ON–028: DEXs (Part 2)
Jul 3, 2020
- The amount of ZRX staked dipped briefly by 3M ZRX on June 20, likely due to high accruals of COMP to ZRX holders on Compound. (Source)
Contributor: Brock Elmore, Co-Founder of Topo Finance
- Today's dYdX spotlight focuses on flash loans. With atomic refinancing, oracle manipulation, Balancer pool COMP gulping, turns out there are a lot of uses for millions of dollars that are trustlessly borrowed and repaid instantaneously. The following looks at the past 2 months of flash loan activity on dYdX. First, ETH, which has been a main-stay for arbitrageurs, refinancing, and more, has picked up steam recently. This likely comes from an explosion of opportunities in DeFi.
- DAI flash loans have some uses, but the main reason for the massive influx is the introduction of COMP farming on Compound. You can borrow DAI to repay DAI debt, reduce the need to perform multiple sells when getting leverage on compound, or prior to the recent COMP update, affect the borrow rate of a particular asset to pump the rates earned by other assets.
- With the introduction of COMP, USDC flash loans have exploded in usage as well. Their usage is a lot of times used in combination with an ETH and DAI flash loan. So one can withdraw the entirety of dYdX token balances of ETH, DAI, and USDC and use that roughly $33m for a transaction if you return it by the end.
- Flash loans volume by contract. The way flash loans are executed is by using withdraw + call + deposit actions inside dYdX's Solo Margin contract, where the call function calls an arbitrary contract with the specified data. The data below shows aggregate dollar value of how much was withdrawn by each address. The top user of this functionality has used $142mil in flash loans in just the last 2 months. This user accessed this for $0 in fees.
Contributor: Caleb Sheridan, co-founder of Blocklytics
Uniswap flippens itself. Since our last update, Uniswap v2 has overtaken v1. Here are the most recent figures:
Uniswap v2: $40M liq ($20M vol)
Uniswap v1: $30M liq ($5M vol)
Combined, Uniswap holds $70M of liquidity, representing slight growth since v2 launch (roughly attributable to ETH price rise). (Source)
Uniswap grows in the shadow of other yield farms:
No dominant pools have formed in v2
Key liquidity is split between versions
Incentive budgets are fleeing
However, the protocol remains healthy:
Uniswap has more markets than all other DEXs combined
Pool liquidity is utilized relatively well
When looking at the Uniswap v1 Liquidity Reserves in ETH, we can observe three distinct slopes that are thee result of notable events:
The first wave of migrations took place
LPs continued migrating, at a slower pace
Yield farming season starts
Finally, please take a moment to look at a few of the most notable v1 pools:
sETH: proved external incentives work (both ways)
USDC: attracts more deposits as a popular base pair on v2
DAI: has mostly migrated to v2
UMA: after the IUO, half moved to v2 and the rest is experimenting with other platforms
