Crypto Price Analysis June 23: CRV, MATIC, ENJ, SOL, COMP

Key Insights:

  • Bitcoin and Ethereum make no significant growth for the eighth day.
  • Most altcoins closed in green, led by Curve DAO token.
  • The ones to mark a decline also limited their fall to 2-3%.

The broader crypto market continues to drag its value at $900 billion as most of the altcoins in the market marked a rally today.

With the king coin, Bitcoin, and altcoin king Ethereum consolidating this week, the entire market might be blocked from sustaining the recent rallies.

Curve DAO (CRV)

As one of the best-performing assets of the day, CRV managed to mark an almost 17% rally in a single day yesterday, adding to the week-long rise of 39.79%.

Although the altcoin is still far away from recovering the losses it witnessed this month, trading at $0.8, yesterday’s rise brought it closer to achieving it.

The MACD continues to exhibit a bullish crossover at the time of writing, with green bars taking over the helm.

Polygon (MATIC)

Following in the footsteps of CRV. MATIC too registered a 20.37% growth in the last 24 hours after Polygon announced its achievement of Carbon Neutrality for this year.

The news was enough to not only push the coin beyond $0.5 but also help it escape the bearish zone.

The Relative Strenght Index (RSI) pulled out of the bearish zone after more than two months furthering MATIC’s efforts to reclaim its 45.46% losses.

Enjin (ENJ)

After noting no significant growth in the last few days, ENJ rallied by 11.02% in 24 hours to note a 24.67% rise in 4 days, bringing the altcoin to the mark of $0.5.

This will reinstate investors’ confidence in the asset, and at the same time, inflows could return to ENJ.

After the 11-day-long decline of 36.69%, ENJ lost a lot of the inflows from its holders, which recovered during the last few days. And a rise as such will only further it.

Solana (SOL)

One of the top 10 cryptocurrencies in the world, SOL joined the list of the best-performing assets as it shot up 11.21% in the span of a day. This added to SOL’s 32.76% rise bringing the altcoin closer to invalidating the 32.36% losses of June.

Being one of the few altcoins to begin recovery this soon, SOL has already reclaimed the bias of the Bollinger Bands.

Although the volatility has not come to an end for the altcoin, the bias acting as support will only push the price upwards during price swings.

Compound (COMP)

After a 9.61% rise yesterday, COMP crossed the $40 mark to trade at $43.24 at the time of writing.

Even though the DeFi token is observing receding bearishness on the Awesome Oscillator, it still has a long way to go before turning its 50.87% recovery into a bullish rally.

Once the bars flip up and rise from thereon, COMP will be in a good spot to mark a solid rally.

Crypto Price Analysis June 21: WAVES, SHIB, ZIL, COMP, AAVE

Key Insights:

  • The total crypto market today was worth a little less than $900 billion.
  • WAVES and Shiba Inu led the market rally.
  • The majority of the cryptocurrencies, including Bitcoin, closed in green today.

The last few days have been very fruitful for crypto investors who bought the crash, and the investors who had been facing losses breathed a sigh of relief.

At the time of writing, the crypto market cap rose to $893 billion as altcoins pulled it out of the weeds.

WAVES (WAVES)

As opposed to other altcoins, WAVES, although closed in the green for the last two days as well, marked the most growth only in the previous 24 hours. Rising by 44.82%, WAVES led the crypto market rally bringing the price to $6.5.

According to the Bollinger Bands, the altcoin might continue rising going forward, albeit slowly. This is because the volatility seems to be declining courtesy of the converging bands, but with the candle above the bias, the price action will be positive.

Shiba Inu (SHIB)

The meme coin did not hold back today and, on the back of broader bullish cues, marked a rally exceeding 33%. Trading at $0.00001077, SHIB finally invalidated all the bearishness it witnessed this month.

It has room for growth going forward as well since the bullishness only seems to be increasing, as is visible on the Awesome Oscillator. As soon as the green bars appear above the neutral line, SHIB will note consistent rises.

Zilliqa (ZIL)

Walking along the lines of its fellow cryptocurrencies, ZIL too marked a 28.21% rise in the last three days, trading at $0.041. Although the altcoin is far from recovering June’s losses, this rally did bring it closer.

The Relative Strength Index (RSI) also indicates a further rise, given its proximity to the bullish zone, which it will achieve once it crosses above the neutral line.

Compound (COMP)

Compound’s governance token COMP witnessed an excellent beginning to the week with a 48.33% rise, which placed the altcoin closer to invalidating its 51.16% losses. Trading at $42.51, COMP will continue a sustained rise.

This is backed by the appearance of an uptrend on the charts after the white dots of the Parabolic SAR shifted their position to underneath the candlesticks.

AAVE (AAVE)

After a 57.81% decline, the DeFi token did not seem like it could recover its losses. However, the 38.8% incline over the last two days rose the trading price to $68 at the time of writing. 

Regardless, AAVE still has a long way to go to invalidate the losses, and in doing so, it would also be able to flip the 50-day Simple Moving Average into support which would be crucial for a further rally.

DeFi Pulse Index Rises by 13% As Underlying Tokens Rally by Almost 30%

Key Insights:

  • The DeFi Pulse Index inclined by 28% in the last three days.
  • The total Value Locked in the DeFi market has been reduced to just $74 billion.
  • Underlying tokens include Uniswap, AAVE, and Loopring, among others.

The growth of the Decentralized Finance (DeFi) market is essential to the growth of crypto if it intends to make web3 mainstream. But the recent market crash dwindled the faith investors had in DeFi protocols resulting in losses far worse than the recent crash.

