yield

Automation opens up pathway to a simplified, more user-friendly DeFi

Hunting for the best opportunities in the world of DeFi is often time consuming. But automation is changing that.

Few doubt the potential that DeFi has to redefine crucial aspects of finance for all. But, as it stands, using DeFi platforms and protocols is often time consuming and anything but easy.

One of the biggest draws of DeFi are the yields users can earn on farming and staking protocols. However, the yields on offer are constantly changing, meaning crypto enthusiasts need to stay locked to their screens to ensure they aren’t missing out. Given the 24-hour nature of this fast-moving industry, keeping on top of things is often easier said than done.

Some protocols are also pretty difficult to use, requiring users to monitor a plethora of different pools. And even when you find the best returns that the market has to offer, the process of manual compounding can be quite tedious.

In search of growth, DeFi traders often have to switch between different blockchains and delve into pools that lack liquidity. Not only can this be pretty expensive once transaction fees are accounted for, there are safety concerns to consider too.

Given that part of the push behind decentralized finance is bringing money into the 21st century, one has to ask: Why isn’t this sector more automated? Where are the tools that can do all of the heavy lifting on the user’s behalf? And if aggregator sites can scour the market for the best deals on things like car insurance and flights, surely there can be one keeping track of DeFi too?

Now there is — and it’s saving crypto enthusiasts a lot of time and energy. This means they can focus on the things they’re truly passionate about. Better still, it’s a tool that’s ripping down the high entrance barriers that have undoubtedly put off some tech-savvy consumers from getting involved in the first place.

Introducing Autostrats

Earlier this year, research by Morning Consult suggested that just 77% of those who own crypto had actually heard of decentralized finance, and that figure is at just 31% among non-crypto owners. All of this suggests there are huge strides to be taken in demystifying DeFi, and ensuring it’s accessible to the masses.

UNO aims to tackle this by taking the grunt work out of DeFi once and for all, meaning that consumers can “just deposit and relax.”

It offers a new approach called Autostrats that achieves two things. First, it automatically compounds crypto holdings to naturally enhance annual percentage yields. And second, it continually moves assets to the highest APY sources available — irrespective of whether this involves a switch across trading pairs, pools, protocols or blockchains.

Ultimately, Autostrats is positioning itself as a crypto enthusiast’s best chance of unlocking everything that the world of DeFi has to offer by maximizing efficiency and eliminating that dreaded sense of FOMO.

Speaking to Cointelegraph, the UNO team compared this evolution to the switch from coal to petrol, which once transformed the world we live in. The project believes it has found the silver bullet for usability that will entice millions of consumers around the world to finally experience DeFi’s potential.

Keeping tabs

Of course, automation should never be regarded as a replacement for keeping a close eye on how your capital is performing and that’s why UNO has placed a heavy emphasis on providing its users with the tools they need to scrutinize their portfolios.

Handy analytics offer at-a-glance insight into the current state of the market, and the impact this has had on funds. Crucially, funds can also be redeemed at any time — along with the interest that’s been accrued to date. The fact that UNO offers all of this in one place is a big benefit, especially considering how much time it would take to analyze profits and losses across an array of different protocols quickly. Transparency is another key tenet of this platform, meaning users can monitor liquidity transfers and see where their funds are going.

UNO says it is proud to have been backed by some of the biggest names in the space, too — Polygon, Aurora, Axelar, Everscale and Chainlink among them.

The project offers a range of easy-to-understand explainers on its website, breaking down how DeFi works, the risks associated with these protocols, and step-by-step tutorials concerning UNO’s features and how to make the most of them.

For beginners and experts alike, this is a team determined to defy DeFi’s current limitations.

Material is provided in partnership with UNO

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you with all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor can this article be considered as investment advice.

45% of ETH validators now complying with US sanctions — Labrys CEO

Labrys CEO Lachlan Feeney is trying to raise awareness among validators running Flashbots’ software that they may potentially be contributing to censorship within the Ethereum network.

According to the CEO of blockchain development agency Labrys, Lachan Feeney, approximately 45% of all Ethereum blocks currently being validated run MEV-boost relay flashbots and comply with United States sanctions.

