MakerDAO
New Whales Suddenly Accumulate Chainlink (LINK) and One Additional Ethereum-Based Altcoin: Lookonchain
Deep-pocketed investors are suddenly scooping up massive amounts of Chainlink (LINK) and one other Ethereum (ETH)-based altcoin, according to on-chain data. The blockchain data tracker Lookonchain noticed that newly created crypto whale wallets were accumulating two digital assets Wednesday using the top global crypto exchange Binance. One crypto whale scooped up more than $4 million […]
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DeFi economic activity drops 15% in August —VanEck
According to an analysis from investment manager firm VanEck, exchange volume across DeFi protocols declined to $52.8 billion in August, 15.5% lower than in July.
The decentralized finance (DeFi) ecosystem has suffered more setbacks in August as on-chain economic activity dwindled. According to an analysis from investment manager firm VanEck, exchange volume declined to $52.8 billion in August, 15.5% lower than in July.
The findings are based on VanEck's MarketVector Decentralized Finance Leaders Index (MVDFLE), which tracks the performance of the largest and most liquid tokens on DeFi protocols, including Unisawp (UNI), Lido DAO (LDO), Maker (MKR), Aave (AAVE), THORchain (RUNE), and Curve DAO (CRV).
The DeFi Index underperformed Bitcoin (BTC) and Ether (ETH) in August, falling 21% in the month, notes the report. The results were exacerbated by UNI token negative performance of 33.5%, as investors sold off tokens to capture gains from July.
Another key metric for the ecosystem, the total value locked (TVL) declined 8% in August, from $40.8 billion to $37.5 billion, slightly outperforming Ethereum’s 10% slump in the month.
Even though DeFi tokens had poor performance in August, the ecosystem witnessed positive developments throughout the month, argues the analysis. These developments include Uniswap Labs' dismissal of a class action lawsuit, and Maker and Curve's stablecoin growth.
Recovering from a major exploit in late July, Curve Finance's stablecoin crvUSD saw a significant growth in August, achieving a new all-time high of $114 million borrowed. CrvUSD is pegged to the U.S. dollar and relies on a collateralized-debt-position (CDP) model. Meaning users deposit collateral, such as ETH, to borrow crvUSD.
"The growth of crvUSD has allowed it to become a significant contributor of revenue for the platform, with crvUSD fees exceeding fees collected from all non-mainnet liquidity pools in 3 of the 4 last weeks," reads the report. Curve Finance’s governance token, however, has not shown promising signs of recovery since the exploit, with its price falling 24% in August to $0.45.
VanEck analysis notes about CRV token performance:
"Due to the price decline, investors who bought CRV OTC from Michael Egorov last month are now only 12.5% above the water on their investment, with 5 months left until they can sell. If crvUSD can continue to grow to the point that it offsets the drop in exchange revenue caused by decreasing DeFi volume, CRV price may see some relief. Still, until then, declining DeFi volume remains a solid headwind for CRV appreciation."
Curve Finance's founder Michael Egorov had around $100 million in loans backed by 47% of the circulating supply of the protocol’s native token, CRV. As the CRV price dropped nearly 30% following the hack, fears of Egorov's collateralized loans liquidation sparked concerns of contagious effect across the DeFi ecosystem. To reduce his debt position, Egorov sold 39.25 million CRV tokens to several notable DeFi investors during the crisis.
Additionally, VanEck pointed out that current levels of global interest rates, in particular in the United States, continue to put pressure on stablecoins. The aggregate market capitalization of stablecoins fell 2% in August to $119.5 billion. "This is mainly a result of elevated interest rates in traditional finance, which have incentivized investors to dump their stablecoins and move into money market funds where they can receive ~5% risk-free yield," wrote the firm.
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Decentralized stablecoins could dominate crypto: MakerDAO founder
MakerDAO’s Rune Christensen says appropriate regulation will see stablecoins become mainstream, but the real opportunity is in decentralized stablecoins.
Decentralized stablecoins may eventually dominate the stablecoin market, so long as crypto “ends up living up to its potential,” says Rune Christensen, the co-founder of DeFi pioneer MakerDAO.
Speaking to Cointelegraph’s Andrew Fenton at Token 2049 in Singapore, Christensen aired his thoughts on the future of decentralized stablecoins such as Dai (DAI) and their role in the wider crypto economy.
They discussed a presentation by Castle Island Ventures partner Nic Carter at the TOKEN2049 conference in Singapore in which he said that interest-bearing stablecoins could become 30% of the market within two years.
Christensen agreed but said it would probably depend on the macro situation, adding “if high inflation high rates continue, then probably,” stablecoin dominance will increase.