The DeFi Pulse Index

Also known as DPI, this Index is a digital asset index designed to track tokens’ performance within the DeFi industry. By evaluating the value of each DeFi token, the DPI bases its Index on either positive or negative.

The protocols that are tracked by the Index are not selected randomly, as only the ones that have major use cases and consistent development and maintenance make it to the Index.

During the recent market crash of June, the Index depreciated by 45.31% and closed at a low of $58.3. Since then, the broader market recovery triggered a rise for the Index as well, resulting in the 28.06% rally bringing the value of DPI to $75.6.

While the DPI has recovered slightly, the DeFi market’s total value recovered by $3 billion as well. However, an increase as minute as this will bring no significant change as the market lost more than $160 billion in the span of 2 months. 

This is because as soon as the crypto market was hit with bearishness, it broke the confidence investors had in DeFi protocols as well.

Add to this the depegging of TerraUSD and the fall of the second biggest DeFi chain in the world, Terra, and you get the decline observed.

The Underlying Tokens

Currently, the DeFi Pulse Index tracks 14 protocols’ performances which affect the value of DPI. These include Uniswap, AAVE, Maker, Loopring, Synthetix, Compound, and Yearn.Finance, SushiSwap, KNC, REN, Balancer, Badger, FARM, and Rari Capital

Of these 14 tokens in the last three days, Synthetix has outperformed every major altcoin to become the leader of the rally with a 109% rise in the span of 24 hours.

In doing so, it recovered the entire crash it witnessed this month and is currently trading at $3.05.

Robinhood To Buy London Based Crypto App as Part of Europe Expansion

Key Insights:

  • Robinhood is set to purchase the London-based fintech app, Ziglu.
  • Through Ziglu’s crypto capabilities, Robinhood will expand into UK and Europe.
  • This is Robinhood’s second major announcement after listing Shiba Inu, Solana, and other assets on its exchange.

Robinhood gained prominence during its GameStop debacle but has since managed to make a name for itself in the crypto space with its cryptocurrency exchange Robinhood Crypto.

Thus, the company is now focusing on simply expanding on the same with its decisions to build on the existing momentum.

Robinhood Comes to the UK

As per a report by CNBC, Robinhood yesterday finalized the purchase of Ziglu, a fintech application based in London that provides crypto trading services for Bitcoin and other cryptocurrencies.

This deal will play an essential role in Robinhood’s plans of expanding its presence in the United Kingdoms and Europe, which it has been eyeing for a while now.

Two years ago, Robinhood was gunning for occupying these territories but had to terminate the plans citing business at home as its priority instead of expanding overseas.

This deal will be of massive value for the platform, which has noticed a steady decline in its monthly active users in quarter 4 of 2021, losing over 1.3 million users in 3 months.

Commenting on losing the market share and the potential that the new deal holds, the Chief Executive Officer (CEO) of Robinhood, Vlad Tenev, said,

“Together with the Ziglu team, we’ll work to leverage the best of both companies, exploring new ways to innovate and break down barriers for customers across the UK and Europe.”

Robinhood’s Attempts at Crypto

Ziglu’s purchase is the second most significant step taken by Robinhood this month, as just last week, FXEmpire reported on the exchange’s announcement of adding Shiba Inu, Solana, Compound, and Polygon’s tokens to Robinhood Crypto. 

A few days later, CEO Tenev was reported discussing the possibility of Dogecoin becoming the ‘Currency of the Internet’, saying the coin’s inflation rate is way below that of USD (Dollar) and that by lowering fees and increasing the number of transactions per second, it can achieve that status.

Thus, it seems like Robinhood will not stop until it becomes a major crypto market player worldwide.

The Stars Are Aligned for SHIB After Robinhood Announcement

Key Insights:

  • It was a bullish session for SHIB on Tuesday.
  • News of Robinhood adding Shiba Inu delivered a boost, with Bitcoins of America and burn rates also SHIB positive.
  • Technical indicators have turned bullish, with SHIB sitting above the 100-day EMA.

It’s been a busy start to 2022 for SHIB, which had hit a February current-year high of $0.00003545 before testing support at $0.000020.

Despite the bearish start to the year, news updates have been SHIB positive, supporting a run at February’s high and a return to $0.000050 levels.

Robinhood, Burn Rates, and Bitcoin of America Deliver SHIB Support

On Tuesday, news hit the wires of Robinhood adding SHIB to its crypto offering. SHIB was one of four new crypto additions that also included, Solana (SOL), Compound (COMP), and Polygon (MATIC).

Solana, Compound, and Polygon showed a more muted response to the news, reflecting investor interest in meme tokens.

In response to the Robinhood announcement, SHIB struck a day high of $0.00002999 before retreating, with resistance at $0.000030 capping the upside.

This year, other news updates have also been SHIB positive.

Earlier this month, FX Empire reported the inclusion of SHIB on Bitcoin of America ATMs across the U.S. Greater SHIB accessibility is a positive for SHIB. Coupled with the SHIB inclusion on Robinhood and investor interest, demand is likely to rise as a result of increased accessibility.

The other key support mechanism has been burn rates following some high-profile SHIB burn pledges.

According to Shibburn, the total burnt from the initial supply stands at 410,312.3bn, with a max SHIB supply of 999,991.7bn.

While the burn rate over the last 24 hours was modest at just 13.59%, burn pledges and increased SHIB adoption provide a bullish outlook.

SHIB Burn 1304

In recent weeks, there have been some sizeable SHIB burns. The reduced supply provides SHIB price support.

On Tuesday, Shibburn tweeted 300,123,501 SHIB tokens burned in a single transaction.

One negative consideration is the number of SHIB holders, which has been falling.

