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DEFI TO RESUME ITS UPTREND AND LEAD THE ALTS RECOVERY?Just said about altocins, their dominance seems to be on its way to increase, in line with a post-halving run, but the environment has changed from the last time. Not all random alts will increase, just the real gems or hyped sectors, the others will bleed anyway except for short pumps and dumps. In this sense, DeFi was the only pushing sector before this last alt slaughter, and now has broken the downward trendline. For the most risk lover of you, this is the time to enter. Which coins though? I will tell in the next update, as I honestly still do not know. One name I have in mind by the way: BZRX
FTX:DEFIPERPLong
by edutradinguru
DEFI INDEX, Tradings In Channel, These Levels Important Now!Hello Traders Investors And Community, welcome to this analysis where we are looking at the somewhat new index in cryptocurrency Defi index, the 4-hour chart and what it is currently building, the index made heavily down moves as bitcoin fell with it together, now it seems like a recovery nevertheless there are still some importances we should not keep by side in this structure, in my chart you can watch the ascending-channel marked in blue in which the index is trading and steply advancing, there is also a wave-count detected where waves A-C already developed and now the index setting up to form the wave D and E, the final wave E will run directly into resistance which the index has in the red range marked in my chart. It all depends how the wave-count coming to an end and how the index reacts into the resistance, when it is a strong bearish move upcoming in this zone there is a high possibility given that the channel confirms as a bear-flag that will show more downside ahead, when the price move has no strong bearishness and volatility to the downside the index can possibly stay in the channel, however as the resistance and previously established bearishness is just to strong a break below the lower boundary of the channel which will confirm it as bear-flag can be more expected. This does not mean the index is completely bearish but lower levels should not be kept by side especially when the move is strong. In this manner, thank you for watching, support for more market insight, good day to you, and all the best! Information provided is only educational and should not be used to take action in the markets.
FTX:DEFIPERP
by VincePrince
6
Everything you need to know about auto Market Making in DeFiAn Introduction To Automated Market Makers I wanted to explore the token economics of ZRX and Kyber for this issue of the newsletter but given the rising interest in “yield”, I just thought it would be good to summarise how non-lending platforms are beginning to leverage idle capital to offer a return. In particular, we will explore Curve, Balancer and Uniswap for this piece. The three holds one thing in common - they are critical infrastructure to exchange one digital asset to another without requiring a centralised custodian. To understand their role, we will need to know why they matter first. Note : This piece is written with people may not have historical context to DeFi or why any of this matters in mind. You may skip to the parts starting with Uniswap if you don’t need all that context building. The Why And What The trade of digital assets from one to another has been heavily reliant on trust. Remember the guy who sold his pizza for 10,000 Bitcoins? He had to ensure the person he was transferring Bitcoins to would not vanish with his coins. One way this used to happen in Bitcoin forums and IRC channels was by trusting the reputation scores of an individual engaging in a trade. This is common in all P2P trading. Factors like the age of the account and frequency of transactions are a core part of platforms like Craiglist and LocalBitcoins. It came with the risk of individuals scamming once the trust was earned. With the arrival of exchanges like Coinbase and Mt Gox, the need for trusting reputation scores vanished. Individuals could deposit on a centralised account and trade with one another. However, custodial risk came along with it. As we saw with Mt Gox, the custodial risk of depositing with a central party is quite high. As the number of digital assets in the ecosystem rose with developers increasingly issuing their tokens, centralised exchanges became gate-keepers of liquidity. It used to be common for exchanges to demand over a million dollars to list a token. “Value-added-services” like market-making for the asset or sending e-mails to their user-base used to be sold. The challenge with this is that it put teams with lesser resources at a disadvantageous position. While centralised exchanges have played their role, it became impractical over time to rely on them for go-to-market. As the number of digital assets in our ecosystem increases in the form of NFTs, personal tokens and other representations of value on-chain, it will become necessary to have infrastructure that enables the exchange of one asset to another without a central party. This is where automated market makers and liquidity pools play a role. It is about replacing the gate-keepers with lines of code. An automated market-maker makes it