Uniswap’s “Crypto Stimulus Check” Sends Defi Market Into Frenzy

Weekly Analyst Thoughts

Uniswap Token’s “crypto stimulus check”

Last week became a momentous week in Defi when Uniswap decided to drop 400 UNI tokens to anyone who ever used their exchange. The drop included anyone who even tried to use their DEX, even if their transaction failed. Most people in crypto are dubbing this airdrop the “crypto stimulus check,” worth roughly $1,200 when it was first airdropped, ballooning to $3,200 one day later, then finally finding price resistance around $2,000 soon after. The efficiency of this airdrop, in how it was immediately distributed to over 140,000 addresses, versus the many weeks of delays on the US government stimulus checks, is quite striking. Furthermore, Uniswap has enticed liquidity providers to contribute even more liquidity to their platform by offering four yield farming pools, pictured below.

Although the “crypto stimulus check” was an amazing development for all Defi users, the one thing it exposed is the lack of scalability on the Ethereum network, as some paid fees in excess of $60+ to turn their 400 UNI into ETH.

In summary, the “crypto stimulus check” was a pleasant surprise for Defi users, but if Uniswap wants to continue to grow into a powerhouse decentralized exchange, it must seek scalability solutions for its platform with Ethereum 2.0, considering the high Ethereum gas fees deter users from transacting on Uniswap.

Jacob Stelter | Blockchain Analyst

Kraken Announces Federal and State Permissions for Bank Charter in Wyoming

Kraken Financial: The United States’ Pioneer for Crypto Banking

Earlier today, the world received news that one of the largest US-based crypto exchanges, Kraken, received approval to establish a bank charter as the world’s first Special Purpose Depository Institution, or SPDI, called Kraken Financial. Kraken will be based out of Cheyenne, Wyoming, as Wyoming is one of the few regulators around the world to follow through on talks to foster fintech innovation as disruptive as blockchain technology and cryptocurrencies.

This announcement is a massive advancement for the crypto industry, as Kraken is the first digital asset company in the United States to receive federal and state permissions as a bank charter, according to Kraken’s news release, and will have permission to offer depository, custody and fiduciary services for cryptocurrencies.

While Kraken Financial is currently limiting their services to US-based customers, the exchange’s bank charter permission is a big step for other states to follow suit, as Kraken Financial’s vision is to expand their fiduciary services worldwide.

According to their announcement, Kraken seeks to integrate their banking efforts with their pre-existent crypto exchange services, expanding to digital asset custody, demand and deposit accounts (DDAs), and wire transfer services in their first year, while looking to provide digital asset staking, mobile banking, and cryptocurrency debit cards, among several other initiatives, in the coming years.

Sarson Funds is hopeful that Kraken’s bank charter will bring the crypto ecosystem one step closer to greater regulatory and full-scale adoption.

Read more about this crucial advancement in the crypto space, which is arguably the most pivotal event towards universal crypto adoption in 2020, here.

Cream Finance: New Crypto Exchange Rivaling Uniswap and Balancer

Weekly Analyst Thoughts

Cream Finance: New Crypto Exchange Rivaling Uniswap and Balancer

Introducing Cream Finance, a new Defi liquidity exchange that is as robust as competitors like Uniswap, Balancer, and Compound. Cream stands for “Crypto Rules Everything Around Me” and its token jumped 145% just last week. Cream Finance allows the borrowing and lending of multiple cryptocurrencies and offers better yields than Compound Finance, as pictured below.

Cream Finance also allows liquidity providers to yield farm Cream on Balancer and Uniswap pools, pictured below.

Finally, Cream Finance has its own Uniswap and Balancer exchange, “Cream Swap,” that delivers yield farming rewards for being a liquidity provider on their platform. One of their liquidity providing pools has a 200% APY just for depositing a different type of Ethereum into a pool, as seen below.

In summary, Cream Finance provides a platform to borrow and lend a multitude of cryptocurrencies, yield farm and become a liquidity provider on their Cream Swap exchange, and yield farm in Uniswap and Balancer Pools.

Jacob Stelter | Blockchain Analyst

Sushiswap: The Yield Farming Platform that Caused Defi-Mania

Weekly Analyst Thoughts

Sushiswap

Last week was Defi mania for crypto. One reason why Defi reached such a frenzy this week was because of the launch of Sushiswap. Sushiswap incentivizes Uniswap liquidity providers to deposit their pool tokens on Sushiswap’s platform to start earning Sushi. Below are some rewards that one could earn if they deposit their Uniswap tokens on Sushi’s platform.

