DeFi Pulse Farmer #19
Catch up on a new week in DeFi as we recap DeFi's TVL, the Farm of the week, the latest Governance updates, and more!
Welcome to DeFi Pulse Farmer - your guide to staying up on the latest and best trends in yield farming and beyond.
In this newsletter, we break down top stories, developments, and trends from the past week in tandem with two key farming opportunities to keep an eye on.
If you want to access the full DeFi Pulse Farmer experience to receive emerging Yield Farming opportunities sent to you throughout the week as part of our Alpha Tractor Series, or the DeFi Pulse Farmer Protocol Express, which consists of a weekly recap of APYs and new pools on major protocols and a highlight of an emerging opportunity, subscribe today.
DeFi’s total value locked (TVL) crossed $15B for the first time on Monday, a rather astonishing feat considering how the metric had never breached $700M prior to January 2020.
It’s been a year of rapid growth for DeFi, then, and at this rate (and considering how DeFi can move in incredible fits and bursts, particularly lately), the possibility of hitting the $20B TVL milestone by the end of 2020 doesn’t seem out of the question.
There’d still be a decent amount of ground to cover, of course, as DeFi’s TVL has since ceded from Monday’s top to ~$14.05B currently. With $15B now notched, though, $20B and beyond seems more in reach than ever. In the meantime, let’s see if the last 3 weeks of 2020 are defined by more decline, another acute DeFi surge, or chop somewhere in between!
As for big headlines this week, we saw:
ETH-friendly CFTC Chairman Heath Tarbert announcing plans to step down from his post early next year. Tarbert became a darling in the Ethereum community in October when he said: “The whole idea of DeFi really is … obviously revolutionary, and I think at the end of the day could lead to a massive disintermediation of the financial system and traditional players.”
Two separate crypto firms, stablecoin issuer Paxos and BTC payments firm BitPay, are filing for national banking charters in the United States. The cryptoeconomy is going mainstream! Or at least for Paxos, perhaps the company is trying to preempt the possibility of a future law like the STABLE Act.
Lastly, when it comes to top DeFi tokens, some of the best-performing assets from the past week included IDLE (+400%), COVER (+150%), FARM (+16%), INDEX (18%), and COMP (13.8%). The DeFi Pulse Index (DPI) declined 7% on the week to $94.46.
Thank you to our sponsors TrueFi, the uncollateralized lending platform from the makers of TUSD, Vesper, an upcoming platform for professional DeFi products, starting with set-and-forget pools for HODL'ing and growing your assets, and DEXTF, an asset management protocol that makes managing and investing assets easier.
Earn competitive yields & farm at TrueFi.io today, sign up to Vesper to be among the first to try Vesper's incentivized beta, and accumulate and bundle yield generating assets with your favorite longs now on DEXTF.
Expansionary Farming with Empty Set Dollar!
Empty Set Dollar is one of the most interesting arrivals in a new wave of projects inspired by Basis, a once-promising algorithmic stablecoin project that closed up shop in 2018.
In this sense, you can understand Empty Set Dollar as like a revival of Basis that’s been updated for DeFi. Instead of relying on over-collateralization like Dai or supply changes that directly affect user balances like Ampleforth, Empty Set Dollar uses voluntary and incentivized rebases.
So how’s it work?
At the heart of Empty Set Dollar is ESD, the project’s stablecoin and governance token.
To make the ESD system go-’round, users bond these tokens to the project’s DAO to participate not only in governance but also in Empty Set Dollar’s rebasing mechanics. ESD is minted during expansionary supply periods and, if not spent on protocol debt, is awarded to bonded ESD holders. ESD can also be burnt in contracting supply periods in exchange for special coupons redeemable 1:1 for ESD plus bonus ESD during supply expansions.
How to Farm ESD
Right now, the Empty Set Dollar team is running a flexible protocol rewards program that shifts in accordance with the project’s ongoing supply circumstances.
To start, there’s the incentivized ESD-USDC pool on Uniswap. Liquidity providers (LPs) to this pool, always receive a 20% cut of Empty Set Dollar’s expansionary rewards, regardless of the protocol’s supply situation. (Note: if ESD is below its peg LPs only earn trading fees).
