2019 has been absolutely fascinating for Ethereum and the DeFi space. With $670M locked within the Ethereum DeFi ecosystem as of this writing and more than 100% growth since the beginning of 2019, we can now say for sure that DeFi is the killer application for Ethereum.
We deployed our protocol to mainnet in late 2018. At the time, we were the first margin protocol on mainnet and the protocol had only been adopted by a single 0x relay that had difficulty bootstrapping open order books and basically no liquidity.
2019 was a year of building for us here at bZx. After our deployment on mainnet, we noticed that developers’ curiosity in building on a recently-deployed protocol was limited and the bear market probably hit a lot of developers as well. For these reasons, we decided to develop a bunch of dApps ourselves, which are built on top of the protocol.
In March 2019 we published an introduction to Fulcrum, the first and only completely trustless platform for margin trading; it does not use centralized price feeds or centrally administered margin calls. The platform is permissionless and rent-free; there are no fees and no accounts.
Fulcrum is built on the bZx base protocol and extends the protocol by allowing both loans and margin positions to be tokenized.
We went live with Fulcrum in June, enabling everyone was able to lend, leverage, and short ETH, wBTC, ZRX, KNC, BAT, REP, DAI, and USDC. Upon launch, users enjoyed access to over $750,000 in liquidity as we were able to secure buy-in from multiple liquidity providers to seed the platform.
We keep working on improving Fulcrum and have gathered helpful feedback from our users. In the upcoming months we will work on improving the user experience, mainly by:
- Improving the charts of our assets
- Introducing limit and stop-loss orders via 0x v3.0
- Adding DEX aggregators to reduce slippage
- Including trading history
When developing Fulcrum, we already had our second product in mind: Torque. We had an idea to develop the first borrowing platform with indefinite-term loans and fixed interest rates and published an introduction article at the end of August.
The main advantages of Torque include:
- Non-custodial asset management
- No penalties
- Fixed interest rates
- Flexible repayments
- Universal wallet access
Since Torque draws from Fulcrum’s liquidity pools, it has benefited from deep liquidity from day one.
bZx ecosystem growth
Our friends at Kyber publish a monthly report about stats and developments within the DeFi ecosystem, or specifically about their integrations. July was the first month that Kyber (our on-chain liquidity protocol) published something about Fulcrum:
Fulcrum closed its first month with $840,680 in volume and around $1,000,000 in total value locked (TVL). TVL refers to the value of the assets locked within a protocol/dApp.
Although volumes across the crypto world have dropped sharply since mid-July, this hasn’t been enough to slow down the growth trends in the DeFi space.
We closed July with $1,401,936 in volume (66,8% growth). As we noticed an increasing demand for trading $LINK in a decentralized way, we decided to add $LINK as the first new asset after our launch.
Since then, we have seen a lot of trading activity from the LINK community, for which we are truly grateful.
Today, LINK is #3 in assets and has the highest TVL. Although there was a strong market decline in August, we were still growing both in terms of ETH and Dollar value and closed August with an increase of 38% (in ETH) and 15% (in USD).
During the summer, we noticed that bZx and Fulcrum were getting a lot of attention from teams active in the space and people actively following the DeFi space. Some of the tweets during that period:
The attention our first dApp received is something we noticed in our upcoming monthly volumes as well. We were really excited when Kyber published their September ecosystem report. Our volumes grew from $1,605,330 to $2,829,254 (+76%) and 8,090 ETH to 15,470 ETH (+91%). This month we were 47% of all DeFi traffic through Kyber Network!
October was a month where our volumes stabilized, with comparable trading volume (in ETH) as the month before and a small decrease in USD value. During November, our volumes picked up again and we increased 12% in ETH and 27% in USD.
Another metric that has been monitored widely by the DeFi community is the total value locked (TVL).
The 18th of November was a big milestone for everyone: MakerDAO was transitioning away from Single Collateral DAI toward Multi Collateral DAI and there was a lot of uncertainty within the DeFi community about the impact of this transitioning.
To make this process smooth for our own users, we included a single-click conversion method from SAI -> DAI. It’s worth mentioning that we believe in decentralization and economic incentives (such as higher APR for DAI), so we are not enforcing the SAI to DAI migration and let our users choose when they want to do it.
After the transition to Multi Collateral DAI, a governance round of MakerDAO increased the DSR rate from 2% to 4%, which brought the DSR close to the lending rates of protocols such as bZx.
As our protocol is suitable for money legos, we initiated a transaction that updated the iDAI logic contract. Going forward, DAI in Fulcrum lending pools that haven’t been loaned out are deposited to Chai.
