DeFi liquidity is at its lowest level since February 2021. As we all know, the high interest rate environment makes the pursuit of on-chain yields less attractive. Coupled with the decline in cryptocurrency prices, it has led to a new low in TVL.

What does this mean? It means that it becomes harder to make a profit in the short term. For a project to take off, liquidity needs to flow out of other areas of DeFi. Unless you have a solid advantage in this space, or spend 16+ hours a day staring at a screen, the best thing to do is probably to develop a long-term investment strategy and stick to it. Don't over-trade and get shaken.

News and Catalysts

ETF Deadline and Grayscale

There is an ongoing lawsuit between Grayscale and the U.S. Securities and Exchange Commission (SEC) regarding the conversion of its existing GBTC Trust into a spot Bitcoin exchange-traded fund (ETF). While many had been expecting a decision this week, Grayscale could be required to reapply, which could take up to 240 days before a final decision. However, as you can see below, Grayscale is expanding their ETF team. What does this mean? It's likely that they are trying to send a message that they are serious about converting to an ETF, rather than that they have some kind of inside information about the outcome of the case.

According to ETF experts, delay in ETF approval is most likely to happen.

Frax expands to RWA

After unpegging USDC earlier this year ($FRAX has a strong collateral relationship with USDC), the vision of FraxV3 is already in the works. Founder Sam Kazemian calls FRAXV3 the "ultimate stablecoin". Real-world assets will be on-chain and used as collateral for $FRAX. The profits from these operations will be passed on to token holders through so-called "Fraxbonds" (FXB). Fraxbonds allow people to buy future $FRAX at a discount (i.e. $FRAX for $0.9 per $FRAX two years later).

Thorchain Lending Launches

Thorchain has just launched their lending product, and users can currently lend multiple assets, using BTC and ETH as collateral. The collateral list will soon expand to include multiple new assets such as BNB, BCH, LTC, ATOM, AVAX, and DOGE.

One of the core mechanisms of this lending design is to destroy $RUNE when issuing debt (users borrow against collateral) and mint $RUNE when closing positions. This also allows for loans without liquidation even if the price of collateral such as ETH or BTC drops, because the collateral is stored in the form of RUNE behind the scenes.

On-chain fund flow

Off-chain Labs appears to be buying back $ARB

1.72 million ARB were purchased on Binance at $0.98 per token ($1.7 million total) and sent to an address labeled Offchain labs (the company behind Arbitrum). This is close to the lowest price $ARB has traded since it went public earlier this year.

CMS Holdings Accumulates $DYDX

CMS was an early investor in dYdX and has further traded the token over the past two years. They recently purchased $519,000 DYDX ($1 million total value) on Binance at $1.94 per token. The average purchase price (excluding private sales) on CEX transactions was $1.88 and the average sell price was $2.78. Currently, CMS holds $3.05 million DYDX (worth $5.98 million).

DeFi Airdrops and Strategies

Friend tech airdrop

Friend Tech will award 100 million points to platform users over the next 6 months. Below is a table estimating the price per point based on the issuance valuation and the percentage of the airdropped token supply.

It seems that points are awarded based on the volume of shares traded, but may also be tied to referrals. Nonetheless, it appears that currently, top users have accumulated the majority of the points distributed.

Real World Asset (RWA) Mining

Maker's Spark protocol offers a 5% annualized yield on the Dai Savings Rate (DSR). This yield comes from the income generated by DAI as collateral for RWAs such as US Treasuries. A current proposal on Aave proposes adding a liquid token of the DAI Savings Rate (sDAI) as collateral for lending markets. As shown below, looping 8 times (deposit sDAI on Aave, borrow the native $GHO stablecoin, convert it to sDAI and repeat) would result in an annualized yield of 11.29%.

This will likely go live in the next few weeks, and the APY does not take into account gas fees. Still, earning an 11% APY on a sustainable yield just investing in DAI is very exciting, and could attract new and more sophisticated participants into the space over longer time frames.

The above are a few recent events worth noting. Later, I will bring you analysis of leading projects in other tracks. If you are interested, you can click to follow. I will also organize some cutting-edge consulting and project reviews from time to time. Welcome all like-minded people in the cryptocurrency circle to explore together. If you have any questions, you can comment or send a private message