possible to list and exchange digital assets without the help of an order-book. Unlike decentralised exchanges - there is nobody putting in ask and bid orders for an asset. A formulaic approach is used to determine the price of an asset. What this means is the price of the assets in an automated market-maker product moves only when a trade occurs and as such may be less susceptible to external manipulation. For assets such as Ethereum that are also listed on centralised exchanges, occasionally the prices may diverge from what it is on an exchange. In these instances, it becomes profitable to arbitrage and bring the price on the AMM to parity. Automated market-makers are crucial as one could bootstrap liquidity with fewer resources at play and as the name suggests - without a market-maker. Products like 0x and Kyber work as there are incentives for people to make trades on them. Automated market-makers on the other hand incentivise those that commit to providing liquidity (as idle assets) with yield that comes as a result of trading fees and token rewards. Jargon Explainers In the context of exchange-related yield solutions, there are three primary projects to know about - Uniswap, Curve.fi and Balancer. Each of them has its incentive mechanisms as we will see shortly. But before we dive into that, there are two concepts to be aware of. 1. Liquidity Pool - Consider this the total of assets that have been provided to a platform like Uniswap to enable users to trade one asset to another. It is the combined balance of user-deposits from individuals looking to create yield. The larger the size of a liquidity pool, the more likely that it can absorb large trades in short periods. This matters as one of the key criticisms of decentralised finance today is the inability to exchange over $100,000 worth of a digital asset to another without what is referred to as slippage. Slippage can be described as the difference in the price you were hoping to receive and the one you actually paid for an asset while trading it. 2. Impermanent Loss - In providing digital assets to platforms like Uniswap, there is the risk that your asset is unable to trade back to its initial value and that means you take a loss by partaking in the liquidity pool. The reason for this is explained further below in the context of each platform. But here’s what you need to know for now. Impermanent loss emerges from a situation where traders have no incentive to take a trade - leading to those that provided an asset to a liquidity pool in hopes of generating a yield losing money. They are primarily the result of a situation where an asset trades at a discount on a decentralised platform in comparison to what it is being traded at on a centralised exchange. For more on the concept of liquidity pools, I suggest reading this article by Pintail. 3. Liquidity Mining - The act of providing assets to a market to receive rewards that may be denominated in the platform’s tokens. The individual providing the liquidity takes on the risk of the assets provided fluctuating in price but has the benefit of selling reward tokens for dollars and maximising yield. This was common in certain Asian exchanges in 2018. Sadly, since the immediate response of anyone receiving these reward tokens is to sell, the price trends downwards over time. With those three in context - let’s look at how the prominent automated market-makers of the industry work and what incentives users have. Uniswap Uniswap runs on a simple equation that follows the model of x*y=k. Where K is a constant. In a hypothetical situation, consider a pool that has been seeded with 50 Ethereum and 10,000 USD and K to be constant at 10,000. Y here will be the price of the asset. Assuming x is the supply of Ethereum (50), Y will be the price at which ETH is traded. In this case that will be 10,0000/50 = 200 as we have k=10,000 as a constant. If someone comes and buys Ethereum, they will remove Ethereum (x) and add to the dollar amount in the pool. Assume they purchased two Ethereum at 200. This will make the x value 48, and change the value of y. Since the value K here is a constant, the price of Ethereum will need to change for it to be the same. To calculate this - we consider 10,000 / 48 = $208 to be the new price. Similarly, in the next trade, if someone decides on selling a huge amount of Ethereum, the supply of Ethereum in the pool will increase. Assume someone wishes to sell 7 Ethereum after a while. Total ETH on the pool will be 48 (from previous balance) + 7 = 55 ETH. Since x here is now 55, there will need to be a change in the value of y (price) to reflect the new supply and demand. Since k is 10,000 , we divide it by 55 to receive the new price. In this case that would come to $181. The supply of dollars in the pool now would be 10,400- (7*181) = $9133 As you can see, an algorithmic approach to price discovery has its advantage in the sense that it can discover price without an order-book in the way a centralised exchange does. It also makes manipulation less likely as you cannot see the orders of other traders in these instances. The challenge here is that price swings wildly if the amount of ETH or dollars in a liquidity pool is not high enough. The high volatility is part of what makes Uniswap