Speaking to Cointelegraph in an interview on Sept. 30, Feeney noted that while reports have stated that 25% of all blocks validated since the Merge complies with United States sanctions, this is a lagging indicator and the current number is likely to be closer to one out of every two blocks.

Feeney pointed out that MEV-Boost relays are regulated businesses, often U.S.-based, and are “censoring certain transactions in the blocks that they build, particularly transactions from Tornado Cash.”

The CEO also pointed out validators have a financial incentive to use MEV-Boost relays, which would drive an uptick in their usage, noting:

“The issue, is that from the validators perspective, these guys are paying them to sort of do this. So if you want to make more money, you just turn this feature on and as a validator, you sort of boost your yield.”

MEV-Boost relays are centralized entities dedicated to efficient Maximal Extractable Value (MEV) extraction. With Flashbots being the most popular, MEV-Boost relays effectively allow validators to outsource block production and sell the right to build a block to the highest bidder.

Labrys released an MEV Watch tool on Sept. 28, which can inform validators about which MEV-Boost relays comply with Office of Foreign Assets Control (OFAC) sanctions. Referring to the motivation behind the tool, Feeney said:

“We’re just trying to raise some awareness for those who are unaware that by running this software, they are potentially contributing to censorship of the network.”

Feeney noted a worst-case situation often referred to as hard censorship, where “nodes would be forced by regulation to basically discard any blocks with any of these transactions in them.”

“That would mean no matter how long you waited, no matter how much you paid, you would never get to a point where those sanctioned transactions would get included in the blockchain,” he explained.

He also pointed out that even in the event of soft censorship, where sanctioned transactions would eventually be validated, it could take hours and require a high priority fee, resulting in a sub-par user experience.

These findings are reinforced by Ethereum researcher Toni Wahrstätter, who published research on Sept. 28 suggesting that of the 19,436 blocks verified by the Flashbots Mev-Boost Relay, none included a Tornado cash transaction.

*How many blocks from different MEV Boost Relays contain Tornado Cash transactions. Source: Toni Wahrstätter.*

Censorship fears were prevalent before The Merge. Speaking to Cointelegraph, the lead investigator for crypto compliance and forensic firm Merkle Science, Coby Moran, suggested the prohibitive cost of becoming a validator could result in the consolidation of validator nodes to the bigger crypto firms — who are much more susceptible to being influenced by government sanctions.

US Treasury yields are soaring, but what does it mean for markets and crypto?

The 10-year U.S. Treasury yield recently hit its highest level in 12 years, but how might this impact investors’ sentiment toward stocks and cryptocurrencies?

Across all tradeable markets and currencies, U.S. Treasurys — government bonds — have significant influence. In finance, any risk measurement is relative, meaning, if one insures a house, the maximum liability is set in some form of money.

Similarly, if a loan is taken from a bank, the creditor has to calculate the odds of the money not being returned and the risk of the amount being devalued by inflation.

In a worst-case scenario, let’s imagine what would happen to the costs associated with issuing debt if the U.S. government temporarily suspended payments to specific regions or countries. Currently, there is over $7.6 trillion worth of bonds held by foreign entities, and multiple banks and governments depend on this cash flow.

The potential cascading effect from countries and financial institutions would immediately impact their ability to settle imports and exports, leading to further carnage in the lending markets because every participant would rush to reduce risk exposure.

There is over $24 trillion in U.S. Treasurys held by the general public, so participants generally assume that the lowest risk in existence is a government-backed debt title.

Treasury yield is nominal, so mind the inflation

The yield that is widely covered by the media is not what professional investors trade, because each bond has its own price. However, based on the contract maturity, traders can calculate the equivalent annualized yield, making it easier for the general public to understand the benefit of holding bonds. For example, buying the U.S. 10-year Treasury at 90 entices the owner with an equivalent 4% yield until the contract matures.

*U.S. government bonds’ 10-year yield. Source: TradingView*

If the investor thinks that the inflation will not be contained anytime soon, the tendency is for those participants to demand a higher yield when trading the 10-year bond. On the other hand, if other governments are running the risk of becoming insolvent or hyperinflating their currencies, odds are those investors will seek shelter in U.S. Treasurys.

