🦄 Recap: DeFi Week of Sept. 18

Hello Defiers!

Don’t look. Just don’t look. Pretend the crypto market simply doesn’t exist for a spell. It’s on hiatus. That’s the only sensible thing to do at a time when token prices — and numerous other assets — are cratering in the most challenging macroeconomic environment in generations.

If you must look, check out our market analysis this week: Aleksandar Gilbert reported on how the smart money is piling into staked ETH, and Sam Haig wrote on how PoW miners are dumping ETH and impacting the market.

The good news is that there is plenty of scintillating action taking place across DeFi, and our writers were all over it this week. Aleks Gilbert covered the surprising performance of Solana in attracting new NFT projects — it’s booming thanks to hot new collections such as the ABC NFT Collection. In this week’s podcast, Camila Russo spoke with another Defier who is putting his head down in these challenging times and working hard: Robert Lauko, the founder and head of research at Liquity, a DeFi lending protocol.

And Sam Haig reported the latest twist in the SushiSwap search for a new head chef — there are now five candidates. Sam also revealed how the DAO is poised to add new multisig signers and is laboring to establish its legal foundation, a thorny problem vexing many cooperative crypto organizations.

Meanwhile, Owen Fernau covered the other major challenge for crypto: regulation. The CFTC’s case against a crypto derivatives platform lit a fire under Washington crypto folk such as Jake Chervinsky, and one of the agency’s own commissioners who filed a withering dissent. The battle lines are drawn and the action is getting heavier in DC.

And make sure to check out Robin Schmidt’s latest post-Merge segments on The Defiant’s YouTube channel. His Tuesday Tutorial on how to earn during the bear market is pretty awesome.

Enjoy!

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This Week: Earn NFTs By Completing Quests On Optimism

DeFi, NFT & Web3 Insights – The Defiant ⍺ DeFi Alpha: Earn NFTs By Completing Quests On Optimism Yields: Up to 25% APR on Stablecoins, 7-10% on ETH and BTC Tutorial: Earn NFTs By Completing Quests On Optimism DeFi Alpha is a weekly newsletter published for our premium subscribers every Friday, contributed by Defiant Advisor and DeFi investor at… Read more 2 months ago · 6 likes · yyctrader

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Podcast

🎙 Listen to the Exclusive Interview with Robert Lauko

This week on The Defiant Podcast we speak with Robert Lauko, founder & head of research at Liquity, an overcollateralized DeFi lending protocol and issuer of the LUSD stablecoin.

Following the fallout from CeFi services such as Voyager, BlockFi, and Celsius, the focus has shifted back to the core values of decentralization, which Liquity tries to apply to the fullest: LUSD is backed purely by Ether and Liquity is governance-free and has no centralized frontend.

What makes Liquity a unique lending protocol is that depositors earn interest from liquidations as opposed to borrowing fees that we usually see in other protocols, such as Maker. We discuss the incentive mechanisms Liquity employs to maintain this model.

In DeFi, the code that makes projects work is deployed on public blockchains that can’t be stopped or censored. This is a crucial component of decentralization. Conversely, the websites that provide an interface to the smart contracts are mostly centralized and only a handful of projects have decentralized frontends. Lauko explains why Liquity chose this route from the outset.

Crypto mixer Tornado Cash was recently sanctioned by the US Department of the Treasury together with addresses that interacted with the protocol. This prompted other DeFi protocols such as Aave and dYdX to blacklist those addresses in a bid to minimize legal risk. Robert discusses how DeFi projects can deal with censorship.

Defiant Video

📺 The Open Metaverse Show: Vector Meldrew comes out swinging with Broadside

📺 Tuesday Tutorial: Earn During The Bear

📺 Quick Take: Merge Completed – What’s Next?

📺 The Open Metaverse Show: Josie Bellini is the queen of the Metaverse

DeFi Dive

⛏ Proof of Work Mining Craters After Ethereum’s Merge

Ethereum Miners Struggle to Find Their Footing After The Merge

Samuel Haig digs deep into the The Merge’s impact on the PoW community in this Defiant Premium story…

FALLOUT The fallout from The Merge for Proof of Work mining outfits has been swift and profound. As expected, many former Ethereum miners appear to be shutting down their hardware following the execution of its historic upgrade last Thursday.

To read the full story subscribe to The Defiant newsletter.

