DeFi Pulse Farmer #22
Catch up on a new week in DeFi as we recap COVER's attack, the Farm of the Week, the Conservative Farmer, the Governance Watcher, 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.
The DeFi ecosystem closed 2020 on a strong note, rising from $13.43B total value locked (TVL) to $14.6B over the last week. Now it’s anyone’s guess where DeFi’s TVL will be at this point next year!
That said, let’s take a snapshot of the top 5 DeFi projects right now so we can check back on how this leaderboard looks at the start of 2022:
Above, notice how the top three projects currently -- Maker, Aave, and Compound -- are lending protocols. These outfits were tour de forces in DeFi in 2020, and they’re already primed to extend their strong performances as we enter the new year.
As for headlines, the big DeFi news this week was the hack of the COVER token from Cover Protocol, an insurance project that recently made waves for its partnership with popular yield aggregator project Yearn.
The exploit, nominally a “whitehat” effort from fellow DeFi project Grap.finance, involved a massive COVER printing scheme that ended up tanking the price of the token. The Cover Protocol project, who’s main infrastructure was unaffected by the attack, has since issued a compensation plan centered around the 4,350 ETH that Grap.finance returned to its address. Notably, Binance has also announced plans to use +$10M from its SAFU Fund to reimburse its affected COVER traders.
Closing out, let’s look at the best-performing DeFi assets from the last week. These tokens included APY (+60%), WNXM (+34%), RUNE (+40%), UNI (+32%), and SUSHI (+28%). The DeFi Pulse Index (DPI) is also up 12% on the week to $119.37.
Thank you to our sponsors DEXTF, an asset management protocol that makes managing and investing assets easier, and Vesper, an upcoming platform for professional DeFi products, starting with set-and-forget pools for HODL'ing and growing your assets.
Accumulate and bundle yield generating assets with your favorite longs now on DEXTF, and be among the first to try Vesper's incentivized beta.
Farm +350% APY with SushiSwap’s Onsen Campaign
2020 was a wild run for DeFi, and SushiSwap burst onto the scene last year in wild fashion accordingly.
Preceding Uniswap’s UNI launch, SushiSwap’s arrival captured traders’ attention because the project appended SUSHI tokenomics and governance atop of a Uniswap-like trading protocol. Moreover, SushiSwap also launched the first DeFi “Vampire Attack,” i.e. an incentivized liquidity migration from Uniswap.
These developments alone made SushiSwap a project that couldn’t be ignored at the time. Yet things took a sharp turn for the worse in September when the protocol’s pseudonymous founder Chef Nomi “rug pulled” the project’s SUSHI treasury. The Chef ended up returning ~$14 million worth of ETH back, but SushiSwap was jeopardized. What would happen next?
Well, something of a rebirth. Chef Nomi moved on and the project was passed off to the community and a new lead developer, 0xMaki. The SushiSwap team has since cleaned up shop, shipped fast, and differentiated itself from Uniswap. This progress led to Sushiswap recently partnering with Yearn as the yield aggregator protocol’s in-house automated market maker (AMM).
Let’s Talk Onsen
You might have previously heard of SushiSwap’s “Menu of the Week,” which was the protocol’s previous liquidity mining campaign. Now, the project’s rolled out a new interesting liquidity incentivization program: Onsen.
In short, Onsen is a “rotational rewards system” that the Sushiswap community collaborates on by voting to determine which DeFi trading pairs should be incentivized with SUSHI rewards.
What makes Onsen really interesting, then, is its scope.
For example, whereas Uniswap only incentivized 4 pools with its initial UNI rewards campaign, Onsen is incentivizing dozens of trading pairs, including for small-cap and mid-cap projects. As DeFiance Capital project Arthur Cheong recently pointed out, the program paves the way to Sushiswap becoming a premier trading venue for long-tail assets in DeFi.
If you’re interested in jumping into Onsen, you can follow these steps:
Navigate to Sushiswap’s Onsen dashboard.
