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Will the Impact of Yearn Finance's yETH Vault on the DeFi Space Last Long?

Yearn.finance, a decentralized finance (DeFi) protocol, has recently launched yETH vault, its core product. The yETH vault enables the process of seeking the best returns for yield farmers, pooling funds to reduce Ethereum gas fees.

Yield farming in the DeFi space has been seeing a growth in popularity, as crypto whales have been leveraging DeFi protocols to generate high rates of return. Although DeFi enables an ecosystem of decentralized applications to have access to financial products including cryptocurrencies, yield farming is most profitable only to crypto whales, who are able to have a high amount of crypto locked up in DeFi.

yETH was launched as a part of Yearn.finance’s yVault strategies, which are a set of predefined actions that allow users to deposit funds and automatically send them to liquidity pools. This will then enable high-yield interest where more token rewards are earned by the user.

The yETH vault strategy involves four steps. Ether (ETH) is first deposited and used as collateral to acquire MakerDAO’s DAI at a 200 percent collateralization rate. Interested would then be earned and the DAI will then be sent to DeFi stablecoin liquidity protocol, Curve Finance (CRV).

After the DAI is sent to Curve Finance, DAI is locked and interest from extra CRV tokens are received, which is then sent to Ether, back to the yETH vault. An analyst recently explained that MakerDAO’s collateralized debt positions (CDPs) are used as a bridge for ETH to be used for yield farming on DeFi.

What does this mean for DeFi tokens?

According to the analyst, yETH “demonstrates how composable protocols within Ethereum’s ecosystem have become.” He added that yETH accelerates the productivity of idle Ether.

As the yETH vault strategy involves some of the DeFi tokens, the process would then be bullish for Ethereum (ETH), MakerDAO (DAI), and Yearn.finance (YFI). However, Curve Finance (CRV)’s price would be driven down, as CRV is sold to buy ETH, adding the selling pressure to the token. The analyst added:

“It’s pretty impressive to see how much ETH has already been locked up. yETH’s impact on the space will be long-lasting.”

The Yearn.finance token has already seen multiple all-time highs in the past month, reaching $39,600 recently, more than three times the value of Bitcoin. Analysts and the crypto community previously suspected that the anticipated launch of yETH will drive a bull run in the Ether market.

Maker (MKR) Token Hits a New High as MakerDAO's First Financing Proposal Gets Approved

The buzz around Coinbase’s direct listing is slowly fading, causing investors to return to the home market of the crypto market. The market value of altcoins broke through $1 trillion for the first time, and the Maker successfully attracted the attention of investors.

Amid the price hype surrounding COIN stocks, Bitcoin has successfully broken through the previous resistance level and stabilized at the level of $63K.

This phenomenon has also served to redirect traders’ attention towards the crypto market, which has generated treated yields than the mainstream stock market.

According to official sources, the first entity financing implementation proposal initiated by the MakerDAO governance facilitator and smart contract team has been passed on April 14 and will be implemented on April 16, UTC time. MakerDAO is a smart contract system on Ethereum, providing the first decentralized stable currency Dai (Ether U.S. Dollar) and derivative financial products. The proposal proposes to add a New Silver Series 2 DROP as Maker agreement collateral.

New Silver is a technology-first non-bank loan originator, focusing on financing real estate investors with fixed and flipped or small commercial assets. New Silver’s proprietary technology automates and simplifies loan generation while using data to reduce the risk of default. In addition, New Silver’s FlipScout tool uses intelligence to help find real estate investment projects with the highest return on investment. Investing in New Silver Series 2 DROP tokens means financing real estate in 39 states in the United States.

As soon as the news came out, the Maker rose in response. The price of Maker rose by more than 40% on April 15, hitting an all-time high of $4,096.57.

Maker, the 42nd largest cryptocurrency with a market cap of $3,676,392,142, has risen by 35.33% with 24 hours and 65.49% in a week.

At the time of writing, the price has retraced and is trading at $3,035.

Maker (MKR) Price Analysis

Source: MKR/USDT Hourly via TradingView

Judging from the hourly candlestick chart, MKR is forming a bull flag shape with the 25% gain at the pink flagpole of this pattern. Currently, the price is consolidating between the $3,600 nearby, and gradually forming the purple flag of this pattern shown on the above chart.

According to the increase of the upswing flagpole, this altcoin would likely exceed $4,500.

