DeFi Pulse Farmer #7
Catch up on a new week in DeFi as we recap Uniswap, Collaborative Competition, updates on YAM, the Farm of the week, and the Conservative Farmer.
Welcome to the seventh edition of 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.
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Looking to catch up on the week? We’ve got you covered!
DeFi Recap
The Total Value Locked (TVL) in DeFi once again crossed over $9.56B, with a weekly inflow of ~$1.78B. All eyes are now on the $10B mark, a milestone first neared in early September but that’s never been reached before.
The main driver of this week’s TVL uptrend was the buzz generated by Uniswap’s surprise Wednesday launch of the UNI governance token. The powerhouse DEX protocol’s creators did so in splendid fashion: 400 UNI were airdropped to any address that interacted with Uniswap before September 1st, 2020, and historical liquidity providers were also rewarded retroactively!
Amid all the UNI excitement, Uniswap’s TVL surged up ~80% to $1.6B within 48 hours of the airdrop. That’s because users rushed to provide liquidity in the protocol’s first UNI rewards pools. In parallel, the APY of the new frenzied ETH-UNI pool spiked as high as +500% at times from fees alone.
Another one of the bigger intrigues in DeFi this week was the relaunch of Yam Finance, which was fittingly pitched to yield farmers as the “Replanting.” The migration from YAMv2 to the elastic-supply project’s optimized V3 system kicked off on Friday alongside a YAM yield farming campaign aimed at YAM/yUSD LPs.
Finally, the token that stole the show this week was unsurprisingly UNI, which rocketed up from a launch price of $1.03 to as high as $6.5 on Saturday -- an acute 650% climb.
Collaborative competition
Week after week, we continue to see how fierce competition in DeFi continues to move the space forward. And how being a last mover can be a massive advantage for launching new token and governance distribution mechanisms.
When launching new governance distribution mechanisms that look to put more value in the hands of the community, for example, projects largely benefit from others' experience. And can even use information from the present to change the past by rewarding community members retroactively, opening up new use cases, and creating more overall value for the platform.
Also, when it comes to having fairer governance mechanisms that can lower the community's barrier to participating in decision-making, the last movers can benefit from others' experience.
Even though DeFi has mostly been perceived through the lens of money legos, in which platforms leverage each other to create novel financial products and services, and transfer value trustlessly. We're also starting to see how other platform's open-source governance modules can be leveraged. Uniswap, for example, is leveraging Compound's new Autonomous Proposals tool, in which users that do not own large allocations of governance tokens can still make proposals to upgrade the protocol and look for community support in the form of delegated voting power.
Even though sometimes fierce competition in DeFi creates noise and can be perceived as a zero-sum game, leveraging others' experience and competing collaboratively can bring massive benefits to the communities involved and overall generate more value for the industry as a whole.
Stories of the Week
Fair Launch Capital Partners with Marqet
TLDR: Fair Launch Capital, a non-profit community resource fund, announces new trustless margin trading platform Marqet will be its first grantee.Introducing SyntheticRebaseDollar
TLDR: yEarn launches a new credit-based rebase index designed to track the USD value of its underlying collateral.YAM Replanting: Migration and Launch
TLDR: Yam Finance relaunches with a migration from its V2 to V3 contracts and YAM yield farming campaign.DeFi Pulse Partners with Set Protocol for DeFi Index
TLDR: DeFi Pulse launches the DeFi Pulse Index Set (DPI), which tracks the performance of top DeFi tokens, in collaboration with token management project Set Protocol.Toward a community-owned & driven middleware
TLDR: DEX aggregator Paraswap, which just completed a $2.7M seed round, charts a path toward becoming a simple swapping UI for other DeFi apps.Gnosis and xDai partnership
TLDR: DeFi infrastructure provider Gnosis is transitioning its smart contracts to xDai to leverage the sidechain’s cheap and rapid transactions.iToken Duplication Incident Report
TLDR: bZx recovers funds from an attacker that took advantage of a flaw in the project’s iToken contract.Voter Gas Fee Rebate Program
TLDR: UMA Protocol offers its governance voters gas rebates for participating in the protocol’s administration.