Source: https://sushiswap.org/farms  ***Note: One needs to connect their metamask wallet in order to view these returns on this page ***

As you can see, there are a multitude of opportunities to earn Sushi with different pools and generate outsized returns! Here is a six-step process to start earning Sushi if one wants to dive into Defi mania:

  1. Acquire Ethereum
  2. Go to Uniswap and swap Ethereum for a pool token that is available on Uniswap (Ex: UMA)
  3. Add Liquidity on Uniswap with ETH & UMA (Approve then supply the collateral)
  4. Go to sushiswap.org and unlock your Metamask wallet
  5. Approve and Supply the UMA and ETH LP tokens in the Sushiswap liquidity pool
  6. Harvest the Sushi that you are now farming!

Jacob Stelter | Blockchain Analyst

Defi Highlight: Yield Farming Token Auctus Surges in Volume

Weekly Analyst Thoughts

Auctus

With great risk comes great reward. This is the case with Auctus, a decentralized options platform that recently broke into the Defi Pulse scene and is offering a liquidity mining rewards program. Auctus is becoming a burgeoning Defi options platform that aims to compete with Deribit as it continues to establish its network effect. Below, find a graph of the current TVL (Total Value Locked) within the Auctus platform and notice the gravity of its growth over the last month.

Source: https://defipulse.com/aco

Also, compare the Auctus options platform below with Deribit and notice the similarities in the user interface.

Source: https://aco.finance/advanced/trade/ETH_USDC

Source: https://www.deribit.com/main#/options?tab=ETH-25SEP20

In sum, Auctus is an aggressive, low market cap, Defi yield farming coin that is looking like it will have a fruitful future.

Jacob Stelter | Blockchain Analyst

Multi-Platform Yield Farming With Curve’s CRV Token

Weekly Analyst Thoughts

Curve Dao Token- CRV

In the Defi ecosystem, three major decentralized exchanges, Dexes, are used. These Dexes are Uniswap, Balancer, and Curve.

Balancer’s BAL token incentivizes Defi users to become liquidity providers within their Balancer pools to earn BAL tokens, while Uniswap has the network effect of being one of the first Dexes to have liquidity pools. Curve, on the other hand, is known as the stablecoin Dex where users can seamlessly exchange stablecoins like sUSD, DAI, USDC, and USDT, making them one of the most popular Dexes in the ecosystem. To add to their fervor, Curve has released their own CRV token to incentivize Defi users to contribute to their liquidity pools.

The rewards for CRV tokens are between 57-150% for contributing to a Curve liquidity pool. I would recommend that Defi users combine Compound liquidity rewards with CRV liquidity rewards to maximize their yield farming earnings.

Example Yield Farming Scenario:

  1. Supply $10,000 of USDC to Compound Protocol: Estimated Interest Revenue: $671, Compound Liquidity Earnings: $817
  2. Supply $10,000 cUSDC tokens received from supplying to Compound Protocol: Estimated Interest Revenue: $822, CRV Liquidity Earnings: $6,056

Estimated Yield Farming APY: 83.66%

In summary, with the addition of new yield farming tokens, there is new opportunity to combine different Defi protocols and earn higher than normal APY, all while helping other Defi users trade seamlessly between different Ethereum ERC-20 tokens.

Jacob Stelter | Blockchain Analyst

Yield Farming With Yam Sees APY Returns Above 300%

Weekly Analyst Thoughts

YAM

Last week was an exciting week in Defi. A new cryptocurrency, Yam Coin, was launched that gives yield farmers APY returns above 300%. The platform allows seven cryptocurrencies to be farmed, and each experienced price rises last week. Those currencies are: LEND, LINK, SNX, WETH, MKR, COMP and YFI.  Below, see examples of different yield farming pools that investors can join.

The Yam platform puts a fun spin on liquidity pools with names like Aave Agriculture, Maker Range, and Compounding Hills. Yam coin has an interesting feature similar to Ampleforth called a rebase, which is a new iteration of stablecoins. Yam is not pegged to a value like the US dollar (Ex: USDC), but instead has a target value of $1 and reaches that target value through rebases, which either expand or contract the Yam supply in order to keep its price at its target value. For example, if Yam trades above $1 during a rebase, the Yam Coin supply expands in order to bring Yam back down to its target value of $1. Unfortunately, Yam Coin recently suffered a rebase bug that bricked the project temporarily, but with community funding and a proper audit, Yam 2.0 should be just as exciting as Yam 1.0.