Identify a supported trading pair you’d like to provide liquidity for. There’s plenty to choose from!
Select your desired pool and connect your wallet on the ensuing page.
Input the amount of liquidity you want to provide, and fire off the deposit transaction.
Once your deposit is confirmed, take your SushiSwap LP tokens and stake them through the same liquidity dashboard.
That’s it, if you follow these steps you’ll start racking up SUSHI rewards through Onsen, which is currently offering a handful of pools that have +300 APY. Keep in mind that the project is in the process of being audited, so caution is always warranted in that regard. Also keep in mind that serving as a liquidity provider often comes with impermanent loss (IL) risks, so Onsen involves such considerations.
Cover Protocol 12/28 Post-Mortem
TLDR: DeFi insurance project Cover Protocol breaks down the bug that led to this week’s COVER token attack.Primitive is Live on Mainnet
TLDR: New DeFi derivatives project Primitive arrives with the aim of offering tokenized options for any Ethereum asset.Synthetic 2020 - A decade in review
TLDR: Popular on-chain synthetics project Synthetix explains its recent accomplishments and its plans for the future, including the protocol’s coming V3 system.Tokenized yield credit via yCredit
TLDR: Yearn creator Andre Cronje unveils yCredit, an experimental DeFi credit protocol centered around the new yCREDIT ERC-20 token.Uniswap’s Year in Review: 2020
TLDR: Leading Ethereum trading protocol Uniswap outlines its major developments from the past year, including the launch of Uniswap V2.UMA Token Release & Treasury Update
TLDR: On-chain synthetic assets project UMA offers a series of community updates, including an announcement of an additional two-year lockup period for the team’s UMA token.Updated COVER Incident Resolution Plan
TLDR: Cryptocurrency exchange powerhouse Binance reveals plans to compensate COVER traders on its platform after the Cover Protocol’s native token was exploited this week.Rethinking “Money LEGOs” for Sustainable Yield Strategies*
TLDR: Vesper describes its modular approach and multi-pool capability to target pool abandonment.
*This is part of our sponsored links series.
Harvest +300% APY with Aave Lending
Currently, Ethereum’s second-largest dapp with a TVL of +$2B, Aave is among the upper echelon of DeFi’s borrowing and lending protocols.
Aave’s infrastructure is sound, easy to use, and profitable, so it’s no surprise why users have flocked to the project over the last year. For these same reasons, it’s also no surprise why Aave’s lending pastures are some of the safest and most attractive farms in DeFi right now.
Unlike so many other yield farms that are active right now, these lending opportunities don’t entail any risks pertaining to impermanent loss (IL) since they don’t involve providing liquidity for a potentially volatile trading pair.
This is why these opportunities are relatively safe in the context of DeFi, and the returns aren’t bad either: Aave’s CRV market is presently fetching lenders +300% APY! So if Aave lending sounds like a farm for you, head over to the project’s lending dashboard and pick which asset you want to supply liquidity for. After you deposit, you’re in!
Aave is a blue-chip project, but nothing is risk-free in life and certainly not in DeFi. Do your own research and always farm responsibly!
Compound passes a modification to its cDAI implementation that will lead to gas savings for users.
Balancer proposes new tokens to be added to its BAL distribution program, including 1INCH and YLD.
Aave proposes a loan origination fee that if passed would be delivered to AAVE stakers.
This week’s Plow of the Week goes to Argent learn. Ideal for beginners, Argent learn includes a set of guides and other resources to dive into what is DeFi, what is gas, and much more!
Happy New Year everyone! Surely we’re in store for a very interesting 2021 around DeFi, but only time will tell how things shake out from here. There are some things we can reasonably expect, though, if 2020 was any indication. Think things like the arrival of more yield farms, more retroactive token distributions, more DeFi mergers, and more flash loan attacks. The stakes are higher than they’ve ever been before, and they’re continuing to rise!
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!