Each week, we’ll round up the hottest news across the DeFi ecosystem to help you keep up to speed as things continue to move fast.
With Ethereum’s EIP-1559 implementation in the upcoming London hard fork update, every single transaction on the network will burn a small amount of ETH. With the robust DeFi ecosystem built on top of the Ethereum network making millions of transactions a day, a significant amount of ETH will be burned from DeFi alone.
In a move seen in the community as imperative to increasing crypto adoption from major players, major DeFi projects are beginning to ship products intended for institutions to create products with. The latest project to announce such an implementation is Aave, through its popular DeFi lending / borrowing platform called “Aave Pro.” At launch, Aave Pro will support four assets — Bitcoin (BTC), Ether (ETH), Aave, and USD Coin (USDC), with its pools segregated from Aave’s other deployments.
It’s a popular topic as of late: staking. What to do with your coins that are chilling? With ETH 2.0, the Proof of Stake upgrade to the Ethereum network coming within the next year, users of all sizes are considering the financial implications of staking ETH. Not only is staking more environmentally friendly than typical mining, it’s also starting to excite players like JPMorgan CEO Jamie Dimon.
You may have seen some of the sky high yields available in DeFi over the past year plus. Makes sense since DeFi yield farming and liquidity pool mining uses yields to incentivize consensus among stakeholders. But lately, these yields are trending closer to traditional financial yields, especially among stable coins. What was once easy to get 20% on is now getting comfortable in the single digits.
One of the space’s most popular AMMs has now joined one of the most popular scaling solutions to help provide a better gas experience to users. Users will be able to liquidity mine (i.e., yield farm) inside of index-like pools on Polygon. Balancer follows other popular Ethereum protocols like Aave, Sushi, and Curve by providing their users implementations on Polygon, which reduces gas costs significantly for users.
Compound Labs is often regarded as the inventors of yield farming, a tenet of DeFi, starting when they launched their liquidity mining program for COMP tokens in the summer of 2020. This past week, the group announced treasury services designed for non-crypto native businesses and financial institutions to access the benefits of the Compound protocol at a fixed 4% rate.
DeFi comes with a number of considerable risks, and in line with that, there are insurance products that exist to help protect users against bad weather. How can one protocol insure another? What types of activities and assets are insurable, and in what circumstances? If you’ve ever participated in on-chain activity, you know how much trust plays a part. This is the state of insurance in DeFi, and where we’re heading.