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Yield farming frenzy pushes Uniswap daily volume over $1 billion

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A dramatic spike in yield farming activity associated with SushiSwap and similar protocols has seen Uniswap become the first decentralized exchange (DEX) to exceed $1 billion in 24-hour trade volume.

According to crypto data aggregator CoinGecko, Uniswap V2 is currently the third-largest exchange by normalized trade volume with $1.02 billion worth of ERC-20 tokens changing hands over the past day.

CoinGecko ranks Uniswap below only Binance and OKEx, who represent $6.25 billion and $1.10 billion in daily trade respectively. The decentralized exchange is now beating out major centralized platforms like Coinbase Pro, Huobi Global, and Bitfinex.

The boom in yield farming has also seen Uniswap suddenly emerge as the top decentralized finance (DeFi) protocol by locked funds with $1.69 billion — representing 18.05% of the total value locked in the sector’s smart contracts according to DeFi Pulse.

Defi Pulse has Uniswap at No.1

However, analysts are predicting that Uniswap’s dominance may be short-lived, with rival forks offering extreme incentives to liquidity providers rapidly proliferating in recent weeks.

SushiSwap, an unaudited fork of Uniswap, has already attracted $1.47 billion in locked funds through what many are describing as a ‘vampire attack’ designed to suck liquidity from Uniswap.

Rival platforms offer extreme incentives to yield farmers to stake LP tokens — the tokens provided to liquidity providers on Uniswap — on their platform, migrating liquidity from the leading DEX. As a consequence, LP tokens farmed on SushiSwap currently representing more than 72% of the total funds locked on Uniswap.

SushiSwap is not the only platform seeking to siphon Uniswap’s liquidity, with similarly unaudited Uniswap forks such yuno.finance, Hotdogswap, pizzafinance, and Kimchi enticing yield farmers with purported returns that sometimes exceed millions of percent. Despite quickly attracting attention, Hotdog’s native token plummeted from $4,000 to $1 over just five minutes earlier today.

Uniswap is also set to face increasing competition from decentralized exchanges targeting the tokens of rival networks, including the forthcoming Polkaswap platform.

The Tron (TRX)-affiliated JustSwap platform also recently emerged as the second-largest DEX with roughly $200,000 in daily trade according to CoinGecko. However, some analysts believe JustSwap’s volume may be inflated through wash-trading, artificially bolstering its rankings.





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Price analysis 11/27: BTC, ETH, XRP, BCH, LINK, LTC, ADA, DOT, XLM, BNB

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Bitcoin’s recent correction is healthy, but several altcoins have lost momentum and could remain range-bound for a few days.



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Compound liquidator makes $4M as oracles post inflated Dai price

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The crypto market suffered a powerful crash on Thursday morning UTC, which sent prices of major currencies like Bitcoin (BTC) and Ether (ETH) tumbling in excess of 10%.

When traders rush for the exits, the price of stablecoins generally increase as the demand for stability rises. In today’s crash, however, the effect became particularly pronounced on Dai (DAI), which briefly traded for $1.3 between 7 and 8 AM UTC.

Dai/USD price on Coinbase, courtesy of TradingView

Most notably, DAI traded at this inflated valuation only on Coinbase and Uniswap, while other exchanges including Kraken and Bitfinex seem to have maintained a relatively stable price.

Dai/USD price on Bitfinex, courtesy of TradingView

Coinbase and Uniswap are the two exchanges used by Compound’s Open Price Feed oracle. The former acts as the baseline, while the latter is used as a sanity check and anchor. Nonetheless, it appears that Uniswap failed in its function and also posted a much higher price than normal.

Compound’s liquidation this morning amounted to $89 million, of which about $52 million came from DAI, according to data from DuneAnalytics.

One liquidation in particular is notable for its extremely large size of 46 million DAI repaid.

As DeFi researcher Sam Priestley explained, this liquidation was performed on a leveraged COMP farmer, who used USD Coin (USDC) and DAI collateral to power recursive borrowing in the same currencies. The apparent increase in DAI price put the account below the liquidation threshold.

The liquidator seized almost 2.4 billion cDAI, worth approximately $50 million with a price of $0.0209, while returning just $46 million in DAI. This is expected behavior given Compound’s current liquidation incentive of 8%.

The transaction in question involved the use of a flash swap from Uniswap and calls to update Compound’s oracle. Another four transactions issued by the same liquidator removed an additional $6 million in debt.

The event highlighted the dangers of relying on just a few data points for oracles, Chainlink (LINK) founder Sergey Nazarov told Cointelegraph. “We predicted this very exploit of centralized oracles and poor data quality over a year ago,” he said, mentioning his explanation of the risks of using a single exchange. He continued: 

“DeFi protocols that rely on centralized oracles that pull data from single exchanges, DEXes or otherwise, are inadvertently putting user funds at risk. […] The Chainlink network was unaffected by this exploit because we source data from multiple leading data providers and hundreds of exchanges, making sure we capture the real-world price of a cryptocurrency through proper market coverage.”

While there is no evidence to suggest active manipulation, the fact that DAI price jumped specifically on the exchanges used by Compound’s oracles could draw suspicion. In general, the liquidation adds to the recent flash loan hacks to highlight DeFi’s excessive reliance on just a few data sources as oracles, Nazarov concluded.





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Yearn Finance announces another ‘merger’ with the Cream lending protocol

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Two days after Yearn Finance (YFI) and Pickle Finance joined forces in DeFi’s first effective merger, Yearn founder Andre Cronje published details of another upcoming integration with Cream, a lending protocol similar to Compound and Aave.

The blog post, published on Thursday, outlines how the two protocols will cooperate for the launch of Cream V2. As part of the partnership, the teams will merge development resources and introduce several symbiotic interactions between the two protocols.

Yearn users will be able to put their vault tokens — their share in a yield farming strategy fund — as collateral to borrow on Cream. Furthermore, the farming strategies will be able to access leverage on the platform, potentially increasing their yield.

The cooperation will continue with future releases, with Cream specializing in lending products. Stable Credit, an upcoming lending platform built by Yearn, will be launched through Cream. A zero-collateral protocol that would allow more flexibility in lending was also teased as a future development.

Unlike with Pickle Finance though, the governance and token economics of Cream will remain unchanged. The two protocols will remain largely separate, with synergies more resemblant of a very close partnership, rather than an outright merger.

The community had raised concerns about not being consulted before the Pickle Finance merger, suggesting that the matter should have been put up for a vote. A team member later clarified that it technically did not require approval since most of the integrations were on Pickle’s side.

Chris Blec, a DeFi researcher who often takes an adversarial view of events, believes that these decisions highlight that governance tokens offer less control than people expect.

In a conversation with Cointelegraph, he clarified that these types of decisions would likely fall under the umbrella of “facilitating business development and integrations,” one of the decision-making powers that YFI holders granted to the core team in August.

The Yearn community has so far reacted positively to the Cream integration, but most have yet to process the announcement.

While the core team seems to be within their rights to approve partnerships and mergers, these actions may trigger further discussion of the role of the YFI token holders in the Yearn ecosystem.