How Climbing Mt. Everest Drove One Disillusioned Entrepreneur Back to Crypto

Introducing The Flippening Series with Ganesh Swami of Covalent.


Hello Defiers! I’m excited to announce The Flippening Series with Ganesh Swami, co-founder of Covalent, which provides blockchain data for businesses and investors and created an easy way to track an Ethereum addresses’s P&L. Ganesh is also a deep thinker in the space, and has written about staking yields, the data availability gap, the nuance in the value locked in DeFi metric, and others.

Ganesh was so disillusioned in the crypto winter of 2018, that he almost gave up on his business and on the industry itself. He took some time off and climbed the Himalayas —Mt. Everest has a way to help clear your head ;) When he came back, he was determined to make a data-driven decision on whether he should stay building on Ethereum, or do something else. The data he found convinced him to stay. Every Thursday for the next following weeks, he’ll share with The Defiant readers the data he found. In trying times like these, his findings should be encouraging for builders and investors.

In today’s Defiant:

  • Part I of The Flippening Series with Ganesh Swami
  • The state of USDC on MakerDAO so far
  • MKR climbs ahead of auction

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The Flippening that Matters: A Preamble

By Ganesh Swami, Co-founder of Covalent, exclusive for The Defiant

These are trying times. We are in the midst of a global pandemic and seem to be facing a recession. My heart goes to those affected. Stay safe and speedy recovery.

If you’re a buidler in the space, how do you navigate these turbulent waters? Do you stay the course or do you retreat to safer lands?

I’m going to share a personal, never told before story of how we survived a 90% drawdown of ETH prices in 2018.

When people talk about “The Flippening” they usually refer to the staged rivalry between Bitcoin and Ethereum. The Flippening here refers to the switch (or “the flip”) between market capitalizations of Bitcoin and Ethereum.

Despite the popularity of this narrative, allow me to let you in on a secret.

I belong to a cohort of users that do not care about this narrative. I have gone weeks without checking Bitcoin or Ethereum prices. I’m personally indifferent to the store of value thesis.

I care about what Ethereum can become –– that Bitcoin cannot and will never become.

We are building a new, exciting programmable financial future atop Ethereum. We believe in the magic of smart contracts. To be frank, if not for Ethereum and its smart contract functionality, I would have never entered the crypto industry.

Soul-Searching in the Himalayas

Back to the fall of ‘18 – my company Covalent had been operating for about six months. Most of the ICO “excitement” had died down by then. As a data provider, we went out looking for customers and starting our customer discovery process.

This was my most brutal and disillusioning time in the market. By no means comparable, but I would have traded places with a German soldier retreating from the Russian winter during WW2.

Upon the advice of my mentors, I decided to take some time off and gather some perspective. We had to decide if we wanted to continue on our current trajectory, or do something else.

After a few weeks finding solace in the valleys of the Himalayas (a Mt. Everest story for another day), I came back home with enough energy to plan a data-backed decision.

Data-Backed Conviction

By then my team had built a primitive indexing engine for Ethereum that was ready for dogfooding. I sat down one weekend and crafted a series of analyses that gave me enough conviction to keep going with Covalent.

Over the next couple of posts in this series, I’m going to share the data analysis I did to see the early signs of the promise of smart contracts on a platform like Ethereum.

As I alluded to earlier, the Bitcoin-vs-Ethereum flippening is insignificant.

The flippening that really matters is how fast Ethereum is diverging from Bitcoin from a use-case and traction perspective. We will start with a “simple” question and progress to more complex and sophisticated analysis over the next couple of weeks.

Next week we’ll answer the following question: how fast are transactions with smart contract executions ––found on Ethereum–– growing relative to transactions with simple token transfers ––found on Bitcoin? Stay tuned.


Dai Health Improves After MakerDAO’s Drastic Measures

It’s been two days since MakerDAO slashed rates and welcomed USDC into its system, a controversial move regarded by some purists as going against Dai’s very reason for being — a decentralized stablecoin that’s independent from the traditional financial system. Still, DeFi has kept defying and Dai health is improving.

USDC Stats

Deposits of USDC already surpassed BAT collateral. MakerDAO in November introduced Brave browser’s BAT token as the second type of collateral accepted in the platform to back Dai issuance, after ETH. To be sure, BAT deposits have had meager growth, so it wasn’t a high bar to beat. Maker now has $1.7 million of USDC collateral, compared with $213.5 million for ETH and $789K for BAT.


Zoomed in image of MakerDAO collateral types. Source: Dune Analytics

But why would traders issue Dai against USDC in the first place? At first glance, MakerDAO didn’t make it especially appealing, with higher collateral ratio required than in other platforms, at 125% compared with 75% in Aave and Compound, and an annual Stability Fee (borrowing cost) of 20%, more than double the rate in Aave and Compound.


The key is in the following: Liquidations are currently turned off for USDC on MakerDAO, so borrowers don’t risk losing their collateral. But more importantly, USDC/Dai price has been set to $1, which opens up an arbitrage opportunity, as Dai continues to trade above $1. Traders can deposit their USDC to mint Dai, sell Dai above market for USDC, and close out the loan, gaining the spread. Others are borrowing Dai against USDC, rather than buying it at a discount, to close out their ETH-backed Dai loans.

Dai Liquidity and Peg

In addition to including USDC as collateral, MakerDAO’s governance system also slashed Dai savings rates to 0% and Dai borrowing costs against ETH to 0.5%, to incentivize users to print Dai and keep them from holding it in deposits, with the goal of increasing the stablecoin’s liquidity and push it back down to its $1 peg.

Dai is gradually returning to $1, and traded between $1.03 and $1.02 Wednesday, while Dai minted has started to outpace Dai burnt, according to Dune Analytics data as of March 17.


Image source: Dune Analytics


MKR Climbs Ahead of Today’s Auction

MakerDAO’s governance token MKR is climbing as the system prepares to sell newly minted tokens to refinance bad debt resulting from last week’s ether sell-off.

MKR is up 43% from a low of $168 Monday to $240 at the time of writing. The token sold off after loan liquidators were able to take about $5 million of ether for free as the system broke down amid a market crash, and the community decided to issue more MKR to pay off the bad debt.

The price rebound signals traders are betting the plunge went too far as the community has come together to secure buyers of last resort in the sale. Here’s the link to the blog post with more details on the sale.


MKR price. Image source: CoinGecko


Ethereum creator Vitalik Buterin weighs on the potential for a fork of Steem to overtake the original project.


vitalik.eth @VitalikButerinThis seems like a potential positive watershed moment in the history of blockchain governance. If Hive (the fork) overtakes Steem it would be a strong demonstration that the community is in charge and cannot be bought. See also:… /me watches closely


The Block @TheBlock__Steem community plans hard fork to expel Justin Sun’s Steemit AM ∙ Mar 19, 2020795Likes218Retweets

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The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money.

About the author: I’m Camila Russo, a financial journalist writing a book on Ethereum with Harper Collins. (Pre-order The Infinite Machine here). I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.