Mika Honkasalo

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Analysis from the first month of dYdX’s L2 launch

dYdX is one of the longest standing “blue chip” DeFi projects. The protocol first raised a $2 million seed round in December 2017 led by Andreessen Horowitz and Polychain, with participation from Coinbase founders Fred Ehrsam and Brian Armstrong (among others). This was followed by a $10 million Series A in October 2018, which added […]
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May 7, 2021, 10:21AM UTC

ELI5 Recent Crypto Concepts and Arguments: Flashbots, Rollup Wars, etc.

What is Flashbots and is it driving gas prices down? Flashbots is an attempt to make miner extractable value (MEV) have less negative externalities to the Ethereum ecosystem. MEV is the profit miners can extract from their ability (and responsibility) to order and place transactions in a blockchain. For example, we can imagine a miner […]
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Apr 21, 2021, 10:14AM UTC

On the Modularization of Decentralized Governance

What is decentralized governance? Web3 applications — from decentralized finance and compute, to the continued process of blockchain consensus — is all about coordinating different parties, who do not know each other, towards a common goal. The aim can be to run a lending market, asset or derivatives exchange, digital gold, or any other potential […]
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Apr 14, 2021, 9:45AM UTC

Alchemix: a new (popular?) structure for DeFi lending

The DeFi lending space on Ethereum has been heavily dominated by the “big three” of MakerDAO, Aave, and Compound — combining for $12.7 billion in outstanding debt. Recently, Venus on Binance Smart Chain has also grown to a comparable $3.7 billion in outstanding borrows. The general pattern for lending markets is having a supply pool […]
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Apr 7, 2021, 9:40AM UTC

Governance roundup: discussions from crypto protocol communities

Included protocols Lending:  MakerDAO, Compound, Aave. Exchange: Uniswap, SushiSwap. Yield: Yearn, Alchemix. Other: Nexus Mutual (insurance), Pool Together (lottery), Perpetual Protocol (perpetual swaps). Shorter notes on not included protocols with less notable governance activity are listed at the end.  MakerDAO MIP49 staking rewards MakerDAO is generating the most profits to token holders by miles, reaching […]
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Mar 31, 2021, 8:54AM UTC

Uniswap v3: reactions to DeFi’s most anticipated DEX upgrade

There’s quite a bit to say about the details of Uniswap’s v3 release. But if Uniswap’s core intention was to improve capital-efficiency and “to prove AMMs can outcompete traditional exchanges on all fronts,” v3 accomplishes about as much as could have been expected on that front. To understand this, we can compare the main innovation […]
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Mar 23, 2021, 5:34PM UTC

Livepeer: a dark horse in the decentralized compute stack?

The strengths and weaknesses of decentralized compute In addition to finance, the big “expected” category for crypto applications is in decentralizing the compute stack. This part of Web3 doesn’t have meaningful activity like DeFi does — with growth from $1 to $44 billion in value locked within the past 9 months. The argument for decentralized […]
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Mar 17, 2021, 10:54AM UTC

Compound: Ethereum Data and Analysis of its App-Specific Chain

Compound Usage Data on Ethereum Compound is one of the “Big 3” (in addition to MakerDAO and Aave) lending protocols on Ethereum, with $4.6 billion in outstanding debt. This is the highest figure among lending protocols — MakerDAO’s DAI supply is at $2.6 billion and Aave has $1.5 billion in outstanding debt (split evenly between […]
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Mar 10, 2021, 10:41AM UTC

28 Charts on NFTs, DeFi, and Ethereum 2021 trends

NFTs The latest addition to The Block’s data dashboard is a category on NFTs (non-fungible tokens), with DappRadar as the newest data provider. NFTs have been a roaring success of the past few weeks — accompanied by notable headlines like Grimes selling $5.8 million worth of NFT art in 20 minutes, and NFT marketplace Sorare […]
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Mar 3, 2021, 10:16AM UTC

