Uniswap and the Overton Window of Capital - Market Monday LITE (09/21)
The rise of universal basic income & how Uniswap has changed the game for wealth distribution
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Dear Bankless Nation,
Universal Basic Income (UBI) has rocketed to mainstream conversation and popularity in the U.S.
What was recently spearheaded by Andrew Yang and his ‘not left, not right, but forward' movement, UBI has been branded as an apolitical, neutral mechanism for fostering the U.S. economy and supporting all sectors of the country.
As a result of the UBI campaign, as well as the following gut-punch of COVID, Universal Basic Income is now widely known—and is starting to gain support across both sides of the political aisle.
Meanwhile, the U.S. government has only sent a one-time check of $1,200 to all U.S. citizens, and talks of further aid in the ‘Universal’ category haven’t progressed. Restaurants and bars are still closed, jobs are still being lost, and in the midst of the most polarized time in U.S. history, COVID continues to rage on.
It’s in this backdrop that Uniswap, Ethereum’s largest application, just printed billions of dollars of “equity” to anyone that’s ever used the application—all 185,000 of them. Anyone who’s used Uniswap before September 1st can now claim 400 UNI.
At a UNI price of $3, that means Uniswap’s drop matched the U.S. Federal Government’s COVID relief checks—$1,200 per ETH address.
$1,200 in UNIversal basic income
It’s as if Uber had given out shares of its company into the hands of anyone that’s ever ridden with Uber.
But Uniswap had no intention of providing any sort of Basic Income; that was not the goal. The goal was to distribute ownership of Uniswap to the right people—it’s early users.
The rationale? Uniswap’s users are far more likely to be good stewards of their favorite product vs. some rando without any skin-in-the-game.
Chris Burniske’s piece A Blank Slate of State puts forth a thesis for what DeFi and crypto is able to do. Chris believes that, through crypto-economic incentive mechanisms, we’re able to integrate labor and capital together, rather than have them be so incredibly polarized. Chris wants to see labor compensated with more than just money, but rather with equity too.
As the wealth inequality in the world has reached new highs, the global population is becoming increasingly thirsty for new forms of wealth to emerge. As jobs disappear, there either must become new ways of creating and distributing wealth, or instead, there will be growing class conflict and an increasingly higher likelihood for the bottom half of society to ‘sweep the board’.
Good thing Uniswap changed the game for capital and wealth distribution.
By providing liquidity to Uniswap, you’re contributing ‘labor’ to the protocol (although it’s still an activity that requires capital). Liquidity is the input that’s required to produce the product (a decentralized exchange) that’s sold to consumers (traders). Therefore, Uniswap’s distribution model gave both Laborers AND Consumers equity in the protocol while laborers received an outsized share of the distribution.
While this model still has to work its way into the mainstream (starting with Uber drivers earning Uber shares in compensation, in addition to their salary), we are watching the Overton Window shift towards the integration of Labor and Capital.
And per usual, DeFi is spearheading this effort.
🎙️ NEW EPISODE
Scan this section and dig into anything interesting
Scan this section and dig into anything interesting
Market numbers 📊
ETH tumbles -11.0% to $339 from $381 last Monday
BTC ticks down -3.3% to $10,395 from $10,745 last Monday
TVL dives -11.5% to $7.64B from $8.64B last Monday
DAI base fee at 2.00% for non-ETH collateral with savings rate holding 0.00%
Market opportunities 🤑
Lend USDC on dYdX to earn 6.28% APY (link gets you 10% off fees!)
Pay with the Crypto.com card & earn 8% cashback (must hold CRO)
Yield Farming 🌾
What’s new 🗞️, what’s hot 🔥, & money reads 📚
WHAT I’M & WHAT YOU’RE DOING
Make time to complete this assignment before next week
Zapper just released a new DEX aggregator, which allows you to source trades from Uniswap and Balancer. So we brought in DeFi Dad to show us a hack on how to save about 75% on fees getting into yUSD (the yVault for the Y Curve LP token) instead of paying huge fees on Curve and yEarn to enter this high yielding opportunity.
DeFi Dad walks us through the following:
1️⃣ Background on yUSD
2️⃣ How to save on fees swapping to yUSD with Zapper Exchange
3️⃣ Recap of risks
Extra Credit Learning
Some recent tweets…
Execute any good market opportunities you saw
Complete weekly assignment: How to save 75% on fees when swapping to yUSD
Listen to Nexus Mutual to Billions with Hugh Karp
🙏Thanks to our sponsor
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.
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