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DeFi in Ether: Aave V2 on mainnet, Yearn merges DeFi, Loopring’s zkRollup AMM is here, GnosisDAO announced, Nexus Mutual’s Custody cover is now live, Melon integrates Synthetix, The DeFi Bridge integrates RenVM, and much more!

Paradigm
Paradigm
Published in
24 min readDec 8, 2020

Biweekly update on Ethereum DeFi ecosystem vol.19, 25th November — 8th December

TL;DR

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For more updates join Paradigm on Medium. Twitter. Telegram. Telegram Chat. Reddit. LinkedIn.

This post is made as a part of our research partnership with Aave 👻

Feel free to join the Aave Discord server, Twitter and Telegram, and join the governance forum to learn about and discuss future protocol updates.

Total Value Locked in DeFi

Source: defipulse.com

Top DeFi Tokens by Market Capitalization

Total Market Cap: $17,866,226,571

Source: defimarketcap.io

Lending

Aave:

The Aave Protocol V2: V2 of the Aave Protocol on mainnet!

The Aave Protocol V1 launched at the beginning of this year, with the goal of unlocking value in DeFi and improving the user experience. The protocol quickly grew to over $1B market size in less than 6 months, record growth for the DeFi space! V1 brought to market innovations like Flash Loans and aTokens as new ways to unlock previously locked capital in DeFi and provide a permissionless savings account. The Aave Protocol took major steps toward becoming more decentralised with the handover of the Admin Keys to the community. The Aave ethos is that finance should be as you like it, and with a working governance and “Aavenomics”, the future of the protocol is in your hands.

Last week, the Aave Protocol hit another major milestone, with $1B in Flash Loans volume! Due to the 0.09% fee for Flash Loans, this has created an additional $906K going to reward depositors since the launch of V1. The Genesis Team has introduced some Aavesome new features to unlock more value in DeFi and make the overall experience more seamless.

What’s new with V2?

  1. Yield & Collateral swap
  2. Flash Loans Upgraded
  3. Repayment with collateral
  4. Flash liquidations
  5. Batch Flash Loans
  6. Debt Tokenization
  7. Native Credit Delegation
  8. Gas Optimisations
  9. Stable & Variable Rate Borrowing

For more details on V2, feel free to read this post and the Whitepaper.

In the spirit of decentralisation, you can access Aave V2 directly from:

ARC: Aavenomics quarterly upgrade:

Check out November Update: V2 testnet, AIPs, and NFT collabs

Compound:

Developer Community Call Recap, DAI Liquidation Event, Governance Updates

  • Developer Community Call Recap

The Compound community held its third Developer Community Call last week to discuss ongoing protocol and application development. You can also view a longer recap on the Compound Community Forum or listen to a recording of the call.

  • DAI Liquidation Event

The Compound protocol uses Coinbase Oracle for account liquidity calculations, anchored to within 20% of the Uniswap time-weighted average price. Any Ethereum address can post the signed/reported price on-chain, which allows for a permissionless and autonomous price feed that rapidly de-risks accounts.

From approximately 12:00am to 1:00am PT on November 26th, the price of DAI on Coinbase Pro began trading at increasing prices and volume across the DAI/USDC, DAI/USD, and ETH/DAI pairs, reaching as high as $1.30. This coincided with a decline in ETH prices globally, of approximately 8% during the same time period.

During this period, 85.2m DAI were repaid by liquidators, who seized collateral from addresses borrowing DAI. In total, 124 addresses of 225,793 were impacted. There are no under-collateralized accounts in the protocol and all markets are healthy.

Fundamentally, the protocol and price feed performed as designed; real trading, on America’s largest exchange, was used to aggressively reduce the risk of borrowers in the protocol. What was unexpected was the adverse market condition that occurred, how quickly it occurred, and for many users, that it could occur at all.

