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The DEX Brief No. 5

The latest trends within the DeFi space, including leadership transitions and a look at several up and coming protocols.

Written by

Mark Lurie

Published on

February 1, 2022

Top of mind at Shipyard

Decentralization is critical to the long-term health of DeFi, because it ensures censorship resistance. Projects have various degrees of decentralization which comes with various degrees of dysfunction, as evinced by SushiSwap. The reality is that clear leaders are critical to avoid dysfunction. That’s why democracies elect presidents. Therefore, the true test of an organization’s decentralization is not how distributed its wallet addresses are, but rather the extent to which the organization relies on any specific  individual. This is known as  “key person risk”.

For instance, Bitcoin has no key person risk. Yearn does with Andre, Uniswap does with Hayden. However, SushiSwap doesn’t seem to have a key person since 0xMaki and Joe DeLong left, and has been dysfunctional as a result. We were therefore heartened to see the first successful leadership transition this month at Kyberswap with a new CEO taking the reins. While Victor Tran was already a cofounder, it’s still a very positive sign that someone new has taken over with the support of the project’s community.

 

Shipyard Insights

Mark discusses DEXs, technical trade-offs, liquidity management, and changes in DeFi incentive structures in episode #776 of The Pomp Podcast.

Shipyard kicked off its Tech Talks series this month with a deep dive into calculating accurate DeFi yields. If you want to skip the empty crypto chatter and hear directly from the developers building the future of Web3, be sure to follow this ongoing series!

The latest episode of Shipyard’s “WTF Crypto?” podcast is out! This episode discusses crypto fundraising — in terms of the overall fundraising landscape, what crypto valuations look like, and how investment rounds are structured. Tune in today!



DEX headlines that caught our attention


Uniswap launches Seatbelt, a test suite for governance proposals that can be used by any DAO that runs on Governor Bravo. 

0x API is live on Optimism, aggregating liquidity across Uniswap and Synapse.

Curve launches on Optimism, which currently ranks as the fourth-largest L2 by TVL.

Kyber Network announces new CEO, marking one of the first successful leadership transitions within the DeFi space.

The 1inch Network expands to Avalanche and Gnosis with the integration of its Aggregation and Limit Order protocols.

ParaSwap launches on Fantom’s Opera Mainnet following an overwhelmingly supportive community vote.


What we're reading

Ever since OlympusDAO introduced protocol-owned liquidity (POL), many other DeFi protocols have adopted and iterated on their core design. This Substack article provides an excellent overview of the evolution of  POL, as well as the advent of protocol-owned active liquidity management (PALM) — which combines the advantages of POL and active liquidity management to provide more capital-efficient liquidity.


“Decentralized governance” is more often used as a vague buzzword rather than a description of a practical solution. This report by Other Internet explores how Uniswap’s community is responding to ecosystem-level issues, from scaling to metagovernance. Their findings provide a revealing look at the current limitations and future opportunities in decentralized governance.


Token distributions are often the source of great interest, and occasional consternation, for crypto founders and community members alike. This study published by Mirror explores key token distributions trends stemming from data of pitch decks, and Github posts dating back to 2013 and provides several helpful suggestions on how projects can optimize their token distributions. 


Thousands of people use DeFi products every day with little to no understanding of how these decentralized markets truly work. This study provides a comprehensive overview of the major results in AMM research, starting with a basic analysis of constant product market makers like Uniswap before diving into alternative AMM methodologies. While this piece is a bit technical, it offers great insights into the DEXes many of us use every day.

Written by

Mark Lurie

Published on

February 1, 2022

November 28, 2022

The best way to evaluate the profit potential of a DEX pool is to compare its returns against a common benchmark. We recommend a daily rebalanced portfolio.

November 8, 2022

What exactly is #RealYield and why should you care? + more.

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