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Finance Redefined: DeFi’s downturn deepens, but protocols with revenue could thrive

The majority of the top 100 DeFi tokens traded in green, with many registering double-digit gains over the past week.

Welcome to Finance Redefined, your weekly dose of key decentralized finance (DeFi) insights — a newsletter crafted to bring you some of the major developments over the last week.

This past week, the DeFi ecosystem saw several new developments related to the DeFi lending crisis as Celsius filed for bankruptcy. At a time when bears are more dominant in the current market, DeFi protocols with a revenue system can thrive.

Lido Finance has announced plans to offer its Ether (ETH) staking services across the entire L2 system. Aave plans to leverage Pocket’s distributed network of 44,000 nodes to access on-chain data from various blockchains, and gamers are plugging in DeFi through the Razer reward partnership.

The majority of the top 100 DeFi tokens traded in green, with many registering double-digit gains over the past week.

DeFi downturn deepens, but protocols with revenue and fee sharing could thrive

As the crypto winter drags on, savvy crypto investors have realized that one of the reliable sources of passive income that still exists can be found in protocols that generate revenue and share some of it with their respective communities.

Data from Token Terminal shows revenue positive platforms are primarily the nonfungible token (NFT) marketplaces like LooksRare and OpenSea.

Ethereum staking service Lido announces layer-2 expansion

In a Monday blog post, the Lido team noted that it would initially begin by supporting Ether staking via bridges to L2s using wrapped stETH (wstETH). Moving forward, it will eventually enable users to stake directly on the L2s “without the need to bridge their assets back” to the Ethereum mainnet.

In terms of partnered L2s, the team stated that before the announcement, it had already integrated its bridged staking services with Argent and Aztec. It added that the next collection of partnerships and integrations would be unveiled over the next few weeks.

Aave taps Pocket Network to beef up decentralized app development

Aave, an open source DeFi protocol, is teaming up with decentralized Web3 infrastructure provider Pocket Network to offer developers increased scalability and ease of use when building decentralized applications (DApps) on the Aave Protocol.

According to the statement on Tuesday, Aave will use Pocket’s distributed network of more than 44,000 nodes to access on-chain data from various blockchains to power decentralized applications. Developers building Aave-powered DApps may now access blockchain data from Pocket Network on demand following the new integration.

Gamers plug into DeFi through the new Razer rewards partnership

Gamers and customers of IT and gaming hardware firm Razer are set to plug into the world of DeFi through a new rewards swap program in partnership with Cake DeFi.

Razer remains a household favorite brand for gamers around the world, with its Razer Gold rewards program allowing gamers to earn and redeem Razer Silver points for a variety of hardware and digital rewards, including Steam games and discount vouchers.

DeFi market overview

Analytical data reveals that DeFi’s total value locked registered a near $5 billion rise from the past week, posting a value of $58.65 billion. Data from Cointelegraph Markets Pro and TradingView shows that DeFi’s top-100 tokens by market capitalization had a mixed week, with several tokens trading in red while a few others registered even double-digit gains.

Lido DAO (LDO) was the biggest gainer among the top 100 DeFi tokens with an 80% rise over the past week, followed by Fantom (FTM) with a 28% surge. Avalanche (AVAX) registered a 26% surge over the past week, while ThorChain (RUNE) saw a 21% rise in price over the past seven days.

Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education in this dynamically advancing space.

3AC founders reveal ties to Terra founder, blame overconfidence for collapse

Su Zhu revealed the 3AC team had close ties to Terra co-founder Do Kwon, which made them overlook several red flags with the project that eventually led to a multi-million dollar loss for the hedge fund.

The founders of tainted crypto hedge fund Three Arrow Capital (3AC), which filed for bankruptcy in the first week of July, have finally resurfaced after five weeks of no known whereabouts.

In an interview with Bloomberg, the crypto hedge fund’s two founders Su Zhu and Kyle Davies admitted that the overconfidence born out of a multiyear bull market, where lenders saw their value swell by virtue of financing firms like 3AC, led to a series of bad decisions that should have been avoided.

Zhu also revealed their closeness to Terra founder Do Kwon and claimed they believed the firm was going to do big things. He admitted that the firm’s closeness to Terra made them overlook certain red flags about the firm, which eventually led to their $500 million worth of investment going to zero. Zhu explained:

“If we could have seen that, you know, that this was now like, potentially like attackable in some ways, and that it had grown too, you know, too big, too fast.”