According to CoinMarketCap, the total number of unique addresses holding SHIB fell to 1,128,221 on Tuesday. Down by 2,659 on the day, the number of unique addresses has fallen from a current-year high of 1,199,453 on March 16.

The downward trend has pegged SHIB back from a breakout in response to the higher burn rates and fall in supply.

SHIB Holders 1304

SHIB Price Action

At the time of writing, SHIB was down 0.93% to $0.00002667.

SHIBUSD 120422 Dailly
A move through $0.000030 would bring $0.000050 into play.

Technical Indicators

SHIB will need to avoid the day’s $0.0000263 pivot to make a run on the First Major Resistance Level at $0.0000306. SHIB would need the broader crypto market to support a break out from Tuesday’s high of $0.00002999.

Another extended rally would test the Second Major Resistance Level at $0.0000344 and resistance at $0.000035. The Third Major Resistance Level sits at $0.0000424.

A fall through the pivot would bring the First Major Support Level at $0.0000226 into play. Barring another extended sell-off, SHIB should steer clear of sub-$0.0000220 levels. The Second Major Support Level sits at $0.0000182.

SHIBUSD 120422 Hourly
Avoiding the day’s pivot would leave resistance levels in play.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bullish signal. SHIB sits above the 100-day EMA at $0.0000250. This morning, the 50-day EMA converged on the 200-day EMA. The 100-day EMA pulled away from the 200-day EMA, SHIB positive.

A bullish cross of the 50-day EMA through the 200-day EMA would support another breakout session.

SHIBUSD 130422 4-Hourly
A bullish cross would bring $0.000050 into play.

Shiba Inu Rallies by 35% As Robinhood Adds SHIB, SOL, COMP & MATIC

Key Insights:

  • Robinhood Crypto added Shiba Inu, Solana, Compound, and Polygon tokens to its list.
  • SHIB consequently led the market rally with a 35% rise.
  • Investors looking to jump in must be wary of Shiba Inu’s volatility.

As crypto adoption grows, we witness the rise of blockchains and Decentralized Finance (DeFi) protocols which have an impact on the growth of the crypto space.

But then again, others, such as Shiba Inu, happen to get caught in the bullish crossfire and reach where it is today. And what happened today is all thanks to another emerging platform, Robinhood.

Shiba Inu on the Charts

Robinhood Crypto, a rising cryptocurrency exchange, added four new tokens to its list of tradable assets. The ones to make the cut included Shiba Inu, Solana, Compound, and Polygon’s native tokens.

As the announcement came to light, it took less than a few hours for the hype surrounding the news to reflect on the assets’ price action, and as always, Shiba Inu was the first to react. Not only was it the first but also the most to react.

Within the day, SHIB began climbing the charts, and in less than 2 hours, its price shot up by almost 36.88% at one point. However, it came back down soon after to close on a 15.8% rise, and in doing so, it negated the 9% fall in price from the day before.

Shiba Inu shot up by almost 35% at one point

 

Nevertheless, apart from SHIB, all the other assets ended up performing disappointedly. The only coin out of the four, other than SHIB, that fared well was the DeFi token Compound which maintained a 5.22% rise of the 10% ceiling.

Trading at $123.2, it did not manage to recover the fall from yesterday but traded better than the likes of Solana and Polygon.

Compound’s price action was up by 5.22%

SOL on the daily chart did not do any wonders despite the expectations investors had from it, as the token failed to maintain more than 1% of the rise today.

And Polygon’s MATIC, too, observed a similar movement since the broader did not play in the altcoin’s favor. Whether or not they manage to perform better tomorrow is a different thing.

Shiba Inu on the Cards

Naturally, since the meme coin marked such a huge rally, it is bound to notice increased interest from investors. Before that happens, it is important to know that this rise was not organic since the broader market is still exhibiting bearish cues.

And to add to that, the volatility of SHIB also went up with the price, making it further susceptible to price swings. Thus, those looking to enter the SHIB market now should watch out for these signals before making a decision.

Shiba Inu’s volatility is rising quickly | Source: IntoTheBlock

Uniswap Labs Takes Aim at Web3 with New Ventures Division

Key Insights:

  • Uniswap Labs targets Web3 with a new ventures division.
  • The ventures division will focus on broad-ranged projects, including tool development and customer apps.
  • More platforms are likely to target Web3 to drive innovation and Web3 integration into the real world.

It’s been a big first quarter for Web3, which has broken out of its shell as more mainstream players target NFTs, the Metaverse, and beyond.

While it has been an impressive start to the year, Web3 is still nascent and has a long way to go before integration into everyday life.

Investment and innovation remain the key to the success of Web3.

Uniswap Labs Launches Uniswap Labs Ventures to Drive Web3 Innovation

On Monday, Uniswap Labs (UNI) announced the launch of Uniswap Labs Ventures (ULV), a new division targeting Web3.

According to Monday’s announcement,

“Uniswap Labs Ventures will invest in teams at different stages and levels of the Web3 stack, from infrastructure to developer tools and consumer-facing applications.”

The new division aims to support innovation and growth by actively participating in on and off-chain governance and collaborating with communities.

Immediate Uniswap Lab Ventures plans include participation in MakerDAO (DAI), Aave (Aave), Compound (COMP), and Ethereum (ETH) Name Service protocols.

To date, Uniswap Lab Ventures has invested in 11 companies and some native protocols within the Web3 ecosystem.

On Twitter, Uniswap Labs tweeted,

“At Labs, we want to onboard millions of users into the Web3 economy, with the goal of unlocking universal ownership & exchange for all. But we know we can’t achieve our mission alone.”

Uniswap Labs added,

“And in keeping with our ethos of decentralization and community engagement, ULV will be participating in the governance of portfolio protocols. To start, these include @AaveAave, @compoundfinance, @MarkerDao, and @Ensdomains.”

