It was a wonderfully sunny day, right at the start of Corona/DeFi season. Outside, the call of birds and the smell of spring teased us outdoors, into the arms of a world bereft of its inhabitants. Green candles kept us glued to our screens as DeFi value took off like infection rates on the Diamond Princess. Nothing could have cured my COVID blues quite like getting some free money, and that’s exactly what I missed with COMP. Compound, the Coinbase-backed money market platform for DeFi, ceremoniously launched their native token in April, allocating some precious supply to its users for free.
And thus began a new trend. The Initial DeFi Offering. IDO, the big cousin of the Initial Coin Offering or ICO. Instead of distributing tokens to those who pay, IDOs distribute to those that use.
A trend was emerging and Uniswap was next.
Topping the chart of DeFi dApps based on Total Value Locked (TVL), Uniswap was another VC-backed behemoth that had a reason to issue its early backers some exit capital. So I started using. On multiple accounts. A liquidity pool here, a trade there. It was one Friday morning in September when I awoke to free tokens across my many Uniswap-eligible accounts. That sweet, sweet stimulus made me dizzy and drunk on success.
It was Christmas Day 2020 and the weather was sunny and frigid. As we gathered for a sip of mulled wine and delicious home-baked pie, I got word of yet another airdrop that just went live. This time it was 1inch’s turn. Unlike Uniswap, which is a single liquidity network, 1inch is part of an exciting collective known as ‘DeFi aggregators’ that combine several applications in one platform. 1inch’s function is to split up a single order across multiple DEXs, giving traders the best exchange rate for their precious tokens. As someone who doesn’t actively trade much, I hadn’t used 1inch before.
I missed a DeFi distro. But never again. Here are some of the leading contenders for a DeFi distro. Please note: I HAVE NO INSIDER INFORMATION. This is purely the speculative musing of one lad hoping to catch the next wave of free tokens. Interact With Them And You Just Might Get Tokens Next Time.
- Argent: My favorite mobile wallet, Argent is super sleek and gives me an easy, secure way to manage my liquidity pool in one place. Argent’s unique take on wallet security makes use of ‘Guardians’ — mates you trust that can help you recover your wallet. It supports Uniswap, Aave, Compound and so much more. I expect their userbase to grow as more millennial Robinhood-types discover DeFi. Paradigm Capital, who plowed $12 million into Argent’s Series A, is probably looking to capitalize somehow, and what better way than an Argent token distribution for them to do so.
- Zapper: What do Meltem Demirors, Coinbase Ventures and Anthony Sassano have in common? They’ve all invested in Zapper. If you’ve ever interacted with DeFi you’ll know it is a complex machine with a lot of moving parts. Zapper aggregates it all for you in one easy-to-use experience. Their coolest feature has to be the aggregation of swap+pool functionality for Uniswap. Say you want to provide liquidity to the ETH/YFI pool on Uniswap but you only have ETH. Instead of hassling through 2 transactions, one to swap exactly half your ETH for YFI and the other to deposit liquidity, use Zapper to execute the action in one step.
- Zerion: To be totally honest, I haven’t yet used Zerion but I’m gonna. It’s pretty much the same idea as Zapper, a DeFi aggregator where you can monitor your portfolio, make trades and provide liquidity. Like Zapper, they too have raised $2 million in seed funding, this time from Placeholder, Blockchain.com Ventures and Gnosis.
Funding info from Crunchbase. Check it out
Whereas the ICO days were geared towards whales, IDOs benefit an altogether different type of stakeholder — the experimenter. Instead of distributing tokens proportional to the monetary contribution of the participants, IDOs dish out coin to those who interact with already-functional DeFi platforms. Another key difference between ICO tokens and the DeFi tokens popping up today lies in the stated purpose of the tokens.
ICOs — The teams pushing their ICOs on you mostly convinced you to buy their ‘utility tokens’ by claiming that they would accrue value as more people use them for their stated aim in the network. That utility token narrative died a quick and painless death.
IDOs — Today’s crypto kingpins aren’t trying to sell you magic utility tokens. Instead, DeFi tokens serve as ‘governance tokens’ which allow you to make proposals and vote on changes to the protocol. This pivot is crucial because
- It shifts control of the protocol to the community, drastically reducing the legal liability of the founding team and giving the protocol some measure of SEC protection.
- Teams no longer claim that their token has any inherent value, only that it can be used in governance. Do you want to be in the inner crowd, the central committee, of your fave DeFi project? Please, be my guest and get some tokens.
Editors note: As I was publishing this article I discovered yet another packet of free tokens in my wallet. But what the heck is a vTORN? Turns out Tornado.cash, Ethereum’s leading privacy app, had also dropped me some tokens IDO-style to its privacy-loving populace. Looks like the trend is spreading beyond DeFi.