Telegram's CEO was arrested in France earlier this week. They're arguing that he allowed illegal activities to happen on the messaging app. He's out now on a ~$5m bail, but he can't leave France. Telegram started a blockchain called TON several years ago (but are no longer officially linked). After Pavel's arrested, TON's is down by 15% over the past 7 days. It's interesting because Pavel has no official ties to the protocol anymore. But the rationale is this could jeopardize Telegram's future, and the TON protocol's closely tied to it. This is an attack on free speech.
Here's what we got today:
Vitalik's take on DeFi. Everyone's not a fan of his take.
MakerDao Rebrands. MakerDao unveils new branding...Sky.
Around the web. EigenLayer launched permissionless token support, OpenSea received a Wells Fargo notice, and more
Today's email is brought to you by KelpDAO — the DAO for $rsETH LRT.
When Vitalik speaks, the community listens and usually agrees. But this time it's different.
What happened? Vitalik, the founder of Ethereum, made some comments on X about DeFi.
Screenshot of Vitalik's Tweet
80/20:He implied that most DeFi was unsustainable and didn't have his respect.
He even expressed concern that DeFi borrowing protocols are self-referential and potentially unsustainable.
His words created a massive backlash in the DeFi community. Even influential builders like Sam Kazemian, the founder of Frax Finance, openly criticized Vitalik.
We have a right to feel betrayed. Ethereum's market cap is over $300 Billion. Why do think it's that large? It's not because of NFTs of monkey - it's because of DeFi. When I think of Ethereum, I think of protocols such as MakerDao, Aave, Uniswap, Lido, and more.
But before bashing Vitalik, let's examine his arguments.
They must follow the principles of decentralization and permissionlessness.
They should be sustainable. For example, 2021-era liquidity farming was unsustainable DeFi because Protocols were printing tokens out of thin air.
According to him, most DeFi doesn't meet these criteria. It seems like only DEXes, stablecoins, and Polymarket meet his standard.
And this is true. Most DeFi protocols have many points of centralization.
His unsustainability argument makes sense as well. For any financial system to be sustainable, it must be connected to the "real economy" — a.k.a., the production and distribution of goods and services.
As of now, DeFi isn't connected to the real economy in any meaningful way.
If so, what's the problem with Vitalik's critique?
Well... the financial rails we're building on blockchains, aka DeFi, cannot be integrated with the real economy right out of the gate.
We need to test our financial rails. Otherwise, we'll just destroy the real economy. To test the financial rails, we need to use DeFi to play stupid games such as memecoins.
That's just a part of the intermediary stage between TradFi & DeFi.
Are you saying Vitalik is wrong?
Not really. I think he recognizes that DeFi is at an intermediate stage as well. And the controversy was due to the following:
Twitter isn't the right platform to explain his nuanced views.
When he's talking about DeFi, he's not including the future DeFi, where protocols that meet his standards will come.
But I do think that Vitalik isn't fully updated on DeFi. It's understandable cuz he's probably spending most of his time improving the ETH L1.
Imo, Vitalik is also trying to drive builders' attention to other use cases of crypto that he considers more important, such as onchain identity and decentralized social media.
In the long term, it'll benefit DeFi as well. For example, onchain identity will be super-important for connecting the real economy to DeFi. It'll unlock many protocols that can't be built today.
MakerDAO was a symbol of stability and premium stablecoin.
Its recent decision has divided the community. Some it as a bold, strategic masterstroke. Others see it as a reckless leap that can ruin the protocol.
What's going on? MakerDAO is the issuer of $DAI - which used to be the top decentralized stablecoin. For two years, they've been planning a radical overhaul called 'Endgame.' As part of this transformation, they've rebranded themselves as Sky.
What does this mean practically? Here are the changes set to take effect on September 18th.
New tokens. The governance tokens will shift from $MKR to $SKY at the exchange ratio of 1:24k. The stablecoin will change from $DAI to $USDS.
New name & website. They'll be known as Sky Ecosystem. They've even discarded their "@MakerDAO" handle on Twitter. Sky.money will be their new website.
New governance model. SkyDAO will have multiple SubDAOs (they're calling it Stars) under them. They'll be specialized - kinda like different departments in a company. They'll have their own tokens which can be farmed by $USDS.
New "rewards" for stablecoin users. They'll be able to choose from two options. One, Sky Savings Rate - similar to the current $sDAI. Two, Token Rewards - a portion of the inflationary reward in $SKY & other SubDAO tokens like $SPK.
One important detail: the new tokens won't be mandatory. Users can choose whether to convert their $MKR and $DAI into the new tokens. And if they do upgrade, there's also the option to revert to the original tokens.
They've also introduced Skylink: their multichain solution. It'll enable all the core Sky features on L2s.
While these might sound exciting, there were a ton of criticisms.
MakerDAO is already a premium brand in DeFi. Why ruin it with "Sky"?
Some view the governance structure with SubDAOs as unnecessarily complicated.
$DAI is already integrated into most DeFi protocols. The new tokens will lose that valuable network effect.
Many of the new features aren't available to US & VPN users. This goes against the "permissionless" ideal of crypto.
The answer to all these criticisms comes down to one word: Endgame.
In 2021, Maker struggled to fully capitalize on the bull run. Rune, MakerDAO's founder, identified several reasons for this underperformance. The solution? Endgame—a complete overhaul of the protocol.
DISCLAIMER: I'm NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing. Whenever you're ready, there are 3 ways we can help you:
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