The threats to DeFi’s sustainability — and how to fix them

The threats to DeFi’s sustainability — and how to fix them

With insane interest rates and yield farmers endlessly jumping from one protocol to another, fears are growing that DeFi isn’t sustainable — and change is needed.

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In the space of 12 months, DeFi has become a $15 billion industry — spawning governance tokens that are now worth even more than Bitcoin.

But the rapid explosion of protocols has brought considerable growing pains… and concerns that the sector is not on a sustainable footing. When interest rates in conventional savings accounts stand at a fraction of a percent, while yield farming generates triple-digit returns, it’s inevitable that questions will emerge about whether this is a bubble that’s fit to burst.

As Ethereum co-founder Vitalik Buterin recently pointed out on a podcast with Ryan Sean Adams, such sky-high interest rates are “just a temporary promotion that was created by printing a bunch of compound tokens, and you just can’t keep printing compound tokens forver.”

SEBA, a regulated crypto bank in Switzerland, hit the nail on the head in September when it released a report that asks this: “What happens when the music stops?”

Its analysts warned that the current yield farming trend in DeFi is not sustainable — and went on to predict that only a small handful of protocols would survive in the long-term. Indeed, Yearn.finance has already embarked on a plethora of mergers in recent weeks designed to bolster development resources and expand its liquidity pool.

Although SEBA went to great lengths to stress that not all yield farming lacks merit, the company added: “Yield farmers made money by hopping from one protocol to another. As long as there are buyers for new protocol tokens, yield farmers can continue jumping among protocols. When buyers stop accepting the other side of the trade, this deranged activity will be arrested. Clearly, this trend is not sustainable.”

It pointed to SushiSwap, a fork of Uniswap, as an example. Following its launch, a myriad of other food-themed forks emerged. “When markets took a bad turn, all except SUSHI corrected by more than 99% and became almost worthless,” SEBA’s analysts wrote.

The bank ultimately drew parallels with the dizzying ICO boom seen in 2017 and 2018 — where most ambitious projects failed to stand the test of time.  

Siloed protocols

Unfortunately, headaches in the DeFi space don’t end here. This year, Ethereum has established dominance as the main blockchain where protocols are based — and according to DappRadar, this network held 96% of total transaction volume in the DeFi ecosystem in the third quarter of 2020.

As reported by Cointelegraph in September, this led to alarm bells being raised over Ethereum’s scalability issues — with transaction fees surging to an all-time high. Although it is hoped that Eth2 will dramatically increase the network’s capacity, experts warn it could be years before the transition to proof-of-stake is complete… and by then, the industry may have had little choice but to look for alternative blockchains.

The research company BraveNewCoin touched upon these challenges in a recent report, where it identified 18 serious non-financial risks facing the DeFi sector.

“Scalability risk is also the risk that Ethereum itself will not scale properly for DeFi protocols to be able to function sustainably over time. If network activity is too high (as it has been recently) it deters smaller investors and removes the ‘accessible’ aspect of DeFi — because smaller investors are earning rewards that are less than the fees required to obtain them. Not only does scalability risk impact investors, but it also impacts protocols,” BNC wrote.

And all of this is before we mention the countless smart contract vulnerabilities that have led to millions of dollars in capital from being sucked out of the DeFi ecosystem by malicious actors. High-profile incidents appear to happen on an almost weekly basis — affecting investor confidence and jeopardizing the industry’s long-term potential.

Finding the answers

According to Unifi — which has already launched on five different blockchains — change is needed if the sector has any prospect of establishing a meaningful presence in the crypto industry into the 2020s and beyond.

At present, the team behind this protocol believe the space is deeply flawed. On most DeFi platforms, those who make the most rewards are those who leave a platform first and move on to the next thing — creating distrust and causing confidence to evaporate. Resultantly, the top-ranking protocols with the highest total value locked are constantly changing.

“Unifi is custom built to be an efficient, rewarding, and sustainable system. Capitalizing on the strengths of each blockchain Unifi is on, we have created a system where all chains contribute together to form a complete tokenomics model, ensuring the success of the entire protocol,” Unifi CEO Juliun Brabon said. 