Where things shift is who receives the remaining 80% of the expansionary rewards and when. Remember the special coupons I mentioned earlier? Holders of these coupons receive the 80% allocation of expansionary rewards so long as there are outstanding coupons. Conversely, when there are no outstanding coupons, the 80% rewards allocation goes to bonded ESD holders.
As such, there are ultimately three ways to farm ESD through Empty Set Protocol:
Bond ESD to the project’s DAO and earn ESD rewards during supply expansions once coupon holders have been made whole.
Buy ESD coupons and redeem them for bonus rewards during supply expansions.
LPs in the ESD-USDC pool are earning over 600% yearly returns in ESD rewards right now, so even that farm alone is worth considering.
Of course, keep in mind these rewards are coming from elastic supply mechanics. This means the APR is sure to vary wildly going forward, but it’s essentially a stablecoin pool with limited impermanent loss (IL) risk, so LPs have that going for them. You can also check out esd.tools any time to easily calculate your rewards.
And if you’re a subscriber, don’t forget to revisit Empty Set Dollar’s Protocol Express.
Whatever you do, though, farm responsibly and do your own research. Elastic supply projects, even a more streamlined one like Empty Set Dollar, aren’t for the faint of heart. Never jump into a farm with more money than you can afford to lose!
USDC Stablecoin Surpasses 3 Billion in Circulation
TLDR: USDC creators CENTRE outlines how the popular stablecoin token’s supply has exploded by 500% this year.
Introducing the Gnosis Custom Market Maker and Tutorial
TLDR: The Gnosis team explores its new market maker tool that functions through a combination of the Gnosis Protocol DEX and the Gnosis Safe Multisig.
Into the Brine Vol. 4 -- Yearn Collab and Smart Treasury
TLDR: The Pickle Finance team offers a walkthrough on the recently announced Yearn meld and the project’s new Smart Treasury implementation.
YAM x UMA: Degenerative Finance
TLDR: Elastic supply project Yam Finance is collaborating with synthetic assets protocol UMA on a new product suite, “Degenerative Finance.”
Week 15: Make it rain GRAIN
TLDR: Harvest Finance releases its latest community update and therein covers topics like the new GRAIN claims portal.
INDEX Liquidity Mining Update
TLDR: The Index Cooperative community votes to extend INDEX farming awards for another 30 days.
Rari Capital moving to the Melon Protocol
TLDR: Yield aggregator protocol Rari Capital plans to move its infrastructure to the layer-two Melon Protocol system.
Inside the Vesper revenue model*
TLDR: Vesper introduces its revenue model and how its pool strategies benefit from collected fees.
*This is part of our sponsored links series.
Farm 6% APR + 40% APR in IDLE rewards
If you’re a conservative and cautious yield farmer, finding projects that are solid, safe, and straightforward is key. The good news is that there’s exactly such an opportunity this week in Idle, a rising interest rate tokenization protocol.
Idle, which recently rolled out its new decentralized governance system, has been running a series of yield farms since this fall that strikes all the right conservative notes for us. Only stables (or WBTC) are allowed, the protocol’s audited, the devs are known … in other words, these look like pretty conservative pastures.
How to Jump In
First, you’ll want to head over to Idle’s “Best-Yield” dashboard. There you’ll find the protocol’s 5 stablecoin farms and WBTC farms. Click on the “Deposit” button of your farm of choice, and then conduct your approval transaction and your deposit transaction.
That’s all it takes with these farms! And to make things easier, Idle offers an “Estimated earnings” calculator in its various Deposits dashboards so you can gauge how much you could expect to earn from any deposit size.
As I mentioned before, Idle has been audited, but you should never go aping into anything into DeFi without having done your own research first. Farm smartly, farm safely!
This week’s plow of the week goes to Token Terminal, which allows you to check market caps across the DeFi space.
We saw DeFi’s TVL hit $15B this week, a major achievement in the early DeFi space. With DeFi on a tear lately, don’t be surprised if we see the DeFi TVL breach $20B in the immediate future. It’s not a lock, but it’s not crazy talk right now either!
All info in this newsletter is purely educational and should only be used to inform your own research. We're not offering investment advice, endorsement of any project or approach, or promise of any outcome. This is prepared using public information and couldn't possibly account for anyone's specific goals or financial situation. Be careful and keep up the honest work!