Uniswap Labs is not alone in targeting Web3 through investment and partnership to drive innovation and growth.

Investment Funds Target Web3 to Drive Innovation and Growth

Uniswap Labs Ventures follows in the footsteps of Cake DeFi Ventures (Cake) and FTX Ventures, which are looking to support growth in the Web3 space.

One of the biggest VC names in the game is Andreessen Horowitz, also known as 16z, which raised $9bn to further its involvement in both crypto and tech.

According to Institutional Investor, VCs invested $32.8bn in crypto-based projects in 2021.

The 2021 total was reportedly more than all previous years combined, suggesting another strong year for 2022.

17% of the 2021 total went into NFT start-ups, DAOs, Web3, and the Metaverse.

$60M Fund Launched by Southeast Asia VC To Help Global web3 Startups

Key Insights:

  • SeaX Ventures (Southeast Asia Exponential Ventures) closed its second fund today.
  • The fund’s target was over oversubscribed, and thus the total was raised by $10 million.
  • Southeast Asia is attracting a lot of investors from all around the world.

The growth of crypto is attracting not just traditional retail investors but also venture capitalists, and their investments target the behind-the-scenes of crypto.

Supporting emerging companies is allowing them to gain a stake in crypto firsthand. Thus, we’ve seen the announcement of multiple funds in the recent few months.

SeaX Launched web3 Fund

In a press release today, SeaX Ventures (Southeast Asia Exponential Ventures) announced the closing of its second fund.

The fund, which was initially targeted to acquire only $50 million worth of donations, ended up being oversubscribed, which is why the total target was raised to $60 million.

This $60 million will be directed towards funding the growth of startups throughout Southeast Asia.

This region of the world includes the countries of Brunei, Burma (Myanmar), Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, and Vietnam.

But the fund is aimed at supporting only those companies which can bring about a transformation in the sectors of blockchain & web3, foodtech, biotech & life science, artificial intelligence, robotics, and IoT & hardware.

Commenting on why the VC chose Southeast Asia, particularly for this fund, the Founder and Managing Partner of SeaX Ventures, Dr. Supachai “Kid” Parchariyanon, said,

“Southeast Asia is a region of 650 million people with a combined GDP of $3 trillion. We can help innovative startups from across the world grow exponentially in this large and dynamic area through our relationship with over 400 corporates.”

With funding ranging from $500k to $5 million in the pre-seed, seed, and Series A funding rounds, the $60 million will indeed allow deserving startups to be visible throughout the world.

VCs Drive Crypto Growth

While the state of crypto varies in these countries, web3 extends beyond just crypto and Metaverse, which is what this fund aims to tap. However, there are still others who intend on developing the condition of crypto in these countries.

FXEmpire recently reported on one such fund from the Digital Asset Platform, AEX, which allocated $100 million for supporting the country’s crypto and blockchain ecosystem.

Furthermore, Bain Capital, a major private equity investor, also launched a $560 million funding for investing in crypto projects. The company had already invested in multiple projects, including BlockFi Inc., DeFi lender Compound, and Digital Currency Group.

Thus web3 and crypto will, slowly but surely, spread to countries worldwide.

Defi Protocols Agave and Hundred Finance Suffer Hack of $11M

Key Insights:

  • Over $11 million from Agave and Hundred Finance was wiped off in the latest Defi exploit.
  • The attacker introduced a reentrancy bug and used a flash loan exploit to siphon funds.
  • After the protocols announced the hack, their native tokens saw a dip.

Defi protocols getting hacked have been synonymous with crypto markets as crypto crimes have risen over the years. On Tuesday, another Defi exploit came to light when an attacker siphoned over $11 million from Agave and Hundred Finance.

Flash Loan Reentrancy Attacks

Over $11 million has been wiped off in what appears to be a flash loan reentrancy attack on both Defi protocols on the Gnosis chain. The hacker took the stolen funds in Wrapped ETH, Wrapped BTC, Chainlink, USDC, Gnosis, and Wrapped XDAI.

Both the Defi platforms confirmed the hacks through Twitter posts on Tuesday, stating that their contracts have been paused to avoid further damage. Agave also mentioned that their team is currently investigating the exploit on the Agave finance protocol.

The attacker exploited a reentrancy vulnerability in the two Defi protocols.

Reentrancy is a Solidity programming language vulnerability that lets an attacker trick a protocol’s contract into making an external call to an untrusted contract.

After the call happens, the hacker can use this suspicious contract to make repeated calls to the protocol to wash away its funds.

For Agave and Hundred Finance, the hacker introduced a reentrancy bug on both protocols allowing for a flash loan exploit. The same allowed hackers to continue borrowing from the protocols.

Seemingly, the attacker was making repetitive calls to withdraw funds without putting up additional collateral. Notably, the address associated with the attacker has sent over 2,100 ETH, worth over $5.5 million, to a crypto mixer to launder the stolen tokens.

Blockchain security researcher Mudit Gupta thinks that the hack was possible because the official bridged tokens on Gnosis are non-standard and have a hook that calls the token receiver on every transfer. The same enables reentrancy attacks.

Defi Attacks Rising

The recent attack marks the second flash loan exploit on the same day after Deus Finance DAO lost $3 million in a similar attack. Agave is a fork of the lending protocol Aave.

Gupta, however, believes that the difference between Aave and Agave is that ‘Aave actively checks for reentrancy before listing tokens on the main net to avoid similar attacks.’

After the attack, both the protocols’ tokens saw a price decline. AGVE, the token of non-custodial money market and lending protocol Agave, lost over 25% value on Tuesday. Likewise, after announcing the exploit, Hundred Finances’ token HND was down 5.8%.