Unifi says it isn’t a clone of any existing protocol — and instead, the project says it delivers a sustainable tokenomics system that is more akin to a blockchain than a conventional DeFi protocol. This is demonstrated by their governance token, UNFI, which incorporates proof-of-stake into its model. Unifi offers loyalty rewards to liquidity providers and traders, encouraging a sense of community instead of being a race to be the first out. 

The protocol adds that its multi-chain approach results in an ever-increasing audience with each new blockchain supported — with Ethereum, Tron, Ontology, Harmony and the Binance Smartchain united through the use of base tokens. In the last quarter of 2020 and continuing through 2021, Unifi is set to launch on additional blockchains — and new DeFi services, such as cross-chains swaps and a lending platform, will be released.

In order to gain cross-industry support, Unifi says it has received investment from over 20 blockchain venture capital firms, including four major exchanges — Binance, MXC, Bibox and HBTC. Unifi’s governance token, UNFI was recently featured on Binance Launchpool.

As 2021 begins, all eyes will be on DeFi to see whether it can maintain its current size — let alone build on the astronomical growth that was seen in 2020. Sustainability is shaping up to be crucial in making this happen, and encouraging user loyalty could be the key to success.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.


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With insane interest rates and yield farmers endlessly jumping from one protocol to another, fears are growing that DeFi isn’t sustainable — and change is needed.

Sheep Farmer’s Alleged Baby Food-Based Bitcoin Extortion Attempt Thwarted

Sheep Farmer’s Alleged Baby Food-Based Bitcoin Extortion Attempt Thwarted

File this one in the “stranger than fiction” category.

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A resident from Lincolnshire, United Kingdom, was accused by local authorities of attempting to blackmail the supermarket chain, Tesco.

According to The Yorkshire Post, Nigel Wright, a sheep farmer, allegedly wrote Tesco a series of letters claiming that he had planted contaminated baby food in their supermarket stores. He then allegedly offered to reveal the locations of the contaminated baby food in exchange for roughly $1.8 million in BTC.

Wright is believed to have been a part of a group of disgruntled farmers who felt that the grocery chain had underpaid them for previous goods. No information about other members of the group, who seem to have operated under the name “Guybrush and the Dairy Pirates”, was made available. However, it is worth noting that their name appears to be a reference to the 1990 point-and-click adventure game, “The Secret of Monkey Island.”

Prosecutors from the Old Bailey Court charged Wright with two counts of contaminating goods and four counts of blackmail.

The report states that Wright initially asked for 100 BTC from Tesco, but later increased the amount to 200 BTC. Authorities additionally allege that Wright threatened to kill a driver with whom he had an altercation, and demanded that he pay $196,350 in Bitcoin.

The farmer denied all charges before the judge.

Cointelegraph recently reports that the Leicester Crown Court ordered the seizure of over £1.8 million ($2.29 million) from a UK individual who operated a multi-billion crypto drug empire from the attic of his home.


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File this one in the “stranger than fiction” category.

Blockchain Startup Aims to Help Indian Farmers Get Fair Crop Prices

Blockchain Startup Aims to Help Indian Farmers Get Fair Crop Prices

A blockchain-based agtech startup has partnered with the Indian government to help 3 million farmers earn a more fair income

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A blockchain-based agtech startup Agri10x has inked a partnership with the Indian government to help farmers sell their produce directly to buyers.

According to a report published by local news outlet Business Standard, Agri10x will gain access to half a million government-affiliated common service centers that will help farmers in rural areas register on the Agri10x platform.

Indian agriculture industry has huge room for disruption

A report on sale of food produced by Indian farmers suggest that between 69 to 73% of produce left with farmers is sold below the Minimum Support Price (MSP). Due to the failure of government agencies to reach farmers, they are forced to sell the leftovers to middlemen at nearly zero profit.

Agri10x CEO Pankajj Ghode said in a statement that their platform will remove middlemen and engage farmers directly with buyers:

“Our aim is to ‚Connect Local Farmers with Global Buyers‘ that would not only increase their income levels but will also massively boost employment in the agriculture industry.”