  1. Check out Robert Leshner’s full post in the Compound Community Forum.
  2. DAI Liquidation Event — The community is discussing the general events surrounding the liquidation.
  3. DAI Market Risk — The community is discussing potential changes to the cDAI market to address future liquidation risk.
  4. DAI Liquidation — Compensation — The community is discussing potential compensation for users affected by the liquidation.
  • Governance Updates

Proposal 030

- Removes unused code from Comptroller

- Adds Grant function; governance can send $COMP to any address

- Adds Contributor function; governance can stream $COMP to any address

See below for highlights from the Compound Community Forum, and join in the discussion:

  1. Flash loans for compound — @vaibhavchellani describes Flashbank’s proposal for adding flashloans to Compound.
  2. HBTC & HFIL Listing Proposal — @HBTC proposes adding HBTC and HFIL as supported markets on Compound.
  3. Proposal to Integrate Chainlink Price Feeds — @ChainLinkGod suggests integrating Chainlink Price Feeds as the primary oracle solution for Compound.
  4. Should Compound Retroactively Airdrop Tokens to Early Users? — @alive starts a lively community discussion around whether Compound governance should reward early users with COMP tokens.
  5. SNX listing, research required — @massnomis proposes a grant in order to research the optimal yield curve for listing SNX on Compound.
  6. Pls explain real benefit of compound other than spread trading — @Sirokko and @Ledningen explain popular use cases for borrowing assets on Compound.
  7. Reserve Factor Standardization — @rleshner suggests standardizing the reserve factor in each market with a consistent format, using the risk associated with borrowing each asset as the key parameter.
  8. Augur Migration Proposal — @rleshner proposes disabling REP as collateral on Compound, as a final step in deprecating the market.

Maker:

  • DAI Price Increase Leads to Mass Liquidations on Compound: A momentary price increase in the DAI stablecoin last week led to massive liquidations at decentralized finance (DeFi) protocol Compound. The protocol witnessed $88.4 million worth of liquidations, according to on-chain data analyzed by The Block. Data from tracker LoanScan, however, shows the liquidations at $103 million, which isn’t accurate. Market conditions also led to liquidations at DeFi protocol dYdX, worth about $8 million, according to both on-chain data and LoanScan. Together, both the protocols liquidated more than $96 million worth of collateral.
  • Maker DsChief 1.2 Governance Security Update Requires MKR Holder Actions: The DsChief 1.2 Governance Security Update will secure the Maker Protocol against immediate and future risks from flash loan attacks.
  • Making Maker: November 2020: Dai use cases are on the rise, too, and the Maker community has stepped up this month with new tools and documentation to facilitate further growth and, ultimately, full decentralization.
  • Governance Polls: Oracles and Collateral Onboarding: The MakerDAO Governance Facilitator has placed a governance poll into the voting system on behalf of the Maker Governance community which gives Maker Governance the chance to signal their support or opposition to an Oracle whitelisting and collateral onboarding.
  • Executive Vote: Increase ETH-A Debt Ceiling: The Governance Facilitators and the Maker Foundation Smart Contracts Team have placed an Executive Vote into the voting system which will enable the community to approve the following alterations to the protocol.

xDai:

xDai weekly recap covers the recent Ramp Network direct fiat integration, POSDAO tutorials, media coverage and more

  • Ramp Fiat -> xDai

A direct fiat-to-xDai onramp has been on in xDai Roadmap for a long time. The team had previously worked with other providers without success, and were excited this collaboration with Ramp Network could come to fruition. Ramp is currently only available for EU customers, however they plan to integrate US customers in the near future. Their simple SDK or hosted option allows projects to easily add direct xDai purchases to their apps.

  • Public Staking / POSDAO Tutorials

The team released several tutorials from the test environment where they are busy testing the protocol in anticipation of Public POSDAO.

  • Bankless xDai Feature

xDai was featured in the Thursday Thoughts post by Bankless. This article describes the features that make xDai a viable and available scalability solution.

  • GitCoin GR8 Sponsorship

xDai is sponsoring a $3000 Dai bounty for hackers participating in the GR8 hackathon.

DeFi Aggregators

mStable:

  • mStable Dev Update — November 2020: A review of recent development within the mStable ecosystem. Work on MIPs 3 and 4, the new AMM, mBTC, more wallet support, enhanced analytics via Graph protocol, and more.
  • Guide: mStable Staking: This is part of a series of “how to guides” that covers the basic mStable product suite, before getting into more advanced topics.
  • Scaling Up Subgraph Development: mStable has been using The Graph to quickly process and query on-chain data since launch, and it has helped us to deliver Web3 projects. In this post, the team explores some of the ways mStable has approached some challenges, and provide some tools and ideas for scalable Subgraph development.

yEarn.finance:

