DeFi update: Sushi's back on the menu

Heya all, Nick here.

As a reminder (sorry for the plug), if you want access to the exclusive interviews with top traders and industry executives, our research about DeFi and crypto trends, and the additional DeFi letter, you will need to subscribe. But have no fear, it’s only $14.99 a month, or $139.99 a year.

$139.99 is coincidentally how much it cost me to make one Uniswap transaction last night. I think there’s more alpha in getting this newsletter than swapping on Sushiswap when the gas price is 500 Gwei, but that’s just me.

We are back in business, it seems.

After the volatility and chop of the past 7 days, the market has perked back up. Bitcoin attempted to move past $50,000 and Ethereum has taken hold of $1,500 once again. Despite some intraday volatility, tokens pertaining to DeFi, along with other altcoins, have enjoyed strong gains over the past few days.

Let me quickly take a look at some of the best-performing DeFi-related tokens and quickly explain why they’re doing what they are doing:

  • Polygon (MATIC): The native token of the Polygon layer-two Ethereum chain, MATIC, is up 67% in the past week. While Ethereum fees have come down strongly over the past seven days, there’s still be a large narrative shift around layer-twos and other layer-one blockchains that may provide a better user experience than Ethereum natively. MATIC’s rally comes amid at least two positive trends for the layer-two solution: Aavegotchi is making progress on Polygon, and Polygon’s foremost decentralized exchange, QuickSwap, has seen its liquidity surge to $100 million and volume drag higher. There is major yield there if you’re willing to jump through all the hoops and accept that QuickSwap is seemingly a pseudonymous team. Happy farming :)

  • Compound (COMP): COMP has surged 35% in the past seven days, making it by far the best-performing DeFi blue chip. There is a lot of speculation swirling around Compound Chain, along with a release of the network’s testnet, dubbed “Gateway.” Compound Chain is based on Substrate and is focused on allowing developers to create applications and assets for multiple blockchains simultaneously. Here’s a quote from Robert Leshner, founder of the project:

“Ethereum might be the core of where most applications and assets live, but there are going to be popular DeFi applications on other chains and there are going to be popular assets issued on other chains. Gateway is designed to connect Ethereum between different blockchains so users can move value between them more easily.”

  • Synthetix Network Token (SNX): My favorite synthetic asset token SNX started moving in the direction of its previous all-time high again. On the side of fundamentals, I haven’t been too privy or in tune with anything spectacular taking place, though SNX was added to Coinbase Pro for New York residents.

  • SushiSwap (SUSHI): Finally, SushiSwap. Everyone’s favorite food token gained 25% this past week on the back of a number of significant events:

  1. DeFiPulse Index: The DeFiPulse Index by DeFiPulse and Set this week finally added support for SUSHI, which got an allocation of around 8% of the fund. This past week, the fund’s approximately $130 million under management was re-jiggled to include SUSHI.

  2. Block emission cut: Rewards for SushiSwap’s Onsen pools and general Farm pools were cut this past week to 40/SUSHI per block, in line with the decreasing emissions schedule that was planned many months ago. One user jokingly did a stock-to-flow model for SUSHI that indicates the coin will hit $500. While this is unlikely in the near future, the rough heuristic that lower inflation means better price discovery stands.

  3. $1 billion: SushiSwap hit $1 billion in volume in a single day last week. Congrats to 0xMaki and the team :)

What I’m keeping an eye on

There are two projects I’m keeping a close eye on this week (disclosure: I have farmed and hold both), Saffron Finance and Badger

One on-chain sleuth (not me) recently posted to 4chan that they found an address affiliated with Logan Paul that purchased SFI in the past 24 hours. The address is seemingly that of the Youtuber because Paul recently hosted a visual podcast in which he leaked a portion of his address and added that he holds multiple CryptoPunks.

The address in question holds multiple CryptoPunks and has characters that match those seen in the podcast, indicating the address is Logan’s or the address of somebody on his team.

Another thing to think about is Badger. One Twitter user spotted a transaction leaving the address of 0xb1, which sent $2.5 million worth of USDC to the Badger treasury. In return, 0xb1 seemingly received some bBadger, the yield-bearing version of Badger. Similar transactions worth millions of dollars were seen in the days that followed, indicating other whales are purchasing Badger for the long haul.