Considering the present condition of Indian farmers, if Agri10x is able to deliver to its promise of connecting farmers across India to both local and global buyers, it can significantly improve farmer’s income.

Agri10x COO Abhijith Naraparaju stated that Agri10x will be expanding its services from the state level to a national level. They are aiming to onboard more than 3 million farmers on their platform by the end of this year.

Government’s rising interest in blockchain for agriculture

Both the Indian state and central governments have been actively looking into ways to advance agriculture with the help of blockchain technology.

In August 2019, Cointelegraph reported that the second largest Indian state Maharashtra was planning to use blockchain in supply chain and agricultural marketing. In March, the Indian Ministry of Commerce and Industry had announced that the Coffee Board of India launched a pilot blockchain-based e-marketplace in order to integrate coffee farmers with the markets.


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A blockchain-based agtech startup has partnered with the Indian government to help 3 million farmers earn a more fair income

Blockchain for Australian Farmers: A Shield Against Worsening Climate

Blockchain for Australian Farmers: A Shield Against Worsening Climate

The agricultural industry in Australia requires transformation and adjustment to the new technologies in order to survive the natural disasters

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Australian farmers are all too familiar with dry and erratic weather conditions affecting day-to-day business. Reports over the last 20 years demonstrate that these conditions will only worsen — with an increased climate estimated to have​ ​reduced yearly profits​ by 22%.

The current bushfire season has had a disastrous impact on the agricultural industry.​ ​NASA mapping data​ estimated that 8.6 million sheep and 2.3 million cattle across New South Wales and Victoria were affected, and about 500,000 total livestock perished.

While harsh temperature drops and ​intermittent rainfall​ provides an illusion that the worst is over, this is far from the truth. Dozens of bushfires still ravage the drought-stricken landscape and temperatures continue to rise. Resources are becoming less accessible, leaving many farmers — who were already battling arid climates and persistently low profits — on edge.

The window of opportunity for farmers to make profit is closing in. Farmers are struggling. The challenge is to find new ways to retain and increase profitability in these increasingly harsh conditions. Blockchain technology and the new revenue opportunities it enables could be the answer.

Related: Australia’s Blockchain Roadmap Isn’t Music to Everyone’s Ears, Draws Criticism

Blockchain helps improve agricultural efficiencies in times of crisis

Blockchain — an open-source and secure database that provides traceability of records — opens up new and exciting possibilities for improved agricultural efficiency. Consumers are eager to know the items they are buying are clean, safe, and sustainably produced. Visibility along the supply chain provides very useful information that is not otherwise obtainable.

Related: Use of Blockchain in Major Industries by Numbers: Retail, Manufacturing, Finance, and Others

This year, we saw constant hurdles affecting farmers who couldn’t get the emergency assistance they needed. Government teams such as Agriculture Victoria struggled to respond to urgent livestock loss requests, which are considered biosecurity risks. And farmers, who desperately required additional food, water, hay, fencing and other farm facilities, faced logistical nightmares when these essentials couldn’t be obtained.

The industry has the chance to transform the way it does business. There is no need to accept the way “things have always been” as being adequate to meet new global and domestic challenges. New logistics methods based on emerging technologies can improve the flow of goods and information.

In order to make an impact, we need industry transformation. Blockchain is a breakthrough way to store data and share information.

Adopting transparent technology solutions in the agricultural industry opens new opportunities for industry co-operation and increased profits. By digitizing the supply chain process, we can safely store and share data, strengthening the connection between farm and product.

We’ve already seen the impact blockchain technology has had on other businesses such as the taxi and hotel industries. Those who were slow to adapt to the changes were adversely affected. The time for change is now upon the farming and logistics sectors.

Related: Cryptocurrency Adoption: How Can Crypto Change the Travel Industry?

What embracing agritech innovations means for farmers

So, what does it mean for farmers? Firstly, blockchain technology means farmers can track the entire supply chain: from farm to stockyard, feedlot, abattoir and exporter, giving greater control over livestock data. Livestock can be traced from birth through life, and even their feed can be tracked in real time. This allows farmers to calculate the cost of feed per paddock or animal, which assists in monitoring food inventory and improving costing modules to enhance budget management.

