Close to 3% of ethereum’s entire supply is now locked in decentralized financial applications (DeFi).
That threshold of 3 million eth has just been crossed for the first time, with the decentralized tokenized dollar – DAI – dominating considerably.
Maker’s dai dominates by far, with 2.4 million eth locked in the tokenized dollar creating dapp.
That’s worth some $330 million, translating to a market cap of circa $110 million for the multi-collateral dai and the single-collateral sai.
Compound has far less, yet the 360,000 eth locked there are still worth some $50 million.
Unlike Maker’s dai, compound launched ad initio with the feature of locking numerous tokens, in addition to eth, which can be used to draw borrowing capital. While dai accepted only eth at first.
That difference might potentially explain the significant discrepancy between the two, but dai was also the first and so has a considerable market share in defi.
That market share is kind of slightly falling as new projects come to the space, but dai also enjoys an ecosystem around itself.
Instadapp, for example, is a service that runs on top of dai to make it a more smooth process when adding eth collateral to borrow dollars.
310,000 eth is locked on Instadapp, worth some $40 million, with the decentralized exchange of sorts, Uniswap, a distant fourth.
Not included above is Synthetix, and it’s not included because it uses its own token – SNL – for collateral without accepting eth as collateral or any other token.
Synths are paper futures, price betting without actual delivery or an order book, but more like betting on a horse race with the horse, in one interesting synth, being MKR’s price on actual exchanges.
It’s kind of similar to CME bitcoin futures which are suspected of manipulating the bitcoin price.
There’s now evidence this potential form of manipulation works, with an etherean stating a few days ago:
“The user first buys synthetic Long MKR exposure on Synthetix. Then buys up about 144 MKR on uniswap, done in 12 chunks of 12 MKR each, presumably to push up the price and profit from his long.
The user then buys synthetic short MKR exposure from Synthetix. Then dumps the MKR he just bought, dumping the price and profiting from the short.”
So, pretty simple. You go long on paper futures. Market buy on the exchange that sets the price of these “futures” in the hope price goes up. Then you close the long on the paper futures, open a short there, and finally you market sell the asset on spot exchanges.
Raising the question as to why exactly are these fake futures allowed? Fake because there’s no actual delivery of the product, making them useful only for manipulation.
The answer to that is because banks make the laws, so the only thing we can do for now is beat them at their own game by defying on the decentralized financial system.