Lending Stablecoins with DeFi

Nick Sawinyh on 01 Sep 2019

I’ve been advocating for DeFi for a long enough time and tested by myself most of the products presented at DeFiprime. But now I think it’s the right time for skin in the game experiment.

The idea is simple I had put $100 worth into various DeFi lending products, and going to track results over the year. The goal is to increase my wealth in dollar values, and proof that DeFi is the thing and could be sustainable. How good could DeFi products be, comparing to a regular savings account? What would happen if one of the project’s smart contracts get hacked? How DeFi lending rates changes over time? Let’s figure this out.

For this experiment, I will skip fiat on-ramp hassle, and deposit 3.02 ETH(~$515 to cover gas fees) directly to the wallet 0xa51cE0796d32e3cc932C9a9e01663F68f71D9CBf, and then I’ll exchange ETH to the stablecoins I needed at one of the DEXes.

Compound, Nuo, dYdX, and Fulcrum can be described as autonomous money markets. These platforms enable users to earn interest and borrow digital assets without relying on a counterparty. Digital exchanges commonly offer similar features but either the exchange or users need to provide liquidity to allow traders to borrow assets and trade on margin and users need traders to borrow funds to maintain an attractive interest rate. Idle Finance differs in that it aggregates lending protocols to allow users to automatically shift funds between protocols depending on which platform offers the best interest rate at the time.

DeFi products chosen in no particular order, and I don’t take any extra precautions against smart contract hacks such as Nexus Mutual insurance. The reason for choosing USDC over DAI for NUO is that I don’t want to put all of my eggs in one basket, also interesting to check a long time difference between DAI and USDC.

This experiment will help demonstrate the differences between lending protocols in DeFi and contribute to the development of a historical record that can be used for comparing investment opportunities in DeFi.

Experiment conditions

  • Starting date: September 1, 2019.
  • End date: September 1, 2020.
  • $100 DAI deposited to Compound Finance, txid
  • $100 USDC deposited to Nuo, txid
  • $100 DAI deposited to Fulcrum, txid
  • $100 DAI deposited to dYdX, txid
  • $100 DAI deposited to Idle Finance, txid

Results Chart

Product 09/01 10/01 11/01 12/01
Compound Finance 100 DAI 100.77 101.46  
Nuo¹ 100 USDC 100.57 101.22  
Fulcrum 100 DAI 100.67 101.20  
dYdX 100 DAI 100.75 101.39  
Idle Finance 100 DAI 100.72 101.37  

¹ Deposit in USDC

You can track live experiment stats here: 0xa51cE0796d32e3cc932C9a9e01663F68f71D9CBf

I’m going to update the results in this table each 1st day of the month, and provide screenshots from lending platforms dashboards to proof data.

Update: October, 1, 2019

No surprises so far, no one was hacked, and money doesn’t got disappear this month. DeFi rates have been in a range of 8-10% in September. Updates for each platform as follows:

  • Compound Finance

  • Nuo

  • Fulcrum

  • dYdX

  • Idle

Update: November, 1, 2019

DeFi rates have been in a range of 6-7% in October. Updates for each platform as follows:

  • Compound Finance

  • Nuo

  • Fulcrum

  • dYdX

  • Idle

Next update is December, 1, 2019.

Do you like this experiment and want to support our work and future researches? Now you can use Gitcoin Grants for that!

DeFi is coming. Don't get left behind

About the author
Nick Sawinyh
Nick Sawinyh is an LA-based crypto entrepreneur. After having spent over four years in the blockchain industry, Nick founded DeFiprime in 2019, with the idea to provide information about emerging DeFi ecosystem. He owns modest amounts of various cryptocurrencies.

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