Secondly, by collaborating on a single open-source application, farmers can better adapt to environmental changes by developing new and improved business models. Farmers can form alliances with partners and feed important data to key organizations. When more farmers are using the secure database, farmers can highlight gaps or inefficiencies and specifically determine where issues along the supply chain are slowing productivity down.

Thirdly, in times of crisis, a traceable platform demonstrates where the greatest need is and can be the best solution in ensuring we make the biggest impact as we relieve and recover, even when the bushfire season is over.

We learned very quickly this year that traditional communication and data-storing systems are not sufficient. Adopting transparent technological solutions in the agricultural industry is critical, especially considering that climatic conditions nation-wide are expected to worsen.

Farmers cannot afford to fall behind in the climate crisis

Farming is becoming increasingly unpredictable, and bushfire seasons are becoming more likely and are lasting longer. As an increasing climate becomes a more pressing issue, there will be greater pressure on workflow and data-sharing solutions.

It is clear that blockchain technology is the solution Australia has been looking for. As farmers look to rebuild their land and livelihood, we recommend adopting agricultural innovations that will improve productivity, profitability and environmental sustainability of their farming businesses.

It’s time to keep up. We need to be aware of the potential in adopting digital technologies such as blockchain across a range of industries. The climate isn’t getting any cooler — as farmers, we cannot afford to fall behind.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Mark Toohey is a joint managing director of Aglive’s blockchain platform, a world-first livestock traceability system based in Australia that utilizes blockchain technology to track food along its supply chain. He was also the co-founder of TBSx3, an Australian logistics technology company dedicated to using blockchain technology to combat the worldwide trade of fake goods.


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The agricultural industry in Australia requires transformation and adjustment to the new technologies in order to survive the natural disasters

UK Startup Puts Haitian Farmers and Their Crops On the Blockchain

UK Startup Puts Haitian Farmers and Their Crops On the Blockchain

UK blockchain company announces a new supply chain ecosystem for Haitian farmers

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A UK tech company recently announced a blockchain ecosystem for farmers in Haiti, bringing clarity to the supply chain while bolstering sales.

Agriledger, a blockchain outfit based in the UK, was responsible for building this new ecosystem. Their goal was ensuring that farmers receive adequate pay for their crops, a Feb. 28 post from Spring Wise stated.

Each farmer is a part of the system

Agriledger’s blockchain-based solution assigns farmers enrolled in the system with a digital ID number. With this ID, farmers become part of the digital supply chain.

Agriledger additionally allows these Haitian farmers to tokenize their products, granting them greater access to peer-to-peer dealings.

Blockchain keeps the data honest

Agriledger’s blockchain underpinnings have allowed for a far more transparent solution than what has previously existed in the region. Parties can now trust the validity of data they interact with, which smooths the process of acquiring loans and other financial services for the participating farmers.

The ecosystem also touts digital wallets and payments, bolstering the additional benefits of convenience and speed.

Looking toward the future, Agriledger aims to build a software-as-a-service (SaaS) platform in which suppliers and retailers can interact.

Supply chain management continues to grow as a hot use case for Blockchain technology. Just a few weeks ago, Avril Group, an agro-industrial partnership specializing in nutrition, started using IBM’s Food Trust blockchain network for its supply chain.

Cointelegraph reached out to Agriledger for additional details, but received no reply as of press time. This article will be updated accordingly, should we receive a response.


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UK blockchain company announces a new supply chain ecosystem for Haitian farmers

Oxfam’s Blockchain-Based Agricultural Insurance Pays Farmers in Sri Lanka

Oxfam’s Blockchain-Based Agricultural Insurance Pays Farmers in Sri Lanka

Oxfam announced the success of its blockchain-based delivery system of microinsurance to farmers in Sri Lanka

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The United Kingdom-based charity organization Oxfam International announced the success of its blockchain-based delivery system of microinsurance to paddy field farmers in Sri Lanka.