However, the long upper shadow line drawn from the daily candlestick indicates that the upward pressure is still huge, and it will suffer a strong selling at its all-time high of $4,096.57.

The transaction price of MKR/USDT is higher than the Exponential Moving Average (EMA) ribbon.

Both the upward floating moving average and the bearish MACD indicate that the bears are currently dominating the market.

However, The Relative Strength Index stepping out of the overbought zone, forming a bearish signal that suggests that MKR is encountering strong selling pressure after touching its all-time high. The MKR’s price will experience a slight retracement, and it is likely to trade sideways for a period of time around $3,400 before resuming its upward momentum.

If the price can stabilize above $3,000, then the upward trend of Maker may open a faster upward channel. As Maker hit a new high- this will mean that the altcoin will not encounter strong selling pressure on its way up. It is very likely to break through $4097.57 in the short term.

Conversely, a surge in the number of sell orders will push MKR below the $3000 support level and may trigger a more severe correction to a 20-day EMA of $2560.

Maker Hits a New All-Time High Close to the $5,000 Mark

Maker is the first Ethereum-based smart contract system to launch an automated cryptocurrency lending platform.

Maker provides the first decentralized basic stable currency Dai (which can be compared and analyzed as the U.S. dollar on Ethereum) and a derivative financial system, promoting the prosperity of decentralized finance (DeFi).

Dai is issued through a full mortgage guarantee of digital assets. Since its launch in 2017, Dai has always remained anchored to the U.S. dollar with a 1:1 ratio.

On April 19, members of the MakerDAO community began to vote on MIP45, a proposal aimed at upgrading the liquidation system of the Maker protocol and maintaining the stability of Dai pegged to the U.S. dollar.

If approved, the liquidation 2.0 system will provide higher security, predictability, and decentralization, and provide community members with more opportunities to participate in collateral auctions through Auction Keeper software and a more conventional interface. This will promote the participation of the Maker community and the entire DeFi department.

According to data from DeFi Pulse, Maker, the largest DeFi agreement with system collateral of $965 million, dominates 16.44% of the entire DeFi market.

The holders of the Maker (MKR) tokens of the project have received a 64.23% price increase reward in the past week. According to CoinMarketCap, Maker with a market cap of $4,817,105,553, ranks as the 30th largest cryptocurrency.

The token has grown nearly eight-fold since the beginning of this year, rising from $587 to $4,652, It hit a record high of $4,995 today, breaking the $4,500 marks in one clean swoop.

Maker (MKR) Price Analysis

Source: MKR/USD 4-hour via TradingView

Judging from the 4-hour candlestick chart, MKR has successfully broken through its previous high of $4,118, and the rapidly expanding trading volume has resulted in $4,118 being flipped from a resistance to a support level.

The transaction price of MKR/USD is higher than the Exponential Moving Average (EMA) ribbon. Both the upward moving average and the bullish MACD index indicate that the bulls are currently dominating the market.

However, the Relative Strength Index stepping into the overbought zone is gradually levelling off, which suggests that MKR is encountering relatively strong selling pressure after touching its all-time high of $4,995 today. The MKR’s price will therefore experience a slight retracement, and it is likely to trade sideways for a period of time around $4,400-$4,600 before resuming its upward momentum.

If MKR’s price can stabilize above $4,200, then the upward trend of Maker may open a faster upward channel. As Maker hit a new high, this will mean that the altcoin will not encounter strong selling pressure on its way up. If the entire crypto market emerges from its current slump, it is highly likely that Maker breaks through $5,500 in the short term.

Conversely, a surge in the number of sell orders will push MKR below the $4118 support level and may trigger a more severe correction to the 20-day Exponential Moving Average of $3,795.

Total Value Locked in Maker Reaches a Record High as Maker Foundation Returns Dev Fund to DAO

Maker (MKR), a cryptocurrency built on the Ethereum blockchain, is designed to minimize the price volatility of its own USD-pegged cryptocurrency, DAI.

DAI is issued through a full mortgage guarantee of digital assets. DAI stablecoin, which launched in 2017, has always remained anchored to the U.S. dollar on a 1:1 ratio.

Through the MakerDAO system, users can create Collateralized Debt Positions (CDPs) and use Ethereum as collateral to generate DAI.

Earlier today, the Maker Foundation announced that it will refund 84,000 MKR from the development fund to the MakerDAO community. The refund originates from MKR tokens that have been transferred to the “governance” module.

