Tweet from Parsec founder Will Sheehan, commenting on the more and more standard subject of app-chains. Nascent’s Dan Elitzer wrote concerning the inevitability of UNIchain and the discharge of Cosmos’ Whitepaper 2.0 is shining a lightweight on the advantages of operating your individual chain.
Sheehan – like Menai’s Lanre Ige – argues that apps with bodily settlement are a poor candidate to transition to an app-chain. Those that depend on money settlement – like dYdX – make sense as a result of they don’t must bridge tokens into a brand new chain.
In some ways, the attraction of app chains has pushed by the rise of MEV. On Ethereum and different EVM chains, apps like Uniswap don’t see any of the worth from MEV, which flows fully to validators and searchers, however apps may faucet into this worth if the app token was additionally used to safe the underlying community.
Sheehan’s argument is that finest execution received’t essentially win out. There is usually significantly better execution on CEX’s or RFQ programs, however many customers nonetheless want DEX’s. And for spot buying and selling, an important factor is the place the tokens are.
Lending protocols are the lifeblood of DeFi. Leverage remains to be DeFi’s #1 use case and the mortgage liquidation market mainly birthed the MEV. The chart above from Token Terminal reveals how a lot of DeFi lending is from token incentives.
Maker ($7bn) has a better TVL than Aave ($5bn), however $3.4bn of Maker’s TVL is from USDC within the Peg Stability Module (PSM), which is incomes no charges so not likely lending. Still, because the above chart reveals Maker has achieved its place with none token incentives, which none of its rivals can declare. Of course, MakerDAO has spent $50m a yr on an enormous staff to assist develop adoption (that additionally obtained MKR as compensation).
Massive subsidies to early customers to construct a community impact was pioneered by Uber. Tokens are more practical than reductions, however no less than with Web2 subsidies you’re not paying in fairness.
Dive deeper: Variant Fund’s Mason Nystrom has a nice Twitter thread on the projects “Token Acquisition Cost”
BlockSec releases new transaction explorer for EVM chains Link
Compound Treasury launches borrowing for establishments Link
Chainlink releases prototype of Fair Sequencing Services (FSS) Link
Token Terminal: Introducing Sound Business rankings Link
Someone hacked into dYdX’s npm account Link
CFTC pursues first case in opposition to a DAO (bZx) Link
Skip raises $6.5m to construct MEV options Link
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Dose of DeFi is written by Chris Powers, with assist from Denis Suslov and Financial Content Lab. Caney Fork, which owns Dose of DeFi, is a contributor to DXdao and advantages financially from it and its merchandise’ success. All content material is for informational functions and isn’t meant as funding recommendation.