1. DeFi Data Dashboard

Stablecoin issuance

  • As of March 12, the market capitalization of the top five stablecoins was $130.8 billion, basically the same as $130.7 billion at the end of last month.

  • Affected by the Silicon Valley Bank crash, USDC was de-pegged in a short period of time, and on March 11, its value was even less than 90 cents. After the U.S. Treasury Department issued a statement, the price of USDC rebounded, and the current price has returned to $0.9961.

  • Due to the ban on BUSD minting, Binance has used TUSD as one of the alternative solutions for stablecoins and has minted a large amount of TUSD in recent times. The current market value of TUSD has exceeded US$2 billion, an increase of more than 100% compared to a month ago.

TVL data

  • As of March 12, the TVL of the entire network was US$71.2 billion, down 4.83% from the previous month.

  • The TVL of BSC and Polygon have both fallen by more than 10% compared to last month (-11.5%, -10.86%).

  • The TVL share of the LSD track has further increased to 18.2%, with a pledge value of more than 12 billion US dollars, of which Lido accounts for nearly 75%.

  • As of March 13, the Ethereum network’s total ether staking ratio has increased slightly from the end of last month to 14.71% (Dune@hildobby).

DEX Data

As of March 13, DEX trading volume in the first two weeks reached $61 billion, exceeding the full-month trading volume in January ($60.2 billion). On March 11, Uniswap trading volume reached $11.84 billion, a record high, nearly twice the second highest in history.

Lending data

As of March 6, lending volumes under major lending agreements shrank slightly, falling back to $4.218 billion.

2. DeFi Information Aggregation

DeFi News

1. USDC was temporarily decoupled due to the influence of Silicon Valley Bank

On March 9, Silicon Valley Bank sold $21 billion in marketable securities and suffered a loss of $1.8 billion. It was suspected that there was a liquidity problem. The stock price plummeted by more than 60%, and the market value evaporated by $9.4 billion in one day. Due to the panic of users, SVB was closed by regulators within 48 hours. Since USDC issuer Circle has $3.3 billion in reserve funds in Silicon Valley Bank, USDC was affected by panic and the price was de-anchored, falling to $0.86 at the lowest. On March 11, the market value of USDC fell by 16.9%, from $43.5 billion to $36.1 billion. On March 13, Circle CEO confirmed that deposits in SVB were 100% safe, USDC liquidity operations would be resumed, and USDC returned to around $0.99. As of March 14, the market value of USDC returned to $39.4 billion.

Looking back at the USDC depegging process, we can find that Coinbase's suspension of USDC-USD redemption and Binnance's closure of BUSD-USDC exchange have exacerbated the panic. According to Shenyu's analysis, there are 3 billion USDC collateralized by MKR on the chain to mint DAI. Once liquidation is triggered, there will be heavy losses, which has led to the simultaneous depegging of DAI. In addition, the algorithmic stablecoin FRAX, which uses USDC as part of the collateral, has depegged to around $0.95.

In order to avoid further losses, many whales made emergency operations and suffered heavy losses. When a USDC user exchanged 2 million USDC for USDT on the chain, he only received 0.05 USDT because the slippage was not set.

Chaos is the ladder for a few people. There are also people who make rational calls and profit from the USDC storm this time. On March 11, Hal Press, CEO of hedge fund North Rock Digital, tweeted that Circle holds 77% of its reserves in 1- to 4-month treasury bills, providing a lower limit of 0.77 for USDC; Circle's total losses are expected to be equivalent to 0.8% to 1.5% of USDC at most. It has chosen to continue buying at $0.88, having previously bought at $0.935. A whale address used 16 million USDT to buy 17.05 million USDC to repay debts on Aave when USDC was decoupled from the US dollar, making a profit of about $1.05 million. Vitalik's address bought 378,000 USDC and 50,000 DAI on March 11.

After the exchange partially closed the USDC channel, on-chain transactions became extremely active. On March 11, Uniswap's daily trading volume reached an all-time high, nearly twice the second highest in history. The Curve 3pool (USDC/USDT/DAI) liquidity pool had a daily trading volume of US$2.8 billion, which was 7.46 times the TVL of the pool (about US$378.6 million).

2. Euler events

On March 13, Euler Finance was exploited by hackers in a series of transactions on Ethereum due to logical flaws in its donations and liquidations, resulting in a loss of approximately US$197 million for the project, including approximately 8.8775 million DAI, 849.14 WBTC, approximately 34.414 million USDC, and 85,818.26 stETH.

According to 0xScope Protocol monitoring, Angle Protocol has 17.6 million USDC in Euler; Idle DAO has 4.6 million USDC in Euler; SwissBorg has deposited 6,357 Ethereum and 1.7 million USDT in Euler.

Balancer In the Euler Finance attack, about $11.9 million was sent from the bbeUSD liquidity pool to Euler, involving 4 pools. The UI currently does not support existing LPs to exit positions in these bbeUSD pools, but there is no risk of further loss of funds.

Although Yearn Finance has no direct risk exposure to Euler, some vaults are indirectly exposed to hacker attacks. By using the Idle and Angle strategies, the risk exposure on yvUSDT and yvUSDC totals $1.38 million, and the resulting bad debts will be borne by Yearn Treasury.

3. Crypto Bank Silvergate Bankruptcy

On March 9, the crypto bank Silvergate Capital announced that it would shut down operations and voluntarily liquidate Silvergate Bank. In its latest report, Bloomberg analyzed the reasons for the closure of the crypto bank Silvergate, including lack of diversification, maturity mismatch, and high exposure to cryptocurrencies.