Yearn Finance Newsletters #13 #14

  • Yearn Merges with C.R.E.A.M: the team announced that the C.R.E.A.M. lending platform has officially joined the Yearn ecosystem. Yearn and C.R.E.A.M. developers will join forces to launch C.R.E.A.M. v2. This upcoming launch will expand C.R.E.A.M.’s lending infrastructure and introduce new leverage tools that will be utilized by other Yearn products. The Medium post describing the C.R.E.A.M. merger can be found here.
  • Yearn & Pickle Form Symbiotic Relationship: The Yearn community welcomes developers from Pickle Finance to the Yearn ecosystem. Pickle developers will serve as Strategists in our upcoming Yearn 2.0 yVault release. Yearn 2.0 yVaults will incorporate a 2% management fee, and a 20% performance fee. The performance fee will be split between Strategists and Yearn governance. You can read more information about this upcoming fee structure change here. Medium post describing this relationship is here.
  • Yearn & Cover Merger. Yearn and Cover will join forces and Cover will now serve as the backstop coverage provider for Yearn products — while continuing to serve the broader DeFi market. You can read the Medium post describing this merger here. Understanding Cover Protocol.
  • PowerPool Integrates YFI. PowerPool enables token holders to lend, pool, borrow, and gain income from governance tokens. It also oversees the PowerIndex, which is a decentralized ETF consisting of eight governance tokens. CVP token holders govern the PowerIndex. You can read the Medium post describing this integration here.
  • Yearn x Sushi 行ってきます: SushiSwap has joined the Yearn ecosystem and will serve as our Automated Market Maker (AMM) arm.
  • μα τον Δια! Yearn x Akropolis: Akropolis has also joined the Yearn ecosystem and will serve as our institutional service provider for yVaults and upcoming lending products.
  • Keep3r Scaling With Chainlink: Keep3r is a network that facilitates keepers to perform automated tasks on behalf of requestors. Keep3r is aimed at smaller projects that do not require extremely secure and tamper resistant oracles. Chainlink, however, provides secure, tamper-resistant, and highly reliable oracles that are aimed at high value smart contracts and Fortune 500 entities. Keep3r will integrate with Chainlink so that projects using Keep3r now can seamlessly use Chainlink oracles in the future, if they desire..
  • Launch of yGift, a platform for giving gifts, grants, and gratitude. Upload an image or GIF, and add a message to send an ERC-721 non-fungible token (NFT) to a friend. You can also send one of several tokens as a part of the gift (YFI, yUSD, y3Crv, DAI, USDC, WETH, or WBTC).
  • Governance Updates (YIPs). You can read our weekly governance roundup discussing newly proposed, on-going, or passed governance proposals here.
  • Ecosystem News
  • Yearn State of the Vaults
  • The Yearn Ecosystem Ethos
  • 3rd Monthly AMA Recap. A synopsis of this AMA here
  • Coinbase Adds YFI-BTC Pair
  • Bancor Liquidity Mining Program: YFI was approved to receive BNT liquidity mining rewards and Impermanent Loss insurance on Bancor v2.1.

Latest YFI Pulse:

Derivatives, Swaps and Prediction Markets

Augur:

Augur Development Update: November 2020: After a slow start, Augur v2 set new records for open interest and volume. In spite of the bump in usage, Augur’s work is never done. Product improvements are inbound which will make life easier for traders, liquidity providers, and consumers of market odds, alike.

This update covers:

  • Augur CE
  • Catnip & Election Markets
  • The Graph x Augur
  • Augur AMM
  • REP v2 Migration
  • Protocol Deep Dive: The Case for Invalid

Gnosis:

GnosisDAO Announced: GnosisDAO is a prediction market-driven collective, stewarding the Gnosis ecosystem through futarchy.

  1. GnosisDAO uses futarchy (prediction markets) to guide proposals, and anyone can participate by joining the Gnosis Forum.
  2. After initialization, GnosisDAO is to have effective control over 150K ETH and 8 Million GNO Tokens, with the GNO Tokens vested over 8 years.
  3. The first proposals to GnosisDAO include distributing GNO to active participants, introducing a SAFE Token for governance, and developing Gnosis Protocol.
  4. In the GnosisDAO governance process, the final phase opens proposals to two signaling methods using GNO Tokens.

