Plus Odds & Ends and Thoughts & Prognostications
Tweet of the Week: Begging for regulation
Currency blogger JP Koning highlighting a blog post from Paxos comparing itself to USDC and USDT, on the heels of Circle’s announcement that only 61% of the reserves backing USDC are “cash or cash equivalents”. Paxos argues that the three stablecoins that it powers, PAX, BUSD and GUSD, are truly regulated, because they report to the New York State Department of Financial Services. The circulating supply of these three stablecoins combined ($12.6bn) is far less than USDC ($27bn) and USDT ($110bn) but growth opportunities in the stablecoin space are likely to come in the barbell format; the best opportunities will come at the extremes - either stablecoins become very regulated or very decentralized. For more, check out Dose of DeFi’s recent piece, “Stablecoins, central bank digital currencies and the new era of credit creation”
Chart of the Week: Yearn is back on top
A repeat from last week, but Messari’s Q2’21 DeFi Report has so much good info. This chart shows the yield aggregator competitive landscape, which Yearn pretty much invented. Yearn’s initial success set off a wave of copy cats that used token incentives to attract liquidity providers, which helped bring Yearn’s marketshare to under 20% in January. Yearn’s TVL grew consistently through 2021 thanks to the launch of their v2 vaults and are now the undisputed industry leader with almost 70% of the market share. Many question whether aggregators can build a moat to protect against new challengers, but there may be a Lindy effect the longer it remains the #1 yield aggregator.
Interestingly, of the three big DeFi industries (yield aggregators, DEXs and lending), only lending has a market leader with less than 50% of marketshare.
Odds and Ends
New Sushi deal would get rid of 30% discount in strategic sale to VCs Link
Sushi ONSEN rewards are now live on xDai Link
Reddit chooses Arbitrum to scale Community Points Link
Decrypt: Vitalik Buterin urges Ethereum to 'Move Beyond DeFi' Link
Element Finance, a fixed APR stablecoin, launches on Ethereum Link
Maker Foundation announces plans to dissolve Link
Thoughts and Prognostications
Dr. Reorg or: How I Learned to Stop Worrying and Love MEV [Saneel Sreeni/Dragonfly]
Ethereum Reorgs after the merge [Georgios & Vitalik/Paradigm]
Investing vs. Trading [Avi Feldman/Deribit Insights]
Current crypto market structure and why it leads to extreme volatility [Arthur/DeFiance Capital]
MEV and EIP-1559 [Kristof Grazso & Alejo Salles/Flashbots]
A quick primer on options pricing or ‘stop donating money to Big VC and pass the wasabi’ [mgnr.io]
The dollar isn’t a meme [JP Koning/Moneyness]
That’s it! Feedback appreciated. Just hit reply. Written in Brooklyn in the doldrums of summer.
Dose of DeFi is written by Chris Powers. Opinions expressed are my own. I spend most of my time contributing to DXdao*. All content is for informational purposes and is not intended as investment advice.