ON–047: DeFi

Issue #47 of the on-chain analytics newsletter that reaches 6000 crypto investors every week 📈

1inch, whose v2 offers the best rates by discovering the most efficient swapping routes across all DEXes—swap on the customizable new UI. And also Aave, where you can experience DeFi: Deposit, Earn, & Borrow on Aave.

This week our contributor analysts cover DeFi: Yearn, Aave, Hegic, and Synthetix.

• YFI can now be used as collateral to mint Dai via Maker. In less than 24 hours, the Maker contract became the 4th largest YFI holder, with >4% of the YFI supply locked in Maker. (Source).

• So, was this fast rise driven by a rush of small YFI holders looking to collateralize their tokens and mint Dai? On the contrary; only 16 unique addresses have deposited YFI (via DSProxy contracts, as usual), and the top depositor accounts for >55% of the YFI deposited to Maker. (Source).

• Where did these YFI tokens come from? Drilling down on the largest YFI depositor owning the relevant DSProxy, they were moved from Aave in batches of 100-200 YFI (visible in the individual token transactions below). (Source).

• In fact, the flow of YFI out of Aave is a bigger trend that started in mid-Sep, while DeFi Summer was coming to an end. On September 17th, a whopping 8,356.08 YFI were sitting in Aave, and now it's down to 1,483.69. (Source).

• The chart below shows Aave’s Flash Loan volume broken down per asset and per week since the launch of the Aave Protocol on Ethereum mainnet, as well as the distribution across assets. To date, there have been $715M in Flash Loans resulting in $700k of fees going to reward depositors.

• The following charts show Aave’s weekly liquidations volume per collateral asset. The distribution of liquidations across assets shows USDC is the most liquidated collateral. There have been $68M in liquidations resulting in a $3.6M bonus for liquidators. Anyone can execute liquidations on the Aave liquidations UI, keeping the liquidation bonus.

• $3B of borrows have been originated on Aave, with the volume growing continuously. (Source: Dune Analytics query from johaya)

• Almost 90% of the total LEND supply has migrated to AAVE so far, as well as 3M AAVE has been staked in the safety module. (Source: Aave Watch)

• The Synthetix exchange has generated over $8m in fees in the previous nine months, which works out to be a 1.32% APY on staking. While the exchange currently has 50 traders per day and nearly 5500 Ethereum addresses, the protocol hopes to attract more traders as they move to Optimism, Synthetix’s chosen layer-2 solution. This move will help to reduce fees using the exchange and allow Synthetix to offer more products.

• Peak supply on exchanges coincided with a peak price of Synthetix on September 1st. Since then, supply has been in gradual decline, which could indicate people have stopped profit-taking and gone back to hodling. (Source: Nansen)

• As the price of SNX went below $4 USD, whales stopped selling. Within the last month, they have begun to add to their positions, in addition to new entrants coming into the market. (Source: SNX Watch)

• Synthetix still shows strong growth in the number of active stakers. The only plateau occurred at the recent peak for the overall DeFi market before continuing to rise. This, combined with 77.96% of SNX staked, lends credibility to a healthy ecosystem. (Source: Synthetix Stats, SNX Tools)

• Finally, looking at the below chart we can see the total holdings of top holders. Even with inflation and the extra supply on the exchanges taken into account, we can see there wasn’t much profit-taking by whales on the recent run. Putting the information together paints a rosy picture for Synthetix; however, the protocol must work hard to keep a high active staking level. This will ensure that Synthetix doesn’t lose the liquidity built up over last year. (Source: SNX Watch)