👩‍🌾 DeFi Stabilizes after the UST Collapse

Also, read about boosted yield on stETH and learn how to run Due Diligence on DeFi protocols.

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May 19, 2022

📉 DeFi TVL holds ground — Amid acute selloffs that followed all the Terra landscape drama, the TVL in Ethereum DeFi took another hit: a 15% decline from last week.

Beside the drop in price that usually results in a relative TVL drop, this time Curve’s 3pool was also key on this market behavior. More than 2b dollars were withdrawn from the pool, with a large preference for USDC and DAI, causing USDT to represent almost 75% of the pool’s total share today.

**Source**: https://dune.com/1ronman/Curve.fi-3pool

😳 Driving crypto and DeFi regulatory updates

👛 The $DPI pulse — The DeFi Pulse Index ($DPI) is presently trading at $99.36, up by 1% on the week.

👀 Latest News you shouldn’t miss:

Ethereum shadow fork rolled out, but the Merge will be likely delayed again.

Buterin donates $4M to Uni of NSW for a pandemic detection tool.
Etherscan updates on Coinzilla Ad attack.
Thoughts on Lido incentivizing stETH/ETH rate to 1:1.
Terra contagion leads to 80%+ decline in DeFi protocols associated with UST.
How metaplex is solving Solana’s network crashing NFTs booting problem.
Uniq.cx is free and cheaper than Moby, Compass, and others.
Do Kwon shared plans for Terra 2.0 chain

Unlucky at markets, lucky in love

Lucas 🔴_🔴 @0x_Lucas

Ladies & Gents… It happened. @BanklessHQ history has been made.

I hope this image warms your heart, as it did with mine. If you don’t know what I’m talking about…where have you been, my dear metaverse friend?

These are Ryan Adams and David Hoffman, co-hosts of the Bankless Podcast. This was the first time they’ve met in real life after more than a year co-hosting the show together, can you believe it?

Popular crypto data sites targeted with a phishing attack
TLDR: A fraudulent pop-up prompted users to connect their MetaMask wallets, according to cryptocurrency statistics websites Etherscan, CoinGecko, and others. The phishing assault appears to originate from a website with the Bored Ape Yacht Club logo;
Vitalik Buterin: Both algostables (uncollateralized) and collateralized stables are very different
TLDR: Buterin believes that the phrase "algostable" is being used as a propaganda term to lump uncollateralized stablecoins in with collateralized ones like DAI, despite the fact that they are vastly different;
Ethereum derivatives data hints at further downside from ETH
TLDR: Ether (ETH) has dropped 38% in three weeks, and the current $2,000 level is 59 percent below the November 2021 all-time high of $4,870. As a result, the long-to-short ratio of prominent traders and ETH options pricing indicate a lack of confidence in the $1,700 support;

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🚜 Consider Migrating your stETH to the concentrated stETH pool on Curve

Recently, stETH faced a slight “peg” lost relative to ETH.

Hasu⚡️🤖 @hasufl

In the last week, the stETH/ETH exchange rate has slightly declined in secondary markets here‘s some thoughts on why they traded at pair to begin with and why the current events are both natural and healthy

In order to incentivize people to keep their stETH and match the risk perceived by the investors, Lido Finance decided to boost the rewards in Curve for providing liquidity for the stETH/ETH pair, creating a new pool with extra LDO rewards.

If you currently provide liquidity to the stETH pool, consider migrating it to the new pool to get the 13% in LDO rewards annualized.

And if you want to constantly reinvest your LDO farmed to boost your yield, Yearn launched a vault where you can stake your Curve LP token and not worry about your stETH yield for a long time.

yearn.finance @iearnfinance

Teamwork makes the LPwork. We’ve worked with @LidoFinance to create a new vault for LPs in Lido’s new concentrated stETH pool. More liquidity, more ETH yield, more 🤝 Find it here: yearn.finance/#/vault/0x5faF…

If you still don’t have stETH and want to invest in this strategy, remember to do your own research on Lido and ETH liquid staking to understand the mechanisms behind it!

✅ Advantages of the farm:

Curve, Lido and Yearn are considered blue chip projects with trusted teams and battle tested protocols.
The impermanent loss is extremely reduced in this strategy, since stETH and ETH are highly correlated.

❗ Risks to keep an eye on:

The new Curve pool is still a factory pool. Curve factory pools are permissionless and require extra caution.
More protocols involved, more technical risks. This strategy involves 3 different protocols, which brings 3 possible attack vectors.

-DeFinn

All protocols involved have been audited, but there are no ultimate guarantees in DeFi. So, always do your own research, and never invest more money into any project than you can afford to lose.

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DeFi research guide: Conducting Due Diligence on DeFi Protocols

Due diligence is defined as a systematic way to analyze and mitigate risk from a decision. It’s one of the most important steps in evaluating decentralized finance (DeFi) protocols prior to using them.

When using DeFi protocols, users are putting their funds at risk of being rugged (stolen) and therefore, should take proper steps to gauge protocol risks. This post will outline the basic steps you can take to research protocols and evaluate various risks involved in DeFi.

Read Full Article

Pony_Finance @PonyFinance

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Don’t forget about rho when searching for alpha

If you have deterministic alpha, that means a strategy to make a profit without any risk, you probably wouldn’t be reading this but instead be swinging in your hammock on your private island. Since you are reading this, chances are high that risk management already does or probably should be a concern.

The Greek letter rho (ρ) is typically used to label pairwise correlation of two variables, asset returns in our case. The easiest way to improve risk-adjusted returns is to add an uncorrelated return stream: utilize the power of diversification. This means that when evaluating a potential investment, return predictions (“alpha”) shouldn’t be the only consideration. It is also important to assess how similar the new investment is to existing investments: What are the underlying return drivers of my portfolio? What are the common risk factors? To sum up with the words of Ray Dalio: “With fifteen to twenty good, uncorrelated return streams, you can dramatically reduce your risks without reducing your expected returns.”- Christoph Gackstatter, Indices Lead at Scalara

All info in this newsletter is purely educational and should only be used as research. DeFi Pulse is not offering investment advice, endorsement of any project or approach, or promising any outcome. This post is prepared using public information (which does not account for specific goals or financial situations) and links provided to third-party sites are for informational purposes. Such sites are not under the control of DeFi Pulse, so DeFi Pulse or the author are not responsible for the accuracy of the content on such third-party sites. Be careful and keep up the honest work!