A boat in a container shipyard

The DEX Brief No. 22

SAIL token has officially launched!, Clipper Adventure 4, and more.

Written by

The Shipyard Team

Published on

August 31, 2023

Top of Mind at Shipyard

  • FDV and volumes are poor DEX success metrics because harmful bot flow can skew their true values. 
  • “Human volume” is likely a better metric to observe as it excludes toxic flow that loses money for LPs. 

The two most popular metrics for valuing DEXs are FDV and volumes. This absurdity is almost laughable because it systematically values protocols that cannot survive over time. 

Imagine if an auto salesman earned a commission on every car sold, regardless of price. The salesman could make millions by selling 1,000 cars per month at $10k under market value. With enough starting capital, the dealership would be the largest and fastest growing dealership in the nation. But, of course, pretty soon they’d go bankrupt. In real estate, a comparable example might be WeWork.

In DeFi, the comparable is a DEX that grows volume to billions overnight. The easiest way to accomplish this is by using LPs’ capital to make trades that lose money. Say a thousand developers make bots that take advantage of this arbitrage opportunity–the DEX’s usage and volume will spike almost overnight. 

In fact, this is the norm. A recent analysis from Glassnode reports that 70% of Uniswap volumes are bots. Bots are designed to only make profitable trades (profitable for the bots that is), which means the Uniswap LPs on the other side are getting unprofitable trades.

The better success metric might be “human volume”. It doesn’t solve the problem entirely, but at least it’s not a sure recipe for disaster!

- Shipyard CEO, Mark Lurie

Below DEX

AdmiralDAO launches governance token–SAIL! 

On August 22nd, AdmiralDAO officially launched the SAIL governance token. This marks a major milestone for Shipyard Software as well as a huge moment for the Clipper Community. Already, SAIL holders are actively proposing and debating topics relevant to the DAO.

Community Governance

The token launch marked the DAO’s transition to fully decentralized community governance, driven by SAIL holders. DAO members can now submit and vote on governance proposals in order to make changes to products overseen by the DAO (e.g., Clipper), SAIL-related initiatives, allocation of community Treasury funds, or the governance framework itself.

Earn SAIL through farming 

The more SAIL you hold, the greater your on-chain voting power! SAIL farming is simple: 

A Bigger Mission

Fair and free markets create shared prosperity, and prosperity empowers people around the world to advocate successfully for their own political and human rights. The promise of Decentralized Finance (DeFi) is that it enables open, global exchange, providing access to the transformative power of markets even when incumbent power structures want to limit individual access.” - The Next Horizon

As Clipper moves into its next iteration, led by AdmiralDAO, there will be plenty to say about superior product design compared to competitors, how the community will grow the DEX, or where the next generation of users will come from. But for the moment, it’s important to remember why we are building a more open, decentralized financial system in the first place.

Around DeFi

  • THORSwap introduces a new Streaming Swaps feature aimed at reducing slippage and providing better price execution on large trades.

Team press: Stablecoin supply continues to drop despite wider adoption signals

Community Updates

Clipper’s Adventure 4 Launches! 

  • 24,400 pirates signed up.
  • Adventurers will be learning about AdmiralDAO governance and SAIL tokenomics and farming in the days and weeks ahead. 
  • There will be a mid-Adventure signup week that starts on Monday, September 3rd. 
  • Invite people to get SAIL Token Hodler role in Discord so they can participate in the off-chain phases of Clipper Governance. 
  • See here for more information on joining (or recruiting). 

Written by

The Shipyard Team

Published on

August 31, 2023

January 31, 2024

Breaking down the forms of MEV that most affect DEX LPs and traders.

January 8, 2024

Shipyard LP Report results, 2024 outlook for derivatives DEXs, and more.

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