Achievements Unlocked! Five Awesome Upgrades to Money in 2019
Some very interesting things are happening in crypto, and they don’t have anything to do with “number go up.”
Price be damned, we’re going places.
The flippening that happened wasn’t ETH eating BTC.
The flipping was USDT volume taking over BTC.
When it comes to “number go up” this doesn’t mean a whole lot, but when it comes to upgrading money, this signals something very important for DeFi:
Let’s review how far we have come in 2019:
2019 was the year of DeFi infrastructure. Composability, or “money legos,” was a meme this year because the liquid, interest-bearing, and highly-fungible bits of money, typically with a letter prefix, such as rDAI or cDAI became popular.
Compound was a strong leader in the DeFi Lending space in the first half the year, and made quite a splash when they announced Compound V2: cDAI. What was exciting about this for the DeFi community was it really opened up our eyes to the possibilities. Now it would be possible to lend your money to someone, earn returns on that, and simultaneously have that loan be perfectly liquid and spendable.
Fulcrum has followed suit with iDAI and Uniswap gives out uniswap tokens that can be moved elsewhere or locked in a cold wallet. Given that smart contracts are permissionless, developers are able to connect different pieces together, as we are seeing with DeFi Zap.
I rocked up to the Deconomy conference in Seoul in early April 2019 just in time for the revered Andreas Antonopoulos to walk out. He shared with the mostly first-world audience how Bitcoin wasn’t for them. It was for people whose banking system sucked real bad.
At that conference, I sharpied over my badge:
“ASK ME ABOUT DEFI.”
I got a few people asking, but not many. Fast forward 9 months to a conference in Bangkok where I can’t barely get a mini-muffin into my mouth for all the people asking me about it. DeFi has had a spectacular year, getting popular in both discourse and dollars. Ethereum has led the way, other smart contract platforms have adopted the term, if not the enthusiasm.
Just look at the growth of funds locked in DeFi over the year:
This is actual market traction, and it has drawn people from outside the cryptosphere (but perhaps already crypto-curious) in for the high returns.
“Much Cooler Dai,” AKA “Multi Collateral Dai” came into being on November 18th, 2019. Despite some concerns from DeFi builders, the transition has gone very well. One month after launching, the amount of new Dai exceeded the amount of old Dai (known as Sai.)
Why do we care about this? Well first, it demonstrates a success by the MakerDAO organization and DAO. The new contracts have survived the first critical 30 days without any bugs detected. The peg of SAI and DAI have maintained their tight orbit around $1 Dollar. And the new DAI comes with a host of useful features.
The Dai Savings Rate (DSR) and the In-Built MetaTx Dai are worth special note. The DSR is a rate offered by MakerDAO to all Dai holders who lock their Dai on Oasis.app. Integrations are actually more exciting than that, consider:
- Compound announced that unutilized Dai will earn the DSR, which will effectively make the interest-rate floor on Compound be equal to the DSR. Previously, excess Dai on the system earned nothing and acted as dead weight, drawing down the average.
- CHAI tokens, programmed by the same folks who designed the MCD contract, allow you to earn the DSR and receive tokens back, just like cDAI and compound. bZx’s @KyleJKistner has told us they intend to integrate CHAI into Fulcrum.
- The inbuilt Meta Transactions means that DAI can be sent without gas. This is the feature that enabled our team at Mosendo to build gasless: a quick tool that lets you rescue your stranded Dai by connecting a web wallet, no ETH required (so no Doxxing other wallets!)
Raise your hand if you’re old enough to remember using Ether Delta 🙋♂️
I always felt like I was trying to deal drugs in a warzone when I used Ether Delta. I compare that now to using Uniswap, the DEX with no orderbook, which just surpassed $1 Million paid out in fees to liquidity providers
The UX of uniswap, once you’re already accustomed to a web-wallet like metamask, is extremely friendly. More importantly, liquidity has been increasing, due in part to the growth of the market and natural incentives, and in part to projects like Synthetix providing incentives for their tokenholders to contribute to the liquidity pools.
Uniswap is just one DEX. Other orderbook DEXs like Radar Relay, DDEX, and Paradex use order books and allow for limit orders, which is extremely useful if you’re doing some DAI arbitrage. Sites like dex.ag and 1inch.exchange allow you to optimize each trade based on orders across all DEXs.
This has allowed competing DEXs to join forces against the liquidity giants of centralized exchanges: liquidity on any DEX effectively increased the value of all every single DEX as compared to a centralized exchange.
A second flippening has happened here: Before, I’d only venture onto a DEX if a centralized exchange didn’t have the pair I needed. Now, it is flipped: I’ll only deal with a centralized exchange if what I need isn’t already on a DEX.
Of course, the coolest things about DEX liquidity is that we can hide it under the surface. Wallets can convert seamlessly between assets without exposing unsophisticated users to exchanges at all.
A host of financial tools have launched in 2019.
- Nexus Mutual came out with smart contract insurance, which allows DeFi users to protect certain contracts they are concerned with.
- Synthetix platform has continued to grow and will allow people to access and explore to a range of assets they might not have the ability to purchase otherwise.
- Coinbase, one of the largest fiat gateways, added Dai pairs and even integrated CDPs into their platform
- Sablier has built streaming salary, so people can earn by the second rather than every two weeks.
What’s next for 2020? If 2019 was the year of DeFi Infrastructure, in an albeit contrived way that we draw lines around years, could 2020 be the year of Dai as money? Let’s face it — When you have to spend a half a day seminar explaining how it works to someone and then ask if they trust it, it has not reached the meme-level as cold hard cash.
What is necessary for Dai to become synonymous with cold hard cash?
- Perhaps the first step is fiat gateways, well connected so people can move between fiat and Dai easily.
- Once this network is in place, certain cross-border transfer corridors will migrate to using it (as they have Tether.)
- Thereafter, a mobile wallet that is easy enough for non-nerds to use and keep safe. (I’m sorry, if you’re reading this, you’re either a nerd or my mom.)
- Liquidity and fiat pairs will grow alongside this with growing demand.
- Finally, with enough wallets in use, select merchants will have sufficient incentive to start accepting Dai.
Here’s to 2020, the year of Dai as cold hard cash. If you want to be a part of the revolution, join DeFi Nation.
