To the DeFi Community,
On-chain options contracts are in the spotlight as the year comes to a close, with added features and complexity that could add a new level of complexity to DeFi products.
Opyn, one of the original on-chain ETH options providers, upgraded to v2 with added features like automatic execution if contracts expire in the money and cash settlement, which allows contracts to be generated, traded, and closed without exchanging the underlying asset, simply exchanging the cash difference instead. These changes make it easier not only for everyday users to get the most out of DeFi options, but for DeFi developers to integrate Opyn contracts in novel ways with triggers or components affected by predictions about future asset prices.
Adding to the options avalanche, Primitive Protocol launched on mainnet, aiming to bring simplicity to on-chain options. Primitive smart contracts lock the underlying digital assets (like ETH) and mint long and short position tokens in equal numbers, requiring no oracle price feed to balance buyers and sellers at execution and ensuring positions are covered and settled by the underlying asset.
The long and short position tokens generated by Primitive contracts also introduces an easier way to short digital assets like BTC or ETH for the bold bears among us. More importantly, options give the market more information on how traders are thinking about asset prices, reducing volatility in the long term and moving DeFi another step closer to fully replicating derivative and financial tools offered by traditional institutions.
Options can also be a means of hedging a position in a given asset, allowing traders to limit losses if prices move in unpredictable ways. And they might be a better risk management tool for DeFi die-hards for the time being, after a zero-day exploit against insurance provider Cover Protocol crashed the token price more than 90% just hours after launching. Insurance coverage is still functioning as intended, but LP rewards are temporarily suspended and confidence has been shaken in a vertical that is meant to provide peace of mind.
However, in a show of solidarity and to remind DeFi users it’s not entirely every man for himself, Cover devs and BINANCE announced compensation for COVER holders, using a blockchain snapshot to pay out pending rewards in a new COVER token and ETH for those who were impacted by liquidity pools being drained and the token price crash.
After seeing the bat signal, all available devs from Yearn Ecosystem came together to help and support $COVER team.
The Justice League exists. They don't fly, they code ?????
If you want to go fast, go alone. If you want to go far, go together ?? https://t.co/MVNrvo6wc3
— Facu ? fameal.eth (@fameal) December 28, 2020
It’s a fitting end to a year of remarkable innovation in the DeFi ecosystem, paired against the lurking threat of hacks and exploits that have impacted just about every participant in one way or another throughout the year.
But as in the aftermath of the Harvest Finance exploit and countless others, DeFi pioneers have shown that while we may be decentralized, we can still pull together for the good of the space. After all, a rising tide lifts all boats, and the next unforeseen hack could be the one that catches us flat footed. Doing right (or not) by the community at this early stage is unlikely to be forgotten as the industry reaches for new heights in the new year.
So here’s to 2021, wishing each and every DeFi player high yields, choice memes, and the chance to be a part of the most important financial revolution in generations.
Happy New Year from DeFi Rate!
DAI
Highest Yields: Fulcrum at 13.21% APY, Nexo Lend at 10.00% APY
Cheapest Loans: CoinList at 3.00% APY, dYdX at 8.3% APY
MakerDAO Updates
DAI Savings Rate: 0.00%
Base Fee: 0.00%
ETH Stability Fee: 2.50%
USDC Stability Fee: 0.00%
WBTC Stability Fee: 4.50%
USDC
Highest Yields: Fulcrum at 10.94% APY, Nexo Lend at 10% APY
Cheapest Loans: CoinList at 1% APY, dYdX at 6.28% APY
Opyn v2 Live on Mainnet
On-chain options provider Opyn adds new features for better, faster, stronger DeFi options contracts.
Primitive Protocol v1 Launch
Primitive Protocol brings simplified options on-chain, eliminating default risk and making it easier to short and hedge digital assets.
Cover Protocol Exploited
DeFi insurance provider Cover Protocol gets exploited, crashing COVER token prices.
Rari Capital Partners with Saffron Finance
Rari Capital and Saffron Finance team up for smarter fixed-rate DeFi products.
DeFi Pulse 2020 Year In Review
Industry leading data aggregator DeFi Pulse looks back on a revolutionary year of decentralized finance.
Stat Box
Total Value Locked: $14.39B (up 7.15% since last week)
DeFi Market Cap: $20.51B (up 8.7%)
DEX Weekly Volume: $7.02B (up 31.95%)
DAI Supply: 1.19B (up 5.31%)
Total DeFi Users: 1,150,300 (up 3.8%)
Bonus Reads
[Chris Powers – Dose of DeFi] – The 8 Trends that DeFined DeFi in 2020
[Uniswap] – Uniswap’s Year in Review: 2020
[Kain Warwick – Synthetix] Synthetix 2020 Year in Review
[Seb Audet – Zapper] Zapper 2020 Year in Review
[David Hoffman – Bankless] – Ethereum the Tree of Trust
[Cooper Turley – The Defiant] – 1inch Fuels DeFi Airdrop Trend with Christmas Present
[Anthony Sassano – The Daily Gwei] – Money Games – The Daily Gwei #150
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Alex is an analyst and writer with experience at tech startups and Fortune 500 corporations. He’s focused on cutting-edge technologies in blockchain, energy, supply chains, transportation, urban living, and more and has been in the crypto community since 2014.