Uniswap: information, guesses, and thoughts about v3

Uniswap is the most used decentralized exchange, with a 55% trade volume market share and approximately 10x the number of users (measured by addresses) compared to any competing protocol. Source: Dune Analytics For the first time, Uniswap’s weekly moving average for trade volume passed $1 billion. The protocol’s next upgrade (v3) is a long-awaited one […]
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Feb 23, 2021, 5:37PM UTC

A look at price risk-free yield strategies

Bitcoin’s price has continuously risen for the past six months. On October 1st, BTC was at ~$10,600 to over $51,000 today — a 380% increase. As a product of this run, the demand for stablecoin-denominated debt for leverage has increased appreciably. For stablecoins (or constructions of synthetic USD positions), the yields are extraordinarily high compared […]
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Feb 17, 2021, 11:32AM UTC

An Overview of Synthetic Assets on Mirror Protocol

Synthetic asset protocol design DeFi protocols for issuing and trading synthetic assets can be built in various ways — each with its own set of tradeoffs and strengths — but the big questions that have to be answered are: By what mechanism does the price of the synthetic asset track the price of the underlying […]
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Feb 10, 2021, 11:06AM UTC

Cosmos IBC and the argument for application-specific chains

Flavors of interoperability It makes some intuitive sense that blockchain interoperability should be a useful technology — after all, today, there are many different blockchains (with varying levels of use) that don’t communicate with each other. It’s easy to imagine a future for blockchains where multiple different networks are isolated from each other in some […]
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Feb 8, 2021, 10:49AM UTC

Futureswap: an AMM for perpetual swaps

For a detailed overview on perpetual swaps and the market opportunity in decentralized finance, see this research piece on Perpetual Protocol. Ever since BitMEX launched perpetual futures in 2016, perpetual swaps have been a massive hit in crypto. Unlike traditional futures contracts, perpetual swaps don’t have an expiry date, which has made them easier to […]
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Jan 27, 2021, 12:23PM UTC

Upcoming EIPs and the Ethereum 1.0 roadmap

History of Ethereum forks Ethereum has gone through a series of changes instituted via hard forks since its launch in July 2015. These network upgrades are intended to improve scalability, user experience, and security — and are described by Ethereum Improvement Proposals (EIPs). Since there’s no central authority that makes decisions, there’s a rough consensus […]
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Jan 25, 2021, 12:31PM UTC

Reflex indexes for more stable collateral assets in DeFi

Despite the success of stablecoins, with a total supply of $32.8 billion today — up from $5.8 billion a year ago — the market is still searching for trust-minimized and scalable solutions. To date, DAI, the most successful “decentralized” stablecoin, has a total supply of $1.3 billion while USDT is at $24.3 billion, and USDC […]
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Jan 13, 2021, 11:47AM UTC

Recent DEX metrics and 2021 themes

In November, it looked like the story for DEXs was one of a bubble that had popped and a significant downturn in volumes that followed. After Compound’s liquidity mining incentives — where users were rewarded COMP for borrowing and lending using the protocol — a wave of interest kicked off in decentralized finance driven by […]
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Jan 11, 2021, 12:09PM UTC

How to build a stablecoin protocol from funding rate arbitrage

Stablecoins are a use case in blockchain that has reached a level of product-market fit. The total supply of stablecoins is now $27.3 billion — up 362% year-over-year. Despite this success, there are some question marks with the long-term viability of current stablecoins. There may also be successful stablecoin constructions in the future that are […]
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Dec 30, 2020, 11:30AM UTC

Perpetual Protocol: Liquidity for DeFi Perpetual Swaps

Perpetual Protocol is a DeFi project focused on perpetual swaps. The project launched the first version of its mainnet on December 14th. In August, Perpetual Protocol raised a $1.8 million round led by Multicoin Capital, with participation from Three Arrows Capital, CMS Holding, and Alameda Research. Perpetual swap basics and market opportunity A perpetual swap […]
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Dec 28, 2020, 5:17PM UTC