Recent developments in DeFi and how it affects the Linen App Community
Hey, the Linen App сommunity:
June has been eventful for us with several major developments!
Recent Linen App survey and actions
First of all, thank you to those who participated in the survey that we sent out 3 weeks ago. We received about 700 responses and randomly drew one lucky winner who received 50 USDC in his Linen wallet. Community members provided many suggestions on how to make Linen App better, and these are the top 5 suggestions:
Add more stablecoin liquidity pools to earn interest.
Provide more information on DeFi (Decentralized Finance) and Compound.
Provide early access to Android users.
Add the ability to deposit crypto dollars (stablecoins) from external wallets to Compound.
Add the ability to store cryptocurrencies in the Linen wallet.
When our members talk, we listen! We are addressing all the suggestions above. Next month, we will start testing our new wallet that will have the ability to deposit stablecoins from external wallets to the Compound liquidity pool using Linen App. The new wallet will allow us to onboard additional liquidity pools faster. Over 20 crypto dollar (stablecoin) liquidity pools exist as of June 2020, yielding
0.05%-13% APY as of June 23, 2020.
Linen App on Android will be released shortly after the new wallet. We will also update our Learn section more frequently so that you can learn more about Decentralized Finance (DeFi).
Compound hands over the ownership of the protocol to users
In other exciting news in DeFi, Compound protocol, an interest rate pool integrated with Linen App, started COMP governance token distribution to its users, including the members of Linen App. Compound is owned by its users now. Yes, by you!
COMP allows you to participate in the governance of the Compound liquidity pool, either directly or by the delegation of your COMP tokens. Linen App is one of the delegates. Voting can be related to things like the interest rate formula adjustment, new assets addition/removal of existing assets, collateral ratio, distribution of COMP or number of other things that impact the work of the protocol. If members delegate COMP, they continue to retain ownership of tokens and can undelegate them at any time. More on the delegation topic in the future.
How does the distribution work? Distribution of COMP is according to a predetermined algorithm. Each day, approximately 2,880 COMP will be distributed to Compound users over the next 4 years. Anyone who deposits or borrows from the Compound pool will automatically receive COMP in their Ethereum address when they interact with Compound, if at least 0.001 COMP is accrued. Linen App community members depositing to Compound and using Linen App, COMP tokens will be available for you to claim once 0.001 COMP is accrued and when we implement this functionality in the app. Currently, we have no estimation for when this will be implemented. No action is required by those who deposit to Compound using Linen App. The only way to earn COMP tokens is to deposit to Compound, borrow from Compound, or buy on an exchange. Coinbase listed COMP tokens today. In the future, we will add the ability to buy and sell COMP within Linen App.
But this is not all good news. Because of the COMP token distribution, users are incentivized to deposit assets to and borrow from the Compound protocol to earn COMP tokens. As a result, there is an oversupply of assets now in certain pools, meaning more people are depositing than those borrowing. In DeFi, this is called “yield farming.” Users earn interest from the interest rate and even more from COMP token distributions. Some users are implementing advanced strategies to farm as much yield as they can ;). This caused interest rates in the USDC pool, which Linen App uses, to go down.
COMP token holders made a proposal to adjust certain parameters of the COMP distribution to address the fact that many users are farming COMP tokens now because they went up in price from about $20 on June 15 when they first started trading to ~$260 as of June 23, 2020. Anyone holding 1% of COMP tokens can make a proposal on how to improve the liquidity pool. We will continue monitoring the Compound protocol developments and will update our members.
Last week, our CEO, Vitaly Bahachuk, provided commentary to Coindesk on how the COMP distribution affects members who use Linen App.
Upcoming activities
Once again, we want to thank the members who participated in our survey! We take all the feedback we hear and implement as much as we can. This update related to Compound is our first step to providing transparency and relevant information related to technologies used by the Linen App community members. Expect further updates from us on important developments related to the COMP distribution and other important activities in DeFi.
Don’t forget that our Community Program on Republic is still underway. And as always, use in-app chat if you have any questions or just want to say “hi!” We’re always excited to hear from our members.
The Linen App Team