According to official blog reports, the MakerDAO community currently does not set any conditions or expectations for the returned MKR tokens. This move is to carry out the decentralization of the agreement.

While upgrading the liquidation system of the Maker protocol and the DAO’s Core Unit Framework, Maker stated that the Foundation will focus on its own dissolution and regularly announce the progress until the end of this year to further diversify the power of the protocol until it is completely dissolved. An announcement from the Foundation reads:

“The Foundation now turns inward to focus solely on its dissolution.”

On May 3, the governance facilitators, on behalf of the MakerDAO risk management team, will start a three-day poll. This public opinion survey will provide a platform for the governance community members of MakerDAO to vote on the type of vault that will be added to the liquidation 2.0 system.

The types of vaults cover UNI-A, ZRX-A, AAVE-A, BAT-A, RENBTC-A, LRC-A, etc.

If the governance poll is passed, the executives will vote to complete the upgrade to the Liquidation 2.0 system within 30 days as permitted by the Smart Contracts Team plan.

The integration with the liquidation 2.0 system will provide higher security, predictability, and decentralization, and bring greater predictability and stability to the liquidations executed by the protocol settlement.

Source:DeFi Pulse

According to DeFi Pulse, Maker is ranked as the largest cryptocurrency in the decentralized finance market with a total value locked (TVL) of $12.02 billion. This is a new record-high for Maker.

Despite the overall downturn of the crypto market and Bitcoin’s decline from $58K to $55K, MKR rose by 4.85% within 24 hours and 29.56% in the past week. At the time of writing, MKR is trading at $5,751.

MakerDAO Adds Layer-2 Network StarkNet to Address DAI Transaction Costs

MakerDAO, a major DeFi protocol and the creator of the DAI stablecoin cryptocurrency, announced on Wednesday that it has integrated StarkNet, an Ethereum Layer 2 network (a scaling solution), on its platform.

With the integration, MakerDAO said that StarkNet would enhance the multichain capabilities of its dollar-pegged stablecoin DAI and the related functions of Maker Vaults to reduce transaction costs and improve throughput speed on its platform. Maker Vaults is a core component of the Maker Protocol, which helps to facilitate the generation of Dai stablecoin against locked up collateral.

Ethereum’s higher price gas fees have been a nightmare and have driven more activities and users to other blockchains. MakerDAO stated that the deployment of StarkNet, the zero-knowledge (ZK) side chain, will help address the cost and congestion of its native Ethereum environment by bridging to a cheaper and faster network on this platform.

The rollout, which is planned to start on April 28, is expected to take place in four phases. The deployment is expected to become fully operational in the third quarter of this year (between July to September) as highlighted in the protocol’s roadmap.

Louis Baudoin, the core unit facilitator at StarkNet engineering, talked about the development and said, “as we see unsustainable gas fees drive more activity and users to a wider variety of blockchains, security challenges that come with bridging will continue to grow.”

He further elaborated: “Projects must move on to Layer-2 to continue to serve users, and MakerDAO is partnering with StarkNet to do exactly that. With this strategy, we are positioned to cement the Maker’s Protocol’s position as the leading decentralised lending protocol in the industry and the status of DAI as the most decentralised, secure stablecoin.”

Unlocking Global Financial Access to All

Founded in 2014 by Danish entrepreneur Rune Christensen, MakerDAO was formed to govern and maintain Dai stablecoin cryptocurrency.

Headquartered in Santa Cruz, California, the decentralised autonomous organization (DAO) is made of the owners of its governance token, MKR, who may vote on changes to certain parameters in its smart contracts to ensure stability Dai whose value is pegged to USD.

Anyone can use MakerDAO platform to open a Vault, lock in collateral such as ETH (Ether), Basic Attention Token (BAT), Wrapped Bitcoin, and USD Coin, and generate Dai as debt against that collateral. The decentralised finance platform enables borrowers to use volatile crypto coins as collateral for loans of stablecoins (called Dai) pegged to the U.S dollar.

Argentinians Seek Shelter in Stablecoins after Economy Minister Resignation

Argentinians have taken refuge in stablecoins after the nation’s economy minister Martin Guzman resigned over the weekend attributed to the financial crisis crushing the South American country, reports said.

Due to the continuous inflation, Devaluation continues to undermine the Argentine peso (ARS). Three leading crypto exchanges have seen a trend where consumers are looking for hedges, for instance, the peso depreciated by nearly 15% against various stablecoins like Tether (USDT) and MakerDAO (DAI) on leading local crypto exchanges after Guzman resigned.

