It all flows back to ETH - Market Monday LITE (06/22)

Market Monday for June 22nd, 2020

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Announcement: Bankless AMA with Stani Kulechov from Aave this Thursday!

Dear Bankless Nation,

A week ago…

  • SNX was $1.07 now it’s $1.45 (+35%) 😲

  • AAVE was $.08 now it’s $.14 (+75%) 🤯

  • COMP was $78 now it’s $255 (+210%) 😱


If you want to find out what’s going on with DeFi tokens listen to the podcast with Dan Elitzer we just put out. Summary—DeFi tokens are real & crypto is about to 🚀.

But I want to talk about something else today.

Because despite DeFi going bananas ETH is mostly flat.

What gives?

When ICOs took off in 2017 so did ETH.

So why is ETH getting left behind DeFi now? That’s the question I asked Friday.

It’s not that I think 6 days of DeFi token pumps tell us much. Crypto investors buying on fundamentals need far more patience if they’re going to make it on the journey (pick a time horizon folks!).

But I asked the question because it gets at something more important. It gets to the heart of ETH value accrual: if DeFi is successful—will ETH accrue value?

The answer to that question tends to fall in two camps: bears and bulls.


ETH bears

The bears say…ETH won’t capture the value on Ethereum—that’s why DeFi is going up without ETH and we expect this to continue because:

  • ETH is losing its moneyness. It’s losing moneyness to non-ETH assets on Ethereum like stablecoins and tokenized Bitcoin. In 2017 if you wanted to raise funds on Ethereum, you had to use ETH. It was the reserve money. In 2020 ETH competes with dozens of assets—and it’s losing.

  • DeFi doesn’t mean ETH goes up. The utility of DeFi doesn’t have anything to do with the price of ETH. Why should it? People buy the minimum amount of ETH needed to run a DeFi transaction. ETH is like gas for your car—you don’t hold it, you just keep a full tank—the minimum needed.

  • Ethereum is a prototype. The market knows another network will supersede Ethereum. Look at the gas fees! Unsustainable. Look at the transactions per second! Paltry. Look at staking! Still not here. Ethereum is a prototype—DeFi will move to a better network long-term. [P.S. buy my ETH killer!]


ETH bulls

The bulls say…ETH will capture the value of Ethereum and if you’re a little more patient you’ll see we’re right—and retrospectively it will have been obvious that:

  • The market is wrong—ETH is money.
    The market’s coming off two years of the harshest ETH winter ever seen. So the market is backward facing—still assuming ETH is a utility coin. No. ETH is the reserve asset for DeFi—the trustless economic bandwidth, the only asset that gets scarce with DeFi use. The market will catch on soon.

  • DeFi profits cycle back to ETH.
    As DeFi’s reserve asset ETH isn’t threatened by stablecoins or tokenized bitcoin on Ethereum. DeFi’s success is good for ETH. More economic activity increases ETH locked up as collateral and ETH as a trading pair. DeFi token profits will be cycled back into ETH. Wait and see.

  • Ethereum eats the world.
    Layer two scalability is hitting mainnet now and Eth2 is just as far along as any competitor. Finance is a game of network effects and Ethereum’s lead over competitors isn’t just growing it’s accelerating. Competing chains will be sidechains of Ethereum. None will have an asset like ETH.

See the problem?

Both can’t be right.

It’s either bears or the bulls. It can’t be both.

So who’s right?

I’ll make this easy.

I’m betting the ETH bulls are right.

If you’ve been reading Bankless you know the big reasons why (e.g. see the Ethereum section of guide) and this new DeFi rocket fuel reinforces my view.

I’m seeing three things now:

  1. DeFi locking up more ETH.

    $100m ETH locked after the release of COMP last week.

  2. Early stages of ETH momentum shift.

    Email expert from a fund manager I know this I received this a.m.

  3. Protocol sink thesis coming true.

    Crypto banks like Nexo using money protocols like Compound is how DeFi wins

Yes…what’s good for DeFi is good for ETH.

Yes…DeFi token profits will eventually get cycled into ETH.

Yes…the narrative that ETH is just a utility coin will die in the coming cycle.

Yes…it flows back to ETH.

Feel free to disagree. No one knows how this all turns out. We’re all placing bets!

And I’ve placed mine.


P.S. People are loving the new Bankless Starters Guide…you gotta check it out!

🙏Sponsor: Aave—earn high yields on deposits & borrow at the best possible rate! 


Listen to episode #18 | iTunes | Spotify | YouTube | RSS Feed


Scan this section and dig into anything interesting

Market numbers 📊

  • ETH ticks up +5.0% to $243 from $231 last Monday

  • BTC nudges +0.8% to $9,533 from $9,332 last Monday

  • DAI stability fee steady at 0% with the savings rate holding 0%

Market opportunities 🤑

Yield Farming 🌾

What’s new 🗞️, what’s hot 🔥, & money reads 📚



How to Farm Yield with Stablecoins Using Curve Finance

DeFi Dad walks through all the following:

  • What is Curve and how does it earning yield for LPs (aka yield farmers)?

  • Which of the stablecoin pools might I choose to be an LP in?

  • How to deposit stablecoins into a pool and become an LP

  • How to withdraw stablecoins whenever you like

  • The risks of being a Curve yield farmer

You can learn more and try Curve yourself at:

👉Check out Bankless YouTube for & tactics by DeFiDad!

👉Check out DeFiDad’s YouTube channel for extended tactics


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Aave is an open source and non-custodial protocol for money market creation. Originally launched with the Aave Market, it now supports Uniswap and TokenSet markets and enables users and developers to earn interest and leverage their assets. Aave also pioneered Flash Loans, an innovative DeFi building block for developers to build self-liquidations, collateral swaps, and more. Check it out here.

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. I’ll always disclose when this is the case.