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This Week In DeFi – May 5

This Week In DeFi – May 5

This week, Curve launches its crvUSD stablecoin, the Sui mainnet goes live, Ethereum gas fees reach 1-year highs, and Coinbase discontinues its borrow program.

May 05, 2023

To the DeFi community,

This week, Curve Finance has deployed the smart contracts for its long-awaited stablecoin, crvUSD. The contracts were redeployed a pair of times – once due to a mistake in the deployment script concerning rewards, as well as a second time to implement an improvement to gas fees.

The stablecoin is overcollateralized and backed by crypto assets, with its price pegged to $1. Curve will control the supply of crvUSD with a mint-and-burn mechanism similar to MakerDAO’s DAI or Aave’s forthcoming GHO.

CrvUSD differentiates itself with its lending-liquidating algorithm called LLAMA that constantly rebalances users’ collateral as crypto prices fluctuate. The stablecoin will not be accessible to the public until it is integrated into Curve's user interface.

https://twitter.com/chago0x/status/1653839145066700817

Sui, a Layer-1 blockchain developed by Mysten Labs, has launched its mainnet, with its native asset $SUI already trading on major exchanges including Binance, OKX, Bybit, and Kucoin.

Sui aims to offer a highly-scalable blockchain capable of supporting decentralized applications with block finality of less than half a second, achieving a throughput rate of more than 300,000 transactions per second on testnet.

The blockchain has a focus on user-friendliness for smart contract developers and emphasizes composability. The launch comes as the project raised $300 million in a September 2022 funding round, valuing the project at over $2 billion.

https://twitter.com/SuiNetwork/status/1653731940107956225

The median average transaction fee on the Ethereum network has surged to its highest level since May 2022, largely due to increased on-chain activity surrounding memecoin trading.

Ethereum's fees jumped to around 87 gwei on May 2, primarily due to the high demand for Pepe the Frog-themed token. The coin's market cap rose to over $500 million before falling back down below $400 million again, leaving it susceptible to sharp price swings.

To avoid high transaction fees, users have been seeking alternatives, leading to a surge in daily new unique addresses of EVM-compatible blockchains such as BNB Chain, Polygon, and Avalanche.

https://twitter.com/apolynya/status/1654020493152862209

Coinbase is discontinuing its Borrow program from May 10, 2023. The program allowed users to borrow cash using bitcoin as collateral.

The move is said to be due to a lack of demand for the product. Coinbase first unveiled the Borrow program in August 2020 and launched it in November 2021. It allowed users to avoid selling their bitcoin when they needed cash urgently, which could incur a taxable gain or loss.

The termination of the program comes amid a regulatory dispute between Coinbase and the Securities and Exchange Commission. Coinbase had to shelve its Lend program in September 2021 after an SEC warning.

https://twitter.com/ChainDustry/status/1654143820244680707

Memecoins have truly taken over the Ethereum blockchain over the past week, spiking gas prices to highs not seen since an entire year ago – and sending $PEPE to a $1.5 billion market cap in the process.

The network congestion is, however, once again re-igniting the need for scaling solutions or lower-cost chains. Coincidentally Sui is one solution attempting to fill this gap, launching its mainnet this week. At a $13 billion fully-diluted valuation, the platform may need to rely more on platform innovation and organically attracting customers, rather than price speculation.

Following the trend, CeFi providers continue to work out their issues. Digital Currency Group (DCG), Genesis, and Gemini have initiated a 30-day mediation process, where DCG is expected to arrange the payment of $630M to the Genesis bankruptcy estate. Gemini has warned that DCG may be forced to default on the payment.

To add insult to injury, Coinbase has shut down its “Borrow” feature, enabling users to borrow fiat against their crypto – not long after having to close their staking program.

CeFi may well and truly be over for now, leaving users somewhat restricted solely to DeFi or the traditional financial system.