Welcome to DeFi Frontier, where I highlight the DeFi opportunities, protocols, and market themes worth paying attention to.

The goal is simple: find what’s interesting, understand the tradeoffs, and avoid blindly chasing the biggest APY on the screen.

Let’s get into it.

One quick note before I go any further: the term DeFi is now used so broadly that it often represents something that isn’t truly decentralized. DeFi, of course, means decentralized finance, but how many of the protocols we interact with today are actually decentralized? I’ve been debating whether I should start using the term onchain finance more and possibly even rename this “Onchain Frontier.” If you have a strong opinion, comment below or DM me on X. I’m curious which one you think makes more sense.

We’re at a stage where the number of interesting, novel, and genuinely useful DeFi protocols is starting to grow. There have been times when that number was only a handful, but I think we’re finally pushing into new territory.

For a while, borrowing and lending felt like one of the few use cases that had truly broken through. I’ve gone through periods over my decade in crypto where I’ve asked myself, “What have we actually built?” Right now, my answer to that question is probably the least nihilistic it has ever been.

I’m freshly back from touching grass with my family, but since I can never stay truly unplugged, I kept bookmarking DeFi projects that caught my attention. By the end of the trip, my bookmarks were overflowing.

DeFi feels like it’s at another inflection point. For the teams that have avoided the many landmines of exploits, grifts, and the pain of the bear market, it feels like there could finally be a huge reward waiting.

The infrastructure, tooling, and regulatory backdrop have all converged in a way that is producing a lot of genuinely useful products. These are products that couldn’t be built without crypto rails and, in many cases, are actually better than their web2 peers or simply wouldn’t exist otherwise.

Here are just a few that I wanted to highlight, along with a short blurb on what they’re up to. This list is a mixed bag and a little all over the place, but shoutout to everyone still here building and innovating.🫡

This list is made up of teams that I think are pushing the space forward, or at least marching to the beat of their own drum. I love teams that are opinionated and willing to innovate rather than play it safe by forking the work of others.

This is not an exhaustive list, but more teams that have been on my radar the past few weeks who I think are really shipping lately:

On August 25th I wrote up a number of tokens I’m holding/accumulated in the bear market. ENA was one of those tokens. I can sum it up as simply as the last bullet on my list below:

Then, a mere 3 days later Ethena kicks off a bullish announcement regarding buying out a lot of the remaining investors and vested tokens:

Now Ethena Pay is live and looks to be a real competitor to my beloved EtherFi:

And here’s all they shipped in just August alone:

Disclosure, I’m long ENA

I will spare you a write up here on Ether.fi. I love it, I run my whole business through it, I’ve written about it ad nauseum. EtherFi Summer was a rare “buy the news” event because they overdelivered.

If you want the best primer, this link below is a good place to start as it links to all my other writings on the product + token:

Disclosure, I’m long ETHFI

DeFi Saver has been around forever, and somehow I haven’t used it as much as I should. My partner in crime, DeFi Dad, has been telling me about it for years, though, and he’s been a longtime power user.

Lately, I’ve sort of rediscovered it, and there’s a lot here that I wish I had known about or been using over the years. I think part of that rediscovery has come from Milos’ great whiteboard series and the work he’s been doing on X. He’s been putting out some great content. For example, check out this post on auto-boost:

I’ve written about 3Jane many times, but they strike me as true innovators that are trying to create entirely new categories of DeFi.

One area of interest is their Leveraged Callable Capital primitive or LCC.

What is it?

Here’s two different interpretations from two DeFi 🐐’s:

It’s worth reading through the risks in their docs specifically on LCC to know what you’re getting into of course.

Disclosure, I’m an investor in 3Jane.

I’m very bullish on looping over the long term. It has gone through its ups and downs as the industry and users figure out which models and assets actually work.

The Flex team, which comes from Yearn, seems to have found some nice early PMF. I think they’ve also put good guardrails around the protocol while choosing the right assets: quality collateral that is instantly redeemable.

As you can see, the yields are incredible right now:

To continue with the looping trend, 3F Labs describes itself as “The best place to leverage RWAs onchain.”

