Stablecoin Offerings Expand with DeFiDollar Debut and USDC2 from Coinbase

Tether is still the king of the stablecoins, but with two-thirds of its supply based upon Ethereum, there is definitely room for others. As Ethereum network fees surge to new heights, there has been a great deal of effort to seek out alternative methods of cost-effective transactions in the DeFi markets. Tether has moved some of its supply to the Layer 2 OMG Network to alleviate some of this pressure, and new stablecoins are entering the markets. Tether also recently surpassed $13 billion total supply and flipped Bitcoin for the top spot in average daily transfer value.

DefiDollar (DUSD) Debut

The first offering is called the DefiDollar (DUSD), which has been backed by an index of stablecoins. It leverages Curve’s sUSD pool and allows users to mint DUSD using DAI, USDC, USDT, or sUSD.

DefiDollar ($DUSD) is live! 🥳🥂

🔐Audited by @peckshield & @Quantstamp
📜Blog – https://t.co/ndrgYDR0du

— DefiDollar (@defidollar) August 27, 2020

The exact price of DUSD is a function of stablecoin prices derived from Chainlink oracles and Curve liquidity. According to the official announcement;

DUSD uses DeFi primitives to maintain its peg to one Dollar. As DUSD is not a unit of debt obligation (unlike in Maker and sUSD) it provides a swift arbitrage opportunity aiding in stabilizing its peg.

There is also a native staking pool which provides a volatility cushion and protects against price fluctuations. To foster safety, DefiDollar launched with a $3 million ceiling on the amount of DUSD which could be minted, and this was reached within an hour of launching:

We've hit the TVL cap of $3mn 🤯

Humbled by the amazing response!

Will update the community when we revise the TVL cap.
Please note that DUSD minting is paused for the time being.

— DefiDollar (@defidollar) August 27, 2020

The team suggested that this ceiling could be raised as early as next week. DUSD liquidity providers can contribute to the Curve sUSD pool, which is called a Peak, as they collect lending interest along with additional rewards. This way, rewards can be passively accrued rather than having to manually claim them and suffer the high gas fees. DefiDolllar pools will be incentivized with the CRV and SNX liquidity mining rewards, while stakers can earn Curve Trading Fees plus DUSD Redemption Fees in addition to SNX and CRV liquidity mining rewards. Unlike many recent DeFi ventures, DUSD has been fully audited by two firms, Peckshield and Quantstamp. There were a few bugs to fix as discovered by the auditing teams, and DUSD contracts were deployed to the mainnet where they have been monitored to identify any surfacing issues in beta testing. Full community governance is the ambition for the future—the post elaborated;

This includes, but is not limited to the addition of peaks, the relative weights assigned to them, medianizing oracles and distribution of protocol rewards.

The project is just 24 hours old and it appears to be producing good returns for stakers already. This will likely be one to keep an eye on.

The stakers have received 61% APY in last 5 hours. pic.twitter.com/6FTNgEsuWD

— DefiDollar (@defidollar) August 27, 2020

Coinbase Launches USD Coin 2.0

U.S. crypto exchange Coinbase, along with the Centre Consortium members and Circle, has launched a new version of its own stablecoin, USD Coin (USDC). USDC 2.0 claims to introduce what the company terms as ‘gasless sends’ which enables wallet developers to negate the calculation of gas fees, remove the need for the user to hold a balance of ETH, and instead delegate the payment of the gas fees to another address.

USDC 2.0 launched today, introducing “gasless sends” to help developers build more intuitive, user-friendly applications with USDC. This makes USDC more approachable for crypto experts & mainstream users alike, and is 100% backward-compatible. https://t.co/UCzZlMR2TR

— Coinbase (@coinbase) August 27, 2020

The announcement added that the upgrade also brings in additional security to the existing USDC smart contracts with a new set of on-chain multiple-signature contracts and new consensus mechanisms. It continued to state that the move was driven to avoid the ‘complexities’ of having users hold ETH in their wallets in order to pay gas fees on stablecoin transactions.

This complexity presents a barrier to mainstream adoption and broad usage of digital dollar stablecoins for internet payments.

With USDC2, developers can either pay the gas fees on behalf of the user, or present and deduct the fees in USD Coin. It added that USDC 2.0 changes enabled on Aug 27 are completely backward compatible, meaning that there is no impact on existing wallets, exchanges, or applications currently integrating with USDC. According to Coinbase, USDC has seen ‘unprecedented adoption,’ surpassing $1.4 billion in market capitalization and more than $90 billion in on-chain transaction volume.

DeFi Markets Hit New Highs

Another day has brought another high in total value locked in the DeFi ecosystem. Using TVL as a metric has been questioned on occasion due to the possibility of double-counting collateral, but it still provides a good overall indicator of investment and interest in the DeFi sector. Today that figure has hit a record high of $7.36 billion according to DeFi Pulse.

So far this month, DeFi markets have grown by 84%, and are up 980% since the beginning of the year in terms of TVL. While these figures sound impressive, DeFi still only accounts for 2% of the entire crypto market capitalization which is around $370 billion at the time of press. The Flash loan platform Aave still holds the top spot with a market share of 21% and a TVL of $1.54 billion. Aave has been boosted this week on the back of the UK Financial Conduct Authority (FCA) which granted the company an Electronic Money Institution (EMI) license. Aave has also just been integrated into the InstadApp DeFi smart wallet which provides another boost for the world’s leading DeFi protocol.

We're thrilled to announce the support for @AaveAave 👻 on the Instadapp portal – users can also leverage, short, switch debt, and more exciting recipes coming soon!https://t.co/DlD30ikUKd pic.twitter.com/ARhM027TQV

— Instadapp (@Instadapp) August 27, 2020

Maker is holding on to second place in the TVL charts with $1.41 billion. However, the yield farming protocol Curve Finance is quickly catching up. TVL on Curve has grown by 7.5% on the day to reach a collateral lockup of $1.28 billion. In addition to Curve, the top-performing DeFi platforms over the past 24 hours in terms of TVL are Yearn Finance, Balancer, and dForce, which has surged a whopping 42% to reach a peak of $53 million. It seems that the Compound Finance fever is wearing off as the protocol sank to sixth place, losing 2.5% of its crypto collateral over the past 24 hours. Flexa and MCDEX have also seen large TVL contractions over the past day.