Notably, Cream Finance, another Defi lending protocol with a similar codebase to Compound, suffered a flash loan reentrancy attack last summer. The exploit led to a $19 million loss in crypto from the protocol.

Crypto Firm Gauntlet Valued at $1B Following Latest Funding Round

Key Insights:

  • Gauntlet has just raised $23.8 million in a Series B round.
  • The firm offers data and risk analysis for DeFi platforms.
  • It aims to scale the platform to operate on multiple networks.

On March 14, the company said that it had raised $23.8 million in a Series B round led by Ribbit Capital. Other investors included previous contributors Polychain Capital and Paradigm.

Gauntlet plans to use the capital injection to fund hiring and expansion into new areas such as gaming.

Gauntlet received its first seed investment of $2.9 million from Coinbase Ventures and several other participants in 2018. The crypto quant company raised a further $4.4 million two years later.

According to Bloomberg, Gauntlet has 32 employees, mainly in New York City. It is deeply involved in the decentralized finance (DeFi) space with leading platforms, including Aave (AAVE) and Compound (COMP), which pay the firm $5 million per year. Gauntlet is also heavily involved in Uniswap (UNI) governance.

Billion Dollar Valuation

Bloomberg reported that the firm has now been valued at $1 billion, adding to the lengthening list of crypto unicorns.

According to co-founder Tarun Chitra, Gauntlet products offer a “stress test” type environment to ensure financial institutions are avoiding excessive risks. It does this continuously for DeFi platforms, he said.

The platform runs algorithms using data from cryptocurrency exchanges to help DeFi platforms select optimal lending and collateral levels. Chitra acknowledged that data processing was becoming more complex, adding that they are investing in the platform to scale to “as many chains as possible.”

In recent years, the demand for reliable data has surged, with some DeFi protocols touting insane yields, often in triple figures. Blockchain analytics firms Dune Analytics and Nansen have raised millions from crypto venture firms in recent months.

Referring to these high DeFi yields, Chitra added:

“They don’t tell you where the yield is coming from, and you can only figure it out by analyzing the users and the mechanism involved. When we work with a protocol, we do as much diligence on them as they do on us.”

DeFi Ecosystem Outlook

The total value locked in the DeFi ecosystem, which is often viewed as a measure of market health, is currently $198.5 billion, according to DeFi Llama.

It has declined 22% from its early December all-time high of $255 billion, but a lot of that can be attributed to declines in the underlying crypto asset prices as markets have also been down-trending this year.

DeFi Protocol Yearn Finance (YFI) Expands to Ethereum’s Arbitrum

Key Insights

  • Yearn.Finance (YFI) recently added support for Arbitrum, a Layer 2 network for Ethereum
  • This integration is set to aid Yearn Finance’s growth by reducing transaction costs and transaction fees involving Ethereum-based tokens
  • Other DeFi platforms that added support for Arbitrum include Uniswap and 1inch

Yearn Finance, the 14th ranked DeFi protocol by total value locked, recently announced its expansion into the Ethereum-based Layer 2 solution Arbitrum. With this expansion, Arbitrum became the first Ethereum Layer-2 to be integrated by the DeFi protocol.

Yearn Finance Integrates with Arbitrum

Yearn Finance is a platform for yield-optimizing DeFi protocols anchored on the Ethereum blockchain. The platform’s primary goal is to maximize returns on your cryptocurrency by arbitraging different lending platforms in search of the best available yield.

Yearn Finance also aids shifting between protocols like dYdX, Aave, and Compound, as interest rates differ between these platforms.

The protocol’s decision to support Arbitrum will allow users to transact Ethereum-based tokens without moving those coins on the Ethereum blockchain itself. The project claims that the integration with Arbitrum could drastically reduce gas costs or transaction fees by a factor of 10.

Yearn Finance’s Twitter account revealed on February 24 that it had deployed its initial instruments to Arbitrum.

What Difference Does Arbitrum Bring?

Arbitrum is an inaugural Ethereum Layer-2 solution that Yearn Finance will add (YFI). This integration comes just a few weeks after the release of Yearn’s vaults on Fantom.

The team revealed that the reasons behind choosing Arbitrum were that the solution is Ethereum’s largest L2 with close to $3 billion in total value locked. Furthermore, the team claims that the deployment will bring gas costs by almost ten times.

That said, major crypto exchanges like FTX and Binance will support Arbitrum’s deposits.

Additionally, the project says that the decision to support a Layer 2 network strengthens its ‘first true love: Ethereum.’ In its inaugural release, Yearn Finance noted that it offers a single vault dubbed Curve’s triCrypto.

It also said that it accepts liquidity in three tokens, namely WBTC, WETH, USDT.

Some other DeFi platforms that added support for Arbitrum include Uniswap and 1inch. Notably, Uniswap began adding support for the Layer-2 solution in May 2021, while 1inch added support for Arbitrum around September last year.

Can Curve’s, veToken Model Be the Future of Defi Token Design?

The year 2021 has been a stellar time for the larger cryptocurrency market, with top coins like Bitcoin and Ethereum making new price all-time highs. That said, the global crypto market cap also continued to explode parabolically as most altcoin ecosystems saw decent growth. However, 2020’s star performers which were DeFi tokens, mostly underperformed relative to the larger market. 

Over the last couple of years, DeFi protocols have generated millions in revenue and seen a staggering rise in the use and adoption of their products. However, it has been a bumpy ride in the last year as skepticism around the tokenomics of certain protocols rose. This also gave rise to better models such as veToken model that could shape the future of DeFi token design.

