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This Week In DeFi – October 13

This Week In DeFi – October 13

This week, real estate-backed stablecoin, Real USD (USDR), depegged by a critical 50% margin, following a sudden redemption rush.

Alex Miguel
October 13, 2023

Happy Friday, DeFi readers!

This week…

RealUSD (USDR) stablecoin crashes 50% after depeg
Instadapp unveils lending protocol Fluid
Bitcoin smart contracts without a fork with BitVM
Decentralized perpetual swaps for oil and gold on the way!

RealUSD (USDR) stablecoin crashes 50% after depeg

This week, real estate-backed stablecoin, Real USD (USDR), depegged by a critical 50% margin, following a sudden redemption rush.

Although the initial trigger for the run on reserves appears to be unknown, it appears users were jostling for the limited liquid DAI collateral for the stablecoin – with the rest of its backing lying in illiquid real-estate.

Tangible, the organization behind the stablecoin, says that USDR is now 84% collateralized, and will use its insurance fund and protocol-owned liquidity to make users whole.

Sadly, it has also announced that the Real USD project will be deprecated, citing too many vulnerabilities.

As we’ve all seen, USDR has suffered a serious depeg.
Over a short period of time, all of the liquid DAI from the treasury was redeemed.
This led to an accelerated drawdown in the market cap.
Combined with the lack of DAI for redemptions, and liquidation timeline on real… twitter.com/i/web/status/1…
— Tangible 🏠💙 (@tangibleDAO)
11:34 PM • Oct 11, 2023

Instadapp unveils lending protocol Fluid

Instadapp has unveiled its very own lending protocol, called Fluid, currently in the testing phase. The platform was developed over 1.5 years, integrating features from Aave, Compound, Uniswap, Maker, and Curve.

Fluid looks to address liquidity fragmentation in the DeFi space by providing a seamless transition between key DeFi protocols, consolidating liquidity and lending services.

Instadapp's native token, INST, will serve as the governance token for Fluid, with an official release planned for January 2023.

1/ Introducing Fluid!💧
An ever-evolving DeFi protocol, base for future financial system.
Enabling highest capital efficiency & better rates.
Here's what @0xfluid is all about: 👇
— Instadapp (@Instadapp)
2:14 PM • Oct 10, 2023

Bitcoin smart contracts without a fork? Meet BitVM

Blockchain developer Robin Linus has proposed a new method to enable Turing-complete smart contracts on Bitcoin, called BitVM.

BitVM doesn’t require any changes to the network’s consensus rules, meaning it wouldn’t require a fork. The system would leverage fraud proofs and a “challenge-response” protocol to verify functions on the Bitcoin network.

Despite an enthusiastic response from much of the community, some have argued about the idea’s scalability, complexity and practicality for real-world use cases, as well as doubts about it achieving true Turing-completeness

BitVM is an interesting research experiment (or a limited prover), but it's not a VM, and Bitcoin L1 is not verifying anything here. BitVM uses Bitcoin L1 as a data plane, and then two parties can exchange offline and online (Bitcoin L1) data to play a game with each other.
In… twitter.com/i/web/status/1…
— muneeb.btc (@muneeb)
1:34 PM • Oct 12, 2023

Decentralized perpetual swaps for oil and gold on the way!

Crypto startup Ostium Labs has secured $3.5 million in funding to develop a protocol for perpetual swaps for commodities – including oil and gold.

The platform aims to attract both traditional commodities traders and crypto-native traders by offering a transparent and flexible alternative for trading a wide range of assets from multiple asset classes.

It will initially support trading perpetual swaps linked to oil, Bitcoin, and foreign exchange pairs like the Australian dollar, pound, euro, and yen, with the goal of bringing real-world assets onto the blockchain to enhance access and transparency.

We're thrilled to announce we've raised $3.5M, co-led by @generalcatalyst and @localglobevc, with participation from SIG, @alliancedao, Balaji Srinivasan and others!
We're building the first decentralized perpetuals exchange for Real World Assets ⬇️
medium.com/@ostiumlabs/os…
— Ostium Labs (@OstiumLabs)
4:39 PM • Oct 6, 2023

The real world asset (RWA) trend – the synthesis

As many of you may have noticed, a rapidly rising trend as of late has been real world assets (or “RWA) and their inclusion in decentralized finance.

For some, it represents a boring half-step back into the traditional financial world. But for others, it represents much more than that – the inevitable synthesis of the decentralized and physical worlds.

Although much of DeFi development in recent years has skipped ahead and focused solely on purely digital assets, the benefits of decentralization and smart contracts for real-world assets has finally caught on in a meaningful way.

Tokenizing real-world assets opens them up to a whole host of new advantages. These include:

Efficiency: Quick and secure settlement for delivery of assets, with minimal paperwork and minimal costs.
Transparency: Blockchains allow the easy verification of asset ownership and quality of asset collateral, through a public ledger.
Liquidity and accessibility: A tokenized asset is accessible to anyone, anywhere, as long as they have an internet connection.

As a result, we are seeing a wave of new projects facilitating this tokenization of RWAs and markets for them. Tokenized or decentralized representations of credit, treasuries, securities and commodities have all made their way into headlines this week.