Weekly DeFi/NFT News — July 18th, 2022

Weekly DeFi/NFT news is a collection of major weekly events/announcements brought from the most trustworthy data sources, such as The Defiant, Spencer Noon, Week in Ethereum News etc. with comments and extra insight from the Bulldax DeFi labs.

Solana NFT marketplace Magic Eden crossed 425k YTD users — Spenser Noon

• Magic Eden is the leading NFT marketplace on Solana. The project recently crossed 400k YTD users, tracking at ~425k. Cumulative volume reached 21.6m SOL (~$821m).
• Over the past few months, it has defended its market share, currently tracking at ~99% of volume. Despite recent declines in volume, their user numbers remain strong: 10–15k DAU and ~120k MAU, down only slightly from May and April highs.

• Magic Eden’s retention is quite strong: ~6/7th of their current DAU are returning customers from earlier in the month. The average number of transactions per DAU further supports that the marketplace is beloved by its users, suggesting users purchase ~4 NFTs every day they visit the site.

• Daily transactions, however, are still tracking ~60k / day, indicating users are still transacting despite price drawdowns.

Source: Spenser noon newsletter

Axie Infinity NFT Sales Rising Amid ‘Play-and-Earn’ Transition — Decrypt

• Over the past week, Axie Infinity NFT sales rose nearly 198% over the previous seven-day period, per data from CryptoSlam. Granted, the $1.38 million worth of NFTs is a small fraction of what Axie was selling last summer when it regularly topped $100 million in weekly sales, but it’s a notable week-over-week jump all the same.
• Jeff Zirlin, co-founder of Axie Infinity developer Sky Mavis, tweeted last Thursday that some 22,000 Axies had been sold in the previous 24 hours — a rise from 7,000 sold during a 24-hour span a few weeks prior, he suggested.
• He added that downloads of the new Origin version of Axie Infinity — which implements a new battle system, visual upgrades, and other enhancements — were on the rise, and that 90% of Axie land owners had staked their NFTs to earn AXS token rewards.
• In a blog post yesterday, Sky Mavis Game Product Lead Philip La wrote that media reports about the game’s declining token and NFT prices are presenting “misleading narratives” about the game. He pointed to the ongoing transition from the previous play-to-earn version of Axie Infinity to the new “play-and-earn” Origin version.
• Origin is available to play in a soft launch format that doesn’t yet offer token rewards. Sky Mavis also plans to expand the game into official mobile app marketplaces, since Origin doesn’t require NFTs to play due to its new free-to-play starter monsters.

Source: https://decrypt.co/104888/axie-infinity-nft-sales-rising-play-and-earn-transition

StarkNet Testers Fume After Token Announcement — The Defiant

• StarkWare, the company behind Ethereum layer-2 scaling solution StarkNet, plans to launch a native token designed to decentralize control and maintenance of the network.
• The token is also intended to reward developers and investors, and its unveiling comes a day after Su Zhu, the enigmatic founder of failed crypto hedge fund Three Arrows Capital, slammed the fund’s liquidators for their alleged failure to claim StarkWare tokens before a July 5 deadline.
• But early adopters of the nascent L2 took to its Discord to fume that they were left out of the equation, and some compared it to Optimism’s botched token airdrop last month.
• “Now is the time to advance the decentralization of the network,” StarkWare said in a series of blog posts Wednesday, “so it achieves the liveness, censorship resistance, transparency and inclusivity demanded of an L2 on Ethereum.”
• The initial 10B supply of StarkNet tokens “emphasizes compensating developers for their work,” the company said. About one-third has been allocated to “core contributors”

No Airdrop For Early Adopters

The allocation angered some of StarkNet’s early users, many of who have been using the network’s testnets hoping for an airdrop.

“100% its an error, i can’t believe this,” Discord user Imperator wrote in a channel dedicated to the token announcement. “people are invested in their ecosystem and using the testnet, and there is nothing for them.”

Source: https://thedefiant.io/starkware-token/

Ethereum Still On Track For Mid-September Merge — The Defiant

• Ethereum developers have doubled down on a mid-September target for the Merge during a conference call held on Thursday.
• The Merge is Ethereum’s highly anticipated transition from a proof-of-work to a proof-of-stake consensus mechanism. It’s expected to slash the blockchain’s energy use and, therefore, carbon emissions, by as much as 99%, addressing one of the primary critiques of the world’s second-largest cryptocurrency by market capitalization.
• Tim Beiko, who organizes meetings of the network’s core developers, suggested a target date of September 19.
• The date is meant to be a roadmap, rather than a hard deadline, according to one prominent Ethereum developer.
• “This merge timeline isn’t final, but it’s extremely exciting to see it coming together,” superphiz.eth tweeted Thursday. “Please regard this as a planning timeline and look out for official announcements!”

• Last month, the developers decided to delay Ethereum’s “difficulty bomb” in an acknowledgement that the Merge wouldn’t happen before mid-September. The difficulty bomb is an update built into the protocol that will significantly increase the complexity of PoW calculations, and therefore, the time required to process transactions — a kind of self-destruct mechanism meant to incentivize the transition to proof-of-stake.

Source: https://thedefiant.io/ethereum-merge-september/

DeFi Worked Great — Pantera Capital

• DECENTRALIZED finance protocols — like Aave, Compound, Uniswap, MakerDAO — all functioned flawlessly 24×7. This crisis proves the opposite of the common narrative. It proves DeFi works great. Way better than centralized finance firms like Celsius, BlockFi, Lehman Brothers, et al.
• The centralized finance companies were forced by smart contracts to pay back the DeFi protocols.
• In fact, you could say that DeFi, due to its discipline for over-collateralization, protects you from CeFi. Celsius was forced to prioritize paying down its $400+ million DeFi loans on Maker, Aave, and Compound to prevent its collateral from being liquidated. There is no ability to “re-structure”/renege on smart contracts. In DeFi “a deal is a deal” — you can’t back out.
• All centralized finance companies are forced by smart contracts to pay back the DeFi protocols. On the flip side, centralized finance companies can lie to and then ghost their own clients.
• DeFi also relies almost exclusively on over-collateralization in lending protocols providing transparently healthy risk management practices. This is similar to how banks issue mortgages against homes. The strength of DeFi’s current platforms is over-collateralization with the minimum collateralization ratio for most DeFi platforms being 110–150%, representing a 60–90% loan-to-value ratio. In practice, we saw strong DeFi protocols (MakerDAO, Compound, Aave) with much higher collateralization ratios of 200–300%, representing a 30–50% loan-to-value ratio.
• DeFi players could also be relied upon to conduct their business in the same way before the crash, during the crash, and now in their aftermath, with no pauses in withdrawals or requirements for emergency funding. During the LUNA crash, for example, DEXs continued functioning as normal while some CEXs were forced to halt withdrawals to the clear detriment of their users, who suffered losses as a result.

• There will be lessons learned from the crash of 2022. The strength of DeFi will be recognized and we think that better tooling for institutions to engage with DeFi will emerge and grow in strength in the next bull cycle.

Read the whole thing: https://panteracapital.com/blockchain-letter/defi-worked-great/