DeFi Rate
Posts
This Week In DeFi – Aug 11

This Week In DeFi – Aug 11

This week, PayPal launches its own stablecoin, Base kicks off "on-chain summer", the Curve exploiter returns funds to Alchemix, and MakerDAO's DSR increase boosts Spark TVL.

Alex Miguel
August 11, 2023

To the DeFi community,

This week, PayPal has dominated headlines with the launch of its very own stablecoin, PYUSD.

The move has been considered by many to be a “watershed moment,” as Ethereum gains PayPal’s seal of approval and breaks the ice for other large corporations to use the blockchain.

However, critics argue that the centralized nature of PayPal's stablecoin could diminish the market share of decentralized stablecoins, undermining the decentralized principles at the core of the crypto space.

In a somewhat expected fashion, the smart contract appears to have the ability to freeze and burn tokens at PayPal’s discretion.

https://twitter.com/PayPal/status/1688552795278872576

Coinbase's Base network has been officially launched to the public, with a reported 100+ decentralized applications (dApps) and service providers.

As part of the launch, an event called "Onchain Summer" has been introduced, highlighting partner dapps in art, music, and gaming, with users having the chance to mint a special NFT to commemorate the occasion.

Notably, Chainlink price feeds and Uniswap’s decentralized exchange have both gone live on the platform this week. Coca Cola is also listed as an official partner.

The network has already seen over $100 million in asset transfers ahead of its launch, while TVL is currently sitting at around $72 million.

https://twitter.com/BuildOnBase/status/1689673353379074048

The Curve Finance exploiter has returned a total of 4,820 alETH and 2,258 ETH across three transaction batches, amounting to approximately $12.7 million, to the Alchemix Finance protocol.

This return of funds by the hacker appears to be a response to motivations not to disrupt the project. The initial return included 1,000 alETH, followed by 3,819 alETH and 2,258 ETH.

The exploiter’s message suggests a motive beyond fear of being identified. This comes after Curve Finance experienced a $24 million exploit on July 30 due to a smart contract bug.

https://twitter.com/AlchemixFi/status/1687921557417377793

Lending protocol Spark, developed by MakerDAO, has seen a rapid 750% increase in total value locked (TVL) within just four days.

The surge comes right after MakerDAO raised the DAI Savings Rate (DSR) from 3.3% to 8%, triggering a rise in TVL from $57.7 million to $440 million.

The goal of the rate hike was to encourage adoption of DAI stablecoin, Spark, and the DSR, with decreasing returns as TVL increases.

The increased DSR also positions DAI to compete with emerging rivals like Curve and Aave, which offer yield-generating stablecoin options, and has led to a notable increase in DAI deposits.

https://twitter.com/MakerDAO/status/1689691339288702976

PayPal’s stablecoin is definitely a milestone for the wider crypto world – despite being centralized and somewhat against the crypto ethos. There is significant likelihood of other financial giants or other corporations using the Ethereum blockchain once PayPal’s use case has been validated.

So, what exactly is PayPal’s stablecoin, PYUSD? Funnily enough, stablecoin issuer Paxos is helping them out. According to Bloomberg, PYUSD will be backed by US dollar deposits, short-term Treasury bills, and cash equivalents.

Users will be able to transfer PYUSD between PayPal accounts, as well as to and from compatible external wallets. They will also be able to convert between PYUSD and other cryptocurrencies supported on the PayPal platform.

Whether or not PYUSD will work its way into the broader DeFi ecosystem (or if it will even be permitted to) is yet to be seen.

Another partnership that popped up this week was Microsoft and Aptos Labs – the blockchain that sprouted from Facebook’s “failed” Libra/Diem project.

The partnership will leverage AI technology for user onboarding and development, and the companies will explore asset tokenization, digital payments, and central bank digital currencies.

Aptos will also integrate Microsoft's Azure OpenAI Service and plans to introduce Aptos Assistant, a secure digital assistant for answering queries about their blockchain.

Last but not least, Frax appears to be following in the footsteps of MakerDAO as it explores venturing into real-world assets, including cash, treasury bills, reverse repo contracts and more.

The move is yet another example of the lines beginning to blur between DeFi and the traditional financial world – a trend that will undoubtedly continue well into the future.