The two founders claimed that the LUNA (now known as Luna Classic) investment surely was a setback for the firm. Still, the real issue began when Bitcoin (BTC) fell below $20,000, and it became impossible for the firm to access additional credit. Zhu claimed that even after LUNA’s collapse, business was as usual, explaining:

“Throughout that period, we continued to do business as usual. But then yeah, after that day, when, you know, Bitcoin went from $30,000 to $20,000, you know, that, that was extremely painful for us. And that was in, that ended up being kind of the nail in the coffin.”

When inquired of their whereabouts and why they have been in hiding, the founders blamed a series of death threats as their reason for going underground. The duo didn’t reveal their current whereabouts, but said they were moving to Dubai.

The founders denied any allegations of pulling out money before 3AC went bankrupt and also cleared the air around the $50 million yacht that was disclosed in the recently filed court case. Zhu said that the boat “was bought over a year ago and commissioned to be built and to be used in Europe,” adding that the yacht “has a full money trail.”

Aave taps Pocket Network to beef up decentralized app development

Aave will leverage Pocket’s distributed network of 44,000 nodes to access on-chain data from various blockchains.

Aave (AAVE), an open source decentralized finance (DeFi) protocol, is teaming up with decentralized Web3 infrastructure provider Pocket Network to offer developers increased scalability and ease of use when building decentralized applications (DApps) on the Aave Protocol.

“The goal is to power the next wave of decentralized applications that combine Aave’s best-in-class liquidity market with Pocket’s unrivaled RPC coverage, which now supports 50 blockchains and is well on its way to achieving its goal of 100 blockchains in 2022.”

Aave Grants DAO made this agreement possible by providing a grant for the purchase of the required Pocket Network’s native token POKT for Aave’s frontend traffic. To meet its demands, Aave currently utilizes several Remote Procedure Calls (RPCs) from various infrastructure providers. Because these solutions have varying degrees of reliability, they can occasionally become unruly and cause user experience to deteriorate.

The new connection with Pocket Network is intended to alleviate these problems by offering Aave a more stable and durable infrastructure solution for its decentralized apps.

According to Defi Llama’s analytical data, Aave is the third most valuable protocol in terms of total value locked (TVL) ranking, having a current price of $95.91 and a total value locked (TVL) worth of $6.1 billion as of writing. Aave’s liquidity is derived primarily from Ethereum (ETH) and Polygon (MATIC), as the majority of its operations span multiple blockchains. Pocket Network also offers dedicated RPCs for these networks, lowering latency, improving uptime and providing optimized multi-chain data services.

Finance Redefined: DeFi market fell off the cliff in Q2, but there’s hope

Analytical data reveals that DeFi’s total value locked registered a minor dip from the past week, falling to a value of $56.45 billion.

Welcome to Finance Redefined, your weekly dose of key decentralized finance (DeFi) insights, a newsletter crafted to bring you some of the major developments over the last week.

This past week, the DeFi ecosystem saw several new developments despite a bearish phase brought on by the lending crisis in the crypto market. Another crypto lender, Celsius, with high stakes in DeFi protocols, filed for bankruptcy. The overall DeFi market fell to new lows in the second quarter. However, a new report indicates users haven’t given up hope.

BNB Chain launched a new decentralized application (DApp) platform with an alarm feature. Vermont state regulator opened an investigation into troubled crypto lender Celsius, deeming it deeply insolvent. A DeFi researcher has predicted that Ethereum proof-of-stake (PoS) can help Ether (ETH) overtake Bitcoin (BTC).

The DeFi tokens saw a new flow of bullish momentum over the past couple of days owing to a market-wide green momentum after the inflation data release.

DeFi market fell off cliff in Q2, but users haven’t given up hope: Report

Despite the DeFi market suffering a 74.6% market cap decline in Q2, user activity has remained relatively resilient, says CoinGecko.

In a report published by the crypto data aggregator on Wednesday, CoinGecko reported that the overall DeFi market cap fell from $142 million to $36 million over the second quarter, due mainly to the collapse of Terra and its stablecoin TerraUSD Classic (USTC) in May.

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BNB Chain launches DApp platform with ‘Red Alarm’ to warn users about scams

BNB Chain has launched a new platform, DappBay, to discover new Web3 projects. DappBay is equipped with a novel feature called Red Alarm, which assesses project risk levels in real-time and alerts users of potentially risky DApps, according to a Thursday announcement.

