How a bank run in DeFi would work and how DEX volume fared after FTX collapse
Plus Odds & Ends and Thoughts & Prognostications
Tweet of the week: How DeFi deposit rates work
Of course the bank runs at Silvergate and Silicon Valley Bank are all anyone can talk about this week. Crypto folks should be familiar with this situation after experiencing FTX, BlockFi, Genesis and the rest of 2022, but once again we are drawn to the stark differences between how the same financial panic would play out in DeFi. In the above tweet (h/t Hart Lambur), Superfluid founder Francesco Renzi highlights how depositors would have more incentive to stay when others withdrew their funds because interest rates adjust automatically.
We’d add one more: transparent collateral. There wouldn’t be whispers of how a bank didn’t react quick enough to changing rates and the losses that may have ocurred. It would be on-chain for everyone to verify.
Perhaps it’s because we’re obsessed die-hards, but just as after the FTX collapse, it’s just more reason to double-down on DeFi.
Chart of the week: FTX’s fall is Uniswap’s gain
The first chart in a deep dive into the state of DEX trading activity in the months following FTX’s collapse from Tanay Ved & Kyle Waters in CoinMetrics’ latest State of the Network. The chart above lays out the market share amongst Uniswap and major CEXs - with the notable exception of Binance, which commands an 80% marketshare in the spot market. While Kraken and Coinbase took a good chunk of flow from FTX, Uniswap’s market share has also steadily increased. Barely touching 20% prior to FTX fall versus now consistently above and closer to 30-35%. Uniswap is happy to be on par with these CEXs but it has its sights set on Binance.
It will need to focus on growing volume outside of Ethereum mainnet if it hopes to take on Binance. Around 80% of Uniswap v3 volume comes from Ethereum mainnet, versus ~11% on Arbitrum, 6% on Polygon and 3% on Optimism. With the addition of Base from Coinbase (a fork of Optimism) and other zkEVMs on the horizon, there is more room to grow. And, of course, Uniswap Governance voted last week to launch on BNB chain itself.
Check out the full CoinMetrics post to better understand DEX volume the last few months. There was also a great piece on Messari Pro yesterday looking at DEX users.
Odds & Ends
Alpha Homora offers $32m in ‘seized’ assets to Iron Bank to pay down debt Link
Timeboost: A new transaction ordering policy for Arbitrum Link
Frax co-founder makes a case for stablecoin maximalism at ETH Denver Link
Blockchain Association announces principles for stablecoin legislation Link
Rune, MakerDAO founder, proposes rebranding DAI stablecoin Link
Rocket Pool to launch 8 ETH “mini” pools Link
WSJ: Stablecoins like USDC are commodities, says CFTC chair Link
Odds & Ends
Why are cross-chain auctions hard? [Tarun Chitra/Gauntlet]
Finding fortune in the $Blur craze [EigenPhi]
Nigerians’ rejection of their CBDC offers a cautionary tale [Nicholas Anthony/Coindesk]
Crypto Bank had a boring collapse [Matt Levine/Bloomberg]
All the ways we have fucked up governance, and how to rethink it [Eylon/DXdao]
Backrunning private transactions using multi-party computation [Robert Annessi/Flashbots]
That’s it! Feedback appreciated. Just hit reply. Written in Nashville, where the anticipation for spring is building.
Dose of DeFi is written by Chris Powers, with help from Denis Suslov and Financial Content Lab. Caney Fork, which owns Dose of DeFi, is a contributor to DXdao and benefits financially from it and its products’ success. All content is for informational purposes and is not intended as investment advice.
