Rapture #224: Aave Stablecoin and Anonymous DeFi
Some nice price action these past few days for crypto. Both BTC and ETH are now up more than 30% from their bear market lows. I mostly attribute this bounce to the new SBF put narrative (i.e. SBF will save the market), equities bouncing, an arising consensus that the institutional liquidations are over, and the Saudi Arabia government entering crypto rumor.
I personally don't trust the bounce, and even if the rally went much higher, I will likely remain around 93%+ in cash. I don't try to time every move, especially rallies in what I consider bear markets.
Now that I have my market commentary out of the way, I want to discuss some of the big feature announcements to come out in the past few days from two leading crypto projects: Aave and Aztec.
Aave announces stablecoin
I did not see this one coming. Earlier today, Aave announced the upcoming release of a new crypto collateral-backed USD stablecoin, GHO. While surprising, this move does create additional functionality for Aave's existing collateral markets and by no means will push the Aave development team out of their comfort zone.
If you are interested in the exact dynamics for how the GHO ecosystem will function, you can find more information here.
There are many features to GHO that will make it superior to DAI, MakerDAO's leading crypto collateralized stablecoin. One feature I find particularly interesting is that GHO can be distributed across other networks beyond Ethereum without the use of bridges. Aave uses a mechanism called a portal to achieve such functionality. Another interesting feature of GHO is that users who stake AAVE for the safety module, which is the name of the mitigation tool Aave utilizes in a shortfall event, can mint GHO at a discounted rate. This feature means that users who stake AAVE for the safety module will pay a lower interest rate on the GHO that they borrow.
If you are interested in playing around with the relationship between one's stkAAVE balance and the corresponding GHO borrow interest rate discount, Aave released a google sheet sandbox here. All interest paid for GHO borrow will go to the Aave DAO.
I am incredibly excited to see this stablecoin come to market. Furthermore, I think Aave will not be the only DeFi project pursuing vertical integration within the ecosystem.
Aztec connect goes live
Aave's GHO was not the only exciting feature announcement from a major crypto project this week. Aztec, one of the leading zkRollup implementations, announced Aztec Connect today. Aztec Connect enables anyone to add privacy to Ethereum applications via bridge contracts directly or via a SDK.
Through utilizing zk.money and Aztec Connect, users can now execute transactions on Aave, Compound, Uniswap, Lido, and more effectively in an anonymous fashion.
This breakthrough is significant, as users can now anonymously participate in these DeFi financial markets. This type of technology will make the adoption of Monero and Zcash look like child's play.
Disclaimer:
The Content on this email is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on this site constitutes a solicitation, recommendation, endorsement, or offer by Rapture Associates or Mattison Asher or any third party service provider to buy or sell any securities or other financial instruments in this or in in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.
All Content on this site is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing in the Site constitutes professional and/or financial advice, nor does any information on the Site constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other Content on the Site before making any decisions based on such information or other Content. In exchange for using the Site, you agree not to hold Rapture Associates, Mattison Asher, and its affiliates or any third party service provider liable for any possible claim for damages arising from any decision you make based on information or other Content made available to you through the Site.