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This Week In DeFi – February 16

This Week In DeFi – February 16

Alex Miguel
February 16, 2024

Happy Friday, DeFi readers!

This week…

Starknet Foundation announces STRK distribution
Sushi to build derivatives exchange on Layer N
CoW DAO announces new MEV-protective AMM
Chainlink partners with Telefonica

Starknet Foundation announces STRK distribution

The Starknet Foundation has unveiled its network’s native STRK token, which will have 7% of its supply distributed to 1.3 million wallets.

Those eligible for the initial airdrop will include early users of Starknet and StarkEx, as well as some Ethereum contributors, such as members of the Protocol Guild, EIP authors and more.

Starknet is an Ethereum layer-2, built on zk-rollup technology. The introduction of STRK is intended to decentralize and govern the network.

Pre-launch STRK futures are currently trading on Aevo at around $1.80, which would value STRK at a market cap of over $1 billion, or around $16 billion FDV.

Some criticism has already arisen over STRK’s distribution, following lower-than-expected allocations for users and a massive 1.3 billion STRK token unlock announced for the team and investors in April.

ICYMI👀
More details on the Starknet Provisions Program:
— Starknet 🦇🔊 (@Starknet)
4:59 PM • Feb 14, 2024

Sushi to build derivatives exchange on Layer N

DeFi platform Sushi has announced its intentions to launch a decentralized derivatives exchange named Susa on Layer N, an Ethereum layer-2.

Susa will offer builders the capability to develop custom applications on top of the exchange, utilizing Layer N's Nord Engine for rapid transactions.

Layer N has demonstrated significant transaction throughput in tests and is expected to launch its mainnet this month, having secured $5 million in seed funding co-led by Founder's Fund.

1/ Introducing Sushi's most exciting and ambitious project to date, @susa_ex — the most powerful perpetuals exchange in crypto.
— Sushi.com (@SushiSwap)
2:19 PM • Feb 13, 2024

CoW DAO announces new MEV-protective AMM

CoW DAO has introduced an AMM exchange designed to shield liquidity providers from the negative impacts of maximal extractable value (MEV).

This new AMM aims to mitigate “loss versus rebalancing” effects, where liquidity providers suffer losses due to arbitrage-driven liquidity pool rebalancing, by ensuring that any MEV captured is shared back with the liquidity providers.

The initiative complements CoW DAO's existing user-protective tools like CoW Swap and MEV Blocker, marking its first venture into directly guarding liquidity providers from MEV-related disadvantages.

🌊 🌊 🌊
The dirty secret of AMMs is that many of their pools are leaking.
In fact, liquidity providers lose 5-7% of their profits to MEV every year, making *most liquidity pools* unprofitable.
That's why CoW DAO is building the first MEV-capturing AMM.
We call it CoW AMM.
— CoW DAO | MEV Blocker & CoW Swap (@CoWSwap)
3:08 PM • Feb 14, 2024

Chainlink partners with Telefonica

Chainlink Labs has formed a partnership with Spain-based telecommunications company Telefonica, to enable Polygon smart contracts to interact with Telefonica's networks.

The collaboration aims to introduce new use-cases and enhance security by allowing smart contracts to securely query information from Telefonica and enable actions such as secure account creation and fraud detection.

The initiative, which is part of the broader GSMA Open Gateway project, marks a big step towards integrating telecommunications with the blockchain industry – promising to boost the functionality and security of Web3 applications.

Multinational telco @Telefonica has integrated #Chainlink Functions on @0xPolygon mainnet to help smart contracts detect unauthorized SIM card changes.
Understand how Functions can provide an additional layer of security to blockchain transactions ⬇️
telefonica.com/en/communicati…
— Chainlink (@chainlink)
1:00 PM • Feb 15, 2024

$STRK stirs a scene

The Starknet Foundation is under heavy fire for its airdrop plans, which have disappointed early users and airdrop farmers alike.

TL;DR: Users feel like they’re being short-changed, while VC’s and the team are being largely overcompensated.

The feelings of injustice were exacerbated by a misleading “leak” of eligibility requirements and estimated allocations, which lead to high expectations that were far from reality.

As reported by some users on Twitter, many users were expecting airdrops as high as five-figures:

Lmao we went from literally everyone on the timeline getting 5 figure STRK airdrops to absolutely no one at all rip
— dingaling (@dingalingts)
8:37 AM • Feb 14, 2024

According to pre-market futures prices, however, a majority of allocations seem to be estimated at just a couple hundred dollars – falling far short of those ambitious expectations.

However, that’s not the only reason users are frustrated.

Starknet products have been accessible since 2021, giving the community a ton of time to interact and transact. Funnily enough, users who only began interacting recently have been reported to be receiving just as much as the earliest users.

To make matters worse, liquidity providers – even with thousands in LP positions – have allegedly been short-changed, and will not receive an allocation if their Starknet wallet balance itself lies below 0.005 ETH.

Investors have also been given very favorable terms for their tokens, including their token lock-ups being counted from the token contract deployment date…rather than the actual release of the token. With a massive 1.3 billion STRK tokens due to be unlocked in mid-April, investors are being given an opportunity to almost instantly lock-in profits into a barely launched market, at the expense of initial buyers and airdrop recipients.

Throw in some distasteful comments being fired by the team towards the community – will Starknet’s tech be enough to outweigh the hate?