When asked whether a decentralized stablecoin could compete with its centralized cousins, he replied:
“Easily I mean, I think if the space ends up living up to its potential, then decentralized stablecoins will be the entire market like centralized stablecoins would be the edges that connect us to like the legacy system.”
He added that if crypto “delivers” and becomes regulated, centralized stablecoins will become more mainstream. However, the real potential is in decentralized stablecoins, he suggested:
“I think the real killer advantage of decentralized stablecoins, run by actual data like Maker, is this ability to gamify your savings.”
Related: MakerDAO publishes 5-phase roadmap featuring funding for open-source AI projects
In mid-2022, Christiansen proposed MakerDAO’s “Endgame Plan”. The plan proposes making DAI a free-floating asset, initially collateralized by real-world assets (RWA).
There will be a three-year period when DAI remains pegged to the dollar. During this period, the protocol will double down on RWA to accumulate as much Ether (ETH) as possible which increases the ratio of decentralized collateral.
Rune believes that Maker has built a very solid and stable foundation but it has been overtaken by scammy and illegitimate projects.
He wants to try and gamify to make the protocol fun and more appealing to younger users. “It's what people want,” he said before adding, “Things are designed like a game and that's the kind of interface they will use.”
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DeFi group petitions to stop ‘patent troll’ targeting DeFi protocols
The DeFi Education Fund says a patent owned by True Return Systems is being used to try to profit from lawsuits against decentralized protocols.
A decentralized finance (DeFi) advocacy body has petitioned the United States Patent and Trademark Office (USPTO) to review a patent owned by a company it has accused of being a a “patent troll” — a firm that aims to profit from patent lawsuits.
In a Sept. 11 blog post, the DeFi Education Fund (DEF) said on Sept. 7 that it filed an over 90-page petition to the Patent Trial and Appeal Board in a bid to cancel a patent owned by True Return Systems.
Granted in 2018, the patent lays claim to a process for “linking off-chain data to a blockchain,” DEF legal chief Amanda Tuminelli said in a Sept. 11 X (Twitter) post.
Tuminelli claimed True Return tried to sell its patent as a nonfungible token (NFT). After no buyer, it filed suit against the DeFi protocols MakerDAO and Compound Finance in October.
4/ When that didn’t work, in October 2022, TRS sued MakerDAO and “Compound Protocol” in two separate federal court proceedings, alleging patent infringement.
— Amanda Tuminelli (@amandatums) September 11, 2023
Docket links: https://t.co/w47v7fAAEthttps://t.co/ExTapxhKNq
“Clearly [True Return’s] goal was to name defendants who could not answer the complaint so [it] could get a default judgement,” Tuminelli said.
She claimed True Return would try to enforce the court’s ruling against token holders and repeat the process with other protocols “that either can’t challenge them in court or don’t have the resources to do so.”
DEF claimed True Return’s tech in the patent isn’t new at the time it was granted and claims to highlight similar existing tech such as the InterPlanetary File System (IPFS) along with the decentralized storage platforms Sia, Storj and Swarm.
8/ In our petition, we make the point that the “invention” in the patent was not new in 2018. There are many examples of “prior art” the Patent Board can look at - examples - a NASDAQ patent that links price data off-chain to on-chain transaction historyhttps://t.co/amz3jREab7 pic.twitter.com/RJ3VVGFeEj
— Amanda Tuminelli (@amandatums) September 11, 2023
True Return Systems acknowledged Cointelegraph’s request for comment but did not immediately provide a comment.
Related: SEC’s Gary Gensler to hold firm on crypto enforcement in Senate hearing
DEF said it launched the petition with USPTO to defend the ability to use and develop open source software, to stop any potential plans by True Return to sue crypto projects and help MakerDAO and Compound’s legal defence.
True Return has three months to optionally respond to the petition, after six months the USPTO must make a decision if it will move forward with reviewing the patent where it has 12 months to decide if the patent should be cancelled.
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Ethereum price risks losing the $1.6K support as multiple ETH price metrics decline
A lack of network activity and ground lost to competitors could eventually play a role in ETH losing the $1,600 support.
Ether (ETH) price surged by 31.3% from March 10 to March 18, coinciding with the U.S. Federal Reserve's injection of $300 billion to address the insolvency of Silicon Valley Bank.. Since then, Ether’s price consistently maintained a daily closing price above $1,600.
However, investors are now casting doubt on Ether's ability to sustain this support level, given the prevailing bearish sentiment in the cryptocurrency space and declining metrics on the Ethereum network.
