This Week In DeFi – September 16
This week in DeFi The Ethereum Merge goes live, Compound Finance opens lending to institutions and Maker doubles its stETH ceiling for minting DAI.
To the DeFi community,
This week, The Merge finally went live on Ethereum, marking one of the most important upgrades in blockchain history. The network completed a successful shift to the planned Proof-of-Stake consensus mechanism, removing the need for mining and reducing Ethereum’s energy consumption by over 99%.
While The Merge itself was several years in the making, the upgrade also represents the beginning of a new journey for Ethereum, as it seeks to improve both scalability and privacy to handle mass adoption.
Shortly after The Merge, Ethereum Proof-of-Work fork “ETHPoW” was launched – albeit with some underwhelming price action. The chain, which seeks to continue Ethereum without the Proof-of-Stake model, fell from pre-merge predicted prices to as low as $8.75 per token as it hit the market – around just 0.5% of the main chain’s token value.
Compound Finance has expanded to institutional lending, as its institutional yield platform Compound Treasury announces that it will offer over-collateralized loans backed with crypto. Institutional clients can now borrow USDC or USD against their BTC, ETH and supported ERC-20 assets for as little as 6% APR, with no repayment schedule.
Maker has decided to double its ceiling for staked Ether (stETH) for minting its Dai stablecoin, in an effort to decrease its reliance on USD Coin (USDC). USDC currently makes up over a third of all collateral in the protocol, attracting a growing amount of criticism. Part of the criticism comes from the recent freezing of USDC tokens by Circle following Tornado Cash sanctions by the US Treasury – demonstrating that Dai collateral is not censorship-proof.
With the Ethereum Merge finally complete, the crypto community can breathe a sigh of joy and relief as the major upgrade appears to have been implemented without a hitch. DeFi project updates and releases waiting on the upgrade – such as Curve Finance’s new stablecoin – are now free to be implemented, without any Merge dangers or overshadowing.
Fears over the potential ideological ETHPoW warfare have also been quelled, as the fork launch looks like it was a dud – gaining little steam or support despite some nervousness.
Focus can now rest on the progression of the new-and-improved Proof-of-Stake chain, including further development and efforts to decentralize the validator ecosystem.
The high concentration of staking power within the hands of a few delegated entities (including three centralized exchanges) isn’t all that reassuring, however a similar phenomenon can be argued as being present in Bitcoin via mining pools – still touted as the most decentralized network on the planet.
On the other hand, the significant drop in the issuance of new ETH may give price a long-term boost, a supply shock that should be on everyone’s radar.
Zooming out to the broader picture, more institutional money may be ready to hit the crypto market as Charles Schwab, Citadel and Fidelity team up to provide liquid institutional exposure. On the other hand, inflation also hasn’t eased up all that much, potentially leading to a larger hike in interest rates later this month.
All of the above provides a very clouded picture for crypto market direction (and in turn, attention and investment) – which forces will prevail in the near-run could be anyone’s guess.
Highest Yields: Nexo Lend at 10% APY, BlockFi at 6.38% 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, BlockFi at 7.50% APY
Charles Schwab, Citadel, Fidelity Digital launch digital asset exchange
CPI Inflation Low, But Offers Little Encouragement For Fed Or Markets
64% of staked ETH controlled by five entities — Nansen
Binance Labs Doubles Down on Aptos Bet Ahead of Blockchain Launch
Total Value Locked: $54.61B (down 6.4% since last week)
DeFi Market Cap: $45.80B (down 7.7%)
DEX Weekly Volume: $12B (up 9.1%)
[Mike Dalton – Crypto Briefing] – Google Cloud Now Available to BNB Chain's 1,300 Apps
[Krisztian Sandor – CoinDesk] – Lido’s Staked Ether Surges Closest to Ether Since Terra Crash
[Samuel Haig – The Defiant] – U.S. Permits Tornado Cash Users to Access Crypto Deposits
[Shaurya Malwa – CoinDesk] – Crypto Network Tron Set to Capitalize on DeFi Boom With Wintermute as Market Maker