Regulation Report

🏛 Gensler Rattles DeFi With Suggestion PoS Coins are Securities

Crypto Supporters Decry Move to Treat Ethereum Same as Stocks and Bonds

In which Aleksandar Gilbert analyzes the regulatory and legal effects of the SEC’s approach to Proof of Stake networks…

BATTLE The Merge may be complete, but the battle for legally defining Ethereum 2.0 is just beginning. Hours after Ethereum completed its historic transition to Proof of Stake technology, a top U.S. regulator said cryptocurrencies that use this approach should probably be defined as securities.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

NFT Dive

📈 NFT Volumes Surge on Solana

Transactions Crossed 1M For The First Time This Month

Aleksandar Gilbert chronicles the surprising performance of Solana in the NFT space.

ALL-TIME HIGH NFT transactions on the Solana network are at an all-time high, surpassing 1M in the week ending Sept. 12 for the first time ever and 900,000 in the week ending Sept. 19. A blockchain created to address Ethereum’s high transaction costs and slow speeds, Solana has been having a moment.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Ghost in the Machine

⛽️ Little Understood Trading Stratagem Quietly Siphons Money from Ethereum Users

MEV Bolsters Validator Rewards and Poised to Grow Post-Merge

In this Defiant Premium special report, Samuel Haig explores the arcane world of MEV and its impact on Ethereum blockchain mechanics and ETH trading.

UNSEEN FORCE Most crypto users don’t even know it’s happening. It’s an unseen force, quietly and steadily siphoning money out of the marketplace and leaving unwitting Ethereum users none the wiser.

MEV It’s called Maximal Extractable Value, and it’s costing the average Ethereum user $1,200 over the last 21 months, according to data from Flashbots, a research project dedicated to solving the “MEV crisis.”

To read the full story subscribe to The Defiant newsletter.

Friday

News

• CFTC Action Against DAO Outrages Crypto and One of Its Own CommissionersIn a case that has roiled the crypto community and triggered a dissent from one its own officials, the U.S. Commodity Futures Trading Commission (CFTC) brought an enforcement action yesterday that challenges fundamental tenets of decentralized finance.
• Korean Crypto Bank Inks Deal to Offer Ethereum Staking to InvestorsIn a deal that indicated Ethereum staking may rapidly industrialize, Delio Bank, South Korea’s largest Virtual Asset Service Provider, teamed up on Sept. 22 with blockchain infrastructure firm, Blackdaemon, to offer the service to retail users.
• Cardano Deploys ‘Vasil’ UpgradeCardano, the world’s fifth-largest blockchain with a market capitalization of $15B, successfully deployed a highly-anticipated upgrade Thursday that aims to improve smart contract performance and network throughput.

👀 Defiant Premium Story for Paid Subscribers

• SushiSwap’s Search for ‘Head Chef’ Expands to Five Amid RestructuringAnd then there were five. In what began as a straightforward process to name a new “head chef” of its venture, SushiSwap, the troubled decentralized crypto exchange, has now launched a five-way contest for the job. And Jonathan Howard, the sole candidate just a couple of months ago, is no longer in the running.

NFT News

• NFT Volumes Surge on SolanaNFT transactions on the Solana network are at an all-time high, surpassing 1M in the week ending Sept. 12 for the first time ever and 900,000 in the week ending Sept. 19.
• FIFA Releases Genesis NFTs on Eve of World CupMore than half the world’s population watched the 2018 FIFA World Cup, and with the 2022 edition in Qatar just two months away, football’s governing body is throwing NFTs into the mix.

DeFi Research

• Exploring Ethereum’s On-Chain Activity After The MergeOn September 15, 2022 Ethereum completed its transition to Proof of Stake consensus from the Proof of Work.

DeFi Beginners

• What Is Avalanche?Avalanche is a third-generation Proof-of-Stake blockchain network. Unlike Ethereum, which relies on Layer 2 scalability networks to increase traffic capacity, Avalanche relies on its main chain for scalability.

Thursday

News

• ‘Smart Money’ Plows $33M into Staked ETH Tokens After MergeAlmost six months after it first “de-pegged” from Ether, investors have flocked to Lido’s stETH token, pushing it back up to par with the second-largest cryptocurrency.
• On-Chain Action Disappears on Terra’s Luna Classic TokenOn-chain activity appears to have dried up on the Luna Classic, the network token of the failed and abandoned Terra chain, after it imposed a 1.2% tax on transactions that is burned from supply.
• Boba Network Becomes the First Layer 2 to Launch on AvalancheBoba Network, a Layer 2 chain leveraging Optimistic rollups, is the first L2 to launch on Avalanche, a Layer 1 smart contract network.

