This Week In DeFi – November 18
This week, more details are revealed about the FTX collapse, Genesis and Gemini suspend redemptions for some users, users flock to safety in DeFi and StarkWare deploys $STRK.
To the DeFi community,
This week, FTX stays plastered across the news as details continue to emerge from bankruptcy filings, on-chain data and other sources connected to the situation.
Most interestingly, it was alleged that Bahamian regulators directed ex-CEO Sam Bankman-Fried to hack into the exchange and transfer remaining assets to the Bahamian government.
The allegations were made by FTX in a motion in the US Bankruptcy Court in Delaware – and explains the so-called “FTX accounts drainer” who made off with customer funds, completing the exchange’s fateful collapse.
The contagion from FTX’s downfall has also spread to Genesis and Gemini, who both suspended redemptions for customers.
For Genesis, this applied to their lending arm Genesis Global Capital, citing “extreme market dislocation and loss of industry confidence caused by the FTX implosion.”
In the case of Gemini, the exchange suspended withdrawals from their interest-earning platform Gemini Earn – explaining that they could no longer fulfill redemptions within their service-level agreement promise of five business days.
Genesis has since sought an emergency loan of $1 billion, which it says it needs by Monday.
On the decentralized side of things, DeFi protocols have seen a significant uptick in users and user activity, as the community flocks to safety away from troubled centralized entities.
Data from Nansen shows double-digit percentage growth in users and transactions over the last week for a huge range of platforms, with Aave seeing a 70% increase in users and a doubling of transactions.
Additional data from Token Terminal says that decentralized exchanges dealing in perpetual swap contracts reached $5 billion in daily trading volume – the largest trading volume since the Terra implosion in May of this year.
StarkWare has deployed a token for Ethereum Layer-2 StarkNet, known as StarkNet Token or “STRK”. The token is not yet tradable, however details have been revealed including its distribution and vesting schedules.
The maximum supply of STRK will be 10 billion tokens, with 5.01 billion being allocated to the StarkNet foundation. Tokens held by shareholders, employees and independent partners will be unlocked over the course of four years, beginning after one year.
“CeFi” continues to dominate the headlines this week as the crypto community pieces together the complete story, while second-order effects on the ecosystem begin to surface.
DeFi is not completely unaffected, with the news continuing to dampen the public’s wider perspective of crypto, and therefore prices. On the plus side, there has been an apparent exodus of users from centralized platforms – now looking rather risky – to DeFi, which is now looking like the much safer bet.
Although it was important that the bad actors were eventually flushed out of the ecosystem, it has proven more disastrous than expected, especially with such a major (and trusted) platform biting the dust.
It may take time to rebuild and build confidence back up in the industry as a whole, but DeFi is standing strong and showing its strengths – eliminating centralized risk associated with human error.
Plenty of further bad actors and risks still remain to be removed from DeFi and crypto, however we are on the right path, however painful that may be.
Highest Yields: Nexo Lend at 10% APY, Compound at 1.02% APY
DAI Savings Rate: 0.01%
Base Fee: 0.00%
ETH Stability Fee: 0.50%
USDC Stability Fee: 0.00%
WBTC Stability Fee: 0.75%
Highest Yields: Nexo Lend at 10% APY, Compound at 0.8% APY
Total Value Locked: $42.88B (down 5.2% since last week)
DeFi Market Cap: $38.07B (down 4.2%)
DEX Weekly Volume: $15B (down 46%)
[Samuel Haig – The Defiant] – MakerDAO Releases Speedy DAI Transfers and Tightens Controls on Vaults
[Kyle White – Cointelegraph] – Arbitrum sees steady growth as airdrop speculation leads to increased earnings
[Coinbase – Twitter] – Coinbase Wallet now simulates the outcome of your dapp transactions
[Judith Bannermanquist – Cointelegraph] – 1inch seeks to optimize gas costs with its new v5 router