This Week In DeFi – March 3

This week, Marker looks to add MKR as collateral for DAI, Robinhood launches a non-custodial wallet, Ethereum devs release EntryPoint for account abstraction, and Redeem sends NFTs to phone numbers

March 03, 2023

To the DeFi community,

This week, MakerDAO has proposed allowing users to borrow its DAI stablecoin against its MKR governance token as part of a wider overhaul, provoking some concern from the community. 

Some worry that allowing users to borrow DAI against MKR could lead to bank runs, similar to what happened with Terra's UST stablecoin last year. There are some key differences, however, such as MKR being only one of several tokens backing DAI. 

However, if the price of MKR collapses and leaves the protocol with bad debt, that shortfall will remain on its books. 

Robinhood has launched its own self-custody crypto wallet, Robinhood Wallet, which is now available for all iOS users worldwide. 

The wallet supports both Polygon and Ethereum networks, and users can connect to a range of decentralized applications. The company plans to release Android support later this year and add more features such as a web3 browser, in-app rewards, and support for more assets. 

Token trading in the wallet will also be powered by 0x’s Tx Relay API, via a new partnership with the protocol.

 

Ethereum developers have introduced a new software feature called "EntryPoint" that allows wallet accounts to operate as smart contracts, enabling complex tasks such as automated payments and adding recovery methods – without requiring users to directly interact with the Ethereum blockchain.

EntryPoint is an optional feature to be offered to users by crypto wallet providers and has been released in accordance with the ERC-4337 standard. The feature is accessible on EVM networks, including Ethereum, Polygon, Optimism, Arbitrum, BNB Chain, Avalanche, and Gnosis Chain.

Wallet provider Safe, which branched off the famous Gnosis project, has also announced its own implementation of account abstraction, intended to enable Web3 apps to be used in a Web2-level user experience.

 

Redeem has raised $2.5m in a pre-seed funding round led by Kenetic Capital to develop its Web3 technology, which allows users to send and redeem non-fungible tokens (NFTs) using their phone number. 

Redeem allows users to link any crypto wallet to a phone number, making it easier for non-crypto natives to enter the space. The startup intends to use the funds for its Q2 product launch and to continue developing its core technology.

Several interesting new developments have hit headlines this week, in a great week for progress within the industry.

The most major of these of course, is Ethereum’s Shanghai upgrade, which will take place in less than two weeks if everything goes to plan. At last, Ethereum stakers will be able to withdraw their coins (if need be), allowing for more freedom of movement of ETH within the ecosystem.

Other interesting updates seem to be revolving around ease-of-use – a much-needed point of focus for crypto and DeFi if it is to be more widely adopted. Account abstraction will undoubtedly do wonders on the consumer side, opening up a whole realm of new possibilities. Redeem’s work on sending NFTs via a simple phone number is also exciting, enabling non-crypto natives to begin participating in the sector.

Yet another great innovation is Polygon’s Giddy wallet enabling users to pay gas fees in USDC. This is solving a problem that is old as blockchain tokens themselves, which has been an obstacle to many users, i.e. requiring the blockchain’s native token to make token transactions.

A final major story to watch is Silvergate bank – the struggling banking service provider to several major centralized platforms. The potential demise of Silvergate may close many fiat on- and off-ramps to crypto for US users, shutting crypto users in (or out) of the ecosystem. This may lead to short-term increases in DeFi use, but longer-term difficulties for new adoption.

Interest Rates

Highest Yields: Nexo Lend at 10% APY, Aave at 1.5% APY

MakerDAO Updates

DAI Savings Rate: 1.00%

Base Fee: 0.00%

ETH Stability Fee: 0.50%

USDC Stability Fee: 0.00%

WBTC Stability Fee: 0.75%

Highest Yields: Nexo Lend at 10% APY, Aave at 1.7% APY

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Stat Box

Total Value Locked: $50.00B (up 0.7% since last week)

DeFi Market Cap: $51.67B (down 0.8%)

DEX Weekly Volume: $9,98B (down 13%)

DAI Supply: 5.02B (unchanged)

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