This Week in DeFi - April 22

This week, Tron announces a stablecoin with 30% yield, Optimism may by launching a token, and Framework Ventures announces a $400M web3 fund.

Apr 22

To the DeFi community,

This week Tron crashed the algorithmic stablecoin party, announcing that it will launch its very own USDD stablecoin May 5th. The coin will be supported with TRX and $10 billion worth of crypto reserves – as well as offering 30% interest rate. This may be one to watch, as it attracts liquidity away from the dwindling UST and anchor protocol, as well as stealing the thunder from NEAR Protocol's budding USN.

H.E. Justin Sun 🅣🌞🇬🇩 @justinsuntron

💸The @usddnetwork will provide custody service for the $10B worth of highly liquid assets raised from blockchain industry initiators and use them as an early-stage reserve. ⚖️The @trondaoreserve will set its basic risk-free interest rate to 30% per annum. #USDD #TRONDAOReserve

Ethereum scaling platform Optimism may be the next Layer-2 solution to release its own token, following a development team blog post laying out plans for a move to community ownership and governance. Sparking additional excitement was a recently-discovered Coinbase price page for an Optimism $OP token – providing further evidence of a possible airdrop or other token distribution scheme.

DeFi Airdrops 🦇🔊 @defi_airdrops

Looks like Coinbase knows the $OP ticker name already What's your best guess for fully diluted market cap of @optimismPBC ? 😜

DeFi Airdrops 🦇🔊 @defi_airdrops

Rumours that a L2 is launching a token imminently. Is it @optimismPBC ? When in doubt go bridge into Optimism now and support the best projects 👇 - LP in @HopProtocol - LP in @lyrafinance - Stake $SNX - Trade @kwenta_io - Deposit in @PolynomialFi https://t.co/UaXpIAr58A

Framework Ventures announces a new $400M Web3 fund directed at decentralized finance startups, as well as a significant allocation towards the blockchain gaming sector. It will be Framework’s third investment fund.

Framework Ventures @hiFramework

1/ Framework Ventures has raised $400 million for our third crypto fund, dubbed “FVIII”, bringing our total AUM over $1.4 billion. Approximately half, or $200 million, is earmarked for the rapidly growing blockchain gaming space. @business: Bloomberg - Are you a robot?bloomberg.com

MakerDAO branches out to Ethereum Layer-2 scaling solution, StarkNet, to facilitate a cheaper Dai stablecoin ecosystem. The expansion will take place in four phases, beginning with a bridge that goes live toward the end of this month.

CoinDesk @CoinDesk

Pioneering DeFi platform @MakerDAO is charting its multi-chain future, starting with a bridge to @StarkWareLtd’s Ethereum layer 2. @IanAllison123 reports

Ethereum DeFi Staple MakerDAO Adds StarkNet Bridge in First Step Toward Multi-ChainRebuilding Maker on StarkNet involves four phases, starting with a simple bridge that goes live on April 28.trib.al

The algorithmic stablecoin craze has now expanded across almost every major blockchain, with each Layer-1 protocol now appearing to have announced its very own crypto-backed algorithmic solution. A large proportion of these stablecoins are accompanied by savings rate DApps that offer tremendous yields, in many cases designed to attract short-term liquidity into their respective ecosystems. With interest rates upwards of 20% (and now as high as 30% on the way for Tron's USDD), a majority of these new stablecoins are enticing participation through long-term unsustainable yields – in most cases, subsidized by "yield reserves" funded by development teams or governance systems.

We can expect a short-term disruption across stablecoin markets as participants chase the highest yields for their capital – but this phase may be relatively short-lived. Eventually the yield reserves subsidizing these outsized, fixed-rate returns will run dry and capital will trickle back into long-term sustainable models. For now, however, we can expect some stablecoin market chaos.

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