risky. More importantly, those providing liquidity to a pool can stand to lose their yield in a pool if a large order moves the price in one direction and new trades don’t replenish the pool. I suggest exploring this paper for more on arbitrage opportunities on Uniswap. The critical difference between Uniswap and Curve is that in the former, liquidity is split across a wide variety of assets which can often lead to pricing inefficiency. On Curve in contract, it is concentrated on a handful of assets that are primarily stablecoins at price-points that are within a few percentage points of $1. Tokens like UMA protocol have begun issuing directly on Uniswap as it allows the market to determine the price of an asset without the centralised exchanges getting involved for hefty fees. Incentive Mechanisms in Uniswap: Uniswap charges a 0.3% fee on all trades that occur through the platform. When an individual redeems their pool tokens, they receive a part of the fees generated in proportion to the amount of the pool they seeded liquidity with. The challenge here is fees generated are entirely reliant on the number and size of trades that occur through the automated market-maker. If there is a shortage of trades occurring on the platform, there may be no incentive for individuals to provide liquidity to the platform itself. Curve. fi If you could remove the high volatility of assets on Uniswap and exchange solely between stable currencies, then you could stand to benefit from the fees while reducing the probability of impermanent losses. Curve.fi focuses specifically on this philosophy. Individuals can add liquidity in stable dollars, enable the trade of different pairs of USD (eg: DAI, USDT, USDC) and swap between them. Since they all trade more or less around $1, the losses that occur are lower due to impermanent losses are lower due to lower volatility. The ‘brilliance” here is on focusing on the stability of the asset and volume. Curve is routinely able to absorb volumes in the hundreds of thousands of dollars with relatively low slippages due to the large liquidity pools it has. More importantly, since the platform primarily focuses on stablecoins, it needs to give liquidity only around a few percentage points of $1 and concentrate much of its liquidity on dollar-denominated assets. As you can see, the bulk of the volume has come from stablecoins and more recently between different variants of wrapped Bitcoin. www.curve.fi You can read more about how Curve works in their whitepaper or this well-written FAQ . Kerman Kohli has a brief explanation of how Curve functions in the video shown below. www.youtube.com Incentive Mechanism in Curve: Curve has a 0.04% fees associated with each trade on it. This is distributed to those that provide tokens to offer liquidity on the platform. Unused tokens in Curve are also converted to cTokens (compound tokens) to receive yield from providing loans on the platform. This ensures users receive a base interest fee (from Compound) and an additional return from market-making that occurs on Curve itself. There have been mentions of a token launching, but the specifics are not released yet. Balancer Balancer is more interesting as it allows individuals to have a mix of tokens allocated to a pool. They describe themselves as an ETF turned on its head. Instead of paying traders a fee to manage a pool, Balancer makes it possible for individuals to earn on providing liquidity to a pool. In other words - they determine the amount and mix of assets they would like to hold and receive a fee for providing it to a pool. While the formula behind Balancer is slightly complicated to summarise in this piece, here’s how it differs fundamentally. - Instead of just two assets, Balancer is able to take on a mix of assets. This means a portfolio that has been constructed by someone looking to hold can be absorbed by the system. According to their FAQ , the maximum of the mix is at eight as of now. - Balancer allows custom pool balances. What this means is someone with a substantial amount of token “x” looking to provide liquidity in ETH, can make a pool that is balanced 80% in token x and 20% in ETH . Making it easier for altcoins to offer a liquidity mechanism without requiring a centralised exchange. - Fees on Balancer can be set as per the liquidity provider’s provisioning. It ranges from 0.0001% to 10%. The incentive mechanism that is at play in Balancer is the yield that comes from the trading pool. All of the fees that is set by the pool goes back to the liquidity providers on Balancer as of now. This means individuals inherently have a predisposition towards having higher fees since it is a variable that can be set by the pool. If a pool has a very high fee individuals have no incentive to trade on Balancer as centralised exchanges will have a better fee offering. Therefore lower fees are incentivised in terms of token rewards given. The entire specification of their liquidity mining can be read here . cdn.substack.com The traders on Balancer jumped over 20 times (~70 to 1400+) due to the token based incentives that kicked in. Balancer has over $40 million in volume so far. Why is Balancer all over the news? : Apart from the fact that Balancer is one of the projects that have shown traction