DeFi Yield Farming: Why It's All the Rage But Risky - Ep.180

Dan Elitzer, investor at IDEO CoLab Ventures, and Will Price, data scientist at Flipside Crypto, discuss the yield farming craze. In this episode, we cover:
the goals of protocols offering liquidity mining
the goals of users yield farming right now
whether users of Compound will have much awareness of COMP in the future
how Compound is trying to dampen inorganic activity and properly align incentives 
how incentives in one DeFi protocol can screw up another's such as changes in Compound's liquidity mining program causing Dai to lose its peg
whether the activity created by liquidity mining is sustainable and how
whether Compound is overvalued and how to determine valuations for DeFi tokens
the security risks that come with trying yield farming
how teams can keep their protocols safe given the composability of DeFi and the growing number of developments in the space
whether the yield farming craze will cause the price of ETH to rise and why the prevalence of stablecoins might prevent that
whether new DeFi tokens could push flagging layer 1s out of the top 10
what will happen if even more Bitcoin comes to DeFi
how the next big thing in DeFi might be trying to stack yield across protocols and eventually prime brokerage protocols
Thank you to our sponsor!
Crypto.com: https://www.crypto.com
 
Episode links: 
Dan Elitzer: https://twitter.com/delitzer
IDEO CoLab Ventures: https://www.ideocolab.com/ventures/
Will Price: https://twitter.com/will__price
Flipside Crypto: https://flipsidecrypto.com
 
Total value locked in Compound: https://defipulse.com/compound
 
What liquidity bootstrapping pools are: https://medium.com/balancer-protocol/building-liquidity-into-token-distribution-a49d4286e0d4 
 
Dan on earning more from borrowing USDT than lending it on Compound: https://twitter.com/delitzer/status/1272642107128164354 
 
Tony Sheng on how yield farming works and how much you can earn from it: https://twitter.com/tonysheng/status/1274393189231689728
 
And his followup on the risks of yield farming: https://twitter.com/tonysheng/status/1274780457729617920
 
The purpose of COMP for governance: https://medium.com/compound-finance/compound-community-ownership-ee0ed1252cc3 
https://medium.com/compound-finance/expanding-compound-governance-ce13fcd4fe36
 
Risks of so much BAT being held in Compound: https://twitter.com/spencernoon/status/1276897377446776832?s=20
https://twitter.com/defiprime/status/1277026665952980992?s=20
https://twitter.com/devops199fan/status/1274732220192829441?s=20
 
Cyrus of MakerDAO concerned about the risks COMP poses to the Dai peg: https://forum.makerdao.com/t/upcoming-comp-farming-change-could-impact-the-dai-peg/2965
 
Dan Guido and Taylor Monahan on Unchained discussing DeFi security: https://unchainedpodcast.com/defi-security-with-so-many-hacks-will-it-ever-be-safe/
 
Twitter discussion on whether ETH price will rise due to yield farming: https://twitter.com/RyanSAdams/status/1274781676875452421
 
What will happen to other Layer 1s? https://twitter.com/Shaughnessy119/status/1274376237239189504?s=20 
Aquaponic yield farming: https://bankless.substack.com/p/aquaponic-yield-farming
Learn more about your ad choices. Visit megaphone.fm/adchoices

Dan Elitzer, investor at IDEO CoLab Ventures, and Will Price, data scientist at Flipside Crypto, discuss the yield farming craze. In this episode, we cover:

the goals of protocols offering liquidity mining the goals of users yield farming right now whether users of Compound will have much awareness of COMP in the future how Compound is trying to dampen inorganic activity and properly align incentives  how incentives in one DeFi protocol can screw up another's such as changes in Compound's liquidity mining program causing Dai to lose its peg whether the activity created by liquidity mining is sustainable and how whether Compound is overvalued and how to determine valuations for DeFi tokens the security risks that come with trying yield farming how teams can keep their protocols safe given the composability of DeFi and the growing number of developments in the space whether the yield farming craze will cause the price of ETH to rise and why the prevalence of stablecoins might prevent that whether new DeFi tokens could push flagging layer 1s out of the top 10 what will happen if even more Bitcoin comes to DeFi how the next big thing in DeFi might be trying to stack yield across protocols and eventually prime brokerage protocols

Thank you to our sponsor!

Crypto.com: https://www.crypto.com

 

Episode links: 

Dan Elitzer: https://twitter.com/delitzer

IDEO CoLab Ventures: https://www.ideocolab.com/ventures/

Will Price: https://twitter.com/will__price

Flipside Crypto: https://flipsidecrypto.com

 

Total value locked in Compound: https://defipulse.com/compound

 

What liquidity bootstrapping pools are: https://medium.com/balancer-protocol/building-liquidity-into-token-distribution-a49d4286e0d4 

 

Dan on earning more from borrowing USDT than lending it on Compound: https://twitter.com/delitzer/status/1272642107128164354 

 

Tony Sheng on how yield farming works and how much you can earn from it: https://twitter.com/tonysheng/status/1274393189231689728

 

And his followup on the risks of yield farming: https://twitter.com/tonysheng/status/1274780457729617920

 

The purpose of COMP for governance: https://medium.com/compound-finance/compound-community-ownership-ee0ed1252cc3 

https://medium.com/compound-finance/expanding-compound-governance-ce13fcd4fe36

 

Risks of so much BAT being held in Compound: https://twitter.com/spencernoon/status/1276897377446776832?s=20

https://twitter.com/defiprime/status/1277026665952980992?s=20

https://twitter.com/devops199fan/status/1274732220192829441?s=20

 

Cyrus of MakerDAO concerned about the risks COMP poses to the Dai peg: https://forum.makerdao.com/t/upcoming-comp-farming-change-could-impact-the-dai-peg/2965

 

Dan Guido and Taylor Monahan on Unchained discussing DeFi security: https://unchainedpodcast.com/defi-security-with-so-many-hacks-will-it-ever-be-safe/

 

Twitter discussion on whether ETH price will rise due to yield farming: https://twitter.com/RyanSAdams/status/1274781676875452421

 

What will happen to other Layer 1s? https://twitter.com/Shaughnessy119/status/1274376237239189504?s=20 

Aquaponic yield farming: https://bankless.substack.com/p/aquaponic-yield-farming

Learn more about your ad choices. Visit megaphone.fm/adchoices