DeFi Talks - Weekly Newsletter
Week 8 - Sunday 4th of September 2021
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.
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Let’s start…
MACRO UPDATE:
Bad news means good news.
Finally, the US labor market is slowing down: non-farm payrolls are growing by 315k vs 300k expected, and the same is happening for the unemployment rate which rose 0.2% MoM to 3.7% from 3.5% in July.
The higher the unemployment rate rises over time, the more likely the fed will ease off on the accelerator, but we may still be a long way from that.
After the labor market data, the odds of 75bps hikes from the fed are 57%.
It’s still too early to understand which interest rate hike we will have in September, what will make the difference will be the 13th of Sept. when the new CPI data will be released.
On Friday, G7 ministers proposed putting a cap on the price of Russian gas, after a few hours Russia responded by shutting off the piped gas North Stream 1.
This news brought some fear to the markets, which are worried about the precarious energy situation in the eurozone with winter approaching.
NEWS OF THE WEEK:
When Arbitrum Odyssey was launched his main purpose was to onboard new users to the Arbitrum ecosystem, the hype was all over the place and on CT everyone was talking about it.
This led to a network congestion, bringing the transactions fee up to 3$ forcing the Arb. team to temporarily alt the campaign.
To overcome this problem it has been proposed to implement the Nitro upgrade which provides an even more scalable network.
Now it’s live: on 31th August Arbitrum officially released Nitro!
Now that Arbitrum is stronger than ever we expect that Odyssey will be resumed shortly…
INTO THE DEFI RABBIT HOLE:
DeFi TVL (7d change) according to Defi Llama:
Ethereum: $51.79b (+1.56%)
Bnb chain: $6.4b (+0.06%)
Tron: $5.59b (-3.44%)
Avalanche: $2.07b (-11.16%)
Polygon: $1.98b (-4.08%)
Top protocol revenues (last 7d) according to Token Terminal:
Uniswap: $10m (-13.3%)
Opensea: $9.2m (-17.2%)
dYdX: $5.3m (+13%)
Lido Finance: $4.6m (-16.8%)
Pancake Swap: $4.1m (-1%)
Venture capital rank by Mcap according to CryptoRank:
Alameda research: $92.99b (+0.35%)
Multicoin capital: $72.62 (-0.14%)
Sequoia Capital: $59.4b (+0.83%)
Weekly winners: (data from CoinGecko)
$ CEL +62.7%
$ GMX +38.6%
$ DFI +26.3%
Weekly losers: (data from CoinGecko)
$ HNT -30.4%
$ XCN -10%
$ AMP -9.2%
Top stable farm:
PUSD-3Crv → 17% APR on Convex Finance
PROTOCOL OF THE WEEK:
Borrowing in TradFi is widely used by institutions, companies, or consumers to gain access to credit and they account for a large share of the Financial markets.
In DeFi most platforms, such as Aave, offer overcollateralized loans.
When you take a loan you can choose to pay a fixed or a floating rate (Borrow APY), and generally floating is lower than fixed although you are exposed to market volatility.
What if you can also hedge/speculate on this rates?
With Ipor protocol you can!
Ipor is a decentralized platform focused on IRS (interest rate swaps).
The main component, the Ipor index, somenthing like EURIBOR, is calculated with a weighted average of rates among all the money markets which for now are Aave and Compound.
Example:
With the upcoming merge, Ethereum holders will receive a PoW ETH.
**Ethereum is not available yet on Ipor, this is only for example purpose
This has led many users to borrow ETH in order to receive the “airdrop” fork, causing an increase in the borrowing rate, with Ipor you could have used this situation to your advantage in two ways:
Hedging your rate by paying a “fixed rate” and receiving a “floating rate” (long):
If the borrowing rate goes up you will pay more interest on your loan meanwhile you will earn from longing the Ipor index,
If the borrowing rate goes down you will pay less interest meanwhile you will lose from longing the rate
Speculation by longing the index and gaining thanks to the ETH borrow rate increase.
You can leverage up to 1000x your collateral and maximize your capital efficiency.
There are other strategies that you can apply according to your own needs and preferences.
Here is their discord where you can find all the info: discord.gg/ipor
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