Red Alarm is a contract risk scanning tool offered by DappBay that helps users identify high-risk projects to protect their investments from rug pulls and scams. Users can check if a contract address has logical flaws or fraud risks by entering it into the Red Alarm feature.

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Vermont becomes the sixth US state to launch investigation against Celsius

Vermont’s Department of Financial Regulation (DFR) issued a warning against troubled crypto lending firm Celsius on Tuesday, reminding users that the crypto lending firm is not licensed to offer its services in the state.

The DFR alleged that Celsius is “deeply insolvent” and doesn’t possess “assets and liquidity” to fulfill its obligations toward the customers. The state regulator accused the crypto lender of mismanaging customers’ funds by allocating them toward risky and illiquid investments.

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PoS gives Ethereum the economic structure to overtake Bitcoin, says DeFi researcher

As Ethereum shifts into PoS, a DeFi researcher has argued that the platform can overtake Bitcoin’s throne as the top dog in crypto.

In a Twitter thread, researcher Vivek Raman highlighted that the upcoming Ethereum Merge could create a better economic structure for the smart contract platform. According to Raman, the shift into PoS lowers Ether inflation, gives better security and positions the crypto as a digital bond.

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DeFi market overview

Analytical data reveals that DeFi’s total value locked registered a minor dip from the past week, falling to a value of $56.45 billion. Data from Cointelegraph Markets Pro and TradingView shows that DeFi’s top-100 tokens by market capitalization had a mixed week, with several tokens trading in red while a few others registered even double-digit gains.

Aave (AAVE) was the biggest gainer among the top 100 with a 30% rise over the past week, followed by Uniswap (UNI) with a 23% surge. Compound (COMP) registered a 19% surge over the past week, while Curve DAO Token (CRV) also saw a 15% rise in price over the past seven days.

Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education in this dynamically advancing space.

DeFi token AAVE faces major correction after soaring 100% in a month

More than 50% of AAVE’s recent gains appeared after Aave Companies proposed to launch a native stablecoin.

The price of Aave (AAVE) has more than doubled in a month, but its bullish momentum could be reaching a point of exhaustion.

AAVE price tests key inflection level

Notably, AAVE has surged by over 103% after bottoming out locally at $45.60 on June 18, hitting almost $95.50 this July 15. Nevertheless, the token’s sharp upside retracement move has brought its price closer to the level that triggered equally sharp pullbacks since early June.

In other words, AAVE has been testing an ascending trendline resistance that constitutes a “bear flag,” a bearish continuation pattern. For example, the trendline’s previous test on July 9 ended up in a 20% downside move. Similarly, a similar attempt on June 24 pushed AAVE price lower by nearly 30%.

*AAVE/USD daily price chart. Source: TradingView*

As a result of this distribution behavior, AAVE’s ongoing attempt to break above the flag trendline could meet with extreme selling pressure. A pullback could then see AAVE/USD retest the flag’s lower trendline near $67.75 as its downside target by September, down almost 30% from July 15’s price.

Meanwhile, the $76.30-level serves as interim support, primarily due to its history as a price floor in May that preceded a 60% rebound move.

Bear flag breakdown scenario

As a rule of technical analysis, the breakdown below $67.75 could see AAVE plunging by as much as the height of the “flagpole” that formed before the bear flag. That would have the token eye $35.50 as its bear flag profit target, down over 60% from the current price.

*AAVE/USD daily price chart featuring ‘bear flag’ breakdown setup. Source: TradingView*

Conversely, a continued rebound move above the bear flag’s upper trendline would invalidate the breakdown setup. In this case, the bullish target for AAVE will likely be the $115–$120 range that served as resistance in June.

GHO stablecoin

More than half of the gains during AAVE’s price rally have come after its proposal to launch a U.S. dollar-pegged stablecoin called GHO.

1/ Calling all GHOsts

We have created an ARC for a new decentralized, collateral-backed stablecoin, native to the Aave ecosystem, known as GHO.

Read more below and discuss your thoughts for the snapshot (coming soon)!https://t.co/P7tHl9LbBe

— Aave (@AaveAave) July 7, 2022

On July 7, Aave Companies, a centralized entity that backs Aave’s lending protocol, requested its community to vote on their “overcollateralized” stablecoin proposal. AAVE’s price surged by over 53% afterward, led by speculations that GHO would boost the DeFi token’s adoption.