Jacob Stelter | Blockchain Analyst

The Iterations of Cryptocurrency Trading and What to Look For

The Iterations of Cryptocurrency Trading and What to Look For

The first iteration of cryptocurrency trading when Bitcoin was created in 2009 was peer to peer trading. Trading partners would meet in a physical location where they would trade cash for cryptocurrency. LocalBitcoins was a prominent platform to orchestrate these trades, however, trading partners began using alternate payment methods, like Paypal, for Bitcoin. Those who used alternate platforms later realized there was inherent “chargeback risk” in accepting Paypal payments for irreversible payments like Bitcoin, creating the need for a second iteration of cryptocurrency trading.

The second iteration of cryptocurrency trading was in the form of Cexes (Centralized Exchanges) like Coinbase, Kraken, Gemini, etc. These exchanges accepted multiple forms of payment: debit card, wire transfer, ach transfer and conducted trades on an orderbook where they would match sellers and buyers. However, Cexes were plagued with problems like social engineering attacks, sim swapping, and server problems, never mind users not being able to sign up for accounts during the bull run of 2017, crypto users not passing KYC/AML, and account closures for innocuous actions. The cryptocurrency space was in dire need of a third iteration of cryptocurrency trading, but there was not enough adoption for Decentralized exchanges with orderbooks.

The third iteration of cryptocurrency trading is where Uniswap comes into play. Uniswap is an iteration of cryptocurrency trading that allows users to trade any ERC-20 asset they want without orderbooks, having to make an account, passing kyc/aml, server problems, spoofing transactions (exchanges who fake their volume), risk of sim swap attacks or hacking risk. This third iteration of cryptocurrency trading is made possible by “liquidity pools,” assets provided on demand by liquidity providers in exchange for a 0.3% fee. A uniswap liquidity pool is made up of two assets, with 50% of each asset in the pool. The most common makeup is 50% WETH (ERC-20 token of Ethereum) and 50% of another token.

In conclusion, the progression of crypto trading has created the opportunity for Uniswap to provide a seamless experience for crypto users. While it is now easier than ever to trade crypto with liquidity pools, atomic swaps, the fourth iteration of crypto trading, are on their way to maturity, so be on the lookout as more of these swaps enter the ecosystem.

Jacob Stelter | Blockchain Analyst

Yield Farming With YFI Attracts Profit-Seeking Investors

Weekly Analyst Thoughts

Yield Farming with YFI

“Yield farming” is a new iteration of cryptocurrency mining and staking that allows entities to earn an interest rate well above a typical US bank account. Below, find a scenario overviewing how you can use yield farming with YFI.

Scenario: Step 1: Start with $10,000 ETH and open up Uniswap. Convert $9,700 of ETH into DAI with Uniswap.

Step 2: Go to yearn.finance/earn and deposit the $9,700 of DAI into the pool to create (y)Dai tokens and earn a 10% interest rate.

Step 3:  Claim your yDai tokens that were created when you deposited your DAI into the pool.

Step 4:   Deposit and stake the yDai tokens into the curve.fi pool that is labeled “Y,” here: https://www.curve.fi/y.

Step 5: Receive your Curve LP tokens and then stake them at https://ygov.finance/stake to earn YFI.

Step 6: Go to Zerion and monitor your tokens as you are now yield farming YFI tokens!

Jacob Stelter | Blockchain Analyst

Yield Farming with Compound: New Tactic Yields Higher Returns

Yield Farming Analyst Altnotes

Yield Farming Analyst Altnotes

Weekly Analyst Thoughts

Yield Farming with Compound

“Yield farming” is a new iteration of cryptocurrency mining and staking that allows entities to earn an interest rate well above that of a typical US bank account. Below is a scenario detailing how an investor can use yield farming with Compound, a decentralized finance (DeFi) platform that allows users to exchange stablecoins and Ethereum tokens amongst each other.

Step 1: Start with $10,000 DAI and deposit it into Compound. One will start earning the 2.21% supply APY (annual percentage yield) for DAI and the supply APY 9.72% from Compound, returning $1,183 per year.

Step 2: Borrow 50% USDC with the DAI supply, pay a borrow APY of 5.69%, and earn a Borrow APY of 10.69%, which creates a net of $250 a year. With this, take that $5,000 of USDC and convert it to DAI and repeat the process again.

*** Repeat Steps 1 & 2 with a lower starting value

Step 3:  Start with $5,000 DAI and deposit it into Compound. One will start earning the 2.21% supply APY for DAI and the supply APY 9.72% for Comp token, totaling $591 a year.

Step 4: Borrow 50% USDC with the DAI supply, pay a Borrow APY of 5.69%, and earn a Borrow APY of 10.69%, generating a net of $125 a year. Take that $2,500 of USDC and convert it to DAI and repeat the process again.

The yield farming interest rate one would see in this scenario would be 21.49% rate, returning $2,149 a year with this simple trick.

Jacob Stelter | Blockchain Analyst