and gradually tokenised themselves, there is the fact that the first tranch of balancer rewards have just gone out. Of the 100 million Balancer tokens that will be in existence, 25 million are allocated to founders and investors. Balancer has raised $3 million at an initial price of $0.6 per token. As of writing this, it trades at $13. Roughly 7.5 million Balancer tokens will be released over a year. In the past week ~435k tokens were issued to those providing liquidity over the past 3 weeks. High token price for Balancer means individuals can benefit from the tokens they resceive as a reward (sold on the market) and the yield on the underlying assets they provide. As we saw with Compound, this will be interesting as long as the price of the reward assets stays high. What could be the future of AMMs? Automated market-makers have been perfected slowly over multiple years and the recent push to decentralise governance through tokens has pushed for new levels of interest in them. A common theme we are seeing is the gradual push to releasing a token and allowing the community to have governance of the project itself. This works as long as the returns of governance (eg: fees) themselves are worth more than the opportunity cost of not doing so. What does this mean? Currently being a LP on Balancer would make sense considering the risks involved because of the high price of the token today ($13). However, as it goes lower - if the volume on the platform itself does not surge high enough to create sufficient revenue from the fees, it won’t be long before liquidity providers lose interest. As of writing this, cumulative revenue on Balancer is at $140k on a total volume of $40 million so far. If that figure does not grow over time, incentivised liquidity providers may leave the platform. The counter-argument to this is that since incentivised reward on AMMs like Balancer is proportional to the share of the pool an individual is providing liquidity to, the rewards one receives increases as other liquidity providers leave. The higher amount in Balancer token rewards will justify LPs to stay. For now, it is safe to say that the interest in the underlying token itself is what is driving interest. For more established platforms like Uniswap, the volume has reached a large enough number to justify continued interest. For context Uniswap alone had $169 million in volume over the last seven days. That is over $570,000 a week to be distributed in fees. Since the figure is relatively high, individuals will be interested in how the governance of the platform will function. In other words - decentralised projects like AMMs will need high amounts in revenue to be able to justify premiums for their governance tokens. I would argue that this is a better model than traditional venture capital as it ensures dead projects with no revenue to show don’t last around as zombies on private money infusion for years. The fluidity of capital in DeFi would mean large liquidity providers move capital around to platforms with the highest yield at all times. I am excited for the innovation this space could bring. The idea that you can mix in a bunch of assets and have a market running for it with just code and formula could be used in a mix of ways. For one, personal tokens are already being traded on Balancer. In the future, I won’t be surprised to see tokenised intellectual property rights and income share agreements being listed on platforms like Balancer. They are fundamentally kicking out the middlemen that historically connected issuers to markets. Almost like how Wordpress made a publication as easy as a few clicks and took power away from newspapers. Will this be abused? Yes. People stand to lose money. However, as with most innovations that disrupt the middle-men, this may do more good than evil over time. I wait observing patiently for proof of the same. Thank you very much for the information: Joel John Matteo Leibowitz Daryl Lau Kerman Kohli Best regards EXCAVO
FTX:DEFIPERPEducation
by EXCAVO
21
LONG DEFIPERP on FTX for 8% ProfitGood morning Europe and Good afternoon Asia (and Good night to the Americas) Sharing a Long on the DEFIPERP Indices on FTX. This index also exists on Binance but I'm used to trading the FTX one It's a weighted sum index of the DeFi crypto tokens. Very easy to trade because the movements are slower compared to individual DeFi tokens displaying sometimes -/+ 90% in a single day Setup Entry: In the purple box This trade is a bit risky and isn't completely bullish just yet. Though, the setup looks interesting - that's why I enter cautiously with a pullback Take Profit: Aiming a bit before the Daily Traditional Pivot R1 Cheers Daveatt
FTX:DEFIPERPLong
by Daveatt
1
DefI 8.27.20Defi still looks to be consolidating after a failed breakout attempt. It has found support and overall i see no reason that this train will be slowing anytime soon. Would i be buying this ? Hell no. I am looking for other small cap defi projects that are under 300 million but preferably 200 million. It's also entertaining to watch the Bitcoin Maximalists squirm as they watch these projects jump thousands of percent and bitcoin does nothing really. Be aware defi will correct at some point but right now it doesnt look to be that time.