However, any further gains would risk pushing AAVE into “overbought” territory with its daily relative strength index (RSI) treading just five points below 70 as of July 15

*AAVE/USD daily relative strength index. Source: TradingView*

Rising above the 70 threshold could push AAVE’s price into a correction phase, likely triggering the bear flag scenario as discussed above.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Cred Protocol unveils its first decentralized credit scores

Releasing the results of its first credit score on the Aave Protocol, a decentralized credit scoring mechanism called Cred Protocol is set to expand to Compound and MakerDAO.

Cred Protocol, a decentralized credit scoring startup has unveiled the results of its first automated credit scoring system for users of decentralized finance (DeFi).

Cred Protocol CEO Julian Gay outlined the results in a Twitter thread, which showed how Cred successfully utilized past transaction behavior on the Aave protocol to assess the creditworthiness of future borrowers based on on-chain behavior in the DeFi space.

1/ Over the last few months, we’ve been working to build one of the first credit scores for DeFi.

Today, we’re excited to share the results of our first credit score with the world!

Read more below

— Julian Gay (@juliangay) July 14, 2022

By using machine learning to assess time-based account attributes and analyze the user’s past transaction behavior, Cred Protocol generates a health factor score that predicts the likelihood of future liquidation for a single address, which, according to Gay, was one of the strongest baseline creditworthiness predictors.

Cred Protocol claims to make decentralized finance more accessible to the world by implementing trustworthy credit scores that would see “anyone with an internet connection” and “a good financial reputation” gain access to loans.

Where borrowers and lenders have their loan worthiness assessed by a central authority such as a credit bureau, DeFi makes it possible to run financial services with a peer-to-peer (P2P) system, eliminating the idea of an intermediary or central authority.

Prominent DeFi researcher Chris Blec raised concerns that a borrower could use multiple Ethereum addresses to skirt credit scoring — to which Gay responded that a potential solution was in Beta.

So it’s just a credit score for that 1 Ethereum address? What if someone uses 10 different addresses?

— Chris Blec (@ChrisBlec) July 15, 2022

Cred Protocol is a small nine-person team based out of San Francisco with additional “hubs” in New York and London. However, Gay says that he aims to bring DeFi technology to more than one billion people.

In a Medium post, Cred outlined its plans to grow from the Aave protocol and expand its data analysis to other lending protocols like Compound and MakerDAO.

Two years ago, blockchain lending protocol Teller raised $1 million in a seed funding round to incorporate traditional credit scores into DeFi.

In November 2021, Credit DeFi Alliance (CreDA) officially launched a credit rating service that would ascertain a user’s creditworthiness with data from multiple blockchains. CreDA was developed to work using the CreDA Oracle by evaluating records of past transactions carried out by the user across several blockchains with the help of artificial intelligence (AI).

Recently, P2P lending protocol RociFi labs concluded a seed funding of $2.7 million in partnership with asset management firm GoldenTree, which is aimed toward expanding on-chain credit ratings for decentralized finance.

Vermont becomes the sixth US state to launch investigation against Celsius

The state financial regulator alleged that Celsius violated state security laws by offering high crypto interest rate accounts to customers and unethically using clients’ funds to invest in illiquid products.

“In addition to the ordinary risks of cryptocurrency investing, holders of Celsius interest accounts were also exposed to credit risk that Celsius would not be able to return their tokens upon withdrawal.”

The financial regulator noted that the high crypto interest account offered by Celsius qualifies as unregistered security and the firm also lacks a money transmitter license to offer any investment services in the state.

DFR believes Celsius operated without any regulatory oversight and exposed retail customers to high risks investments resulting in heavy losses for them. Keeping these concerns in mind, the state financial regulator has joined the multi-state investigation against the troubled crypto lender:

“The Department believes Celsius has been engaged in an unregistered securities offering by offering cryptocurrency interest accounts to retail investors. Celsius also lacks a money transmitter license. The Department has joined a multistate investigation of Celsius arising from the above concerns.”

Vermont became the sixth state in America to open an investigation into Celsius’ crypto interest rate accounts. As Cointelegraph reported earlier, Alabama, Kentucky, New Jersey, Texas and Washington opened investigations into the troubled crypto lender after it paused all withdrawals, swaps and transfers between accounts on June 13, just a day after its chief executive officer Alex Mashinsky claimed all is well with the firm.