A delicate balance allows the U.S. government bonds to trade lower than competing assets and even run below the expected inflation. Although inconceivable a few years ago, negative yields became quite common after central banks slashed interest rates to zero to boost their economies in 2020 and 2021.

Investors are paying for the privilege of having the security of government-backed bonds instead of facing the risk from bank deposits. As crazy as it might sound, over $2.5 trillion worth of negative-yield bonds still exist, which does not consider the inflation impact.

Regular bonds are pricing higher inflation

To understand how disconnected from reality the U.S. government bond has become, one needs to realize that the three-year note’s yield stands at 4.38%. Meanwhile, consumer inflation is running at 8.3%, so either investors think the Federal Reserve will successfully ease the metric or they are willing to lose purchasing power in exchange for the lowest-risk asset in the world.

In modern history, the U.S. has never defaulted on its debt. In simple terms, the debt ceiling is a self-imposed limit. Thus, Congress decides how much debt the federal government can issue.

As a comparison, an HSBC Holdings bond maturing in August 2025 is trading at a 5.90% yield. Essentially, one should not interpret the U.S. Treasury yields as a reliable indicator for inflation expectation. Moreover, the fact that it reached the highest level since 2008 holds less significance because data shows investors are willing to sacrifice earnings for the security of owning the lowest-risk asset.

Consequently, the U.S. Treasury yields are a great instrument to measure against other countries and corporate debt, but not in absolute terms. Those government bonds will reflect inflation expectations but could also be severely capped if the generalized risk on other issuers increases.

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.

Investors shifting toward lower-risk crypto yields — Block Earner GM

The Australian fintech company has seen a surge in investors wanting a “less risky version” of double-digit crypto returns.

Block Earner, an Australian fintech company, says the fall of Terra in May has led to “positive surprises” for his company, with investors beginning to find their way toward the lower-risk crypto yield products they offer.

Speaking to Cointelegraph, the company’s general manager Apurva Chiranewala revealed that the company has seen a surge of investors previously seeking double-digit returns but now wants a “less risky version” of those returns:

“Given that the risks have gone up significantly for those returns, those guys have actually started coming in engaging with us because we look like the less riskier version of those double-digit return products.”

Before their collapse, crypto lending platforms such as Celsius and Anchor Protocol offered annual percentage yields (APYs) of up to 20% for users who locked their digital assets up with them.

Block Earner is a blockchain-powered fintech company that allows access to crypto-related yield-generating products. Still, Chiranewala explained the platform is aimed at those that want exposure to the crypto markets but have a lower risk appetite.

Its Gold Earner and United States dollar Earner products currently generate single-digit yields.

Data shared by Block Earner to Cointelegraph shows that the Terra fiasco coincided with an increase in withdrawal events at the beginning of May and again in mid-June due to the fall of Celsius. However, there’s been a steady return to normal levels since.

Australian dollar (AUD) cash deposits have also remained steady over the April to July period, while the company’s user base has increased an average of 15% month on month.

Chiranewala also stated that over the last few weeks, he had seen a “high degree of interest” from institutional investors, including hedge funds, venture capital (VC) and superannuation funds (retirement funds):

“We are almost forced to now simultaneously build institutional products because the interest in that space is massive.”

“There are VCs with treasuries, there are hedge funds, there are private funds […], and then there are super funds that have a mandate for a very small portion of the portfolio to be deployed into high-yielding assets,” he added.

Chiranewala admits that the company has not been entirely immune to the slump in the crypto markets. Block Earner has had to pull back its user-acquisition marketing spend:

“In the environment that we are in right now, it makes very little sense for us to market and acquires users. So we stopped, we actually pulled back a lot on our marketing strategy.”

“You naturally see a little bit of a softer trajectory of growth, as opposed to a steeper, you know, curve that grows week on week,” he said.

Earlier this month, a CoinGecko report stated that the decentralized finance (DeFi) market cap fell 74.6% 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.