Governance Watcher
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Farm of the Week
Harvest UNI, DeFi’s hottest token, with Uniswap
UNI unquestionably took DeFi by storm this week. Out of the gate, 1 billion $UNI tokens were minted for distributions over the next 4 years. After this, an annual inflation rate of 2% will begin and proceed in perpetuity.
60% of that genesis mint, or 600 million UNI, have been set aside for Uniswap community members. Some of the first allocations from this war chest are going to users who stake their LP tokens in one or more of Uniswap’s first four $UNI rewards pools: ETH/DAI, ETH/USDC, ETH/USDT, and ETH/WBTC.
This initial UNI rewards campaign runs for two months (from September 18th, 2020, to November 18th, 2020) and will see 5 million UNI allocated to each of the four aforementioned pools. This breaks down to about 83,333 UNI distributed per pool per day during this span.
These UNI rewards pools have only been live for hours at this point, but they’ve already seen an incredible surge of activity.
Source: CoinGecko
The explosion of activity also naturally fed into a frenzy of trading around the new Uniswap ETH/UNI pool, too. This pool, while not included among the inaugural UNI rewards pools, has arisen as an interesting opportunity because its transaction fees are stellar right now and thus powering APYs as high as 500%.
Zooming out, a big plus about Uniswap as the Farm of the Week is that the protocol is tried and true and easy to navigate. To participate in UNI farming, you’ll simply head over to your pool of choice and provide liquidity. Then take your LP tokens to Uniswap’s staking dashboard and deposit them. Voila! You’ll start automatically earning UNI for harvest and all through Uniswap’s familiar front-end.
The Conservative Farmer
Harvest up to 162% with Curve’s new 3pool
The low slippage focused DEX’ new pool is focused on providing liquidity for DAI, USDC, and USDT. With a current APY of 8.25% from fees only, it is currently one of the most lucrative stablecoin farms in Curve, making it an interesting opportunity for conservative farmers. This APY doesn’t take into consideration CRV rewards (an extra 61.3% without considering the boost).
Source: Curve
Here’s an example of our estimations for the different stablecoin pools on Curve (including CRV rewards with a potential maximum 2.5 boost, which will be turned on in the next few hours)
Farmers that want to take advantage of the opportunity must make sure to have DAI, USDC, or USDT before they get started. Once stablecoins are in their wallets, they have to simply:
Head to the 3pool interface on Curve’s website.
Deposit their tokens and receive LP tokens (which represent their proportional ownership of the pool) in exchange.
Boost your rewards
Farmers that want to get CRV rewards of up to 154% APY can lock their CRV and stake their LP tokens in the designated Gauge for this specific pool. They also get extra up to 300% APY out of the locked CRV. Curve has recently added the “Deposit & stake in gauge” button in every pool, which allows farmers to deposit their LP tokens in the correct gauge without having to switch between tabs.
Source: Curve
If you’re uncertain about how to provide liquidity in Curve, please check our Curve guide on DeFi Pulse Farmer 4 & DeFi Pulse Farmer 5 editions.
Plow of the Week
This week’s plow of the week goes to CoinGecko’s Yield Farming calculator. The tool showcases all the top yield farming pools by TVL, together with their estimated APYs. But that’s not all; farmers can use the Impermanent Loss and APY calculators by clicking on the arrow on the right-hand side of each pool and calculating potential rewards and losses before allocating assets.
Source: CoinGecko
Alpha Leaker of the Week
Closing Thoughts
Week after week, we keep witnessing how DeFi continues to innovate at breakneck speed. New teams join the race, and existing teams leverage the learnings from the previous experiments that have been held in the open. If one thing is for sure, these are the first glimpses into what DeFi can accomplish.
Enjoy your weekend and re-charge as we get ready to continue to witness history in the coming weeks.
Stay safe and happy farming!
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!