ON–075: DeFi

Coverage on COMP, AAVE, GTC, and CREAM.

Jun 11, 2021

ON–075: DeFi
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This is issue #75 of the on-chain analytics newsletter that reaches nearly 12k crypto investors every week 📈

About the editor: Spencer Noon is an investor at Variant, a first-check crypto VC fund.

This week our contributor analysts cover DeFi projects: Compound, Aave, Gitcoin, and C.R.E.A.M.

① Compound

  • The Compound protocol is a set of open-source interest rate markets for earning interest and borrowing assets. In late May, COMP token holders overwhelmingly passed governance proposals 45 and 46 to add TUSD and LINK as supported markets. Since then, the TUSD market has grown to $60M of supply and $6M of borrowing, while the LINK market has grown to $86M of supply and $9M of borrowing. Both of these markets have a 0% collateral factor to start, and can be upgraded by governance at any time.
Compound Markets
  • The Compound protocol’s reserves continue to grow at a steady rate, from $15.8M on March 10 to $27.2M on June 10. Stablecoins make up 75% of the reserves, as these markets have the highest borrowing activity. Governance can use these funds for a variety of use cases to support the protocol.
Flipside Crypto
  • Compound’s liquidation mechanism performed flawlessly during the mid-May volatility, as the price of Bitcoin and Ethereum tumbled 50% from their all time highs. $200m+ of collateral assets on Compound were liquidated during the downturn, ensuring that all suppliers of liquidity remained secure.

② Aave

📈 Record Transaction Volume On Aave

  • The Aave Protocol reached a record $14B TVL in May. Shortly after, the general crypto market consolidation led to a 37% contraction in TVL. Within a couple of weeks, however, TVL returned to past levels due to organic growth since prices have not recouped.
DeFi Pulse
  • Subsequent to the market volatility, Aave Protocol continued to see significant activity. Week 21 recorded the highest volume with $3B of borrows repaid—$110m of those borrows were repaid with collateral without the need to provide additional capital ($1.6B of Flash Loans).
Dune Repay Volume @erichare
  • Gauntlet Network took a deep dive into these May events in an Aave Protocol Liquidation Retrospective covering May 17th to 23rd, during which users engaged in approx. $310m of liquidations. Gauntlet concluded that the protocol handled the events well with now just $60k in underwater positions.

③ C.R.E.A.M.

📈 Assets supplied on C.R.E.A.M. crosses $1.5B

  • C.R.E.A.M. Finance is a decentralized lending protocol for individuals and protocols, live on Ethereum, BSC, and Fantom. The C.R.E.A.M. ecosystem has been exploding, driven in large part by the Iron Bank, which recently crossed $1B in assets supplied. Some of the Iron Bank’s growth is driven by Yearn’s crvIB vault, which recently passed $300M TVL.
yEarn Vision
  • C.R.E.A.M. revamped its interest rate model for the Iron Bank two months ago. It's now clear that C.R.E.A.M. is the most efficient money market in crypto, with a total market utilization rate of 64% (driven by protocol-to-protocol lending relationships Alpha Homora, yEarn, and mStable).
  • C.R.E.A.M. makes significant revenue as a validator on BSC and Fantom. C.R.E.A.M. launched its BSC node in May and became a top five validator within a week. Not only is CREAM helping to decentralize these networks, but it’s on track to contribute more than $2M annually to C.R.E.A.M.’s treasury.
Twitter @bsc_chain

④ Gitcoin

📈 Gitcoin has facilitated >$20M in funding for Open Source projects!

  • Simply stated, Gitcoin’s mission is to support those who support open source software. With over $500B in economic output per year; creatively developed, carefully maintained and freely shared source code form the backbone of our modern digital infrastructure. Acting as a coordination command center, Gitcoin incubates digital public goods through funded bounties, sponsored hackathons, matching grant rounds, and educational quests designed to onboard new stewards of the digital commons. Platform stats below:
  • Most user engagement with the Gitcoin platform comes through the quarterly matching fund grant rounds, which feature a quadratic voting scheme that allocates matching contributions more favorably towards projects with many small donors. The most recent raised over $1.9M through 168k donations, bringing total lifetime funding to over $20M.
  • With the issuance of its governance token, Gitcoin itself was transformed into a decentralized public good. Now token holders guide the protocol by reaching consensus on proposals designed to improve the platform and grow the community even further beyond the 161k current monthly active developers.

About the editor: Spencer Noon is an investor at Variant, a first-check crypto VC fund.