Category: DeFi

Is Aave making the case for decentralized social media?

On By mehranmuslimiblogIn Blockchain, DeFi, Innovation, Web 3.0Leave a comment

What shall we call ‘decentralized social media’? Decentralized finance was easily turned into DeFi, but DeSM or DeSocMed doesn’t have quite the same ring. Still, somebody will come up with a shortened version in time.

One of the proponents of decentralized social media is Stani Kulechov, the founder of the Aave DeFi protocol. He has been tweeting teasers about his support for decentralized SM platforms, pointing out that there is a widespread belief that the current SM platforms generally ‘suck’. Twitter has also been talking about it, which surely points to that’s the way it is considering going.

According to The Defiant, five persons in crypto told the website that Kulechov has sent them a cryptic text asking them to sign up to ‘lens.dev. However, The Defiant was unable to find out from Aave or Kulechov any more information about this site.

The Lens Protocol

Follow the lens.dev link yourself and you’ll find yourself at a simple site that contains a  short letter expressing dissatisfaction with Web2.0 social media companies, such as Facebook and Twitter. The letter says, “Web3 brings forth a renewed hope for what social media can be. It offers the ability for us to control how our content is used. We can have the power to own and monetize our content and community with no middlemen or centralized data harvesting.”

Should you wish to sign the letter, you do so with a tweet. The tweet includes a cryptographic signature that uses their Ethereum wallet and text that usually reads “I should own this tweet @lensprotocol #digitalroots.”

This is not the first attempt to decentralize social media. Other efforts include STEEM, which emphasized blogging; FEEDWEAVE, which was built on Arweave and Cent is an experiment in selling content. None of them have made much impact on the SM world, but as The Defiant says, “the top minds in the space seem to believe that this is still a crackable use case for one blockchain or another.” Indeed, Sam Bankman-Fried of FTX said, “I think social media on the blockchain — I continue to think this could be absolutely huge. I think it solves a lot of existing pain points, which are really coming to the forefront of society right now.” Of the others who have been talking up the idea, one supporter is Vitalik Buterin, who has proposed an SM platform built on the Ethereum blockchain. However, perhaps Aave will beat him to it, and these cryptic tweets are just the beginning of the platform’s attempt to finally deliver a blockchain-based, decentralized social media platform. Then perhaps we’ll know what to call it!

Solana boosted by Bank of America

On By mehranmuslimiblogIn Blockchain, DeFi, Ethereum, NFTs, SolanaLeave a comment

Alkesh Shah, a digital asset strategist at Bank of America, is sweet on Solana. This week in a research note he claimed that Solana, widely seen as a competitor to Ethereum, could become the “Visa of the digital asset ecosystem.”

Solana only launched in 2020, and since then has become the fifth largest cryptocurrency with a market cap of $47 billion. Its impressive growth spurt has outperformed that of Ethereum, and it has been used to settle over 50 billion transactions. It has also minted some 5.7 million NFTs.

Despite this performance, it still has its critics, and they argue that the speed at which it settles transactions comes at the cost of decentralization and reliability. Shah doesn’t buy this. He believes the benefits outweigh the drawbacks: “Its ability to provide high throughput, low cost and ease of use creates a blockchain optimized for consumer use cases like micropayments, DeFi, NFTs, decentralized networks (Web3) and gaming.”

In his note, Shah also pointed out that he believes Solana will take market share from Ethereum, simply because it offers lower fees, is easier to use and has greater scalability. He told Business Insider, “Ethereum prioritizes decentralization and security, but at the expense of scalability, which has led to periods of network congestion and transaction fees that are occasionally larger than the value of the transaction being sent.”

Ultimately he thinks Solana may take over the transaction settlement side of the market, while Ethereum focuses on “high-value transaction and identity, storage and supply chain use cases.”

But perhaps the most surprising element of Shah’s note is the comparison of Solana with Visa. Visa processes an average of 1,700 transactions per second (TPS), although if pushed to the max it could do 24,000 TPS. By contrast Solana has an upper limit of 65,000 TPS. Ethereum handles about 12 TPS. The difference is striking.

However, as Solana followers will know, the network has suffered a number of problems recently, something that Shah acknowledges. Already in 2022 there have been withdrawal issues on both Binance and Coinbase and an alleged DDoS attack on 5th January, something the network denies. And in December of last year there was a DDoS attack, as well as reports of network congestion. This does not seem to have deterred investors this week. After several rough days, Solana (SOL) has bounced back to $151, an increase of 8.56% from a 52-week low of $130, although it has some way to go before it reaches its former ATH of $260.  But if Shah is right, and Solana becomes the “Visa of the digital asset ecosystem” who knows how high its price may go.

