Uniswap charting major growth plans with V2, becoming the defacto industry leader.
Dharma, the Coinbase-backed DeFi startup has decided to add token-exchange protocol Uniswap as its latest in-app offering. Dharma users will now be able to trade any ERC20 token for another in addition to earning interest on Ethereum stablecoins.
Uniswap is one of the most popular DeFi applications on Ethereum giving Ethereum users the ability to swap ETH and ERC20 tokens like MTA or YFI with any other Ethereum based token. It currently possesses $43 million of liquidity assets locked into the protocol. Instead of using the traditional order book model, Uniswap collates tokens into smart contracts allowing users to trade against the liquidity pools provided. Anyone on Uniswap can swap tokens or even add tokens to a pool to earn fees.
The Uniswap V2 was launched as the second iteration of Uniswap including several new features and upgrades. In the new version, any ERC20 token can be directly pooled with any other ERC20 Token. Wrapped Ether or WETH is used instead of native ETH in the core contracts. In the earlier version, all liquidity pools are between single ERC20 Token and ETH.
The introduction of ERC20 token/ERC20 token pools in V2 will be useful for liquidity providers who have the potential to maintain a diverse ERC20 Token denominational position without the need to have an exposure to ETH. Some added features of V2 are:
Uniswap V2 has implemented a novel functionality that allows for a highly decentralized and a manipulation-resistant on-chain price feed. This is essentially achieved by measuring prices and collating historical data to its potential allowing smart contracts to generate gas-efficient Uniswap prices across any timeline.
The V2 flash swaps allow the users to withdraw as much ERC20 token as wanted with no upfront costs. The withdrawals can be used for any purpose provided that at the end of transaction execution users pay for all ERC20 tokens withdrawn or pay a percentage of ERC20 tokens while returning the rest or finally opting for returning all ERC20 tokens withdrawn.
Uniswap V2 has also included some significant changes and improvements as given below:
- Uniswap V2 efficiently takes care of ‘missing return’ ERC20 tokens that were not on the earlier version.
- Smart contracts are now written in solidity rather than Vyper
- Mutex to strengthen re-entrancy protection adding more support for ERC777 with other ERC20 non-standard tokens.
- Error messages have become more figurative, meaning that they have become more descriptive.
The protocol upgrade has been one of the best things with Uniswap this year. It has been trending over the past few days with sharp rises in trade volumes. A majority of the trade now happening on its new version, with a 24-hour trading volume of over USD 125 M on the upgraded protocol compared to 3.5 M on V1.
Check out the trading volume over the last 2 months:
With Uniswap V2 reaching such high volumes, it is also being compared to exchange giants like Coinbase and Kraken.
DEXs are permanently popular but despite their popularity, many have warned of the dangers of using decentralized exchanges like Uniswap considering that it is becoming vulnerable to becoming look-alikes of popular tokens. Uniswap has many imposter tokens because there is an almost zero barrier to entry and any ERC-20 token can be traced on it.
Despite these claims, Uniswap is the largest DEX over the course of the second quarter this year even before V2 took off.
Uniswap is the perfect candidate for exploring the on-chain cash flows. Even without any additional growth, it has the potential to generate more than $5M + in liquidity provider fees this year.
Make sure to check out more DeFiRev articles and sign up for our exclusive newsletter + get access to VIP DeFi Networking here.
Saffron Finance: SFI a new DeFi bluechip? This hidden crypto gem seems primed for massive growth.
November 10, 2020
Saffron Finance or SFI, is currently one of the hottest defi projects right now that is still very much under the radar.
Just as we have reported on YFI, CORE, and Curve long before most DeFi news organizations, this is one we’re definitely adding to our watchlist.
Just like the aforementioned tokens, SFI seems to be in the same league of technical expertise mixed with an extremely creative application, all with code that is completely original. Here’s what you need to know about Saffron Finance.
What is Saffron Finance?
Saffron. Finance is bent towards innovative offerings in the crypto world. It is a protocol meant for the tokenization of on-chain assets. There is an advantage of the format of the tokenization of on-chain assets as it allows the liquidity providers great flexibility and unhindered access to the base collateral leveraging the benefits of staking.
Typically due to the overcrowding of different scenarios, Liquidity providers have to undergo insurmountable impermanent losses as a result of extreme volatility.
Yet, Saffron is one such protocol that narrows down such outcomes and provides liquidity providers with the necessary dynamic exposure.
Customize your risk
Liquidity providers can now select and customize their risk and return profile with the use of Saffron Pool Tranches. Pools are segregated into different tranches each having their own set of properties. The different tranches here are:
AA Tranche: In this case, the LPs add liquidity to the AA tranche earn less interest but are protected and covered in case of loss from platform risk. The covered capital comes from the principal and interest earnings of A tranche LPs. They have a great share in the SFI token generation grabbing 80% from it all.
A Tranche: Under this category, LPs add liquidity to the A tranche and earn far better interest compared to the previous, yet vulnerable enough to lose their interest in case they are exposed to platform risks. The liquidity providers under this tranche earn 10% of the SFI tokens generated per epoch. Their earnings will not be included in covering the first loss of AA tranches.