Flaws in the Tokenomics

Many market experts are of the opinion that the early models of DeFi token design were pretty flawed and gave rise to massive value destruction at the cost of retail investors. While most protocols used the idea of valueless governance tokens to rise to prominence in 2020, the model had some issues. As per the model, token holders strictly have governance rights, but that wasn’t true in every case. 

DeFi giants like Uniswap and Compound for instance used the aforementioned model to fuel their growth and the same aided a huge rise in TVL for the tokens. However, COMP and UNI are ‘valueless’ governance tokens since there is no direct economic benefit, like a right to cash flows, for holding them.

While the model isn’t considered ideal it was needed to avoid regulatory scrutiny and allowed these protocols to tokenize faster. 

veToken Model vs Tradition DeFi

There are some major upsides of the veToken model, vs  tradition DeFi models:

  • It encourages long-term-oriented decision-making by incentivizing the same and ensuring long-term commitment to the protocol.
  • It offers greater incentive alignment across protocol participants. The ve-model has proven to be beneficial since it can align incentives across a wide swath of protocol participants and stakeholders.
  • Lastly, it improves supply and demand dynamics by helping numbers go up.

Rise of veTokens

Since the valueless governance model had diminishing returns, the ve-token model has emerged as a popular alternative among DAOs to the valueless governance token regime. It aimed to encourage long-term-oriented decision-making, aligning incentives across protocol stakeholders, and creating favorable supply and demand dynamics for price appreciation.

Notably, many claimed that major DeFi 1.0 tokens that have the valueless governance token model didn’t perform well. Curve on the other hand at press time had a DeFi dominance of 9.75%, as its TVL stood at $18.9 Billion. 

The veToken model or vote-escrowed model is pioneered by Curve’s CRV and aims to instill value into valueless governance tokens. It also involves token-holders taking on the risk of locking their tokens in exchange for specific rights, such as governance power, within a protocol. For now, many in the market are of the opinion that veTokens could be shaping the future of DeFi tokenomics.

A CryptoPunk NFT Was Recently Sold for $23.7 Million

NFTs were one of the most trending topics in 2021. The CryptoPunks and the Bored Ape Yacht Club NFT collections are among the most talked about. 

The CryptoPunks NFT collection was created in 2017 by Larva Labs. The collection includes 10,000 different pixelated characters on the Ethereum blockchain.

Deepak Thapliyal, CEO of a blockchain-based company called Chain, purchased the CryptoPunk #5822 on February 12 for 8,000 ETH ($23.7 million). He posted a picture of the NFT on his Twitter account, as you can see below:

The NFT was purchased with leverage using Compound Finance’s DeFi protocol, as he stated on his Twitter account.

There are only nine aliens out of the 10,000 NFTs, and this is one of them. According to the Larva Labs’ website, this same CryptoPunk was last sold for 8 ETH (about $1,646 at the time) in July 2017.

The Most Expensive CryptoPunk Ever Sold

This CryptoPunk surpassed its previous most expensive sale, which was CryptoPunk #7523 sold for $11.8M in a Sotheby’s auction in June 2021. Although, according to NonFungible data showed that CryptoPunk #4156 was its previous most expensive, sold for $10.2 million (2,500 ETH) in December 2021.

Last week, CryptoPunk #5577 was sold for $7.7 million (2,501 ETH), becoming the third most expensive CryptoPunk ever sold.

Sotheby’s announced last week they will be hosting the sale of “Punk It! 104 CryptoPunks” later this month on February 23.  

Celebrities Are Entering the NFT World

Over the last couple of months, celebrities are buying NFTs, especially from the CryptoPunks and the Bored Ape Yacht Club collections.

World-known celebrities such as Jay-Z and Jason Derulo own CryptoPunk NFTs. Both have their CryptoPunk NFT as profile pictures in their Twitter account.

On the other hand, Neymar Jr. is one of the latest celebrities to join the Bored Ape Yacht Club NFT collection, joining Eminem, DJ Khaled, and others.

Other celebrities like Lindsay Lohan and Gal Yosef are entering the space by launching their own NFT collection.

Millions of people have been attracted to the NFT world. With more celebrities entering the NFT world, more new users will feel more comfortable entering the space.

Compound (COMP) up by 11% in the Last 7 Days

COMP, the native token of the DeFi platform, Compound, is enjoying an uptick in price after a 1% increase in the last 24 hours, reaching a high of $242.94 within this timeframe.

Compound’s TVL Rises in Tandem With its Price

The cryptocurrency, which also serves as a governance token for the platform, has been in the green for the past seven days despite the overall dip in the market. With more than an 11% price increase in a week, it appears the COMP is enjoying a mini bull run in the largely bearish market.

The Compound protocol is one of the biggest decentralized finance platforms on Ethereum, and it offers borrowing and lending services. Users on Compound can lend or borrow several other digital assets. 

For those lending on the platform, there’s the benefit of earning interests for the liquidity they provide, and borrowers also have to provide collateral when they borrow. 

As one of the first DeFi platforms, the total value locked in Compound has also grown significantly and is currently over $8 billion.

COMP has a total supply of 10 million tokens and a current circulating supply of 6.3 million. It is an ERC-20 token and was first distributed in June 2020. 

The coin is mainly used for protocol governance through discussions, suggestions, proposals, voting, and delegating voting rights to others. This has made it increasingly valuable as the platform itself grows.

What Could be Pushing Compound’s Recent Rise?

While there are no clear signs of what’s responsible for the recent surge in price, recent significant developments on Compound could have been a catalyst for the growth. In December, Coinbase announced offering access to DeFi yields for its users outside of the United States. It was revealed that the yield, in DAI, would be deposited on Compound. 