How to buy DeFi tokens in 2022

On By mehranmuslimiblogIn Blockchain, DeFiLeave a comment

How to buy DeFi tokens in 2022

DeFi offers multiple investment opportunities, but as with all crypto there are risks. Jordan Finneseth offers us three ways to analyse the DeFi tokens on offer, together with their protocols.

As he says, “There’s more to investing than just technical analysis and gut feelings.” Since decentralised finance projects burst onto the scene, we have seen some blockchain analysis platforms appear with the aim of providing better insights into the “fundamentals supporting a cryptocurrency project” and these offer us three ways to evaluate them.

  1. Check the community and developer activity

Looking at this is one of the most basic ways to begin your evaluation. Many of the top protocols in the space offer analytics that track the growth in active users over time. For example, you should look for the average number of active wallets on a daily, weekly and monthly basis. Investors should also look at the number of transactions and volumes transacted on the protocol, as well as sentiment about the project on social media channels, such as Twitter. Information about developer activity is available on GitHub.

  • Look for increases in total value locked (TVL)

The overall strength of a project may be revealed in the sum of all assets deposited on the protocol, otherwise known as the total value locked (TVL). Growth in the TVL shows that momentum and interest in the project are increasing. Tools you can use to look at this are DeFi Llama and DappRadar, which allow users to dive deeper into the data and look at the statistics for different blockchain networks, such as Ethereum, and on individual projects.

  • Identify the majority token holders

Another factor to consider are the benefits given to a project’s token holders for their activity. Finneseth says, “Investors should also look into the manner in which the token was launched and who the dominant token holders currently are.” He also warns, “caution is warranted when excessive yields are offered for low liquidity, anonymously-run protocols with little community activity because this can be the perfect setup for catastrophic losses.” This is what is referred to as a ‘rug pull’ in DeFi speak. Also, look at the number of tokens allocated to the developers and founders vs. the tokens held by the community as this could be an indicator of a platform that could fall victim to a rug pull.

And that is a basic guide to buying DeFi tokens. Season’s Greetings to my readers, and wishing you all a healthy, happy and prosperous 2022.

DeFi will fuel a new Roaring Twenties

On By mehranmuslimiblogIn Blockchain, DeFi, UncategorizedLeave a comment

The DeFi boom started in 2015 when the Ethereum network went live, and since then it has grown by 33x to 1.2 million per day on the Ethereum blockchain alone, and it would be even bigger if other chains were added to this figure.

The current DeFi sector “represents only 0.1% of its maximum potential,” writes Artem Tolkachev. As he says, “DeFi is a natural product made possible by blockchain technology and has the right and ready infrastructure to propel the technology to a bigger playing field.”

What has contributed to DeFi growth?

The answer is the use of DeFi services such as Uniswap, which facilitates over $1 billion swaps each day, as well as lending and borrowing protocols such as Aave, Compound and BondAppetit. Combined they form a market worth tens of billions.

The TradFi (traditional finance) market is of course much bigger at trillions of dollars, and currently DeFi can’t offer the same extensive list of services as TradFi. At the moment, DeFi is mostly confined to lending, borrowing, decentralized trading and yield-aggregating, but it also has the advantage of playing an important role in the future of NFTs and in Web 3.0, otherwise known as the Metaverse.

The key to DeFi growth

The TradFi market is ripe for disruption, writes Tolkachev, and that is where DeFi can excel. For example, consumer payments are worth $500 billion per year in revenue for banks worldwide, but this could be tapped into with a frictionless UI, a global stablecoin and broad acceptance points.

And in capital markets, security tokens are an inevitable trend that regulators will eventually need to approve and construct the regulatory framework so that centralized and decentralized exchanges – at least the ones that adhere to the know-your-customer (KYC) requirement — can tap into the trillion-dollar TradFi equity market.

There is also the 1 billion plus daily global credit card transactions to be captured, and even moving 1% of them onto the Ethereum blockchain, or another of the DeFi-friendly smart contract blockchains, would multiply the number of its transactions by eight.

And there is the revenue from DeFi protocols. At the moment this is estimated to have a value of $5 billion annually, which is a fraction of the $2.3 trillion global retail banking revenue; $2 trillion global cross-border payment revenue and $35 billion global stock exchange revenue. Tolkachev says, “The TradFi industry is so lucrative that seizing a 1% market share means 10x-ing the DeFi revenue.”

Furthermore, it is estimated that DeFi has not really yet penetrated the general crypto user market, with only 5% of the 221 million global crypto users accessing DeFi services, revealing a massive untapped market for DeFi that can be captured as the UI/UX is improved.

DeFi is only three years old, so it needs to be given time to grow. The DeFi builder community has grown stronger in 2021 with more programmers from the traditional startups and big tech joining the blockchain and DeFi scene. Tolkachev says, “with the resources and talent flowing into the space now, growing 100x in the next 5 years is not a dream, it is inevitable.”