Therefore, according to reports, Argentinians purchase stablecoins two to three times more than is the case on a typical weekend. Per the report:

“Argentine exchange Buenbit recorded a 300% increase in trading on Sunday compared to the same day in previous weeks.”

Sebastian Serrano, the CEO of cryptocurrency exchange Ripio, noted that Argentinians have resorted to the crypto market if uncertain news emerges. Serrano added:

“Whenever there is one of these news stories in Argentina, because of the 24/7 nature of crypto, it is the first market where Argentina starts to look for a price for the U.S. dollar. This drives volumes up.”

With inflation hitting 60% on a year-over-year basis, Guzman’s resignation was fuelled by the lack of a precise economic direction as differences between the president and vice president took centre stage.

As a result, Argentinians have been seeking shelter in digital assets despite the nation recently halting crypto operations undertaken by financial institutions.

Depending on different regulations, crypto usage is speculated to continue rising in Argentina because cryptocurrency is deemed a hedge against a cyclical economic crisis that includes hyperinflation, recession, and repeated currency devaluations.

MakerDAO Intends to Depeg DAI from USDC

Announcing through Discord, MakerDAO’s founder Rune Christensen revealed that the DeFi protocol might consider depegging its native token DAI from stablecoin USD Coin (USDC).

Christensen pointed out:

“Will be discussing it at tonight’s call but I think we should seriously consider preparing to depeg from USD … it is almost inevitable that it will happen and it is only realistic to do with huge amounts of preparation.”

This decision might have been reached based on tornado sanctions, given that MakerDAO might replace USDC as collateral with Ethereum (ETH).

Christensen added:

“I have been doing more research into the consequences of the TC sanction and unfortunately it is a lot more serious than I first thought.”

Tornado Cash, a popular crypto mixing platform, was recently slapped with sanctions by the United States Treasury Department based on accusations of facilitating money laundering for hacker groups like the North Korean government-sponsored Lazarus Group, Blockchain.News reported.

MakerDAO’s consideration of jumping on the Ethereum bandwagon was revealed by Yearn.finance core developer Banteg who tweeted:

“MakerDAO is considering a $3.5 billion ETH market buy, converting all USDC from the peg stability module into ETH.”

Therefore, this will mean that Ethereum will back more than half of DAI stablecoins.

Nevertheless, Ethereum founder Vitalik Buterin reiterated that caution was not to be thrown to the wind because this was a risky affair. He stated:

“Errr this seems like a risky and terrible idea. If ETH drops a lot, value of collateral would go way down but CDPs would not get liquidated, so the whole system would risk becoming a fractional reserve.”

The MakerDAO was also not contented with this decision because it deemed it another Terra in the making, given that Terraform made the miscalculation of backing its native token UST with Bitcoin (BTC) as the LUNA crash continued.

Users Panic as Nexo Withdraws 7,758.8 WBTC from MakerDAO

There has been panic in the digital space amidst rumors of Nexo being insolvent due to the abrupt withdrawal of Wrapped Bitcoin (WBTC) from MakerDAO with an address labeled as Nexo Ox8fd.

This comes just a few days after market analysts predicted a 50% drop in the price of Nexo.

According to reports gotten from sources, approximately $151 million worth of WBTC was withdrawn on Friday from MakerDAO from the Nexo wallet.

While many users believe the sudden withdrawal is a fraudulent move by the company, a Nexo spokesperson has highlighted that the withdrawn funds are still in the public space (Nexo wallet) adding that;

“the withdrawal was a routine transaction and represents a loan repayment according to the latest market dynamics and the company’s normal asset management.”

Nexo has continued to provide professional financial services to the digital economy since 2018. Nexo is among the world’s most trusted financial institutions that provides lending services in the digital finance industry. According to the firm, it has more than 5 million users around the world transacting with about 40 fiat currencies across more than 200 jurisdictions.

Crisis in the Digital Assets Economy

The recent uproar comes after a number of recent crypto bankruptcies have left investors without access to their funds this year. Nexo customers are seriously in dismay considering that Celsius Network which offers a similar offering to Nexo filed for bankruptcy after freezing customers’ accounts in June.

About eight states in the United States had earlier in September filed proceedings against Nexo as regards registration and cryptocurrency products yielding interests.

