DeFi Saver Newsletter: January 2022

Nikola Milinkovic -

After closing 2021 with a significant December selloff, this month brought even more uncertainty amid a bloodbath which turned the entire crypto market red.

Over $600B wiped out from the crypto market

An immense plunge in value has hit the crypto markets with 50% gone since November's all-time high. January 21st turned into the worst crash since May 2021 crash. Both Aave and Maker had the highest number of liquidations since May.

Ethereum has dropped 25% in the last week to $2,401, a price level web3 enthusiasts haven’t seen since July when the cryptocurrency was coming out of a severe May 2021 selloff.

With such a large drop in value, real danger appeared of cascading liquidation of a vault with $600 million worth of ETH, which would have a ripple effect on the rest of the market. Dubbed “7 siblings” vault, it got topped up after only $65 million in liquidations. Here’s some math of just how much less costly it would have been if the holder relied on DeFi Saver:

Now, what is important no note about this selloff is that it marked yet another test for the DeFi protocols and their functionality amid another high-stress period. Although liquidations hit users hard and heavy at the start of 2022, at DeFi Saver Automation performed as it should have and we haven’t had any liquidations among our users. Overall, DeFi protocols continued to work as intended, which is a good long-term signal of our ecosystem maturing.

On the other hand, what raises some concern is clear evidence of crypto markets following a larger market sentiment and growing correlation with traditional markets and stocks leading this selloff due to concerns regarding the FED announcing this year’s interest rate hikes and the world facing increasingly unstable geopolitical issues.

News of various regulatory moves around the world was not lacking either:

Top cryptocurrencies going into freefall mode was a general trend one could observe since the start of this year. It’s difficult to pick and choose among those many potential reasons ranging from geopolitics, stock, and market correlation, probable FED hikes, regulatory pressure, but this year is putting the entire ecosystem to the test for sure.

Moving on to some more DeFi focused and in fact mostly positive news Uniswap set a new impressive record! The leading DeFi exchange by trade volume processed more ETH/stablecoin volume than any other centralized exchange. As Hayden tweeted, one can only imagine how things will look when we Ethereum scales and we achieve lower fees.

Aave moved forward towards institutional support with the launch of Aave Arc on mainnet - a new platform for regulatory compliant DeFi access for institutions, after widespread support from the protocol’s community. They soon followed up with an announcement of the launch of Aave ARC on Optimism and Arbitrum with surging interest coming from institutional investors.

As Layer 2 adoption continues, Curve announced that it’s feeling optimistic with the launch on Optimism.

In a fairly unexpected turn of events, Ethereum Foundation decided to change the Layer terminology to be more in line with the one core developers seem to have already moved on to. Namely, with Eth 1.0 and Eth 2.0 terms being phased out, the execution layer (Eth1) and consensus layer (Eth2) are the new ones being used in the Q1 roadmap. The team explained in detail why they decided to make this move, and we have to agree that it does make Ethereum more inclusive.

We also had two big NFT news in January. A new decentralized NFT marketplace was born. LooksRare got all the attention and buzz as it launched on Ethereum with an airdrop and incentive structure aimed to really take on OpenSea’s, with lower fees, and new features. Meanwhile, to the joy of many, Twitter announced NFT verification for its Twitter Blue subscription users, enabling them to verify ownership of NFTs in their wallets while also using any of them as a profile picture.

Lastly, it would be strange if such a wild month passed without a hack or a scandal. In nothing less of a thriller movie script, Wonderland DAO and its coin $TIME came under fire as one of its co-founders and CFO Sifu was revealed to be non-other than an infamous co-founder of QuadrigaCX, the rug pulled Canadian cryptocurrency exchange. Rarely are these things explained better than how the rekt team does it.

DeFi Saver news and updates

For our team, January has been a bit of a slower month with team members taking their time to rest and make the best of the New Year and Christmas holidays. For the rest of the month, the team has been working diligently on the big Automation update we have in store in the following period.

Maker vaults minimum debt requirement

Maker Governance updated the Maker protocol’s minimum debt requirement (the dust parameter) for its vaults. For the most popular ones dust is now at:

  • 15,000 Dai for ETH-A, WSTETH-A, WBTC-A
  • 30,000 Dai for WBTC-B
  • 40,000 Dai for ETH-B

You can check this for all vault types using DeFi Explore https://defiexplore.com/stats or Dai Stats https://daistats.com/#/collateral.

This of course affects our Automation feature, since it may not be able to automatically repay under a certain amount. If an automated vault debt reaches the dust level, Automation can no longer kick in, since Maker disallows small changes to Vault debt (it either being 0 or nothing).

If you happen to have less than 50,000 Dai debt, it would be good to pay attention to this.

Smart Saving update - mStable Vault support

After releasing our big Smart Savings overhaul last month, we continue to improve on the experience. This month we introduced mStable Vault support with $MTA rewards for depositors.

We’ve also added a simple Move option to move your assets easily across integrated Smart Savings protocols - yearn, Rari and mStable.

DeFi Saver goes to ETH Denver

For some time now it was our plan to go to ETH Denver and everything was in place for some Nikolas to hit the road this month. Due to public health concerns, it wasn’t certain until mid-January whether we would actually be able to attend, so we waited before we announced it officially.

After sponsoring Liscon in the previous year, ETH Denver is another major event we decided to engage with more actively contribute to the community as much as we can. We’re thrilled that we’ll be able to meet in person with our users, community members, and newcomers. It definitely looks like it will be a blast.  

January Stats

Although we began 2022 with a difficult month, January nearly broke our May record in the unique number of users visiting our platform. We love to see it, though in hard times. On the other hand, we witnessed quite a drop in our total volume.

In total, users made $335M of actual trade volume during January, with over 2,800 unique leverage management transactions and custom recipes done at DeFi Saver.

In terms of Automation specifically, at the end of January, there were 346 MakerDAO, 46 Compound, and 52 Aave automated positions — an unfortunate drop that totals 444 unique positions with Automation enabled.🤖

The total amount of managed collateral at the end of the month was 126,000 ETH, 702 WBTC, 2096 MKR, and 111,000 LINK among other collateralized assets. In total, DeFi Saver Automation was managing around $360M of collateralized assets in different user-created positions at the end of January.

Community Shoutouts

We definitely received lots of love after the crash…again :)

Here are some interesting community shoutouts.

Our new Smart Savings update was dubbed as conservative in the DeFi Pulse shoutout. We’ll take it!

Lucas from Maple Finance showing some post-crash appreciation:

Loth from mStable sharing some cool Smart Savings data:

Danger still loving the DeFi leverage:

Stay connected:
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