The potential for wider adoption of DeFi this year is also another factor that could be causing the price to increase. Like COMP, the native tokens of other popular DeFi platforms such as Yearn.Finance, Aave, and Uniswap have also seen a significant increase in value in the past seven days.

However, COMP has lost some of its early gains at the time of writing, as it’s currently trading around $233 according to data from CoinMarketCap. Even with the increase, it is still a long way off from its ATH of $911 back in May 2021.

Has the Santa Rally Arrived? Bitcoin Cracks Above $50K As Cryptos Turn Bullish

The cryptocurrency market has awakened from its stagnation mood and managed to break upside, with major coins such as Bitcoin (BTC) rallying over 4% and Ether (ETH) taking bids to rise over 3% across the board.

The world’s largest crypto by market capitalization pierced over the $50,000 handle, and now it targets the 200-period simple moving average at the H4 chart around $52,000, where a dynamic resistance lies.

Challenging Critical Levels After Sudden Rallies

Ether is now challenging such an SMA at the same timeframe around $4,100, targeting the $4,200 psychological area.

Other altcoins are following the lead, such as Dogecoin (DOGE), which had a slight rise to consolidate around $0.18, aiming to consolidate above the $0.19 level where it coincides with the 200-period SMA.

Solana (SOL) is another crypto that had a strong rise in the last hour of over 6% to test the 200 SMA around the $191 level after gathering strength around the 50 SMA. Finally, Cardano (ADA), which is in the sixth place of CoinMarketCap’s ranking, rallied over $7% to stand at around $1.45.

Santa Rally is Coming

From a fundamental perspective, no major catalyst triggered the sudden spike across the sphere. However, it should be noted that as the Christmas and New Year Eve holidays loom, traders had a bullish’s shift in their mood – the so-called “Santa Rally.”

That said, it’s not strange to see further upside in the crypto markets, in the same way, that it often happens during this season in the traditional markets like forex and stocks.

Also, altcoins like Aave (AAVE), Compound (COMP), and Uniswap (UNI) followed the bullish sentiment across the board, even rallying double-digit numbers on a daily basis.

Moreover, Binance Coin (BNB) surged over 2% in a single hour following a dull session around the 50-period SMA at the H4 chart, and now it’s poised to break above the $550 level. If that happens, doors will open to test the $570 zone.

Loosely Regulated DeFi Market Suffers Mounting Scam-Related Losses

DeFi has risen into one of the hottest segments in the cryptocurrency industry, with more than $260 billion in total value locked (TVL) currently. The DeFi market is still largely unregulated and has gained the reputation as the Wild West of crypto. A new research report by crypto risk management firm Elliptic illustrates some of the pitfalls associated with the market.

Losses stemming from DeFi-related fraud and theft total $10.5 billion year-to-date. This amount is up an eye-popping 600% vs. 2020 levels of $1.5 billion. Last year, DeFi ended the year with $21.1 billion in TVL, according to DeFi Llama.

In a more top level view, DeFi market participants lost slightly more than $12 billion so far this year overall due to “the malicious exploitation of flaws” across Dapps including “decentralized exchanges (DEXs), lending protocols and asset management offerings,” according to the announcement.

Elliptic Chief Scientist Tom Robinson stated,

“The DeFi ecosystem is an incredibly exciting and fast-moving space, with financial services innovation happening at light speed. This is attracting large amounts of capital to projects that are not always robust or well-tested. Criminal actors have seen the opportunity to exploit this.”

DeFi Culprits

According to the report, the culprits have been flaws in Dapps, giving nefarious actors the opportunity to exploit bugs. While decentralized apps are designed to be trustless and not require the intervention of any centralized third party, this does little good when the code has vulnerabilities.

Flawed Dapps represented $10.8 billion of the loss tally. In addition, rug pulls, or exit scams, have also been on the rise in DeFi and have tacked on another $1 billion to this year’s losses.

Burgeoning Market

Despite the risks, DeFi continues to attract top-tier developers and high-net-worth investors. DeFi has already disrupted the traditional financial system, giving market participants the opportunity to generate returns from activities such as lending and borrowing, staking and yield farming.

The Bitwise management team forecasts that DeFi has only scratched the surface. They say DeFi could balloon into a $15 trillion segment in the next five-15 years if it follows in the footsteps of other disruptive technologies in which the Teslas and Amazons of the world operate.

Ethereum, which is the most popular platform for DeFi projects, currently boasts $172.5 billion in TVL and rising. The Ethereum price has been on a tear in 2021 alongside the rise of DeFi.

The Ethereum blockchain is home to popular DeFi projects such as MakerDAO for crypto lending and borrowing, exchange liquidity pool Curve Finance, and Compound, to name a few.

What are Lending Protocols? The Rise of DeFi Lending

The cryptocurrency space has grown to become a $3 trillion industry. Over the past decade, there have been numerous innovations within the cryptocurrency space. One of the most recent innovations is the decentralized finance (DeFi) space.

DeFi is one of the fastest-growing sectors within the cryptocurrency space. It offers numerous services to cryptocurrency investors and other market players. Due to its importance, this post will touch on an aspect of DeFi, which is lending.

What is DeFi?

DeFi can be defined in simple terms as decentralized finance. This is an ecosystem of financial applications built on top of blockchain technology. Unlike the regular financial ecosystem, the DeFi space operates without any third part of central authority.

Instead, DeFi relies on a peer-to-peer network to establish decentralized applications that would allow people to connect and manage their assets regardless of their location or status. DeFi aims to ensure people gain access to open-source, transparent and permissionless financial services from every part of the world.

The decentralized finance ecosystem is built on smart contracts. Smart contracts are self-executing and don’t require a third-party intermediary. DeFi started on the Ethereum network. Hence, it is not a surprise that most of the DeFi protocols are built on the Ethereum blockchain.