S Tranche: The S tranche like the A tranche earns 10% of SFI generated per epoch. The S epoch has an underhand mechanism to maintain the exact value of the tranche interest multiplier. It maintains the position of equilibrium between A and AA tranches with its functionality.
Saffron individually tokenizes the future earning stream and the NPV of the used-up capital in every tranche. The earnings-based on tokenized holdings are distributed across all tranches through payback waterfalls.
The Epochs are discussed in tranches are of 14-days in length. In the epoch period, the liquidity providers can earn interest on the platforms and mine SFI tokens – the native token of Saffron Finance.
When liquidity gets locked in the pool, they can trade their Saffron LP tokens defining their ownership of the pool. But when the 14-day epoch period ends, the Liquidity providers can remove their liquidity with SFI mined and interest earned. The first epoch was already kicked off on 1 Nov and all the liquidity was added to the S tranche. The other two tranches will be available in the second epoch.
Saffron has been launched with DAI liquidity mining. With this, all DAI will be added to the Saffron pool and is used for compounding and earning interest. The best part about it all is that in the future versions of the protocol additional currencies and platforms will be added dynamically.
SFI is generated at the end of the epoch and is redeemable in proportion to the total outstanding dsec tokens generated during that epoch. They are redeemable in proportion to the total outstanding dsec tokens generated in that epoch.
Saffron smart contracts have already been deployed and their code has been verified on etherscan and already been added to a GitHub repository. The team is still working on code audits but the team’s ongoing development timeline has allowed for it and the entire set of Saffron smart contracts. The Saffron Pool, adapter, strategy, and token contracts have been tested with 10,000 DAI in the best test epoch on the Ethereum mainnet.
SFI Pools and Adapters
The platform has pools of liquidity that collect deposited base assets from LPs and deploy them on platforms in order to earn interest. Adapters connect this pooled capital to platforms.
The already launched first adapter is DAI/Compound adapter which connects the DAI pool to the Compound platform giving the DAI pool LPs the chance to pool together and earn interest on Compound. This strategy connects all pools and adapters together, selects the best adapter for capital deployment. It also generates and distributes SFI tokens to LPs at the end of every epoch.
By offering asset collateralization on its platform, liquidity providers have access to dynamic exposure and have a great advantage of selecting customized risk and return profiles.
Saffron Finance Telegram: https://t.me/saffronfinance
Saffron Medium: medium.com/saffron-finance
Make sure to check out more DeFiRev articles and sign up for our exclusive newsletter + get access to VIP DeFi Networking here.
Ethereum 2.0 Launch: Staking, Launch Date, and More. Here’s everything you need to know.
Ethereum 2.0 – what it is and why is it necessary?
Ethereum 2.0 is a major upgrade to the Ethereum Network that aims to improve the speed, efficiency, and scalability of the network. Ethereum is up for a major facelift with the new version release which will state to drastically improve its transaction volumes, alleviate congestion, and high gas costs. Upon reaching the final phase of the upgrade, dubbed as ‘Phase 2’ Ethereum will meet the goals of being a 100% transparent and open network for decentralized finance.
Ethereum 2.0 will involve sharding to drastically augment the bandwidth and reduce gas cost making it cheaper to send Ethereum, tokens, and interact with smart contracts. The system will undergo fundamental economic changes also allowing support to stake nodes and earn Ethereum as passive income. Ethereum 2.0 is a unified effort of thousands of developers who have put in years of hard work.
The Ethereum 2.0 upgrade will be done in 3 distinct phases starting with Phase 0. After having faced criticism for the network’s high transaction costs and fragility during peak usage will Ethereum 2.0 stand up for the challenge? This we will come to know once the launch is successfully built and practiced.
The next generation of Ethereum Blockchain will go live on December 1’st and will go from a Proof-Of-Work model to a Proof-Of-Stake model where participants can tie their crypto to the network as collateral. As per the announcement, for the launch to really happen, 16384 validators will have to stake a minimum of 32 Ether worth $12,800 at current market rates thereby underpinning the network. Once the threshold has been staked it will trigger the launch of Beacon Chain in the Ethereum 2.0 genesis event.
What’s different about this time?
The most important change is that the consensus mechanism will transition from PoW to PoS which is touted to be more effective and energy-efficient in terms of network maintenance. Both PoW and PoS are designed to incentivize network maintenance ensuring that the blockchain data is tamper-proof. Hence in a PoW system, one unit of computational power equals one unit of mining power, and in PoS one unit of value secures one unit of mining power for the validator.
In Proof of Stake validators stake crypto for the right to verify the transaction. The validators are selected to propose a block based on the amount of crypto they hold and the duration of how long they have held it. The main advantage of PoS is that it is far more energy-efficient than PoW as it disengages energy-intensive computer processing from the consensus algorithm. This also means that there is a lot of computing power to secure the blockchain.
The other big change is the introduction of network sharding which will happen at a later phase. Sharding implies that only a portion of the nodes has to validate any given transaction instead of all of them. This will directly increase the network’s throughput in a big way.