GnosisDAO Governance Tutorial: How to participate in the prediction-market driven collective

  • Gnosis Safe now supports Spending limits. A new way to access funds from Gnosis Safe accounts through (recurring) allowances
  • Gnosis Impact: Explainer: The Gnosis Impact app is a tool for projecting into the future. The app uses simple analysis of prediction markets to expose the price that traders are willing to pay for an asset in the condition that a particular event occurs. This information is an invaluable decision-making tool as it gives insight into how the market perceives the event impacting the relative value of asset pairs.
  • Gnosis Protocol v1 and API3: On November 30, 2020, the API3DAO project initiated their API3 token IDO on Gnosis Protocol v1 through a fork of the Mesa DEX frontend. The token distribution is set to run for a maximum of two weeks, ending on December 14th, with a price range of $0.30-$2.00 per token within each batch auction. A serious incident occurred in the first batch auction of the API3 IDO, which was settled at a clearing price of $0.56, an amount equal to the fourth lowest limit price set by the API3DAO team. Given supply and demand at the time, the intended “fair” price for this batch auction would have been $0.98. All successive batch auctions in the API3 IDO have cleared at the intended prices.

For the full technical details, please see API3 IDO incident — Post Mortem.

UMA:

Fund Management

Melon:

Set Protocol:

Securities, Insurance and NFTs

Nexus Mutual:

  • Nexus Mutual’s Custody cover is now live: Users of centralised exchanges and custodians — who are responsible for the safekeeping of their users’ private keys to cryptocurrency assets — will now be able to purchase custody cover from Nexus Mutual. Custody cover will protect users who put funds into an organisation which is responsible for the safekeeping of private keys to cryptocurrency assets on behalf of their users. Users will be covered in the event that either;
  1. the custodian gets hacked and the user loses more than 10% of their funds, or
  2. withdrawals from the custodian are halted for more than 90 days.

Liquidity Relays

0x project:

The 0x team was quite silent these weeks. Busy working on the upcoming version of the protocol.

Matcha:

1inch.exchange:

  • 1inch successfully closes $12 mln funding round led by Pantera Capital: The 1inch team announced a successful closure of a $12 mln funding round from institutional investors, including Pantera Capital, ParaFi Capital and Nima Capital. These funds will be used to further develop a variety of 1inch products, hire additional team members, fuel the project’s expansion into new markets and to amplify marketing activities.
  1. Private Transactions for everyone (not supported on Metamask)
  2. No more front-running
  3. 1inch is now connected to 10 Ethereum miners in order to broadcast user transactions directly to the miners — reducing transaction mining time

Bancor:

Kyber:

  • Kyber Reserve Innovation Program: New Liquidity Models For DeFi: In this post the team explains Kyber Network’s flexible reserve system and share how DeFi developers can create new reserve models to be deployed on the network to provide liquidity for a wide range of unique use cases. In order to enhance liquidity and capture greater value, it is imperative that the DeFi space is able to create new liquidity systems catered to different needs, and we believe that there is huge potential for Kyber to be the cradle for liquidity innovation. To encourage liquidity innovation for DeFi, Kyber will be launching a Reserve Innovation Program, with up to $100,000 in total grants for selected projects. They are looking for talented developers who are interested in liquidity innovation beyond the current Automated Market Maker (AMM) landscape.

Loopring:

  • Loopring’s zkRollup AMM is live: Loopring just launched the AMM based on Loopring 3.6, its improved Ethereum zkRollup implementation. This brings the ability to do gas-free, instant swaps, and gas-free, instant adding/removing liquidity as a liquidity provider on Layer 2. AMMs have been a cornerstone of Ethereum DEX & DeFi success, and now they are on our highly scalable, self-custodial L2. As of now, to walk before it runs, only the LRC/ETH pool is enabled. There is ~$5m worth of assets in the pool right now. You can try the web app at: exchange.loopring.io
  • Loopring Monthly Update — 2020/11: For Loopring November has been an incredibly busy and exciting month, especially the final week. The bulk of the development work throughout the year is at the point where it is materializing into a very powerful protocol, and user-friendly products. Loopring Wallet has a live beta, Loopring AMM launched a mainnet beta, Loopring protocol v3.6 is being rolled out little by little, and all combined, things are going to get very interesting.

