To the DeFi Community,
Tokens have made a roaring comeback. What seemingly was looked down upon for years during the bear market has been pretty much forgotten overnight.
Now, virtually every DeFi project in existence is exploring a tokenized avenue on the back of yield farming. Many previously untokenized protocols, like Curve Finance, have capitalized on the yield farming frenzy while others like dYdX are exploring the opportunity (listen to AMA here w/ Founder Antonio Juliano). And for protocols that have been adamant about not launching a token, like Uniswap, they’re now being taken advantage of by their peers. Mooniswap, SushiSwap, and others are all forking the popular liquidity protocol and launching a native token with yield farming mechanisms in an effort to ‘Vampire mine’ liquidity away. Whether or not they’ll be successful is a different story.
2017: Ethereum killers
2020: Uniswap killers— Hayden Adams 🦄 (@haydenzadams) August 28, 2020
But it’s like the DeFi landscape has been flipped upside down in a matter of weeks. Adding to this, the “food farming protocols” have been a party in their own respect. Yam Finance, Spaghetti Finance, Cream Finance, the list goes on. All of these protocols are copying the same model to launch these new protocols that don’t actually offer a product (Yam’s governance treasury was interesting though).
Which leads us to my point. Product market fit has been completely thrown out of the window in recent weeks. For two years, the DeFi market was focused on building innovative products that people wanted to use. Uniswap was a prime example. Compound was another. These were products that provided a valuable service to users. And within weeks, this critical ethos of building has been seemingly forgotten. It’s now all about the token as protocols aren’t looking to innovate, but instead mimic their predecessors as they launch products and native tokens in tandem.
But that’s the wrong model. Protocols and applications should aim to establish product-market fit and their ability to provide value before launching a token. In the wise words of Jeff Bezos: “The most important single thing is to focus obsessively on the customer”. In other words, builders should always focus on providing genuine value to users.
Have a product-market fit, tangible growth, and looking for an exit by decentralizing control to the users? Awesome, knock yourself out with a token.
The idea of Jesse Walden’s “Ownership Economy” has the potential to become incredibly valuable and reshape the internet as it stands today. New technologies can provide a significant amount of upside to its most valuable actors: the end-user. And I believe the Ownership Economy will ultimately become a profound piece to a decentralized future that many of us are building for.
But we’re in the midst of a DeFi bull market. So I don’t believe this party is ending anytime soon. Or at least until something goes fatally wrong, giving the DeFi community a rightful cold shower.
So if you’re partying right now, make sure to buy some insurance 🙂
Till next week!
– Lucas
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Ethereum’s leading blockchain company acquired Quorum from the major U.S. Bank
The DeFi asset management platform known for “Zaps” closed a $1.5M seed round from leading DeFi investors
The DeFi money markets protocol has acquired an EML in the U.K. to integrate fiat onboarding directly into the platform
One of the leading DEX aggregators in DeFi released details of its 1INCH token along with plans for Mooniswap liquidity mining
The DeFi liquidity & asset management protocol will boost rewards for all BAL liquidity pairs on Balancer.
- Total Value Locked: $8.24B (up +24% from last week)
- DeFi Market Cap: $14.2B (up +21%)
- DEX 7 Day volume: $2.55B (up +2%)
- DAI supply: 443.3M (up +2.1%)
- Total DeFi users: 386K (up +39%)
Shoutout to Aave for supporting This Week in DeFi!
Aave is a leading lending protocol supporting dozens of the top DeFi tokens. Aave recently showcased an EMI license, giving them the ability to onboard new users directly into DeFi through their parent company – Aave Limited.
We’ve done an extensive amount of coverage on Aavenomics – a new suite of protocol upgrades that incentives protocol safety through AAVE rewards and protocol fees. The best part about Aavenomics is that all of its parameters – including the logistics of Aave yield farming – are governed by tokenholders. There’s a ton of good activity happening on the Aave governance forum and we’d definitely recommend checking it out if you fancy yourself to be an Aavenger.
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Analyst at Bankless – one of the leading resources for open finance. Lucas is an active contributor to the DeFi ecosystem with appearances in other notable DeFi outlets including The Defiant and Our Network. He has years of experience working with dozens blockchain and token startups where he focused on token economics, marketing, and growth.