DeFi Research News June 2022

State of The DeFi Market Throughout June

DeFi TVL

Earlier in June the DeFi TVL was ~$142 Billion. By the end of June it was ~$88 Billion. This decrease in TVL is due to the domino effects caused by the collapse of the Terra Luna ecosystem that we mentioned in our DeFi Research News - May. The collapse of Luna and its stablecoin UST caused waves of insolvencies across crypto space including big name firms such as Three Arrows Capital (3AC), CeFi lenders such as Celcius Network and BlockFi and many others are on the verge of bankruptcies. In the chart below we tracked the change in TVLs for different chains:

• Ethereum TVL dropped from ~$94 Billion to ~$54 Billion, a whopping $40 Billion!
• Binance Smart Chain TVL dropped from ~$11 Billion to ~$7.4 Billion. 
• Tron Chain TVL dropped from ~$6 Billion to ~$4 Billion and
• Avalanche Chain TVL dropped from ~$6.1 Billion to ~$5.5 Billion 

Macro View

The total cryptocurrency market cap was ~$1.2 trillion as of Week 1 of June 2022. By the end of June, it had a market cap of ~$902 Billion, experiencing a 25% drawdown in June. All asset classes were down during June, amidst inflation concerns, monetary tightening, and a volatile geopolitical environment. Gold outperformed at -1.87%. BTC and ETH dropped -29.29% and -33.95%, respectively. Within a few weeks of Terra’s downfall, the crypto market plunged again and several crypto companies announced layoffs and froze withdrawals to slash costs due to the extreme market conditions.

Regulations and Institutional Update

• June started off with a major conference in Austin, TX called the Consensus 2022. At the conference, Fidelity Investments CEO Abby Johnson reiterated her belief that the long-term fundamentals of cryptocurrency remain strong. She mentioned, 

“I figure this is my third crypto winter. There’s been plenty of ups and downs but I see that as an opportunity….when everybody else is dipping [out], that’s the time to double down and go extra hard into it.”

• ProShares, the largest provider of Bitcoin-linked ETFs in the U.S., launched its short-Bitcoin CME futures ETF recently on 21 June, under the ticker BITI. 

• EU becomes the first continent with crypto-asset regulation as per Stefan Berger, a European Parliament member and reporter for the MiCA regulation. In his twitter thread he mentions that there will be no ban on Proof Of Work (POW) technologies, such as the one used by Bitcoin. His full twitter announcement can be found here

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Major News/Event in June

Uniswap Acquires NFT Marketplace Aggregator Genie.xyz

Hayden Adams, the founder of Uniswap, recently made a big announcement on the Bankless podcast. Uniswap just acquired ‘Genie’ which is an NFT Marketplace Aggregator along with the entire Genie team of 15. They are going to merge this business with their DeFi protocol webapp. Essentially they are becoming a swapping station for a number of different ERC tokens (ERC20, ERC721, ERC1155) as opposed to just ERC 20.

A key point to reiterate is that Genie is not an NFT marketplace. It is an NFT marketplace aggregator. Which means, uniswap can use its knowledge on the most efficient trade routing mechanisms and the best execution price on token swaps to optimize the trading of NFTs. You could swap NFTs with other NFTs or swap NFTs for any tokens on uniswap, seamlessly within one app.

They are planning to airdrop USDC tokens to some of the earliest users of the Genie platform in order to get the Genie community excited about the Uniswap acquisition.  Usually airdrops are done in the new protocol’s native tokens in order to attract new users. However, Uniswap is airdropping stablecoins, which means they are purely giving the choice to the receivers as to what they want to do with the so-called ‘cash’.

While other crypto companies are laying employees off, Uniswap is expanding their team. On June 15 2022, Uniswap announced that former New York Stock Exchange president Stacey Cunningham will join the company as an adviser, bringing her TradFi experience to the world of DeFi. According to Bloomberg’s article from June 9, 2022, Uniswap’s new hires include some high-profile additions such as the former BlackRock Digital Wealth team lead Mary-Catherine Lader as the COO, former Federal Reserve economist Gordon Liao was brought on to lead research, and former Snap Inc. senior director of engineering Chad DePue to lead engineering. Salman Banaei recently became head of policy; in the past he held various roles at the U.S. Commodity Futures Trading Commission.

On-Chain Metrics & Data

In our final segment of June newsletter, let’s look at Crypto Fees on-chain metrics for the fees generated by various DeFi protocols and blockchains. 

As of June 29th 2022, Ethereum chain is leading the 7-day chart with an average of $4.7 million generated in fees! Right behind Ethereum blockchain is the leading Decentralized Exchange Uniswap with around $3.1 million in fees. In fact, the top 4 protocols/chains to generate highest fees (which are a result of transaction activity and volume) belong to DeFi. Bitcoin ranks 5th on the list of fees generated. We can clearly see that the DeFi related chains and protocols are the leaders in terms of fees generated in June. This is an indication that DeFi protocols are very active despite the bear market conditions and a clear reason to continue earning passive yield with DeFi strategies. Sign up today on Coinchange using this link 

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