Big Bucks Don't Equal Better Blockchains
Hello defiers! This is what’s going on in decentralized finance:
- Larger initial investment doesn’t lead to greater development
- Nuo Network revamps margin trading
- InstaDApp raises $2.4 million form who’s who of crypto
- Dai pool on Uniswap gets you 14 percent return
Bigger Bucks Don’t Equal Better Blockchains
In the blockchain space, initial funding isn’t a good indication of future development, research firm Delphi Digital found.
Projects that received under $15 million in funding, like NuCypher, Handshake and Casper Labs have more GitHub commits than projects that raised 10 times that, like Polkadot and Dfinity. The same is true when looking at number of contributors and number of “watchers.” or people tracking the projects’ development. Tom Shaughnessy of Delphi Digital wrote,
A project does not need massive funding to attract a viral developer community that is passionate about it. Never forget what Bitcoin was able to achieve and it never raised a cent.
Image source: Delphi Digital
Blockchain development doesn’t depend on funding because of two characteristics that differentiate them from traditional businesses: They’re public and they have tradeable tokens. The fact that they’re public means that anyone can start working on the code, without needing to get hired by a company. That’s how chains that didn’t raise enough money to hire tons of talent are able to still attract hundreds of developers.
The token is the incentive. The rising value of a token depending on how well its blockchain is developed and used can compensate for low salaries or even lack of salaries. Activity will bring more activity. Nobody wants to build something that won’t get used.
There are at least nine different blockchains slated to launch by the end of the year, including Telegram, Polkadot, Blockstack and Nervos, and many more planning to launch in the next two years. Telegram raised $1.7 billion and Hedera Hashgraph, Dfinity and Polkadot all raised more than $100 million.
Ethereum is the undisputed leader in terms of developer activity. We’ve seen that competing blockchains’ large initial funding won’t necessarily lead to greater development, but that doesn’t mean it will stay that way for ever. Ethereum will continue benefitting from its first mover advantage if the chain can support applications that can scale. If it doesn’t, it will only be a matter of time before developers leave for a chain that does.
Liquidity Providers Can Get Better Returns Than Lenders
Liquidity providers for Dai on decentralized exchange Uniswap can earn annualized returns of about 14 percent, according to a tool launched by Caleb Sheridan of Blocklytics yesterday.
This compares with returns of about 8 percent for lending Dai on Compound or Dharma, according to LoanScan. Dai provides the largest yield out of all the pools on Uniswap, according to pool.fyi.
Image source: pools.fyi
Beyond the eye-popping 14 percent return, which of course comes with multiple risks, including rate coming down and smart contract bugs, it’s remarkable that anyone with an Ethereum account can now become a market-maker and start earning fees for that.
Nuo Network Revamps Margin Trading
Nuo Network is revamping margin trading on its platform to make it easier for users to track their trades and protect against liquidations.
Since first enabling margin trading in March, the platform generated over $8 million in trade volume, more than $500,000 of profits for traders and about $200,000 for lenders. An improved trading experience will benefit the core decentralized finance user, who largely uses these platforms to speculate.
dYdX will be Nuo’s main competitor as it has attracted most margin trading volume, with more than $105 million traded since April, or more than ten times Nuo’s volume, according to its website. Some differences between the two: Nuo allows 3x margin across more than 30 trading pairs, including the ability to go long or short ETH/BTC (with wrapped Bitcoin), while dYdX allows 4x across four pairs.
New features on Nuo:
- Users can set a stop loss between 40% and 80% of collateral and view the Liquidation Price when the trade is created and in real time as the trade progresses.
- Increased the maximum amount allowed per trade by ~1.5x for WBTC, USDC, DAI and ETH.
- Users can choose the token in which they want the profits to be made
- Traders will now be able to view how their trades would have performed had they placed the trade at any time in the past 3 months.
InstaDApp Raises $2.4 Million From Major Crypto Funds
DeFi portal InstaDApp raised a seed round of $2.4 million from some of the biggest names in crypto and DeFi, including Pantera Capital, Naval Ravikant, Balaji Srinivasan, Coinbase Ventures, Robert Leshner of Compound Finance and Loi Luu of Kyber Network.
India-based InstaDApp was co-founded by 21-year old Sowmay Jain and 19-year old Samyak Jain, who dropped out of school to go full DeFi. They won the ETHIndia hackathon, and received a grant from Kyber Network t build their project.
They made it easier for users to interact with decentralized finance, for example bridging MakerDAO and Compound Finance so borrowers could easily switch to the platform offering better rates. The value locked in InstaDApp’s smart contracts quickly grew to more than $30 million currently, or fourth in total value locked in DeFi Pulse.
