathon was announced this morning aimed at using the hashtag ” solanaszn “to start. “Other people took care of“ Solana Summer ”in the shape of last year’s DeFi summer, but whatever your favorite sobriquet is, the competition is real.

The success has – perhaps predictably – led some observers to poke holes in SOL’s growth thesis. While, as with any chain, there are many avenues to attack, one growing criticism is that Solana’s flagship language, Rust, is both difficult and exotic.

In a statement to Cointelegraph, Solana founder and current President of the Solana Foundation, Anatoly Yakovenko, rejected this view.

“Rust is a modern, widely accepted language suitable for writing secure, high-performance code. Stack Overflow has been rated as one of the most popular programming languages ​​by 65,000 programmers. We are therefore confident that this will play a key role in the organic growth of our developer community, ”he said.

He also noted that the foundation has counted 2,000 developers building on Solana (he didn’t mention any methodology or definitions used to get that number and it may seem a little puffed up as a study conducted by ConsenSys The year 2019 showed that there are around 1,300 Ethereum developers and in 2020 Electric Capital put the total number of ETH developers at around 2,300) and that Solana developers are not interested in “copies / pastes” of Ethereum projects.

He’s also right about the Stack Overflow study, although a 2018 poll on the Rust blog found that over 20% of developers working with the language felt unproductive after a year.

Whatever you think of Rust, it is likely a problem that money can fix. And for this purpose Solana steps on the pedal: The hackathon offers prizes and / or start-up capital of “up to 1 million US dollars”. I think I could learn a tough language for that.

Other stories this week:

Uranium Finance is likely to lose $ 50 million

ETH is cracking all-time highs

Aave’s liquidity mining program has been a success from the start

NYSE President optimistic about DeFi