Celsius became one of the key crypto lenders in the industry during the bull market, managing billions in customers’ funds and churning out high interet rates for account holders. While regulators and analysts did warn about risks associated with such high lending products, crypto lenders continued to play it down, claiming it was a ploy of greedy bankers.

A recent report in Financial Times highlighted that Celsius aggressively bet with client funds, putting them in risky decentralized finance (DeFi) yield products. The crypto lender’s compliance team had flagged concerns as early as February 2021, where internal documents showed that employees were allowed to invest in funds without gaining explicit permission and without any compliance checks. This reportedly helped the firm to disguise its losses.

However, with the advent of the bear market in May initiated by the Terra ecosystem crash, the faults started to show up. Several reports have highlighted that market conditions are not the only reason for the downfall of crypto-lending firms like Celsius. In fact, it was mismanagement and unethical business practices on their part that have brought them to this point.

Celsius is currently hiring new legal teams and working on restructuring plans to avoid bankruptcy. The firm has also worked on repayment of several DeFi loans over the past couple of weeks, having paid 20 million in USD Coin (USDC) to Aave on July 11 and paid the remaining $41.2 million debt to Maker protocol on Thursday, freeing up more than $500 million in Wrapped Bitcoin (wBTC) collateral.

3AC co-founder returns to Twitter, blames liquidators for “baiting”

The tweet attracted wild reactions from the community with several accusing the co-founder of playing the blame game while his whereabouts are unknown.

Su Zhu, co-founder of Singapore-based crypto venture capital firm Three Arrows Capital (3AC), returned to Twitter after nearly a month of inactivity. In another cryptic tweet, he blamed liquidators for baiting them with respect to StarkWare tokens.

The tweet with attached mail from legal counsel claimed that Starkware equity had a token warrant that expired on July 5 and that the liquidator didn’t exercise the warrant, resulting in the loss of Starkware tokens. Zhu blamed liquidators for not using the Starkware tokens and claimed they baited the firm to use information in court.

The cryptic tweet from the co-founder comes days after 3AC filed for a Chapter 15 bankruptcy in a New York court after it failed to meet several margin calls from its lenders. The rumors about the firm’s insolvency began in June and later, a British Virgin Islands court-ordered liquidation of 3AC funds.

TLDR (thanks @0x_Kun) :
• 3AC was handed over to liquidator
• Liquidator didn’t exercise Starkware token warrants [which expired worthless]
• Zhu Su believes the liquidator baited them for information to use in court

Alpha derived from this post:
Starkware token confirmed. https://t.co/zvQGDdVqZk

— CC2 (@CC2Ventures) July 12, 2022

3AC’s trouble began with the bear market turmoil in May that was fueled by the Terra (LUNA) — now called Terra Classic (LUNC) — ecosystem crash. Later, it was revealed that the crypto hedge fund had accumulated $559 million worth of locked LUNA, which depreciated to $650 after the crash. The firm also held a significant position in Solana (SOL) and Avalanche (AVAX), which fell to new lows in the same time frame.

With the crypto market crash, most cryptocurrencies lost nearly 70% of their valuation from the top. 3AC also held significant positions in synthetic assets such as Grayscale Bitcoin Trust (GBTC) and Lido’s Staked ETH (stETH). So when the prices of top cryptocurrencies dipped to a four-year low, it led to a series of liquidations for the troubled crypto hedge funds. It has been estimated that 3AC accumulated nearly $400 million in liquidation across multiple platforms.

The apparent insolvency of 3AC has affected lenders across the board with Voyager filing for bankruptcy last week after the hedge fund defaulted on a $500 million loan. BlockFi also struggled with its business after the crypto hedge fund defaulted on a $1 billion loan.

The recent tweet from the 3AC co-founder comes amid rumors about the founders of the crypto hedge fund going missing and attracted a wild reaction from the community. Many questioned his whereabouts while others mocked him for expecting “good faith” from liquidators after losing million of investors’ funds. One user wrote:

“Zhu really over here talking about “good faith” lmao”

Another user called out Zhu for playing the victim card and wrote:

“This is a pretty standard “spin” for the architects of financial destruction once things hit the legal stage. Zhusu is playing the “victim” card in the court of public opinion. Disgusting behavior, but to be expected at this stage.”

