This edition of Blockchain Soundbites has a DeFi focus to it and features soundbites from the following leaders in the industry:
Leighton Cusack - Co-founder & CEO, PoolTogether
Itamar Lesuisse - Co-founder & CEO, Argent
Sergey Nazarov - Co-founder & CEO, Chainlink/Smartcontract.com
Kyle Samani - Managing Partner, Multicoin Capital
Leighton Cusack
Leighton Cusack is the co-founder and CEO of PoolTogether, which is a no-loss, audited lottery built on the Ethereum blockchain. On a recent podcast, Leighton explained the basic idea of their new DeFi no-loss lottery protocol where users deposit money for a chance to win a prize, and if they don’t win they still get their money back.
To buy a ticket for the PoolTogether no-loss lottery, a user needs to have Dai, which is a cryptocurrency stablecoin that is pegged to the US dollar. This means that the value of one Dai should always be approximately $1 USD.
PoolTogther currently have a large pool of around 1 million Dai (i.e. $1 million USD). Interest rates on DeFi liquidity platforms such as Compound (who PoolTogether use) were up until recently offering a Dai Savings Rate (DSR) of up to 8% (or higher), meaning that interest from the PoolTogether Dai pool was generating about $1,500 per week, which was the prize fund of the weekly draw.
However, since the 17th March, the DSR was reduced to 0% to stabilise the system following an unprecedented crash in the price of ETH on 12th March. This means the current PoolTogether weekly prize is only $77. Once the system has stabilised, a positive DSR can be expected, which will increase the weekly prize fund again.
Check out my Medium post on PoolTogether here, and the podcast interview with Leighton here.
Itamar Lesuisse
Itamar Lesuisse is co-founder and CEO of Argent, which is a new generation of smart contract wallet for holders of Ethereum that has a user experience that rivals most traditional finance apps.
Itamar explained on a recent podcast some of the innovative features of their wallet over competitors in the market including wallet recovery, trusted contacts, guardians, gas abstraction, and being non-custodial wallet (i.e. user maintains control of their assets), all of which is setting a new benchmark for smart contract wallets. Their ENS integration is also very useful as it helps breakdown barriers to make the user experience much more intuitive for crypto newcomers as the industry scales.
Argent also provide a very simple gateway to access Decentralised Finance (DeFi) products on Ethereum such as being able to open a Maker CDP, earn interest on a range of crypto assets via their integration with Compound, as well as the Dai Savings Rate (DSR), thereby allowing users to send, earn, and invest their crypto assets directly from the Argent app.
Check out the podcast here.
Sergey Nazarov
Sergey Nazarov is the founder and CEO of Chainlink and SmartContract.com. In his interview on The Crypto Conversation with Andy Pickering, he explained what smart contracts are, what the ‘oracle problem’ is, and what his plans are for ChainLink, their secure blockchain middleware for Ethereum.
He explained that smart contracts exist on the blockchain and can only access data that is available to them on-chain. In order to interact with the real world, they rely on oracles which are sources of data that are being fed to a smart contract off-chain like the price of a stock, weather data, or the outcome of a sporting event.
Oracles introduce potential risks, because if these data feeds, which can control large amounts of value, are compromised, it could result in large losses so they need to be secure and decentralised. This is what ChainLink aims to do - to connect smart contracts to external APIs, other blockchains, as well as widely used payment networks.
Check out the podcast here.
Kyle Samani
Kyle Samani is the managing partner at Multicoin Capital, who are an investment firm that invest in cryptocurrencies, tokens and blockchain companies. In his recent interview with Laura Shin on the Unchained Podcast, he explained why the two-legged price drop on March 12th (aka Black Thursday) exposed fundamental issues with the crypto market and why this type of cascading drop in price could happen again, if these issues aren’t addressed.
He explains why he thinks the Bitcoin and Ethereum blockchains cannot operate at a global scale in their current forms, as during times of crisis they can become so congested that arbitrageurs cannot keep prices aligned across the multiple venues they are traded in, causing massive dislocations on individual exchanges. These massive dislocations on a single exchange (BitMEX) caused Bitcoin to dip below $4,000 for a short period of time on 12th March.
Kyle also described why he thinks Maker - the largest DeFi protocol and the foundation on top of which much of the rest of DeFi is built - ‘nearly imploded’ on Black Thursday for the following reasons:
Keepers: Maker vaults became under-collateralised and the open source software (Keepers) they provide to anyone who wants to perform liquidations didn’t work, as they weren’t configured to dynamically adjust Gas prices when the network is congested, meaning miners were not including Keeper liquidation transactions in blocks. The result of this was $8M in ETH collateral being lost to some quick-thinking individuals who took advantage of this issue.
Oracles: At one point the Maker oracles stopped sending prices to the Maker contracts. There were a number of vaults that should’ve been liquidated when ETH dropped below $100 but weren’t because the oracles didn’t report the price drop below $100. If they had’ve reported the correct price it would have set off another cascading price drop that could have pushed the price of ETH to $50 or below.
Check out the podcast interview here and Kyle’s 2-part blog post here.