According to state regulators in New York, Kentucky, California, Maryland, Oklahoma, South Carolina, Washington, and Vermont, Nexo offered users accounts earning interests without registering them as securities and without providing required information.

Investors, according to state regulators, cannot make informed investment decisions without access to these financial statements.

Stablecoin Issuer MakerDAO Invests $500m into U.S Treasuries & Corporate Bonds

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MakerDAO, a decentralized autonomous organization (DAO) tasked with the governance and issuance of stablecoin DAI, on Thursday allocated $500 million for investment in U.S. short treasuries and corporate bonds.

According to the announcement, the strategic investment will see 80% of its overcollateralized stablecoin DAI converted into U.S. short-term Treasuries and the remaining 20% invested into corporate bonds. The move aims to diversify MakerDAO’s balance sheet into scalable traditional finance investments, expanding revenue streams and limiting exposure to any one asset.

European wholesale lender Monetalis is acting as the advisor, while digital asset bank Sygnum is the lead partner in the $500 million diversification effort.

In June, MakerDAO voted on a proposal aimed at helping it weather the bear market and use untapped reserves by investing 500 million DAI stablecoins into a combination of US treasuries and corporate bonds. The largest delegates in MakerDAO voted for the 80/20 split allocation. They reasoned that the allocation would be beneficial for the Maker protocol in the long term in many ways, including its new exposure to major traditional financial institutions and learning to manage finances in a bear market.

The DAO’s decision to invest such a huge amount of funds was based on recommendations by several members who believed that deploying the unused funds could help boost the protocol’s profitability with minimal risk.

The development signals a strategy by a major digital asset firm to move beyond the crypto landscape and earn yield from traditional “safe” financial investments with its flagship cryptocurrency DAI stablecoin.

MakerDAO is the governing body of the Maker protocol, and Dai is a decentralized, collateral-backed stablecoin on the Ethereum blockchain. The Maker protocol leverages Ethereum smart contracts to automate the collateralization and lending of its stablecoin (DAI), as well as provide other functionalities of other cryptocurrencies.

The development is a good example of decentralized governance participation to give more stability to the tainted algorithmic stablecoins. In May, Terra UST stablecoin, which was the fourth-largest stablecoin on the market during that time, crashed, wiping out investors globally. Besides wrecking investors, Terra’s destruction renewed scrutiny of the entire stablecoin and crypto space.

DeFi TVL Rebounds to the $54 Billion Mark, Eth-based MakerDAO Remains Dominant Lender

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Fresh data from tracking service DeFi Llama shows that the total value locked (TVL) in decentralized finance (DeFi) protocols has rebounded to the $54 billion mark.

According to the data, the total TVL was down — between $53.7 and $53.29 billion — since October 12. In September, the TVL was down to $52.22 billion, the lowest since March 2022.

Source: DefiLlama

Data from DefilLama shows that the largest DeFi lending platform across all chains remains the Ethereum-based MakerDAO, with a market dominance of 14.48% and $7.83 billion TVL. Lido is the second most dominant DeFi lender with a market cap of $6.11 billion, while the third is Curve Finance with $5.92 billion, Aave comes fourth with $5.19 billion, and Uniswap is fifth with $4.97 billion.

The value locked in Ethereum remains the largest, according to DefiLlama, with around $31.2 billion, or just over 57% of the aggregate value locked today. Ethereum is followed by Tron’s $5.54 billion, Binance Smart Chain (BSC)’s $5.33 billion, and Avalanche’s $1.41 billion, among other DeFi protocols.

In simple terms, TVL measures the total value of all assets locked into DeFi protocols. TVL includes all the tokens deposited in all the functions that DeFi protocols offer, including staking, lending, and liquidity pools. In other words, the TVL is a measure of the funds deposited in smart contracts, and this figure is closely monitored by analysts as an indicator of investor confidence in the market.

Over the last two years, the cryptocurrency sector recorded a dramatic increase in the total value locked (TVL) across all DeFi platforms because of the boom associated with the bull market that attracted massive capital during that time. But all that changed in 2022.

As of March this year, the value locked in DeFi traded above the $200 billion mark. But things started turning worse in May amid a wider sell-off in global markets and waning interest in risky assets, such as cryptocurrencies. The total value locked in the crypto market declined from $160 billion in mid-April 2022 to $52.2 billion in September 2022, the lowest level since March 2022.