Over the past six months, the cryptocurrency sector has been plagued by negative developments. Notably, the Digital Currency Group (DCG), the owner of Grayscale mutual fund manager, has faced financial troubles. Concerns are mounting that a portion of the $4.8 billion worth of ETH deposits held in the Grayscale Ethereum Trust could be liquidated to address DCG's debts.
Furthermore, two major global exchanges, Binance and Coinbase, are currently facing legal action from the U.S. Securities and Exchange Commission (SEC). Additionally, investors initially expressed excitement when several requests for futures-based Ether exchange-traded funds (ETFs) surfaced in early August. However, it's important to note that these instruments, unlike spot ETFs, would not involve actual ETH coins if approved.
On-chain metrics point to declining demand
Aside from a handful of unfavorable market conditions, Ethereum's on-chain metrics point to a stagnation in demand, both in terms of ETH investments and smart contract transactions.
Notably, the number of Ethereum addresses holding a minimum of $1,000 worth of ETH deposits has reached its lowest level in nearly six months. This is concerning, considering that Ether's price reached a peak of $2,130 in mid-April, which should have attracted new investors.
Part of the lack of investor interest can be attributed to the fact that Ethereum's average transaction fee has remained above $4 for the past six months. Consequently, despite fluctuations in network staking metrics, there appears to be no increase in the total number of investors when using the $1,000 threshold as a proxy.
Moreover, data on decentralized application (DApps) activity on the Ethereum network corroborates the notion of a dearth of new users.
Even excluding the significant 60% decline in the Uniswap NFT Aggregator, the average number of active addresses across the top Ethereum network DApps decreased by 4% compared to the previous month.
From cryptocurrency games to decentralized exchanges, NFT marketplaces, and Web3 services, every sector has witnessed a decline in the number of active users, according to DappRadar. Regarding token activity on the network, with the exception of stablecoins and wrapped ETH, no project has recorded more than 13,000 unique receiver addresses over the past week.
This analysis underscores the fact that Ethereum's network is currently constrained by its relatively high transaction fees, which limits the number of active users. Without an uptick in network activity, the catalysts for a price recovery are lacking, such as potential network upgrades and implementations that could lead to lower costs or enhanced user privacy.
Competitors are benefiting from the stablecoin volumes
In the meantime, recent developments have left Ethereum enthusiasts somewhat disappointed. Visa, the payment processor, has incorporated Solana blockchain settlement capabilities, following Circle USD (USDC) introducing native accounts and transfers on the Base chain. In response, Coinbase exchange promptly announced its intention to assist partners in converting old, bridged versions of USDC to the new format.
Furthermore, Rune Christensen, co-founder of MakerDAO, has put forth a proposal to develop the decentralized finance project's upcoming native chain based on Solana's codebase, despite its longstanding affiliation with Ethereum.
In light of the prevailing bearish sentiment in the cryptocurrency market, which includes exchanges facing legal challenges from the SEC and diminishing interest in cryptocurrencies, as indicated by the latest Google Trends data, the likelihood of Ether's price dipping below the $1,600 support level has increased.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
MakerDAO and DAI Creator Proposes New Native Chain Based on Solana (SOL) Fork
MakerDAO co-founder Rune Christensen is proposing that Maker (MKR) launch its own native blockchain based on the Solana (SOL) codebase. Writing in a new blog post, Christensen reveals plans for the fifth phase of “Endgame,” the long-term roadmap for Maker that was originally laid out in May of 2022. In the post from May, Christensen […]
The post MakerDAO and DAI Creator Proposes New Native Chain Based on Solana (SOL) Fork appeared first on The Daily Hodl.
MakerDAO co-founder proposes fork of Solana codebase for native chain
Rune Christensen stated that Solana’s codebase should be the foundation of MakerDAO’s upcoming blockchain, as he highlighted that it’s optimized for building “highly efficient blockchains.”
MakerDAO co-founder Rune Christensen has submitted a proposal to build the decentralized finance project’s upcoming native chain off of a fork of Solana’s codebase, and not the Ethereum Virtual Machine despite its long-running ties with Ethereum.
MakerDAO’s native chain or what is currently dubbed as “NewChain,” is part of the fifth and final phase of the MakerDAO “Endgame” upgrade announced in May.
The final phase is expected to take around three years to complete, and it will see the full re-implementation of the Maker Protocol into a new stand-alone blockchain.
In a Sept. 1 X (Twitter) post highlighting the proposal, Christensen stated that: “After some research, I believe the Solana codebase should be considered as the basis for NewChain.”
