On the Verge of Mainstream: PayPal to Add Crypto for Payments

Hello Defiers! Here’s the latest:

• PayPal is putting crypto at its 346M users’ fingertips, strengthening the CeFi to DeFi bridge
• Uniswap’s first governance vote failed because of the very thing it was trying to fight: voter apathy
• Thought yield farming boom days were over? Barn Bridge drew over $200M in a week
• Yield Protocol releases fixed interest-bearing token fyDai.

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PayPal Move Shows Crypto is Bound to Become Mainstream

PayPal is putting crypto at the fingertips of its 346M customers, helping digital assets break away from speculation as their main use case, and drive a real economy where you can earn, save, invest and now spend.

In the coming weeks, Paypal customers will be able to buy, hold and sell Bitcoin, Ether, Bitcoin Cash and Litecoin within the company’s digital wallet, according to an announcement by the company today. Initially, the service will be available only to U.S. users, with plans to expand the features to Venmo and select international markets in the first half of 2021.

Image source: PayPal

Crucially, PayPal customers will also be able to use crypto to pay at the company’s 26M merchants around the globe beginning in early 2021.

BTC is up 12% on the news, jumping past $12,800, the highest since June 2019, while ETH is climbing towards $400 for the first time since August.

Image source: CoinGecko

Not Your Keys

It’s important to note that while PayPal users will be able to hold a crypto asset balance, they won’t hold the tokens themselves — in other words, they won’t control or own the private keys, according to the terms.

This means users won’t be able to send crypto to other accounts and wallets, and they’ll have to exchange their digital assets for fiat to withdraw their balance —at least for now. All crypto custody and trading will be performed by Paxos Trust.

Still Bullish

While some in crypto may downplay the news saying “not your keys not your coins,” it’s still bullish.

First, because of the sheer increased demand for crypto: PayPal will need to buy the supported coins to fulfill clients’ orders.

Second, PayPal’s move continues to legitimize crypto as both currency and its own asset class. The news comes weeks after MicroStrategy and Square added Bitcoin to their balance sheets,

Third, PayPal sees the “shift to digital forms of currencies is inevitable,” including by central banks, and soon other fintechs and banks will see this too. A growing number of financial institutions is set to allow their customers to hold and transact with digital assets, strengthening the bridge from centralized finance to decentralized finance.

As more and more people start to use crypto, a portion of them is bound to cross this bridge.

Uniswap’s First Governance Vote Thwarted by Voter Apathy

By Cooper Turley

Uniswap’s first governance proposal to reduce quorum thresholds failed due to the exact thing it proposed to fix.

Dharma, an Ethereum mobile wallet leveraging Uniswap for in-app trading, proposed to reduce the quorum, or the amount of the supply needed for a vote to pass, from 4% of the supply to 3% and to also reduce the proposal threshold, or the amount an address needs to hold to make a new proposal, from 1% of the supply to 0.3%.

The proposal drew criticism, as some community members said that the lower thresholds would give larger token holders including Binance and Dharma itself undue governance influence. Still, it received overwhelming support, finishing with 98% in favor of the reduced parameters.

However, due to Uniswap’s 4% quorum, the vote was unable to pass as it didn’t meet the 400,000 UNI needed, rendering the proposal defeated.

This issue stems from the base parameters of Compound, the governance module forked by Uniswap, which also includes only 16.2% of the circulating supply for voting.

Hayden Adams 🦄 @haydenzadams@scott_lew_is @defiprime It's a compound gov fork Would be super confusing if we used different meanings for the same terms as them4:31 PM ∙ Oct 19, 2020

Despite an impressive 25% of the circulating supply participating in the genesis vote, the inability to reach quorum suggests that delegates need to push harder for voting power, or that incentives to participate may be necessary to kickstart the early days of governance for DeFi’s largest decentralized exchange.

Barn Bridge Keeps Yield Chasers’ Hopes Alive

By Cooper Turley

Barn Bridge has soaked up more than $200M in assets for a tokenized risk management protocol giving yield farmers a second taste of glory.

Traders eager to start earning Bond tokens and using the protocol had poured just over $200M in stablecoins just 7 days after the project launched. Users can stake USDC, DAI and sUSD to earn Bond - the platform’s native governance token.

Tokens will represent collateral that has been placed in different lending protocol and bundled up to offer bond-like characteristics, like fixed-rate yields.

Bond Farming

Bond farming is broken down into 25 different epochs, with rewards funneled to the LPs of different pools. Pools are used to kickstart the bond marketplace, set to launch in roughly two months.

Despite there being no active bonds to trade today, DeFi founders and investors are rallying around the concept of risk management, an indicator that the project is receiving a sign off from those at the top of the booming sector.

kain.eth @kaiynneDo you like weird origin stories? You do? Good here is great one. Early August I get an unsolicited email from a purported SNX holder. This happens pretty regularly, no idea how they get my email, probably @garthtravers’s fault…3:35 AM ∙ Oct 19, 2020173Likes24Retweets

Whether it be the community NFTs or the top-tier memes, Barn Bridge represents the first farm to receive notable attention in the past few weeks as DeFi yields cooled off across the board.

According to the project roadmap, the full protocol is not likely to ship for at least another month, but the MVP version of ‘Smart Yield’ is live today thanks to the stablecoin pool mentioned above.

If anything, the community is excited to support a team with a strong roadmap and commitment to ship, especially in a landscape of half-baked flash farms that plagued DeFi for the better half of the last three months.

Yield Protocol’s Fixed Lending Goes Live

By Cooper Turley

Yield Protocol unveiled v1 of its fixed rate, fixed lending market with support for Dai.

The protocol offers a unique way to lend and borrow an interest-bearing wrapper of Dai called fyDAI that adjusts its return and price relative to the time it was issued and its maturity date.

Users can deposit ETH to mint fyDAI at varying maturity dates, starting with:

• October 31, 2020
• December 31, 2020
• March 31, 2021
• June 30, 2021
• September 30, 2021
• December 31, 2021

The unique form of fixed lending allows borrowers to know exactly what interest they will earn, a major difference from protocols like Compound where borrowing rates are variable in response to market demand.

While Yield Protocol has proposed the first iteration and maturity dates for fyDAI, anyone can create their own rates and maturities to accommodate different use cases.

We’ve seen various forms of the Yield Protocol used in major DeFi protocols like UMA, highlighting that there is a clear market for fixed-rate lending that has yet to be filled.

The launch of the Yield Protocol app is the first step of a mainnet beta, expected to ramp up to the full product in October upon the first maturity.

DeFi Pulse’s Scott Lewis offers an interesting theory on PayPal’s long-term plans

𝐬𝐜𝐨𝐭𝐭 𝐋🌾 @scott_lew_ispure speculation, but i think the paypal move into crypto is because they want to eventually support stablecoins in e-commerce so paypal merchants do not have to pay interchange fees.1:57 PM ∙ Oct 21, 2020161Likes18Retweets

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About the founder and editor: Camila Russo is the author of The Infinite Machine, the first book on the history of Ethereum, and was previously a Bloomberg News markets reporter based in New York, Madrid and Buenos Aires. She has extensively covered crypto and finance, and now is diving into DeFi, the intersection of the two.