X2Y2 vs LooksRare, Aave V3 Portal, & DAO Proposals
FEB 23, 2022 • 5 Min Read
DISCLOSURE: DELPHI VENTURES HOLDS A POSITION IN FRIKTION AND LUNA. MEMBERS OF OUR TEAM ALSO HOLD AAVE AND GNO AND MAY HAVE RECEIVED AIRDROPS FROM X2Y2 AND LOOKSRARE. THESE STATEMENTS ARE INTENDED TO DISCLOSE ANY CONFLICT OF INTEREST AND SHOULD NOT BE MISCONSTRUED AS A RECOMMENDATION TO PURCHASE ANY TOKEN. THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND YOU SHOULD NOT MAKE DECISIONS BASED SOLELY ON IT. THIS IS NOT INVESTMENT ADVICE.
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Chart of The Day: X2Y2 Lags on Launch
- X2Y2 is the latest NFT marketplace that launched in hopes of siphoning away liquidity from the leading NFT marketplace, OpenSea.
- Similar to LooksRare, it initially gained traction through its airdrop to OpenSea users. If you have traded any amount on OpenSea before, you will qualify for some reward, but you’ll have to weigh the costs if it is worth claiming your allocation. The maximum airdrop claim is 1000 $X2Y2 per wallet, which is worth ~$950 as of today. Check here to see if you qualify for the Airdrop.
- LooksRare notably gained traction for its volume-based trading rewards largely resulted in wash trading. X2Y2 goes the other route by promoting rewards for NFT listings. X2Y2’s reward methodology makes it tough to game, as you’ll have higher risk by owning the NFT. Plus, they calculate rewards based on last sale, current floor price, and other factors.
- Note: LooksRare volume here is calculated based on its Non-Zero Royalties volume, as most of its Zero Royalties volume originates inorganically from wash trading. Hence, its actual volume is likely slightly higher.
Aave V3: A Multi-Chain Liquidity Protocol
[Excerpt from our Aave V3 Pro report]
Aave is currently the fourth largest DeFi protocol with ~$15bn in TVL, equating to more than a 6 fold increase since the beginning of 2021. This growth is due, in no small part, to their cross-chain expansion efforts on Avalanche and Polygon, where it has cemented itself as the leading money market on both chains. The team will soon deploy on Arbitrum while also setting their sights on Boba, Optimism, and Starkware. With the imminent launch of Aave v3, it wouldn’t be surprising to see them launch on a few other chains either to continue amassing liquidity. This brings us to the first key feature of Aave v3: Portals.
Below, we’ve provided a sample scenario for how this will work. Consider a user who wants to bridge USDC from Ethereum to Avalanche via the Connext bridge. If Connext doesn’t have enough liquidity to fulfill the transaction on Avalanche, it will tap into Aave’s liquidity on Avalanche by minting unbacked aUSDC on behalf of the user and withdrawing USDC from Aave on Avalanche. Subsequently, Connext will periodically collect the USDC from Ethereum to settle the debt incurred from minting unbacked aUSDC on Avalanche. The following diagram illustrates how the process works.
In the event that liquidity becomes scarce on Avalanche, Aave’s interest rate computation module will move interest rates up on Avalanche to ensure people are incentivized to deposit. Since Portals is not a trustless feature (yet), Aave’s governance is also expected to introduce a credit limit cap, and only reputable protocols will be whitelisted to avoid introducing too much risk into the system.
If risks are properly managed, Portals is most definitely a net positive for Aave, liquidity providers and bridge protocols. A new business model should arise from this development, as bridge protocols provide the infrastructure while Aave v3 provides the liquidity that is needed to power that infrastructure instead of having to perpetually subsidize liquidity with token emissions.
Here’s a dank meme highlighting the difference between the two different liquidity sourcing models.
As the multi-chain narrative takes shape in 2022, Aave is well positioned to expand its total addressable market to bridging protocols like Synapse, Hop Protocol, etc., in a addition to users of its flash loan product. In terms of monetization, two different fee models are currently under discussion in Aave’s governance forum. You can check the thread out here to stay up to date with the discussion.
Tribe DAO Liquid Governance, Adult NSFW DAO Takes on OnlyFans
[Excerpt from our latest DAO Insight)
- Aave is currently voting on three proposals.
- Cronos Chain: As readers can probably guess, this proposal asks the Aave community to signal a willingness to launch Aave v3 on Cronos.
- Adding alUSD: Aave is also running a vote to add the Alchemix stablecoin, alUSD, as a borrowable asset to Aave v2.
- AgEUR for v3: This proposal, from Angle Protocol, is asking Aave holders to approve adding agEUR to v3 on Polygon when it launches.
- The Gnosis DAO community is deciding on whether or not to burn 715k GNO vested to the DAO. According to the proposal, this is being considered to better decentralize the supply of GNO. This represents 7.15% of the total supply.
- Lido is currently running two proposals that should harden their protocol.
- Decentralize Lido on Terra: If passed, this proposal allows the DAO to distribute LUNA delegations equally among validators to improve decentralization. Additionally, this will also allow the DAO to remove consistently under performing validators.
- Security Compensation: This gives the DAO a mandate to pay the cost of security audits for launching Lido on other protocol, limited to two reputable firms. It also retroactively funds work done by Mixbytes(), Shard Labs, and Chorus One.
- To keep up to date on the latest DAO proposals, do read our weekly DAO Insights!
Notable Tweets
Friktion Launches Segmented Risk Vaults
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http://app.friktion.fi/income— Friktion² (@friktion_labs) February 23, 2022
LFG Raises $1B as UST’s Forex Reserve
1/ The long awaited [REDACTED] 💎3 is here!
📣 The Luna Foundation Guard (LFG) has closed a $1 billion private token sale to establish a decentralized $UST Forex Reserve denominated in $BTC! 📣
🧵👇
— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) February 23, 2022
Tether Reduces Commercial Paper Holdings
Tether said it shows a 21% decrease in its commercial paper holdings over the prior quarter and an increase in the group’s investments in money market funds and treasury bills as well as A-1+ commercial paper holdings.
https://t.co/SRZYju8Yjb— Wu Blockchain (@WuBlockchain) February 23, 2022
