This Week in DeFi – January 21

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To the DeFi community,

This week, 1inch Exchange went live on Avalanche and Gnosis Chain (formerly xDai Chain) to expand DEX aggregation services to more corners of the DeFi ecosystem. At launch 1inch on Avalanche  aggregates liquidity from more than a dozen exchange protocols, and 9 from the Gnosis Chain.



Aave Arc, the institutional-focused ‘walled garden’ providing KYC verified entities their own liquidity pool is headed to Ethereum scaling solutions Arbitrum and Optimism after a pair of proposals passed with overwhelming support. The additions will mark some of the first ‘institutional-grade’ DeFi services to be ported to L2 solutions, and should help dramatically reduce transaction costs.


Stader Labs, a staking service provider for the Terra ecosystem completed a strategic private sale for $12.5 million led by Three Arrows Capital. Fund will be used to add staking support for more blockchains including Solana, Ethereum, Polygon, Hedera, and Fantom.


And Polygon implemented a number of EIP-1559 upgrades to bring the protocol more in line with its Ethereum parent chain and bring fee burning into the protocol. As with Ethereum, Polygon transactions will now burn a portion of the transaction fee paid by users while delivering more predictable transaction pricing and will reduce the total MATIC supply over time.


Another big week for L2s and competing L1s, with more and more DeFi protocols continuing to expand their reach to every corner of the DeFi ecosystem. In case there were any lingering doubts, the addition of Aave Arc to multiple Etheruem scaling solutions is proof that – at least at the community level – users see it as essential to success to move important services off of the native Ethereum chain.


And while some L2s have attracted more TVL or developer interest than others, the field is still very much open for existing players or new entrants to pull ahead of the pack. L2 providers (and many L1s) have paid sizable bug bounties to those identifying production issues that put billions at risk, and cross-chain bridges have been identified as risky points of potential failure. DeFi is getting more mature, but there are clearly still technical and market-based inefficiencies to work through before being truly ready for prime time.

As builders continue to branch out into different development environments, it’s also becoming increasingly likely that crypto will have a highly fractured liquidity environment, with cross chain liquidity aggregators likely playing an increasingly important role. In the end, the protocols that see adoption and actual use by large scale institutional and corporate players may have a serious leg up in reaching critical mass and pulling ahead of the competition. Those decisions may not have been made just yet, but the conversations are certainly ongoing.


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Interest Rates


Highest Yields: BlockFi at 8.50% APY, Nexo Lend at 8.00% APY

Cheapest LoansAave at 3.9% APY, Compound at 4.5% APY

MakerDAO Updates

DAI Savings Rate: 0.00%

Base Fee: 0.00%

ETH Stability Fee: 2.00%

USDC Stability Fee: 0.00%

WBTC Stability Fee: 2.00%


Highest Yields: Celsius at 8.5% APY, Nexo Lend at 8.00% APY

Cheapest LoansdYdX at 0.01% APY, Aave at 3.81% APY


Top Stories

Formation of the Luna Foundation Guard (LFG)

OpenSea Acquires Dharma Labs, Welcomes New CTO


Solana-Based DeFi Project Hubble Protocol Raises $10M


Cosmos Connects to Ethereum Via the Osmosis DEX

Stat Box

Total Value Locked$92.36B (down -3.79% since last week)

DeFi Market Cap$125.2B (down -14.2%)

DEX Weekly Volume$19.82B (down -3.74%)

DAI Supply9.2B (up 0.76%)

Total DeFi Users4,377,600 (up 0.70%)

Bonus Reads

[Brady Dale – The Defiant] – DEXs Sliding into Price War as Uniswap and dYdX Slash Trading Fees

[Jack Melnick – The TIE] – A Call to Farms: Dopex, Jones Dao, and the Future of DeFi Options

Anthony Sassano – The Daily Gwei] To Bridge or Not to Bridge – The Daily Gwei #418

[Shaun Martinak & Sebastian Bea – Bankless] – What’s taking so long?

[Brooks Butler – Crypto Briefing] – a16z Seeks Record-Breaking $4.5B for Crypto Funds

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