Traders Pour $200M+ in Complex Multi-Yield-Level Projects in Two Weeks

Tranched DeFi is coming. Also, DeFi had the most liquidations on record yesterday, and Yearn announced another merger.


Hello Defiers! Here’s what’s happening in DeFi,

  • Saffron Finance and Barnbirdge lead the charge in a new, risk tranch-based category of DeFi investment
  • Yearn announces yet another merger in its path to become a DeFi mega-bank
  • DeFi liquidations soared to a record $92M yesterday and Compound was the hardest hit
  • Gnosis and Idle announce plans to decentralize governance

If you’re receiving this email, that means you’re a paid subscriber of The Defiant, (thank you!) You’re getting the full content of this newsletter, while free subscribers are getting only a portion of it. Subscribers also get exclusive access to The Defiant’s Discord chat group for the community, here’s a new link to join.

📺 Watch The Defiant’s New YouTube Video on Flash Loans

And watch the kickoff of our DeFi 101 series!!

🎙Listen to this week’s podcast episode with Melon’s Mona El Isa here:


🙌 Together with Zerion, a simple interface to access and use decentralized finance, v2, which aims to provide the best rates by discovering the most efficient swapping routes across all leading DEXes.


Traders Have Poured Over $200M Into New Risk Hedging DeFi Protocols in Two Weeks

Analyst Nick Chong dives into a new investment category in DeFi: yield optimized by risk level, led by Saffron Finance and Barnbridge. Both projects have attracted several millions in the short time since their launch. Chong dives into how these projects work and their performance so far. He also goes into what’s behind Saffron’s SFI token 1,000% rally since launch, and outperformance relative to Barnbridge’s BOND.


Yearn is Becoming a DeFi Mega Bank as YFI Slumps

Yearn Finance yesterday announced a partnership with Compound Finance fork Cream. It’s the latest in a series of mergers and partnerships that’s making Andre Cronje’s project into a multi-purpose DeFi platform —but token holders aren’t celebrating.

Yearn, which started out as a way to automatically invest tokens into lending protocols with the highest yield, will gain an in-house money-market with the Cream partnership. Earlier this week Yearn announced its merger with Pickle Finance, another yield bouncer.

Pickle & Cream Jump

While Pickle and Cream tokens jumped on the news of their Yearn ties, Yearn’s YFI token has slumped, a sign tokenholders are betting the merger will benefit the smaller players more than Yearn itself.


Image source: TradingView

Yearn and Cream developers are now developing Cream v2, which will focus on lending and leverage products and will be a “launchpad for future Yearn & Cream collaborative lending products,” Cronje wrote in a blog post.

Last week Yearn said it was partnering with Hegic to offer decentralized options. Separately, it’s also creating an insurance protocol, a decentralized exchange, in addition to a series of smaller projects like yGift “a platform for giving gifts, grants and gratitude.”

Yearn is gaining developer talent, functionality, and liquidity, all at apparently zero cost. Still, it could be that Yearn holders speculate the project is biting off more than it can chew, or they don’t see how the token will capture that value.

Thanksgiving Day Selloff Triggers Record DeFi Liquidations

The most collateral ever was wiped out from DeFi protocols yesterday amid a broader market sell-off —so much for gloating about crypto at the Thanksgiving table.

$92M of collateral was liquidated from DeFi protocols as ETH and BTC tumbled more than 10%, which sent the price of the Dai stablecoin shooting up on Coinbase Pro as traders sought refuge. The hardest hit was Compound Finance, which had $88.6M of its Dai liquidated.


Image source: DeBank

Single Price Source

Compound was especially affected by the market volatility because it relies on Coinbase for its Dai prices, with Uniswap’s time-weighted average price as an anchor. It was on those two exchanges that the Dai price shot up to as high as $1.3, causing Dai loans to become under-collateralized and ripe for liquidators to swoop in and sell off the crypto backing those loans, making a hefty profit.


Image source: TradingView

$49M Liquidation

In total, 124 addresses of 225,793 were impacted, Compound co-founder Robert Leshner wrote. One of those accounts was a COMP farmer who had $49M of their collateral liquidated, with the liquidator making $3.7M in profit, according to crytpocurrency trader Sam Priestly.

It’s unclear whether Compound’s massive liquidations were the result of a pre-meditated oracle attack, using the lending protocol’s reliance on Coinbase and Uniswap.

ChainLink Fans

In any case, it gave fans of DeFi oracle provider ChainLink a reason to say “I told you so.” They had warned about the risk of using a single trusted price reporter earlier this year.

Leshner urged the community to “use this use this liquidation event as a catalyst to harden the protocol further, debate the trade-offs of aggressive or compassionate (e.g. @MakerDAO) liquidation systems, and add additional safeguards as needed.”

Meanwhile, commenters in the Compound forum are calling for reimbursement and for Coinbase to fix its oracle design.


GnosisDAO Community Now Controls Most of its Treasury

By Sydney Lai

Gnosis joins a wave of DeFi companies launching decentralized autonomous organizations to give control of their communities over governance.

The GnosisDAO will have control over 150K ETH and 8M GNO tokens, that’s 83% of Gnosis ETH Treasury. This is significant as the convergence of DAOs and DeFi shows that a community could share in an entire ecosystem’s success. Gnosis powers decentralized prediction markets, trading and fund management.

Three Phases

The rollout will happen in three phases. In each phase, prediction markets will surface the projected price impact on GNO if the proposal is accepted.

Phase I: Gnosis Protocol V2 would use a DEX to facilitate ERC20 token trading with gasless order placement, and the ability to match retail traders with each other.

Phase II: A SAFE token would be introduced to ensure Gnosis Safe, the protocol’s fund management solution, is an end-to-end community project which aligns stakeholders’ incentives.

Phase III: GnosisDAO would airdrop a 5% bonus to all Gnosis Safe addresses that participate in Gnosis Impact Proposals (GIP), Snapshot voting within the first month after the GnosisDAO launches.

Testing Limits

For an eight year vesting period, 93% of GNO's treasury or $8M will be held to maintain a predictable supply. The remaining treasury funds not allocated to GnosisDAO will be used to finance the operations of Gnosis Ltd.

As a Defi collective, GnosisDAO will test the limits of what a permissionless prediction market for resource allocation can do.

Idle is Latest DeFi Protocol to Unveil DAO and Token

Idle Protocol yesterday announced it will be managed by a decentralized autonomous organization powered by the IDLE token. IDLE token holders can vote through self-delegation or can delegate their vote, which each token representing one vote. Token holders with 1% of IDLE owned or delegated to their address can create a proposal, as long as they hold the tokens during the entire voting process. Idle Improvement Proposals, or IIPs, are executed if the majority of voters cast a “For” vote and at least 4% of the total voting right supply [520'000 IDLE] participates.

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 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.