Cardano Dan's Newsletter - Issue #20
Opportunity, DeFi and Cardano
Welcome to the quick-hitting newsletter about Cardano, Crypto Trading, Blockchain, Monetary Policy, & Data Privacy.
I hope you enjoy this newsletter and it gives you even greater insight into what’s coming with Decentralized Finance (DeFi) on Cardano.
Quote of the Day
“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
DeFi is a huge opportunity and Cardano is poised to participate in a big way. Now is the time to learn and prepare to participate yourself.
Today’s newsletter is sponsored by Cardano Dan’s Stake Pool & my partner Reliable Staking.
Our Cardano stake pools provide high performance and low fees. We greatly value your support!
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Investing Nugget
“Liquidity refers to the efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price. The most liquid asset of all is cash itself.”
Liquidity is really important for markets to function well. If there’s not enough liquidity when a person is ready to exit an asset, they get stuck holding something they don’t want anymore. Take this situation to an extreme and markets stop working well.
Yield Farming
Enter Liquidity Mining (a.k.a. Yield Farming)
There’s a variety of definitions floating around about yield farming. The simplest I’ve found comes from CoinMarketCap
Yield farming is the practice of staking or lending crypto assets in order to generate high returns or rewards in the form of additional cryptocurrency.
Yield farming can be just for the purpose of lending and borrowing, or it can be for the purpose of establishing liquidity for decentralized exchanges.
In centralized markets, exchanges often provide and ensure the liquidity. But in Decentralized Exchanges (DEXs) like we talked about last newsletter, there’s no central party to provide liquidity.
Here’s an interesting piece that gets into more detail about the interrelationship between liquidity pools and DEXs.
Cardano Liquidity is Coming
Cardano enthusiasts know that low fees, better security, and a more integrated protocol add up to a better design and user experience for yield farming and DEXs on Cardano.
There are a number of projects working this needs today. Liqwid is a prominent project funded by Project Catalyst seeking to meet the lending and borrowing use case on Cardano. Its development is well underway and Liqwid is expected to launch when smart contracts become available with the Alonzo HFC event.
There are also numerous parties working on Cardano-based DEXs as well. I’ve noticed at least two Fund4 Project Catalyst proposals seeking funding for work on a DEX. My guess is that there are some parties bootstrapping a Cardano DEX or two to keep their work quiet.
Total Value Locked
Total Value Locked is a way of measuring the total investments in DeFi.
According to DeFi Pulse, there is now $44 billion locked up in DeFi smart contracts. That’s big. It was only $16B at the beginning of the year. And it was only $637 million 1 year ago.
There’s continued growth ahead in DeFi and Cardano is poised to participate in a big way.
Cardano Nugget
Today is D=0 Day! This marks the first day that Cardano is fully decentralized in its block production. Meaning, Stake Pool Operators (SPOs) will be producing 100% of the blocks on Cardano Mainnet. Congratulations to all supports of Cardano on this momentous occasion!
Technical Analysis
Yesterday I tweeted this picture comparing the length of prior consolidation phases to our current consolidation phase. I do think it’s likely we begin moving again soon.
I also tweeted this as well. Cardano continue outperforming all other major cryptocurrencies in BIG ways.
Keep this in mind while you’re waiting for Cardano to begin moving again. Back to some earlier newsletters… you should have an investing plan. The majority of my plan is long-term investing and cycle trading and that gives me the patience to wait for the next moves.
I’ll be talking more about some planning considerations in the newsletter as we continue to move forward.
Before You Go
What do you think? I’d love to hear your thoughts, questions, and feedback below!
This newsletter is for entertainment and educational purposes. I’m not a financial advisor and you should do your own research and consult a financial advisor before investing in cryptocurrencies.
Dan. Muchas gracias por todos tus aportes. La lectura de tus newsletter es muy sencilla de leer y aprecio mucho eso. El contenido muy interesante. Nuevamente gracias