This means that DAI that isn’t being utilized in margin trades or loans is earning the Maker DSR (6% APY currently) - and our users are thus earning the 6% APY + Fulcrum’s own native rate:
Current_Supply_Rate = iDAI_Native_Supply_Rate + DSR * (1 - current_utilization)
Kyle Kistner shared his thoughts about the future of MakerDAO and the Multi Collateral DAI migration during a panel discussion with Rune Christensen, founder of MakerDAO.
Since this innovative integration, we have been leading the pack in terms of offering the highest interest rate, bringing our TLV over $4,000,000 ($4,800,000 at time of writing).
Besides the launch of our own dApps, we have also been working on multiple integrations. Two examples of our integrations are DeversiFi and Augur:
- DeversiFi was the rebrand of Ethfinex - bZx/Fulcrum is included as two of their new upcoming features: Decentralized Margin & Decentralized Lending
Decentralized Margin: Using our protocol, they are preparing to add leveraged trading to the DeversiFi experience. The margin trading experience using Fulcrum will be three-clicks simple!
Decentralized Lending: As with margin, they will be using the bZx Fulcrum protocol to provide lending features on DeversiFi. Like margin, lending will be designed with ease-of-use in mind, allowing traders to lend directly within the Deversifi interface.
- Augur will include bZx in their upcoming Augur v2 launch. bZx is a natural fit for Augur since it is more decentralized than other lending solutions in the industry. It is fully non-custodial, with funds escrowed in smart contracts, and uses both decentralized price feeds and margin calls. The bZx widget will be available in the UI for sufficiently liquid scalar markets on Augur and let traders lend and borrow Dai or outcome shares. Both lenders and borrowers can create orders with their chosen terms.
During September 2019, we hosted several bounties via Kyber for the #KyberDeFi Hackaton. A lot of teams have made use of bZx and we saw some awesome ideas and products came out of this. A few examples include:
DeFiZap DeFiZap allows people to allocate their assets across multiple DeFi protocols in one transaction to save time and gas. One of their most recent Zaps was the “DAI Leverage Liquidity Pool,” which allocates 33% of the funds to a 2x ETH Long position powered by Fulcrum;
dDAI With dDAI, holders can earn interest with smart DeFi Recipes. dDAI is a token which is redeemable 1:1 and backed by DAI. dDAI enables users to earn interest by lending out DAI on Fulcrum and automatically reinvesting the accrued interest into other asset classes using ‘DeFi recipes’
Structured Structured is a simple yet powerful platform that automates the packaging of DeFi products into portfolios. Users are able to select a portfolio that matches their risk tolerance and reward expectations, and purchase that portfolio in seconds, without custodians or brokers.
Check our thriving ecosystem here.
We received a lot of applications for collaboration and integrations after launching the first two dApps and noticed that the pressure on the current core team was becoming unsustainable. For this reason, we expanded our team with three new members:
Boris Shevchenko (full-stack developer): Boris has more than 12 years of full-stack software development for a super wide range of industries. He is actively contributing to the crypto community for three years, developing first-class Ethereum blockchain decentralized applications & autonomous organizations.
Nick Sawinyh (Head of Marketing): Growth-focused Product Manager with more than ten years of experience in the software industry, and a proven passion for developing innovative solutions that combine cutting-edge technology with a deep understanding of customers’ needs. Nick has an extensive background in both digital marketing and agile development of customer-facing web apps.
Keval Sheth (full-stack developer): Keval Sheth is a Full Stack Developer at bZx, where he manages web application platform of Torque and Fulcrum. Keval has worked with reputable companies like Microsoft and Nomura and helped in building the platform that handles millions of transaction on day to day basis
We achieved significant progress on the interface side. iTokens now supported by mobile wallets including Trust, Eidoo, DexWallet, and AlphaWallet as well as DeFi-focused dashboards like Zerion and DeFiSaver. The team also implemented mobile-friendly layouts for Torque and Fulcrum.
We spent a significant amount of time doing fundamental research on the DeFi space this year and created a framework for classifying lending protocols.
The article has set an industry-standard for comparing lending protocols and assessing the degrees of decentralization between protocols.
Another research article we published this year was an overview of the different types of DAI (including our own iDAI).
We have several pillars we plan to focus on in 2020. In summary, we plan to:
- Increase the awareness of bZx, Fulcrum and Torque
- Add more liquidity for our users, which will reduce slippage and improve trading experiences
- Keep updating and improving Fulcrum and Torque
- Improve the utility of the $BZRX token (we will publish an article soon about our governance model, staking and it’s incentives to stake)
- Launch another dApp we will not disclose details about at this time (the name we disclosed earlier in our Telegram Channel: Archimedes)
Kyle and Tom