In a Nov. 4 press release, Etherisc announced that Oxfam’s blockchain-based insurance system had made pay-outs to Sri Lankan farmers who continue to risk losing their crops due to extreme weather events.

Blockchain reduces costs and increases pay-outs

Oxfam in Sri Lanka, together with its partners Etherisc and Aon plc, will now continue to seek solutions to some of the challenges that will present themselves as the new cropping season starts in the month of November. 

In the past, issues such as lack of affordable and reliable insurance products, a lack of understanding about how insurance would help a farmer survive, and when and how a claim would be paid, have always acted as major barriers that prevented farmers from utilizing insurance. 

However, the use of blockchain technology can transform and simplify the insurance claims process, which results in reduced administration costs and a higher percentage of premiums being used for fully trusted pay-outs. Chief inclusive officer at Etherisc Michiel Berende said:

“We are proud to have real-world, on-the-ground success from a blockchain solution for microinsurance […] We are delighted with the first phase results and we are excited to drive on and help more farmers.”

Oxfam continues to use stablecoins to distribute aid

In June, Oxfam partnered with Australian tech startup Sempo and blockchain company ConsenSys to test stablecoin Dai’s (DAI) suitability for aid in regions suffering from natural disasters. With the support of the Australian government, a philanthropic initiative was launched and dubbed UnBlocked Cash. Oxfam and Sempo reportedly chose the world’s most natural disaster-prone country, Vanuatu, to test the system.

In September, Oxfam initiated the pilot program’s second phase to further distribute disaster relief.

Joshua Hallwright, Oxfam Australia’s humanitarian lead, told Cointelegraph in June that it was “highly likely that Oxfam will use stablecoins or other distributed ledger technologies to provide cash aid in disaster responses in the future, either in Vanuatu or elsewhere.”


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Oxfam announced the success of its blockchain-based delivery system of microinsurance to farmers in Sri Lanka

Blockchain-Based Insurance Platform for Farmers Launches in Sri Lanka

Blockchain-Based Insurance Platform for Farmers Launches in Sri Lanka

Three organizations have partnered to launch a blockchain-based insurance platform in Sri Lanka that is designed to protect local farmers against crop loss

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Decentralized insurtech firm Etherisc has launched a blockchain-based insurance platform for farmers in Sri Lanka

The platform is the result of a partnership with the insurance company Aon and the charity Oxfam in Sri Lanka, according to a press release by Aon on July 1.

As per the report, the aim of the insurance platform is to provide a way for Sri Lankan farmers to access risk protection in the face of potential crop-obliterating weather conditions. The report states that almost 200 farmers have enrolled to use this platform for “micro-insurance.”

According to Michiel Berende, the Chief Inclusive Officer at Etherisc, many farmers do not have insurance:

„Farmers represent a third of the workforce and account for almost 20 percent of the economy, yet very few have insurance. This made Sri Lanka a perfect candidate to feel the benefits of decentralized, collaborative and automated insurance. This alliance is really a cooperation between all and showcases blockchain for social good.“

The country director of Oxfam in Sri Lanka, Bojan Kolundzija, said that this new blockchain solution will provide risk protection to “a large portion of the Sri Lanka economy.“

According to the press release, some major barriers to farmers obtaining insurance have included lack of affordability and clarity on how the coverage would provide specific benefits. The new blockchain platform purports to solve these issues by making coverage cheaper and easier by automating the claims process.

As previously reported by Cointelegraph, there is a growing field of tech solutions for insurance — the so-called “insurtech” field — and blockchain-based applications feature prominently. 

A report by Hartford’s Insurtech Trends said that insurance companies are currently using blockchain tech to “streamline processes, provide transparency, and enhance security,” along with data management and protection, reducing administrative costs and boosting consumer trust and loyalty.

Research firm MarketsandMarkets predicted in 2018 that the value of blockchain components in the insurance market will reach $1.4 billion by the end of 2023.


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Three organizations have partnered to launch a blockchain-based insurance platform in Sri Lanka that is designed to protect local farmers against crop loss