Voyager can’t guarantee all customers will receive their crypto under proposed recovery plan

The crypto lending firm said that the exact amount reimbursed to users will “depend on what happens in the restructuring process and the recovery of 3AC assets.”

Following Voyager Digital filing for bankruptcy on Tuesday, the crypto lending firm said its recovery plan was aimed at preserving customer assets but did not explicitly state it would be able to return all equivalent funds to affected users.

In a Monday blog, Voyager said it had roughly $1.3 billion in affected users’ funds in addition to $650 million of “claims against Three Arrows Capital” — referring to the 15,250 Bitcoin (BTC) and 350 million USD Coin (USDC) loan the firm failed to repay. According to Voyager’s proposed recovery plan — subject to approval from the courts — users may receive a combination of Voyager tokens, cryptocurrencies, “common shares in the newly reorganized company,” and funds from any proceedings with Three Arrows Capital, or 3AC.

“The exact numbers will depend on what happens in the restructuring process and the recovery of 3AC assets,” said the lending firm. “The plan is subject to change, negotiation with customers, and ultimately a vote […] We put together a restructuring plan that would preserve customer assets and provide the best opportunity to maximize value.”

Voyagers,

We understand how critical it is to get access to the value in your account and we are working through this process as quickly as possible to do just that. Today’s post provides an update on customer cash and crypto, and next steps: https://t.co/yBlVB0qgVp (1/6)

— Voyager (@investvoyager) July 11, 2022

In addition to crypto assets, Voyager said it was holding funds “equal to the amount of USD in customer accounts” in a special FDIC-insured account at the Metropolitan Commercial Bank of New York. FDIC protection guarantees up to $250,000 per customer should the bank fail — not the lending firm. Voyager added it was “working to restore access to USD deposits,” subject to a reconciliation and fraud prevention process.

Voyager issued a notice of default to 3AC on June 27, later citing the firm’s failure to pay as one of the reasons behind suspending trading, deposits, withdrawals and loyalty rewards. The lending firm also announced it had borrowed 15,000 BTC — roughly $500 million at the time — from Alameda Research, claiming the funds were aimed at covering losses due to 3AC.

In addition to the legal solutions Voyager is exploring with 3AC’s repayment, the company said it was “pursuing various strategic alternatives to evaluate the value of the standalone company compared with a third-party investment or sale.” Data from TradingView shows the company’s share price has fallen more than 98% since its yearly high of $20.35 in November 2021, reaching roughly $0.27 at the time of publication.

DeFi protocol Porter Finance shuts down bond issuance platform after just one month

The firm cited better interest rates from traditional finance loans and regulatory risks in mulling the bond platform.

Porter Finance, a decentralized finance, or DeFi, protocol based on the Ethereum (ETH) blockchain, announced Tuesday that it was shutting down its bond issuance platform. In explaining the discussion, Porter Finance said:

“Looking forward, we are not confident there will be large inflows of lending demand for fixed income DeFi products like the ones offered through Porter Finance. This is primarily due to the competitiveness of rates offered in traditional finance and the lack of institutional fixed income DeFi adoption over the past year. We are also no longer willing to take on the legal risk associated with bond offerings.”

Porter Finance is shutting down its bond issuance platform.

Please see the medium article below:https://t.co/4dPNEvqXrr

— Porter Finance (@porterfinance_) July 4, 2022

Just last month, Porter Finance unveiled the first-of-a-kind service in partnership with Ribbon DAO to issue 3,103,224 convertible bonds redeemable for 1 USDC with a maturity date of Dec. 4, 2022. At the time, each bond was issued at a discounted price of 0.9667 USDC per bond with a yield to maturity of 7% after accounting for interest.

In addition, each bond is secured by 16.112 Ribbon Finance tokens ($4.78 at the time of June announcement) and convertible for 1.111 RBN. It appears significant over-collateralization was required for the issuance of the bond. The instrument also had a significantly higher borrowing cost than money-market securities of the same maturity.

In light of the recent implosion of notable DeFi lenders such as Celsius, investors have taken a risk-averse approach to borrowing and lending on decentralized protocols. The total value locked in such projects tracked by DeFi Llama has plunged nearly 70% since the beginning of the year. The Portal Finance offering, characterized by its underlying smart contract, will remain active until all Ribbon DAO lenders redeem or convert their bonds.