🎲The Domino Fall: Terra, Celsius, Voyager, BlockFi, Babel, Maple?
Also, a $100M bridge hack (again)...
Twitter Spaces Episode #10 with @investrly
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101 today:
Major happenings in the ecosystem —
The domino fall that started with the Luna Crash - explained using Tweets.
A topic we explain —
Introduction to Yield Farming.
Goldmine —
Why it may be the "dial-up" era of cryptocurrency right now.
The Domino Fall:
1️⃣ It all started with the Luna Crash:
2️⃣ Celsius was left exposed by the Luna Crash - About $500M of client deposits was stored in Terra.
3️⃣ It was then 3AC’s turn. 3AC had spent $559.6M to buy Locked Luna before the Terra crash. It is now worth ~$670. 🥶
4️⃣ We all wish it had stopped there. But, it didn’t.
Voyager was next. It has reported a $650M loan to 3AC - and is left with only $150M of cash reserves. Voyager has announced that a notice of default will be issued in case 3AC is unable to repay the loan by the 27th of June.
5️⃣ BlockFi followed:
6️⃣ Babel Finance then halted withdrawals citing ‘unusual liquidity pressures.’
7️⃣ And now, Maple Finance may be the next:
Earlier this week they shared a document mentioning ‘Beginning week commencing 06/20/22, there may be instances where there is insufficient cash in pools, and Lenders must wait for Borrower repayments.’
The interesting event in this mess has been Sam Bankman, founder of FTX, bailing out Voyager & BlockFi.
@thedefiedge shares an interesting take in his recent newsletter:
“Sam Bankman Fried, founder of FTX, is putting Crypto on his back. He has bailed out 2 companies so far, and possibly more to come. Is he the Saint of Crypto, or a wolf in sheep's clothing? Only time will tell!”
8️⃣ dYdX’s v4 is moving to Cosmos:
One of the most successful L2 dApps on Ethereum is moving to Cosmos. Needless to say, this inspired a lot of hot takes on crypto twitter.
9️⃣ Harmony Protocol’s Horizon Bridge hacked for $100M:
Today’s Topics: Intro to Yield Farming
DeFi Fridays launched 3 months ago - and in our last 14 editions, we have covered topics like The timeline of DeFi, Smart Contracts, Stablecoins, Tokenomics, AMMs, the Blockchain Trilemma, L1 & L2 Scaling Solutions, and more.
Today, we start explaining the basics of Yield Farming -
What is Yield Farming?
Simply put, yield farming is a way to earn more crypto with your crypto using smart contracts. It is an ROI-optimising strategy unique to DeFi.
There are many strategies to earn high APYs via yield farming, however, most of these strategies are kept hidden by top farmers. Reason? They may gradually become less effective as more & more people start trying it out.
Let’s check out 4 basic yield farming methods famous in DeFi:
Liquidity Providers: Investors supply funds (liquidity) to a dApp or dex. These dexes handle a large volume of transactions & charge small fees from their users for the transactions. This fees is then paid out to liquidity providers based on their share of the liquidity pool.
Lending: Crypto holders can lend crypto to borrowers through a smart contract and earn yield from interest paid on the loan.
Borrowers: Farmers can take out overcollaterized loans in DeFi & farm yield with the borrowed coin. They don’t lose their initial holdings, it may also increase in value over time, and also earn yield on their borrowed coins.
I’m being paid to take out the loan and my collateral is currently yielding roughly five times the loan interest rate. - DeFiant
Staking: There are two forms of staking in the world of DeFi. The main form is on proof-of-stake blockchains, where a user is paid interest to pledge their tokens to the network to provide security. The second is to stake LP tokens earned from supplying a DEX with liquidity. This allows users to earn yield twice, as they are paid for supplying liquidity in LP tokens which they can then stake to earn more yield.
Read more here: Intro to DeFi Farming
This real time yield farming on Curve by @defi_dad:
Check this video by Finematics:
Remember, these intro videos are of around the time yield farming boomed (2020) and is only for educational purposes. The current scenario is very different.
😇Wait for Brew findouts:
Closely followed the Fintech space & finding it difficult to make your way in DeFi?
Fintech 🤝 Crypto is the best source out there to make you gel your way from Fintech to Crypto. The newsletter shares the best insights from the two worlds biweekly & is authored by @pawt. Check out their recent edition that shares their thought on the annual 2022 State of Crypto Report by a16z here.
How UX for the early-internet days looked like & why it may be "dial-up" era of cryptocurrency now:
That’s it for today folks. 🎩
See ya next Friday.