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Welcome to the latest issue of Cointelegraph’s decentralized financial newsletter.
Read on to understand why almost half of the liquidity providers on Uniswap v3 lose capital due to impermanent losses.
What you are about to read is a reduced version of this newsletter. For a complete breakdown of DeFi development last week, please subscribe below.
Acala wins Polkadot’s first parachain auction
The decentralized financial protocol Acala was announced as The winning project of Polkadot’s first Parachain auction This week, the total amount of earthquakes of 32.5 million DOT (1.28 billion US dollars) defeated competitor Moonbeam to reach the end improve From 24,934 contributors.
Acala is a multifunctional DeFi platform based on Polkadot, which enables developers to build smart contract applications with cross-chain capabilities and is compatible with Ethereum. Its top investors include Digital Currency Group, Polychain Capital, and Alameda Research.
In the case of Acala, all proceeds from the initial token issuance of the crowdfunding are classified as “crypto debt” and therefore must be repaid by the project after the lease agreement is signed.
More than 81,000 community members contributed more than 32 million DOTs, and Acala won the first parachain auction @polka dot!
Thanks to everyone who participated in this historic event. (1/3) pic.twitter.com/CL2jCwA9Re
-Acala-Polkadot’s DeFi Center (@AcalaNetwork) November 18, 2021
related: DFG bids $12.6 million to Astar Network’s Polkadot Parachain
Iota Foundation will launch a temporary network and reward tokens
The Iota Foundation, an open source non-profit entity dedicated to supporting the Iota ecosystem, announced Temporary network Shimmer will be launched soon, This week together with the accompanying token asset SMR.
Shimmer is a first-tier sandbox platform that enables builders and developers to test the efficiency and compatibility of their decentralized applications in the DeFi and NFT space before deploying to the Iota mainnet.
The network is expected to be launched in early 2022 and will also facilitate community governance confirmations for Iota’s large-scale network upgrade, including the upcoming programmable multi-asset ledger, smart contracts, full decentralization, and sharding.
related: Iota launches beta version of smart contracts to promote interoperability
Nearly 50% of Uniswap v3 liquidity providers are losing money
A research report released this week on the Topaz Blue and Bancor agreement shows that nearly half (49.5%) of the liquidity providers on Uniswap v3 suffer financial losses due to non-permanent losses. Volatility liquidity pair.
For example, if the user provides an equal Tether value (USDT) And ether (Ethereum) The liquidity pool is counted in U.S. dollars, and the price of ETH increases.
This means that arbitrageurs-investors who often work with financial institutions to benefit from market price differences-will remove ETH from the pool and sell it at a higher price. This will cause the dollar value of the user’s position to fall, leading to non-permanent losses.
The report shows that, based on current statistics, it may be more profitable to simply hold the market than to actively participate in liquidity services, and points out:
“Compared with users who actively manage liquidity positions on Uniswap v3, users who decide not to provide liquidity can expect to increase the value of their portfolio at a faster rate.”
related: As AMM continues to diversify, Bancor and Vortex jointly issue liquidation-free loans
Token show
Analytical data shows that the total value of DeFi locked in has declined This week it rose 7.89% to 160.47 billion U.S. dollars.
Data from Cointelegraph Markets Pro with Transaction view Reveal the top 100 tokens in DeFi market capitalization Indifferent The last 7 days.
Avalanche (AVAX) secured the top spot on the podium with a score of 30.11%. Curve DAO Token (CRV) ranked second 0.67%, while Maker (MKR) ranked third with 0.34%.
Analysis and hot topics last week:
Thank you for reading our summary of the most influential DeFi development this week. Join us again next Friday to gain more stories, insights and education in this dynamic development space.
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