There is a new narrative about the rise of the decentralized finance world. DeFi projects that distribute income based on the revenue generated by using the protocol — not just by issuing tokens — is the latest trend in DeFi summer 2022.
Worthy “real return(“real payout,” in free translation), the movement is characterized by protocols that distribute rewards in “strong” tokens, such as Ether (ETH) or stablecoin USDC, for users who keep their native tokens locked away mask.
Thus, the logic of “real return” is very similar to the logic of dividends that a company distributes to shareholders, according to its economic performance. The more revenue generated by a particular protocol, the more revenue shared with their native token holders.
Essentially, investing in a protocol whose economic rationale is based on “real income” is a bet on its ability to attract new users, and thus increase revenue generation over time to maximize the profits of that investment.
The “real return” emerged against the classic model of aggressive issuance of tokens to attract users and increase the total withheld value (TVL) at any cost, including diluting the value of the tokens offered as a reward.
This model tends to generate artificial liquidity quickly, as users are initially attracted by the promise of high throughput (APR), but it has proven unsustainable in the medium and long term.
DeFi users alternately held onto their capital, jumping from project to project in search of rewards, then selling them off before the value diluted as the tokens flooding the markets limited their gains. This form became known as Yield farmingand it was a very profitable practice during the 2021 Taurus cycle for those who knew how to profit from it.
Without an artificial incentive to attract users, many first and second generation DeFi protocols have suffered seemingly irreversible collapses, such as the Anchor (ANC) protocol, central to the crisis and collapse of the Terra Classic (LUNC) ecosystem.
In the middle of the crypto winter, when most DeFi tokens are, on average, 80% below their historical maximum, the paradigm has lost its grip on users. On the other hand, in the midst of a severe cryptocurrency winter, users are more attracted to real income, paid in “hard currencies”, albeit at lower rates, than the old model of unrestricted issuance and dilution of practically unlimited value.
While the model is still relatively new and not immune to the risks involved in decentralized finance, it is interesting to be aware of some of the projects that have driven the “real yield” higher in 2022, highlighted by trader and analyst Miles Deutscher in a thread Posted on Twitter.
dYdX
dYdX is a decentralized exchange (DEX) focused on offering a unique and complete experience to traders looking for a decentralized space to quickly and securely execute their operations, without giving up custody of their assets. In addition to spot market trading, dYdX offers trading in derivatives and structured products.
That is, it allows users to build leveraged positions with good liquidity and low fees, while offering the distinct advantages of DEX over its central counterparts.
Currently, dYdX is the largest and most used DEX derivative, generating more than $321 million in annual revenue, according to DeFi data tracker. on the chain Token Terminal, which places it as the third protocol in the ranking of revenue generation, after markets NFTs (non-fungible tokens) include OpenSea and LooksRare (LOOKS).
At the moment, dYdX still does not distribute the revenue generated to DYDX holders, but they have already announced that the model should change with the launch of version 4, later this year. According to Deutscher, DYDX’s economic model as it stands today still causes a high degree of dilution in value.
Thus, for him it is a long-term bet, considering that the protocol will launch its own network in Cosmos (ATOM), leaving behind Ethereum, where it was originally implemented, and StarkNet, a second layer solution from the flagship. The smart contract network where it is currently operating.
GMX
Like dYdX, GMX is a decentralized exchange that offers derivatives trading. It is currently the largest DeFi protocol by Arbitrum, a layer 2 solution by Ethereum, and the seventh largest by Avalanche (AVAX).
According to Deutscher, although its trading volume is much lower than that of dYdX, GMX has the advantage of what may be the best economic model for DEX derivatives.
Keep GMX running mask It guarantees its owners a 30% share of all revenue generated by the platform, distributed in ETH.
Synthetix (SNX)
Synthetix is a decentralized protocol that provides exposure on the chain Access to a wide range of cryptocurrencies and other asset classes such as gold, silver, oil and stocks, as well as the possibility of derivatives trading and futures trading.
Worthy synthThese digital assets are directly linked to the underlying assets without the need for the protocol user to actually own them. The platform aims to expand the cryptocurrency space by offering non-blockchain assets, and expand access to other financial markets through blockchain technology.
The protocol also maintains a set of mask Where token holders can deposit their SNX tokens to earn rewards on a portion of the transaction fees generated by the protocol in sUSD, stablecoin The official Synthetix ecosystem, or the SNX itself.
26/ We can also note both $SNX And GMX$ Ranked in the top 10 for fees generated, exceeding the 7-day average. $100 million fee for the entire crypto space. pic.twitter.com/R9OXPHjndb
– Miles Deutscher (@milesdeutscher) August 9, 2022
SNX currently generates $100 million in annual revenue, occupying the new token terminal.
Say if it’s not a “real” return?
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We can also see that both $SNX and GMX are in the top 10 for revenue generation through fees, ranking above an average of $100 million in weekly revenue across the entire crypto space.
– Miles Deutscher (@milesdeutscher)
Umami Finance (UMAMI)
Umami Finance is a market maker and liquidity provider for Arbitrum, Ethereum’s second level solution. The protocol offers a full range of liquidity services, including bridging, capital raising and market making, to help protocol partners quickly increase their liquidity on the Arbitrum network.
According to Deutscher, the great innovation of the protocol is the implementation of the USDC Vault, which provides a sustainable return of 20%, generated by issuing GLP, the token that liquidity providers receive from GMX, in addition to charging trading fees.
The project’s developers have announced plans to create new Bitcoin (BTC) and Ethereum tanks to offer income in both cryptocurrencies to users of the protocol.
As Cointelegraph Brasil recently reported, the DeFi sector has been facing frequent capital losses lately. Despite this, 3 coins have stood out over the past week, gaining up to 119% in seven days.
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