FTX:DEFIPERPLong
by BrandonrG
What is DeFi?What is DeFi? DeFi - What in the world is Decentralized Finance? The Most Comprehensive Guide DeFi is short for Decentralized Finance. Decentralized Finance includes digital assets, protocols, smart contracts, and dApps built on a blockchain. Given the flexibility and amount of development, the Ethereum platform is the primary choice for the DeFi application, but that doesn’t mean it’s the only blockchain platform. Think of DeFi as an open financial ecosystem where you can build various small financial tools and services in a decentralized manner. Since these are applications built on a particular blockchain, they can be combined, modified, and integrated according to your needs. Just like a lego! What is DeFi Offering? DeFi is offering you control of your own assets. Though many new-age banks and fintech firms promise to provide more control to the users, in reality, you are still trusting in them to manage your funds. The objective of DeFi is to give you full control of your assets, and it can because of decentralization and blockchain technology. Also, many developers of financial apps are adopting open-source protocols for trading through decentralized exchanges. The amount of USD locked in DeFi ecosystem is rapidly growing and up to date is over 7 Billion USD defipulse.com DeFi. It is not a trend; it is a fundamental shift in the way that participants engage with the cryptoasset market, and we believe that it has only just begun. Best regards EXCAVO
FTX:DEFIPERPLong
by EXCAVO
25
DEFI continues to rip!There are a lot of coins that are still looking for use cases out there. I remember when there were coins that said that they can do anything and everything. They would even tie your shoe for you! According to the shills that is. Right now in crypto, there is a group that just doesn’t stop. That is the newly founded Defi movement. These coins have found an area where they can actually be useful. In a world where interest rates are in the zero bound, how can savers make their 7%?It sure isnt high interest savings accounts or bonds. What about high dividend paying stocks? Well dividends are being cut left right and center! Defi has that answer with many different ways to make that happen. So what coins are part of this? Well there are a couple of ways to track them. I personally have made lists from some of the sites like coinmarketcap and coingecko. They both have tabs specifically for the Defi movement. FTX exchange also has a Defi ETF that gives you exposure to some of the bigger names in the space. We will use that as a charting tool. So if some of the bigger names in the space have done 100% in 50 days, what are some of the smaller cap coins doing? The answer is way more. We can cover some of the specific names over the next few days, but one thing is for sure, this is the area that the money is flowing to right now in crypto. So manage your risk and keep your head on a swivel! Happy Trading! Brandon Anderson www.derzzycharts.com
FTX:DEFIPERPLong
by derzzycharts
DeFi Index, They need to calm down!The index itself is in a range while tokens like lend are extremely bullish for weeks. But there is a time for everything... As the DeFi index is approaching the top of its range, and RSI also reaching its bear trend while apparently having a bit of bearish divergence too, we can expect the next move to be another test of bottom of the range. A breakout afterwards can add another 12% to the drop. And obviously if the ranges breaks from top, we will have the bullish scenario, however it appears bearish to me at the moment.
FTX:DEFIPERPShort
by RezzaHmt
2