To the DeFi community,

This week, Balancer introduced the Balancer Grants DAO, a community-driven DAO with the power to grant between $1,000 and $75,000 to projects committed to helping Balancer become the leading DeFi protocol for programmable liquidity. The initial round of grants will be disburse 20,000 BAL tokens over the next three months.

Avalanche announced a significant incentive program with Avalanche Rush, offering AVAX tokens as incentive to liquidity providers on blue chip DeFi protocols soon to be launched on the platform, Aave and Curve Finance. Liquidity providers will be able to claim $27 million over three months in the first phase of the incentive distribution, with a total of $180 million set to be paid out over the full course of the program.

 

 

Polygon announced plans to move towards operating using a DAO, posting a thoughtful breakdown of the advantages and challenges of further decentralizing the governance of one of the most successful Ethereum Layer 2 solutions. There’s no firm date yet, but the Polygon team is actively considering how best to manage the transition to a DAO structure at the network provider level while maintaining strong momentum.

 

 

And another major player is coming to Optimism, with 1inch Exchange allowing users to begin migrating assets to the up-and-coming L2 solution, joining Uniswap, bZx, and other top-tier DeFi protocols. As with other recent additions, transaction throughput will be limited and withdrawing to L1 will be time limited, but the Optimism network, and the potential for more L2 composability, keeps on growing.

 

If you follow the news around decentralized governance, you may have watched the saga of a well known analytics entity within the industry proposing to grant themselves a large sum from the Uniswap treasury to help fund their operations through farming DeFi yields. 

The proposal was eventually stopped over a technical constraint, but it sparked lively debate about how collective DeFi project funds should be spent, who ultimately benefits from proposals, and how to coordinate collective action around a contentious vote like this one.

And this is likely to be the biggest challenge for DeFi and the decentralization movement more broadly as the years go by, even more than technical, financial, or regulatory roadblocks. How do you get people to consistently put time and effort into understanding something that to many of them is simply an irregularly used product? Yield farming and similar incentive programs have been one early answer, but they can’t go on forever, and competition is fierce.

I don’t know the answer, and we very likely haven’t seen anything resembling the final form of tools for voting, collective focus, or frameworks for protocols or communities that can genuinely retain users’ attention long term. The thoughtful work on DAO structure like that being undertaken by Polygon and the iteration of other existing DAOs is only the beginning. As with most development in crypto, things are probably going to get a little weird. Just remember, we’re all friends here, working towards a brighter future for humanity. 

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Cheapest Loans: Aave at 3.9% APY, Compound at 4.21% APY

MakerDAO Updates

DAI Savings Rate: 0.00%

Base Fee: 0.00%

ETH Stability Fee: 5.50%

USDC Stability Fee: 0.00%

WBTC Stability Fee: 4.50%

Highest Yields: Celsius at 8.88% APY, Ledn at 8.50% APY

Cheapest Loans: Aave at 3.47% APY, Compound at 3.7% APY

Total Value Locked: $83.18B (up 0.74% since last week)

DeFi Market Cap: $126.27B (up 10.36%)

DEX Weekly Volume: $17.05B (down -14.58%)

DAI Supply: 5.77B (up 2.12%)

Total DeFi Users: 3,227,400 (up 1.22%)

[Ryan Adams – Bankless] – How to value DeFi tokens

[Anthony Sassano – The Daily Gwei] – ETH’s Scarcity Engines – The Daily Gwei #317

[Kevin Chan – UMA Blog] – Designing A Smart Liquidity Mining Program (LM 2.0)

[Fabian Klauder – DeFi Times] – DeFi 2021 and Beyond: What to Look Out For

[Owen Fernau – The Defiant] – It’s Been a Killer Week for ‘Ethereum Killers’

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