Understanding DeFi Lending

DeFi lending occurs thanks to the lending platforms or protocols. These platforms offer cryptocurrency loans in a trustless manner, allowing the holders to stake the coins they have in the DeFi lending platforms for lending purposes.

On the DeFi platform, a borrower can take a loan, allowing the lender to earn interests once the loan is returned. The lending process is executed from the start till the finish without intermediaries.

A coin holder sends the tokens they intend to lend into a pool using a smart contract. Once the coins are sent to a smart contract, they become available to other users to borrow. Afterward, the smart contract issues tokens (usually, the platform’s native token) that are doled out automatically to the lender. The tokens can be redeemed at a later stage in addition to the underlying assets that were sent to the smart contract.

Virtually all the loans issued via the native tokens are collateralized. This means that users who wish to borrow funds will need to provide a guarantee. However, unlike the centralized financial system, the guarantee in the DeFi space is in the form of cryptocurrencies that are worth more than the actual loan itself.

On paper, this idea might seem absurd as the borrower could potentially sell their assets in the first place to generate the money. However, there are numerous reasons why DeFi borrowing makes sense.

For starters, the users might require funds to take care of unforeseen expenses they may have incurred and don’t intend to sell their holdings as they believe the assets are due to an increase in value in the future. Furthermore, by borrowing money via DeFi protocols, users can avoid or delay paying capital gains taxes on their cryptocurrencies. Also, individuals can use the funds they borrow from the DeFi protocols to increase their leverage on some trading positions.

What are the Popular DeFi Lending and Borrowing Protocols?

Maker

Maker is one of the leading and unique DeFi crypto lending platforms. It allows users to borrow money via its DAI tokens. DAI is a stablecoin whose value is pegged to the US Dollar. Using the Maker protocol is available to anyone. Users can open a vault, lock collateral like ETH or other cryptocurrencies and generate DAI as a debt against the locked collateral.

The Maker protocol encourages users to take part in operational earnings via governance fees, acting as interest rates for the platform. MKR is the native token of the Maker protocol, and its holders serve as the last line of defense in the event of a black swan. As soon as the collateral value starts to decrease, MKR is minted and sold in an open market to raise more collateral. Hence, diluting MKR holders.

Aave

Another leading DeFi lending protocol is Aave. This is an open-source platform and one of the most popular DeFi lending protocols in the crypto space. Aave is a non-custodial liquidity platform for earning interests on deposit and borrowing assets. It allows the lenders to deposit their cryptocurrencies in a pool and receive an equivalent amount of aTokens, its native token. The protocol algorithmically adjusts interest rates based on demand and supply, indicating that the more a user holds aTokens, the higher the interest amount.

AAVE/USD chart. Source: FXEMPIRE

Compound

Another popular DeFi lending protocol is Compound. This is an algorithmic and autonomous money market protocol designed to unlock numerous open financial applications. Compound allows users to deposit cryptos, earn interests and borrow other cryptocurrency assets against them. By using smart contracts, Compound automates the management and storage of capital on the protocol.

As a permissionless protocol, anyone with a cryptocurrency wallet and an internet connection can interact with Compound and earn interest. Metamask is one of the wallets that support the Compound DeFi protocol. The Compound protocol supports the lending and borrowing of numerous assets, including DAI, ETH, WBTC, REP, BAT, USDC, USDT and ZRX.

Now Is the Time to Build Beyond DeFi on Ethereum: Vitalik Buterin

Ethereum has come a long way since it launched in 2015. The network has been behind some of the biggest crazes in the cryptocurrency industry, from ICOs to CryptoKitties to non-fungible tokens (NFTs) and decentralized finance (DeFi).

While ICOs in their original form have fallen by the wayside, the DeFi segment, in particular, has taken the financial industry by storm. DeFi gives users a way to generate passive income through activities such as lending and staking and bolster their returns.

The total value locked (TVL) in DeFi currently hovers at USD 99 billion, according to DeFi Llama. The Ether price has benefited from the rise of DeFi, with the price soaring 657% over the past 12-month period.

DeFi and Beyond

Vitalik Buterin, the co-founder of Ethereum, believes that Ethereum’s use cases could go far beyond financial applications, according to his recent keynote speech at the Ethereum Community Conference 4 (EthCC) event in Paris. He pointed to DeFi protocols such as Compound, Aave and Uniswap, for example, that have all experienced great success. Vitalik is a fan of DeFi, though he is quick to point out:

‘But this isn’t all that Ethereum was trying to do.”

Source: YouTube/Grand Amphi Theatre

Vitalik admits that “price is nice,” but he is quick to add that it should “only ever come as a consequence of utility.” He wants the common denominator among Ethereum users to be utility, not just price.

The reasons why financial applications have thrived on Ethereum are two-pronged, according to Vitalik. First, centralized technology in finance is abysmal. And secondly, fees are so high, a problem that is being solved.

Considering that Ethereum is addressing fees and scalability with the emergence of sharding and Eth 2.0, he says that now’s the time to start building and go beyond financial applications.

NFTs R’ Us

NFTs, which are digital assets containing a component such as art, music, video, etc., are helping Vitalik’s cause by expanding Ethereum’s use cases beyond finance. These digital tokens have caught on like wildfire and have helped to attract outsiders to the cryptocurrency and blockchain space. Vitalik said,

“NFTs are interesting, they’re this interesting cultural phenomenon. And they really have attracted a different kind of people to the Ethereum space that are interested more in the art side than in the finance side.”

Vitalik wants to bring Ethereum further beyond DeFi. He defines the near-term goals as something that drums up enough support in the Ethereum community and “something that is useful for people to do.”