🟣 We Should Take the Treasury Yields… and Push Them Onchain!
Frax’s partnership with FinresPBC has gone quietly live with some test deployments on Ethereum mainnet. This sets the stage for Frax V3 and sFRAX, where Frax will use RWAs to generate yield that will accrue to those who stake their FRAX for sFRAX.
Gm everyone, back again with another day in this grueling bear market.
Do you want the good news or bad news first? OK, I’ll do the bad.
Chase UK has decided they will block all crypto-related transactions starting October 16th. They cite the use of fraud and money laundering as their biggest concerns. It’s important to note that this is just their UK branch, a jurisdiction in which this is a fairly popular tactic. So, if this is your bank and you still want to ape tokens with funds from your account, I would recommend switching banks.
Huobi (HTX) rumors continue to heat up as their onchain wallets are not reflective of the amount of assets held on the exchange. Specifically, the exchange’s ETH liabilities seem to amount to ~124K, while Huobi’s known wallets only account for ~75K ETH, most of which is in wETH and stETH. Moroever, the exchange has 640M of USDT liabilities and only 131M USDT in their known wallets. Renaming the exchange to HTX certainly seems fitting at this point, but we will need more information as there could be wallets that are unmarked that make up this difference. To me, it doesn’t seem likely.
Ok, now on to the good news. Builders keep building.
Frax’s partnership with FinresPBC has gone quietly live with some test deployments on Ethereum mainnet. This sets the stage for Frax V3 and sFRAX, where Frax will use RWAs to generate yield that will accrue to those who stake their FRAX for sFRAX. FinresPBC will begin this process by buying U.S. treasuries and passing that yield back to the protocol. With MKR as a recent outperformer due to their RWA strategy and the Fed’s “higher for longer” messaging, Frax is likely to benefit as well.
Also, hearing through the rumor mill that dYdX v4 will go live in October and ready for trading in early November. This has been a highly anticipated launch both for what it means for dYdX and the trader experience, alongside showing the viability of the Cosmos app-chain model. This will be an exciting one to watch as we get closer to launch.
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It seems that everyone and their mother are talking about the SocialFi application Friend.Tech. The platform first received a vast amount of attention around a month ago as crypto users got excited about the ability to buy Friend.Tech profile keys, which allow the holder to access the associated profile’s chat room. After the initial hype died down, transactions on the platform also decreased, but activity quickly returned as Friend.Tech announced an airdrop point system, with users speculating that the points will be converted to tokens in the future.
Airdrop farming seems to be the name of the game, and many think that Friend.Tech will stay around at least until a token distribution takes place. If you ask me, the usage still feels somewhat forced as the platform has many bugs and features are limited. Some are comparing the points system to Blur’s airdrop strategy, which helped the NFT exchange capture a majority of the market, but it’s debatable how organic the exchange’s usage currently is. Nevertheless, as is common in crypto when a new mechanism or idea starts performing well, Friend.Tech derivatives have started popping up. Most notably, Post.Tech, a SocialFi platform on Arbitrum, has managed to penetrate the market. On September 21, the platform accounted for ~57% of transactions across the protocols shown above. Although, interest in Post.Tech seems to have somewhat calmed down—it had a ~22% share of the Friend.Tech derivatives transaction market yesterday. History doesn’t necessarily predict the future, but derivatives of popular crypto projects seldom do well in the long run, and it’s likely that the SocialFi copycats will fade into irrelevance within a few months. At the end of the day, it’s still unclear whether or not even Friend.Tech can attract a sticky and robust user base.
This proposal looks to change Debt Ceiling Instant Access Module-related parameters for MakerDAO's two largest RWA vaults: Monetalis Clydesdale and BlockTower Andromeda. Most importantly, the former's Maximum Debt Ceiling would be raised from 1.25B to 3B DAI, while the latter's ceiling would be raised from 1.28B to 3B DAI. This means that both vaults would be able to deploy considerably more capital into T-bills, meaningfully ramping up MakerDAO's run rate revenue and free cash flow.
It's worth mentioning that the deployable capital derives from MakerDAO's USDC holdings, currently worth ~$550M, meaning that the maximal investable amount is constrained by the aforementioned figure. Moreover, all RWA vaults are bound and subject to the Stability Scope and the Stability ALM Tier 2 rules, which limit the T-bill collateral type to 78% of the AllocatorDAOs' collateral portfolio.
Nevertheless, this proposal is highly beneficial for MakerDAO since the project could use more of its idle capital to enjoy the currently high-interest rate environment, possibly even rotating funds from low-yielding RWA vaults to the Monetalis Clydesdale and BlockTower Andromeda vaults. If this proposal passes, MakerDAO's run rate revenue should be expected to significantly increase as the project starts rotating USDC into T-bills.
At the time of writing, there are 15,096 MKR voting for the proposal, with zero votes against it. Voting closes on September 28.
All of this and more was first highlighted on GovHub for Blockworks Research subscribers. Be sure to check it out if you haven’t already!
Base has doubled-down on its commitment to the Superchain vision, has shown early signs of success with nearly $400M in TVL, and has become home to novel dapps such as friend.tech which has seen significant traction.
The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.