Uniswap:

Payments Networks

Raiden Network:

Check out the latest Raiden Weekly. Update 146 covers:

  1. M2M Payments Demo with Raiden
  2. New Light Client testnet release
  3. Minor Raiden Service release

Synthetix:

  • L2 SNX is now available for withdrawal from the Optimistic Ethereum testnet: The reward claiming phase for SNX stakers on L2 testnet is now complete, and here marks the start of the final testnet phase, in which participants can withdraw their L2 SNX back to the Goerli L1 testnet. This action is only available to SNX stakers who participated in the previous phase of the L2 testnet trial, which began in October.
  • Synthetix Volume Program trial extended: After three months of trialing their new Volume Program, the team has decided to extend the trial for another three months as they explore making the Volume Program a permanent component of the Synthetix protocol. The Synthetix Volume Program is a new initiative designed to incentivize native integration of the Synthetix protocol across DeFi platforms and protocols by providing a new revenue stream for these projects. This program offers a fee rebate to approved integrators who implement Synth-to-Synth swaps natively and generate protocol exchange volume through their interfaces.
  • SNX and sUSD are now live on Monolith: You can now use SNX and sUSD to fuel your Monolith visa debit card. Monolith is a visa debit card and Ethereum smart wallet that enables users to buy, spend, or hold and earn interest with crypto. Monolith is available in countries throughout Europe (EEA) and can be used around the globe with merchants that accept visa.
  • The Adhara release: All the details for the Adhara release.
  • The Spartan Council election: Some more details on how the Spartan Council operates. The first Spartan Council election ends tomorrow— if you’re an SNX staker, don’t forget to vote on the people to provide this important layer of governance.
  • Binance will list SUSD in the Innovation Zone.

Privacy protocols for DeFi

Ren protocol:

  • The DeFi Bridge Integrates RenVM: The DeFi Bridge has integrated RenVM via RenJS. The DeFi Bridge is a simple dApp (similar to RenBridge) that is built by Codefi, an arm of ConsenSys. The dApp allows individuals to mint and burn assets to and from Ethereum. The first asset supported is Filecoin (FIL), so now anyone can bring native Filecoin (FIL) to Ethereum as renFIL. After months of hard work by all teams involved, the first permissionless Filecoin bridge for DeFi is now live.
  • MyEtherWallet Integrates RenVM: RenVM’s first wallet integration is now live. With this integration, MEW users can convert their BTC and receive renBTC within the MEW mobile app. This service is called “Teleporting” and makes for a simple method of putting BTC on Ethereum via MEW. After months of hard work by all teams involved, the first RenVM wallet integration is now live! It’s available in the MyEtherWallet app on iOS, with Android functionality coming soon.

More updates

  • Coinbase is rolling out an ETH2 derivative product, so its users can enjoy liquidity while simultaneously serving as an Ethereum staker. Binance is launching its own ETH2 derivative, too.
  • Yam November 2020 roadmap update: Lots of updates from Yam this week covering the protocol, treasury, product, governance and more.
  • MCDEX launched on Arbitrum rollup testnet: The MCDEX perpetual swap platform platform is now able to be used on Arbitrum’s layer 2 rollup technology (testnet only for now).
  • DeFi derivatives trading protocol DerivaDEX just launched an insurance mining campaign.
  • CopperConnect announced: CopperConnect is the first tool for institutions to tap into liquidity within DeFi on Ethereum.
  • Meet xAAVE: an automated Aave staking token that generates the same returns as stkAAVE but without having to go through the protocol’s manual AAVE staking process.
  • To address the shortcomings of AMMs for liquidity providers, the new Peanut project is out and functions as an “advanced price balancer pool” system for DeFi.
  • DeversiFi Liquidity Mining Launched: Nectar Beehive V1 went live this week which is a liquidity mining program for the DeversiFi Nectar token (NEC) with the goal of bootstrapping community and liquidity in their ecosystem
  • ZKSwap raises $1.7 million: ZKSwap, a token swap protocol being built on Ethereum’s layer-2 scaling technology ZK-rollups, has raised $1.7 million in an angel round.
  • InsurAce raises $1 million: Decentralized insurance protocol InsurAce has raised $1 million in a seed funding round. The firm said in an announcement last Tuesday that the round was led by DeFiance Capital, a crypto fund that’s focused on the decentralized finance space.

MISC

This is not financial advice.

This post is made as a part of our research partnership with Aave 👻

Feel free to join the Aave Discord server, Twitter and Telegram, and join the governance forum to learn about and discuss future protocol updates.

Subscribe to ‘Defi in Ether’ newsletter ⬙

For more updates, join Paradigm on Medium, Twitter, Telegram, Telegram Chat, LinkedIn, and Reddit.

Read ‘Defi in Ether’ on LinkedIn, me on Twitter 🦄🌈

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Paradigm
Paradigm

Written by Paradigm

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