DeFi Talks - Could interest rate swaps be a new thing in the DeFi landscape?

Week 4 - Tuesday 24th of January 2023

ConsMind

Mr.H

, and

DeFi Talks

Jan 24, 2023

Hi guys,

This is the weekly newsletter powered by DeFi Talks, with the help of the Defi Talks Intern Team :

Hope you will enjoy it, feel free to share and ask questions in the comment section.

Support us:

Donate using any EVM-compatible crypto: 0x1db2bC5951A75C61E12C1A5e8C0475FBb9df95eD

And don’t forget to follow us on:

YouTube: https://youtube.com/defitalks

Twitter: https://twitter.com/myDeFiTalks

Telegram: https://t.me/defitalks_updates

Let’s start…

INTRO:

The crypto contagion seems to be unfinished with a big crypto firm in bad shape and Binance having some “undesired” issues.

A new token launched on Ethereum with high potential, read our Protocol of the week section to find out!

And finally, the question we all ask ourselves is, is the Bullrun back? Not so fast as the US economy could face a really big problem.

INTO THE RABBIT HOLE:

DeFi TVL keeps going up, another +$3B compared to last week, the market seems to don’t believe the FED but it’s still too early to celebrate (or not?).

Price up = TVL up, this isn’t always true but this time seems to be the case.

Optimism is leading the charge with a +10% week-over-week, will it catch Arbitrum?

FLASH NEWS:

Crypto firm Genesis said that they are planning to file for bankruptcy, contagion isn’t over but the market doesn’t seem to care…;
Binance’s banking partner entitled for SWIFT fiat (USD) transfers will no longer accept transactions under 100k for Binance users, starting from Feb. 1st;
Gains Network, a decentralized perpetual exchange, is now offering the possibility to trade stocks and commodities, is it the GMX killer?

PROTOCOL OF THE WEEK:

We previously mentioned IPOR in one of our articles explaining the importance of interest rate swaps in tradFi and how they could become crucial in the DeFi ecosystem.

Well… their token $IPOR is now tradeable on Ethereum (soon on Arbitrum maybe?) but not many are still aware of it, let’s dig on it:

Starting from Wednesday 25th liquidity mining incentives will kickstart rewarding $USDC,$USDT and $DAI single stakers, moreover:

You will be able to stake your $IPOR tokens to get $pwIPOR and a multiplier which will act as a booster to your rewards.

**Note that unstacking has a 14 days cooldown but if you want to unstake right away you will have to pay a 50% fee which will be re-distributed to the other stakers.

This simple mechanism incentivizes users or whales to buy the token, why?

Because the multiplier is calculated through the ratio between $pwIPOR and the amount of liquidity deposited, so for example:

If a whale comes in and deposits 10M worth of $USDC and wants to have a high multiplier he will need to buy a lot of $IPOR in order to do that, this makes things more proportional, especially for smaller fish.

In simple terms, if the gap between the deposit and the staked $IPOR is wide the multiplier will be low.

Back to liquidity mining, here is the emissions schedule:

Could be a good play to farm it given that there’s no IL being a single-sided stake and the current market cap is “only” around 1.5M so there’s upside potential, there are some risks involved tho:

Your deposit will play as a counterpart to IRS (interest rate swaps) traders which, in case they are profitable, will make liquidity providers lose —> It’s like you are playing as the house and the traders as the players, the house wins most of the time but it’s not invincible;
If you buy the token the LM could dilute the circulating supply thus making the price drop if there isn’t a sustainable buy pressure —> if supply goes up (Liquidity mining) and demand stays the same (none/low buy pressure), price will drop.

We gave you the field, now it’s your time to play!

Obviously, none of this is financial advice and remember to DYOR!

Follow them on Twitter to stay updated and don’t forget to read their Docs.

MACRO TALKS:

Debt, even if it can sound bad it’s the backbone of the world economy, it allows any State to raise new money by issuing it and the US has just reached the maximum issuable, what does this imply?

The US government is facing default, as it would be unable to raise new money (by issuing new debt), but since the debt ceiling has been raised 45 times in the last 40 years, we can rest assured that a solution will surely be found between the two parties and that these quarrels are merely political games.

Needless to say, a US default would be disastrous for the whole world, it would be a financial nuclear bomb.

There is an ongoing battle over raising the US debt ceiling between:

Democrats, for raising it;
Republicans, against raising it;