Stake This: DeFi Week Feb. 5

In a sense, the surge in staking is pretty predictable. After The Merge — Ethereum’s big upgrade last September — the DeFi community expected to see a new business develop around providing ETH tokens to tend the Ethereum blockchain in exchange for returns.
Well, this week we saw the products of this shift materializing in a big way. As Sam Haig reported, Ethereum’s devs executed a test this week to let ETH holders withdraw staked tokens from the system.

Soaring Stakers

And guest writers Alberto Guerrero Montilla and Pablo Larguia produced a must-read report on the state of Proof of Stake in not just Ethereum, but also Solana, Polkadot and Avalanche. It’s an invaluable roundup of the risks and rewards in staking.

Then there’s Lido. The liquid staking provider is on quite a streak — its LDO governance token has skyrocketed 34% in the last 30 days. As Aleks Gilbert reports, Lido is now betting its V2 will solve a problem that’s dogged it for some time: its lack of decentralization. Whales and hand-picked node operators have long fired up DeFi critics of the protocol. Aleks unpacks how the Lido team hopes to fix this with its new rollout.

Moreover, Aleks produced a nice piece of market analysis by spotlighting how decentralized staking protocols soared on the news the SEC had hit the CEX Kraken with a $30M fine for not registering its staking-as-a-service offering.

Graph Surge

There was more Lido news: Tarang Khaitan reported on how top DeFi lender Aave opened the door for the distribution of Lido rewards to three liquidity pools, including Ethereum. And if you missed the video tutorial on LSDs on The Defiant’s YouTube channel make sure you check it out. It’s an excellent explainer on one of the biggest trends in DeFi this year.

Rounding out the week was Owen Fernau’s market analysis on The Graph’s astounding performance — its token GRT doubled in value in 24 hours. What gives? Owen dug into the mystery and found some eye-opening developments regarding a potential new trend — AI tokens.
Brace yourselves!

Best of the Week

DeFi Drama

Threat of Uniswap Replication Triggers Rare Clash With A16Z

Venture Capital Firm Disagrees With Community Plan For Bridging

By Aleksandar Gilbert

On April 1, all hell might break loose. At least, that’s how Uniswap’s supporters see it. On that day, Uniswap V3 will enter the public domain, allowing anyone to launch copycat exchanges. Clones could sprout like wildflowers after a desert storm. And that proliferation of Uniswaps has some in the community nervous.

Read the full story in The Defiant

Staking Rally

DeFi Staking Players Soar After Kraken Slapped by SEC

Lido and Rocket Pool Tokens Record Double-Digit Surge After CEX Shuts Staking-as-a-Service

By Aleksandar Gilbert

Liquid staking protocols soared Thursday after crypto exchange Kraken settled a lawsuit with the United States’ top financial markets regulator.

Read the full story in The Defiant

Staking Governance

Lido Bets V2 Will Prove its DeFi Cred

Staking Giant Hopes to Broaden Range of Node Operators

By Aleksandar Gilbert

Lido may be red hot but it has a problem. The staking service is now the No. 1 protocol in decentralized finance, but critics say it has taken the scenic route on the path to true decentralization. The node operators at the heart of Lido’s business are hand-picked by the Lido DAO, the decentralized organization that governs the protocol.

Read the full story in The Defiant

Crypto Bankruptcies

3AC Founders’ New Exchange Branded ‘Insult’ to Burned Investors

Zhu and Davies Launch Exchange for Bankuptcy Claims Amid Furor

By Owen Fernau

In an audacious, and some might say perverse venture, the co-founders of Three Arrows Capital have launched an exchange to trade bankruptcy claims, including those for their own firm.

Read the full story in The Defiant

Market Action

The Graph’s Token Doubles in 24 Hours

GRT’s Performance Evokes Heady Days of Bull Market Amid AI-Token Rally

By Owen Fernau

Forget Bitcoin. Forget the Fed. Forget inflation. The big story in the markets today was a data ecosystem known as The Graph Network. GRT, The Graph’s native token, almost doubled on Tuesday, according to The Defiant Terminal. It was the best performance in the top 100 crypto assets.

Read the full story in The Defiant

Liquidity Staking

Aave Opens Door for Lido Rewards Across Three Networks

Lido Has Skyrocketed 58% in Last 30 Days as LSD Story Picks up Mojo

By Tarang Khaitan

In the latest bullish signal for the burgeoning staking sector, Aave has just cleared the way for Lido to distribute rewards across three liquidity pools on its system — Ethereum, Arbitrum, and Optimism.

Read the full story in The Defiant

Opinion

Why Regulated Custody is the Next Step for DeFi

The Loss of Trust in Crypto Needs a Response — Regulated Custodians

By Mike Belshe

The events of 2022 have been sobering for the digital asset industry. Billions of dollars worth of assets have vanished due to excessive risk-taking, financial mismanagement and malfeasance, and the result was a massive decline in digital asset values.

Read the full story in The Defiant

Research

The State of PoS: Delving Into the Risk and Promise of a Staked Future

A Deep Dive Into Consensus on Ethereum, Polkadot, Solana and Avalanche

By Alberto Guerrero Montilla and Pablo Larguia

Ever since Ethereum executed The Merge in September, there’s been a lot of debate around the ramifications of Proof of Stake. Now with regulators and lawmakers poised to introduce a slate of potential rules on cryptocurrencies, analyzing the blockchain infrastructure of Proof of Stake-based consensus is more important than ever. We can assess a number of risks and key data points to understand the state of decentralization.