DeFi Perspective

1. Binance Research: Real-world assets are entering DeFi

Real World Assets (“RWAs”) refer to assets that exist off-chain and are tokenized and put on-chain, which can eventually be used as a source of income in DeFi. RWAs can represent tangible assets, such as real estate, stocks, cars, carbon credits, and any other value carrier.

By introducing RWA to the blockchain, on the one hand, investors can obtain diversified investment opportunities and higher capital efficiency through RWA-DeFi, which is difficult to achieve in the traditional financial system, and on the other hand, RWA holders can have the opportunity to obtain higher asset returns. Changes brought about include: from the high intermediary fees of traditional finance to the low-fee model of DeFi (only gas is required), from restrictive or high-amount investment thresholds to permissionless investment models, from slow settlement to fast settlement, and from private/fuzzy order flows to transparent order flows.

Traditional institutions such as Goldman Sachs and Siemens and crypto-native protocols such as MakerDAO and AAVE have announced projects based on RWA. They are building protocols on the infrastructure and application layers to seamlessly on-chain assets. So far, there are markets for stocks, physical assets, and fixed income built on RWA-based tools.

The current RWA-based private loan market is very active, with more than 1,560 RWA-backed private loans issued, with a total value of more than $4 billion. The average interest rate for these loans is relatively high, at 9%-9.75% (the average commercial loan rate for traditional banks is 4.9%-9.83%).

  • Goldfinch is a private lending agreement built on RWA. It already has more than $100 million in active loans. Goldfinch's borrowers mainly come from emerging markets. Goldfinch's loans can effectively help borrowers who cannot obtain loans from traditional financial institutions.

  • Maple and TrueFi protocols are removing the traditional DeFi over-collateralization threshold for borrowers, as long as the user is real and can back their debt with RWA. Such protocols require real credit checks on borrowers, which blurs the boundaries between traditional finance and DeFi.

In general, the underlying assets represented by RWA vary greatly, and different protocols will customize their services based on different underlying assets.

By far, the most popular non-stable RWA is real estate. RWA has the opportunity to change the real estate industry. By tokenizing the property value of real estate, small investors can also participate in the investment of such assets.

2. The evolution of stablecoins

Zhao Changpeng expressed his views on stablecoins in the AMA, believing that stablecoins backed by fiat currencies will not exist for a long time, and stablecoins will continue to evolve and iterate. In the long run, in 10 to 20 years, stablecoins not backed by fiat currencies may dominate.

Arthur Hayes, founder of BitMEX, wrote an article about his views on stablecoins in the crypto industry, arguing that super-collateralized stablecoins such as MakerDAO and algorithmic stablecoins such as TerraUSD are not necessary at all, as the former are inefficient and the latter are extremely risky. Although USDT, USDC, and BUSD may continue to exist, the overall growth rate of their deposit base is capped, which is not conducive to the further expansion of liquidity in the crypto market. Arthur proposed the establishment of a stablecoin NUSD (The Satoshi Nakamoto Dollar) based on Bitcoin. NUSD consists of the value of Bitcoin and a "short order of a reverse perpetual swap agreement between Bitcoin and the value of the US dollar", so the currency value can be maintained stable through the derivatives market.

DeFi Outlook

  1. DeFi structured product protocol Sector Finance has launched the mainnet and launched an incentive program. Participants can deposit into the aggregator yield vault or single strategy vault to earn actual returns paid in USDC or ETH. Sector Finance has three core products: Aggregator Vault, Single Strategy Vault, and Risk Engine, with a total TVL of US$1.03 million.

  2. On March 8, the decentralized trading protocol Maverick Protocol was launched on the Ethereum mainnet. The project adopts a dynamic automated market maker model, where liquidity providers can customize the liquidity allocation range and bet on the future price of assets instead of standard liquidity allocation. The project completed $8 million in financing in February 2022, led by Pantera Capital.

  3. Gitcoin tweeted details of gtcETH (Gitcoin Staked ETH Index). gtcETH was created in collaboration between Gitcoin and the Index Coop community, a cryptocurrency index protocol, to fund Gitcoin Grants through ETH staking rewards. gtcETH will be built on the Index Protocol and include Rocket Pool, Lido, and StakeWise liquidity staking tokens.

3. Snap DeFi Radar Data

radar.snapfingers.com is a DeFi strategy information platform under snapfingers. It mines and displays DeFi strategy data and provides valuable strategy screening to lower the threshold for users to operate DeFi. Currently, 18 strategies are online, covering various strategy types such as interest-bearing, derivatives, and liquidity management.

In the past two weeks, mainstream cryptocurrencies have experienced a sharp drop in volatility due to the bankruptcy of Silicon Valley Bank. On March 10, BTC once fell below $20,000. The price drop may have some impact on some strategies. According to APY statistics, more than 70% of the 18 strategies have returns below 30%, but there is no negative return in this period.

In terms of TVL, Diamond Protocol Unibot V2 has the highest TVL, reaching $19.63 M, and Ribbon Finance's STETH Covered Call strategy TVL ranks second at 8,494.19 SETH.

Ribbon Finance's Covered-Call strategy performed well in the bear market. Because the price of put options rose, the held assets were sold at the agreed price of the option on the expiration date, thereby realizing profits. In particular, AAVE's corresponding strategy APY reached 70.68% in the continuous decline. The Coverd Call-T-AVAX-C strategy APY reached 43.66%. Others such as SAVAX, STETH, and RETH, including mortgage income, all have APYs above 35%.

Bull and market neutral strategies underperformed, with Opyn’s Zen Bull ETH and Toros Finance’s Yield-USD strategies earning only single-digit APYs over the past two weeks.

About SnapFingers Research

SnapFingers Research is a research platform under SnapFingers, focusing on DeFi and TradeFi research on various public chains.