The full roll-out of Ethereum 2.0 will take place in three phases: Phase 0, 1, and 2. Phase 0 as we know is aiming for a December 2020 launch date with other phases coming in the following years. Phase 0 is looking at the implementation of the Beacon chain that stores and manages the registry of validators and deploying the PoS consensus mechanism for Ethereum 2.0.
The original PoW chain will concurrently run alongside so that there is no break in data continuity. Phase 1 is due in 2021 and will see the integration of Proof Of Stake shard chains.
Ethereum 2.0 will be arguably much better than its earlier version
One of the reasons calling for the upgrade has been scalability. Ethereum 1.0 can only support 30 TPS causing delays and congestions. Ethereum 2.0 promises up to 100,000 transactions per second through the implementation of shard chains. The new version has also been designed with security in mind. Most of the Proof of Stake networks have a small set of validators making it a more centralized system with poor network security.
Furthermore, Ethereum 2.0 requires a minimum of 16,384 validators making it ultra-secure. The Ethereum Foundation is also setting up a dedicated security team for Ethereum 2.0 which will research all the possible cybersecurity issues that plague the cryptocurrency sector. One of the top researchers for Ethereum 2.0, Justin Drake said that the research will also include “fuzzing, bounty hunting, pager duty, crypto-economic modeling, applied cryptanalysis, formal verification”.
The co-founder of Ethereum Vitalik shared a roadmap of how the next few years things will pan out for Ethereum in the below-given tweet.
Harvest Finance Hack Explained. Here’s how it happened.
Unscrambling the Harvest Finance hack and its aftermath
Harvest Finance, the Decentralized finance protocol was hacked for a staggering $24 million. The attack was a reminder to the crypto community that DeFi has sure risen to prominence but it has its own share of loopholes, and it is this that the attackers take advantage of.
Harvest Finance attack details
The attacker directly attacks the protocol’s liquidity pools leading the arbitrage attack using a large flash loan – a type of uncollateralized loan. The attacker later returned $2.5 million but in a mere seven-minute act, the entire hack was complete, leaving the protocol stakeholders bewildered.
In further addition to the details of the hack, the protocol revealed that the hacker manipulated prices on one money lego which is the Curve Y pool. This was done to drain another money lego farm USDT (fUSDT), farm USDC(fUSDC) multiple times.
The attacker then converted the funds to renBTC and later excited to Bitcoin. renBTC is not synthetic because it does not rely on any liquidation mechanism and it is certainly not the price of Bitcoin on Ethereum. It is a one-to-one representation of Bitcoin on Ethereum which can be redeemed for BTC at any time and in any amount.
The native token of Harvest Finance, FARM fell 54% to $101.79 when the news of the hack came forward. Following the attack, the amount of money that was locked in the protocol plummeted from $1 billion to $575 Million On October 25th. The investors were so fretful that they pulled their deposits back.
Harvest Finance acted accordingly and withdrew all the funds from the shared pools almost immediately after it had completed a fine evaluation of the attack. It began with reconstructing the processes which included DAI, USDC, USDT, TUSD as well as WBTC and renBTC. The funds are currently present in the vaults safely so that they are not exposed to further market manipulation. The hack did not involve DAI, TUSD, WBTC, and renBTC, and the depositors in these vaults were not affected.
How was the hack carried out?
The mechanics of the protocol has allowed for the execution of such an attack. Let us see how:
The investment strategies used by Harvest involves calculating the real-time value of assets that are invested in the base real-time protocols. The value of the assets is then used by the vaults to calculate the number of shares to be used to the user depositing the funds. The same value of the assets is also used when the users take out funds from the vaults.
Payout is then calculated upon the user exit. What also needs to be noticed here is that the assets inside some of the vaults are deposited into shared pools of underlying DeFi protocols. These are subject to market effects such as impermanent loss, arbitrage, and slippage. This means that its value can be manipulated through larger volumes of market trades.
The attacker knew this well and had exploited the impact of the impermanent loss of USDC and USDT inside the Y Pool of Curve.fi by manipulating the asset value to deposit funds into the vaults and obtain the shares for a beneficial price.
The aftermath of the Harvest Finance Hack
Harvest Finance’s Twitter account has been buzzing with messages and activity. The protocol has taken full responsibility for the engineering attack and has ensured that in the future such attacks will be countered and mitigated. The protocol has made it clear that formatting a disaster management plan to assist those who are affected will be the top priority for the protocol.
The protocol is investing its resources to catch hold of the scammers and has already provided a list of Bitcoin addresses of the hacker where it believes that the stolen funds may have moved. It also had taken immediate action by asking prominent exchanges like Binance, Coinbase, and Huobi to block the attacker’s addresses. It further said that there is:
“A significant amount of personally identifiable information on the attacker, who is well-known in the crypto community.” Not willing to dox the cyber-thief, Harvest Finance is now offering a $100,000 bounty “for the first person or team to reach out to the attacker”.
Harvest further tweeted that the $2.5 million returned by the hacker will be distributed to the affected depositors on a pro-rata basis using a snapshot. The attack on Harvest comes only six weeks after the attacker escaped with $8.1 million in Bitcoin from another DeFi protocol BZX, however, BZX managed to recover the funds.