The last phase of Endgame is the launch of a native blockchain for Maker with the codename NewChain
— Rune (@RuneKek) September 1, 2023
It will make the ecosystem more secure and efficient
After some research, I believe the Solana codebase should be considered as the basis for NewChainhttps://t.co/KyGxBBGlVH
In the proposal on the MakerDAO forum, Christensen described Solana’s codebase as the “most promising” option to explore, as he offered three key reasons why he thinks it should be used as the foundation for NewChain.
Firstly, he highlighted the “technical quality” of the Solana codebase, and argued that it is “highly optimized for the purpose of operating a singular, highly efficient blockchain.”
“The Solana codebase is engineered well and benefits from being designed long after the bottlenecks and challenges of blockchains were already well understood, which fits nicely with the objective of NewChain itself in fixing the technical debt of Maker.”
Secondly, Christensen argued that the Solana ecosystem has “proven its resilience by having gone through the FTX blowup” and several other challenges without crumbling.
Co-founder @RuneKek of @MakerDAO, a DeFi protocol, proposes leveraging the Solana codebase for NewChain following extensive research.
— Solana (@solana) September 1, 2023
He cites Solana’s technical quality, strong developer ecosystem, and resilience as primary reasons and suggests potential mutual benefits to the… https://t.co/p5w7pGf47h
As such, the MakerDAO co-founder suggested that the Solana ecosystem is likely to stick around long term, maintain a “high-quality pool of talent available for Maker to access and contribute to” while also providing a cost-effective avenue to build and maintain NewChain with.
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Finally, Christensen noted that as “there already exists examples of the Solana codebase being forked and adapted to act as appchains,” MakerDAO could follow a similar process to develop NewChain.
Back on Twitter, Christensen was questioned on why favored using Solana code over EVM.
Christensen noted that while the EVM is the “most important when it comes to building stuff for users, since that’s where the users are,” it doesn’t suit MakerDAO’s specific requirements on the backend.
EVM is still the most important when it comes to building stuff for users, since that’s where the users are. But for a specialized backend for Maker’s specific needs it is not ideal, and solutions like Solana or something like Sei are a much better fit.
— Rune (@RuneKek) September 1, 2023
NewChain will essentially serve as a back-end for the project’s SubDAO tokenomics and governance security. On the other side of things, Its governance token Maker (MKR) and stablecoin Dai (DAI) will continue to function as usual on Ethereum.
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US Treasuries and Real World Assets Bringing Renewed Interest in DeFi, Says Analytics Firm IntoTheBlock
Market intelligence firm IntoTheBlock says that US treasuries, stablecoins yields and real-world assets are giving decentralized finance (DeFi) a shot in the arm. In a new article, IntoTheBlock head of research Lucas Outumuro says that MakerDAO’s (MKR) new 8% yield on stablecoin Dai (DAI), which has gathered $1 billion in deposits in less than a […]
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MakerDAO increases DAI yield in a bid to boost demand
The Enhanced Dai Savings Rate is based on DSR utilization and could boost the stablecoin yield by as much as 8%.
A proposal seeking to temporarily increase the interest rate granted to holders of stablecoin Dai (DAI) was approved by the MakerDAO community on July 27, raising yields for tokenholders to as high as 8%.
The proposal introduced the Enhanced Dai Savings Rate (EDSR), a mechanism that temporarily increases the effective Dai Savings Rate (DSR) available to users. The enhanced mechanism will be determined by the DSR utilization and will be reduced over time as the DSR utilization goes up.
“The EDSR helps fix this by ensuring that Dai holders [...] get a more fair amount of value from the increased returns generated by the protocol. In turn this might help spur adoption," reads the proposal from MakerDAO co-founder Rune Christensen. He noted that even offering increased yield, the DSR is still generating a high spread with its portfolio strategy of 75% allocated to real-world assets and 15% in custody with Coinbase.
MakerDAO raised its DSR to 3.49% in June, hoping to make DAI more competitive. The effort, however, resulted in less than 7% of the total DAI supply deposited in the DSR. “In practice though, DSR utilization is near 0, which gives us excessive margins and a huge windfall of surplus on top of what we would naturally be earning with the protocol at this size," reads the proposal. “The income we are currently earning is much greater in reality than what is even shown on e.g. makerburn."
The new yield seeks to boost DAI adoption amid a global slump in stablecoin market capitalization. According to CoinMarketCap, DAI is currently in the third position among stablecoins with a $4.5 billion market cap at the time of writing, down from $8.6 billion in 2022. The DAI stablecoin sits behind Tether (USDT) and USD Coin (USDC), with $83.7 billion and $26.5 billion market caps, respectively.
MakerDAO has introduced several measures to keep its competitiveness amid market turbulence. In March, the protocol increased its holdings of U.S. Treasury bonds by 150% to $1.25 billion in an effort to improve the strength of its portfolio.
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