As bullish as I am on looping long term, I’m equally bullish on teams eventually figuring out RWA leverage. 3F is one of the earliest movers on this front, IMO.

As much as we think crypto people are degens, the suit-and-tie crowd is just as degenerate, and they love leverage. Once 3F smooths out its operations and comes out of private beta, I think demand for leverage on blue-chip products like these could be insatiable.

Check out these numbers:

Disclosure, I’m an investor in 3F Labs

Re is one of those protocols I wouldn’t be shocked to see grow to billions in TVL over the next year, and potentially much more from there.

We recently spoke with its founder, Karn Saroya, on our podcast, and I couldn’t help but come away from the conversation incredibly bullish.

We covered so much that I had to write a quick follow-up breaking down my 10 favorite things I learned.

Click the image below to read the piece:

I wrote up some thoughts on USD.AI in last week’s newsletter as its been something I’ve wanted to get some exposure to.

I have similar feelings with both Re and USDai. They both feel like new and novel protocols that aren’t forcing blockchain, but are enhanced and made possible with blockchain rails.

So this is a bit of a rehash:

DeFi Dad and I have been talking a lot about social trading together. There are parts I like and parts I don’t, but the transparency is a clear positive.

It creates an interesting dynamic where I think it becomes harder for influencers to use their audiences as exit liquidity. Flowhorse also explains the prisoner’s dilemma at play here:

Finally, I don’t always agree with Threadguy, but one thing I think he’s directionally right about is that streamers, influencers, KOLs, or whatever you want to call them, will increasingly have to prove themselves through their own PnL. Flood also sort of nails this mentality:

There will be fewer theorists and more practitioners. I actually think this is happening across society more broadly. Practitioners are increasingly becoming the influencers.

Now, to the apps.

Mobile apps will play a big role in this upcoming cycle.

I’ve been playing around with Markets and Fomo, and the level of polish across crypto mobile apps now is insane. I used to interact with crypto almost entirely from desktop, but these apps have become so good that I expect to do almost all of my perps trading on mobile this cycle.

For perps, I personally recommend Markets. For broader access to almost anything onchain, Fomo is pretty great.

If you haven’t tried these yet you can get started with my referrals:

Markets: https://markets.xyz/mobile-app/u/nomaticcap?ref=nomaticcap

Fomo: https://fomo.family/r/Nomaticcap

When I first heard about stocks coming onchain I went from “why do we need stocks onchain” to “wow it would actually be cool to borrow against stocks I like” to “stock LP’ing is quite interesting”.

There’s been a lot more knockon effects to stocks coming onchain than I originally realized.

These stock pairs are creating some nice LP opportunities.

This writeup from Ignas is a great primer on what’s happening here:

Stephen also gives a shout out to vfat.io which is a protocol I had totally forgotten, but remember for early DeFi days.

This 3 minute video is a full of alpha on how you can unearth some of the best sock CLP plays:

7 day benchmark stablecoin rates from Portals: 2.98%:

Here’s the top yielding stablecoin vaults (real yields) for the past 30 days:

Checking in on Stablewatch to see the 7-day TVL changes.

This week the top movers were: OpenTrade (xSOLY) +71.1%, Smart Dex (USDN) + 33.4%, OpenTrade (XDFIS) +20.2%:

7 day benchmark ETH staking rates from Portals: 2.22%

Here’s the top yielding ETH vaults (real yields) for the past 30 days:

Here’s a snapshot of the front page of looping this week from yieldz.io (30d APY):

Taking a look at the front page of Stablecoin yields and RWA yields this week on Pendle:

Stablecoins

RWA

Thanks for reading!

DISCLAIMER: Nothing written in The Edge Newsletter or said on The Edge Podcast is a recommendation to buy or sell tokens or securities. This content is for educational and entertainment purposes only. Nothing shared here is financial advice. Any views expressed in our content are solely the opinion of that writer, host, or guest. Always do your own research. DeFi Dad, Nomatic, and guests may have positions in the assets or other matters discussed in this content.