Markets

• Crypto Markets Dive After Another Rate Hike From The FedGlobal markets took a beating after the U.S. Federal Reserve announced a 0.75% interest rate hike on Sept. 21.

DeFi Beginners

• What Is Yearn Finance?Yearn Finance played a leading role in the decentralized finance (DeFi) boom in the summer of 2020. Running on Ethereum blockchain, Yearn Finance deployed smart contracts to maximize yields on deposits and generate high interest rates.

Wednesday

News

• Wintermute DeFi Operations Hacked for $160MCrypto market maker Wintermute has lost $160M in a hack that targeted its DeFi operations early Tuesday.
• OpenSea To Support Arbitrum NFTs

Crypto Regulation

• U.S. Legislation Would Ban Algo Stablecoins for Two Years: ReportInfluential members of the U.S. Congress appear to be working on legislation that would temporarily ban certain types of algorithmic stablecoins, according to a Sept. 21 report from Bloomberg News.
• Balina Decries ‘Bad Precedent’ After SEC Sues InfluencerAnyone who doubted the U.S. Securities and Exchange Commission isn’t serious about expanding its scope across crypto might want to check out a lawsuit the agency filed this week.

👀 Defiant Premium Story for Paid Subscribers

• Little Understood Trading Stratagem Quietly Siphons Money from Ethereum UsersMost crypto users don’t even know it’s happening. It’s an unseen force, quietly and steadily siphoning money out of the marketplace and leaving unwitting Ethereum users none the wiser.

DeFi Explainers

• What Is Maker?Maker, a crypto lender, is one of the pioneers of decentralized finance (DeFi), Maker uses smart contracts on the Ethereum blockchain to make loans based on DAI, a stablecoin.

Tuesday

News

• Gensler Rattles DeFi With Suggestion PoS Coins are SecuritiesThe Merge may be complete, but the battle for legally defining Ethereum 2.0 is just beginning. Hours after Ethereum completed its historic transition to Proof of Stake technology, a top U.S. regulator said cryptocurrencies that use this approach should probably be defined as securities.
• ENS Regains Control Of eth.link DomainEthereum Name Service (ENS) has regained control of the eth.link domain, according to the project’s Twitter account.
• Cosmos’ ATOM Bucks Broader Bearish TrendEven as the price of Ether has sunk this week despite a successful Merge, another blockchain ecosystem is on the rise.

Markets

• ‘Massive Dumping’ by Ethereum Miners Punishes ETHEver since The Merge took place on Sept. 15 investors have looked on in dismay as Ether lost a fifth of its value over the next four days. What was going on?

The Merge

• Ether Not Quite ‘Ultrasound’ Money As Inflation PersistsProponents hoping to immediately proclaim Ether to be an “ultra sound” form of money can’t celebrate just yet.

👀 Defiant Premium Story for Paid Subscribers

• Proof of Work Mining Craters After Ethereum’s MergeThe fallout from The Merge for Proof of Work mining outfits has been swift and profound. As expected, many former Ethereum miners appear to be shutting down their hardware following the execution of its historic upgrade last Thursday.

DeFi Explainers

• What Is Synthetix?Synthetix operates in one of the riskiest markets in finance — crypto derivatives. These are financial instruments that even professionals find difficult to manage and may punish ill-prepared retail investors. In some nations such as the U.K., regulators have prohibited the sale of crypto derivatives to retail investors.

💜Community Love💜

Thanking all the amazing Defiers for the support and love this week (and always)!

Had such a great time talking with @CamiRusso, @humancapitol, @jensenhaji, and @ericksoncc at our event last night: “Real World, On-Chain: Cocktails & Conversations”! with @centrifuge



thank you everyone who came out! pic.twitter.com/5Z77FzvQIk



— lucasvo ꩜ (@lucasvo) September 22, 2022

🧑‍💻 ✍️ Stories in The Defiant are written by Owen Fernau, Aleksandar Gilbert, Samuel Haig, and yyctrader, and edited by Edward Robinson, yyctrader and Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila, edited by Alp.

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