Read the full story in The Defiant

Defiant Video

Weekly Recap

Friday

News

DeFi Staking Players Soar After Kraken Slapped by SEC Liquid staking protocols soared Thursday after crypto exchange Kraken settled a lawsuit with the United States’ top financial markets regulator.
3AC Founders’ New Exchange Branded ‘Insult’ to Burned Investors In an audacious, and some might say perverse venture, the co-founders of Three Arrows Capital have launched an exchange to trade bankruptcy claims, including those for their own firm.
MakerDAO to Challenge Aave in DAI Market Aave better watch its back. On Wednesday, high-ranking members of MakerDAO, the No. 2 DeFi protocol and lender, released a plan to set up a new lending venture that will compete with Aave’s efforts in the market for DAI, Maker’s widely used stablecoin.
Aave Taps Proof of Reserves System for Avalanche Market Aave will use Chainlink’s Proof of Reserves system to make sure wrapped tokens on the lender’s Avalanche market is sufficiently collateralized, the DeFi players said Tuesday.

NFT News

NFT Market Shows Signs Recovery After Rough Year: Report Bored Apes and CryptoPunks still rule the world of NFTs. And after enduring a bear market that vaporized 60% of NFT value on Ethereum, green shoots are emerging.

Thursday

News

Lido Bets V2 Will Prove its DeFi Cred Lido may be red hot but it has a problem. The staking service is now the No. 1 protocol in decentralized finance, but critics say it has taken the scenic route on the path to true decentralization.
DeFi Dodges Worst of Crypto Layoffs: Report It may not be a surprise that so many workers lost their jobs in crypto in 2022, but DeFi largely dodged the fallout.
DeFi Community Strives to Raise Aid for Quake Victims In an effort to get aid to the victims in the 7.5 earthquake that struck southern Turkey and northern Syria on Monday, anonymous members of Turkey’s crypto community formed a DAO and a website to rally support.

Opinion

Why Regulated Custody is the Next Step for DeFi The events of 2022 have been sobering for the digital asset industry. Billions of dollars worth of assets have vanished due to excessive risk-taking, financial mismanagement and malfeasance, and the result was a massive decline in digital asset values.

Wednesday

News

The Graph’s Token Doubles in 24 Hours Forget Bitcoin. Forget the Fed. Forget inflation. The big story in the markets today was a data ecosystem known as The Graph Network.
Devs Test ETH Withdrawals Ahead of Shanghai Upgrade In a move that paves the way for activating staked Ether withdrawals, Ethereum’s devs executed the Shapella fork on Wednesday.
Coinbase Ex-Employee Pleads Guilty to Insider Trading A former Coinbase employee pleaded guilty Tuesday to insider trading charges, the U.S. Attorney’s Office for the Southern District of New York said Tuesday.

Research

The State of PoS: Delving Into the Risk and Promise of a Staked Future Ever since Ethereum executed The Merge in September, there’s been a lot of debate around the ramifications of Proof of Stake. Now with regulators and lawmakers poised to introduce a slate of potential rules on cryptocurrencies, analyzing the blockchain infrastructure of Proof of Stake-based consensus is more important than ever.

Tuesday

News

Aave Opens Door for Lido Rewards Across Three Networks In the latest bullish signal for the burgeoning staking sector, Aave has just cleared the way for Lido to distribute rewards across three liquidity pools on its system — Ethereum, Arbitrum, and Optimism.
DeFi Giants Join Forces on Twitter to Promote Decentralization About 20 DeFi projects, including Yearn, Aave, and MakerDAO, are poised to begin sharing each other’s tweets Monday as part of a 24-hour campaign to promote the permissionless nature of decentralized finance.
‘Solver’ Hacks CoW Swap Hackers exploited the CoW Swap decentralized exchange on Tuesday and stole $166,000 worth of BNB from a wallet controlled by the protocol, according to the company. In a twist, CoW Swap identified the hacker on Twitter as one of its market makers.

Exclusive

Arbitrum to Let Devs Work in Traditional Programming Languages Developers often need to learn a new programming language to break into crypto, but the company behind Arbitrum, the top Layer 2 network for Ethereum, is trying to change that picture.

DeFi Earnings

MakerDAO Defies Bear With $19M in Profit At first glance, MakerDAO’s financial performance in 2022 looks grim — the No. 2 DeFi protocol suffered an 79% drop in operating earnings and its top line revenues skidded by 42%.

Community Love

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

Crypto donations for the earthquake victims are still ongoing@VitalikButerin donated 100 ETH and Turkey🇹🇷still needs your help

— Alp (@alpGasimov) February 11, 2023

"To create something big, you need a big vision. And you need to have that as a kind of guiding star in all decisions." –@CamiRusso, The Scoop w/ @fintechfrank (1.25.2023)

— Ariel (@goldrel) February 3, 2023

Let's give a shoutout to all the amazing women in tech we met at @EFDevcon last year 🙌🏼

Your passion, creativity, and determination inspire us all 💥

Keep shining, ladies! #WomenInTech #web3 #TBT pic.twitter.com/nRdywA5FJo

— The Defiant (@DefiantNews) February 2, 2023

What was your first #NFT?
Show it to us!
⏬ pic.twitter.com/NzZUhSNQUi

— The Defiant (@DefiantNews) February 9, 2023

gm and LFG frens! pic.twitter.com/RJri4Nu83j

— DiegoCabral.eth/.lens (✊,🦇🔊) (@DiegoCabral__) February 4, 2023

I'm loving today's @DefiantNews weekly recap with @CamiRusso @yyctrader1 and @ofernau!

Great work, team! pic.twitter.com/zVawq4C8Du

— DiegoCabral.eth/.lens (✊,🦇🔊) (@DiegoCabral__) February 3, 2023