December 2022 Yield+ Report

December 2022 Yield+ Report

Yield+ is designed to build economic activity on EOS through incentivizing DeFi dApps that increase TVL and generate yield. This report is produced monthly and will develop organically as the granularity and significance of data evolves.

The program entered its fourth full month in December and The positive trend for the program to continue despite the backdrop of volatile markets.

Total Value Locked (TVL)

The current program allows for EOS and USDT to be counted as TVL for reward eligibility.

There are 4 tiers of eligibility for dApps with minimum TVL of EOS 200K, 750K, 1.5M and 3M respectively.

Fourteen dApps are now participating in the program with eleven qualifying for rewards with Totoro Swap a new addition for this month.

Yield+ Treasury Account

The Treasury runway extends for another month upon which further capital will be required.

Claiming of rewards is broadly efficient, as one might expect, and similar to last month with 98% of rewards claimed and the residual from last month all claimed. The small amount of unclaimed rewards is owed to the same dApps as last month who were late to claim.

ProtocolUnclaimed Rewardsbal.defi0danchorsmart0dfsdeveloper11.0281lend.defi0lend.pizza1558.5520swap.defi0Vigorlending0daoswap85.8533agg.newdex69.7328swap.ttr0.2376Total1,725.4038

The account balance was depleted and adjusted accordingly:

Starting Balance + Funding176,737.3972Allocated(83,393.418)Unclaimed1,725.4038End Balance93,039.3830Net of liabilities91,313.9792

Performance Metrics

The original Yield+ Blue Paper highlighted three core stages of the transition of a Layer 1 chain’s value proposition from speculation to ecosystem driven.

EOS remains in the first of these stages, ‘Green Field’, where Market Cap exists without significant TVL. In this stage, the Yield+ reward mechanism primarily aims to drive adoption through the TVL to Market Cap ratio, whilst the other factors are less significant.

As a brief reminder, the paper considers a formula to calculate total rewards is calculated via three factors

TVL to Market Cap ratio

Absolute TVL (scaled [0.1])

Distribution of TVL – Entropy (scaled [0.1])

The three different factors that will ultimately determine long term rewards play different roles in driving this progress. 

The absolute TVL factor at this moment approximates as 1 so it is removed from the analysis.

Our Entropy factor has again remained stable between 0.73 and 0.76 suggesting a relatively healthy TVL breakdown. 

The Absolute TVL factor has had little effect remaining at close to 1 as it should only become relevant in the latter stages of the program.

We continue to see an extremely high correlation of 0.999 between rewards paid out and TVL to Market Cap ratio. This positive correlation is as desired at this stage in the program.

We have seen an absolute increase in TVL despite a Market Cap reduction along with the broader crypto market. We also observe a 7.5% growth trend in the key TVL to Market Cap ratio continuing on from previous months demonstrating sustained and resilient development.

We continue to observe the correlation between the price of EOS and TVL (of 0.86 this month) in normal moments with market shocks still disruptive but decreasing in frequency.

Wider Market

Below we have plotted TVL in EOS against TVL in six other large cap L1 chains. Although EOS still ranks outside the top 20 chains when it comes to absolute TVL, its specific TVL growth is diverging from the systemic decline experienced elsewhere.

The data this month confirms the same conclusions reached in previous reports and so recommendations remain similar. The program sees steady uptake and steady growth in TVL against market cap. TVL in the EOS ecosystem remains strongly idiosyncratic, although not entirely immune from trends in the wider market. 

Recommendations

Since this is still early in the Yield+ program, the dataset does not allow us to draw hard and fast conclusions as to its effectiveness. However, there is not yet any real growth or expansion from new EOS DeFi protocols looking to tap into the implicit funding from Yield+.  This reflects the general malaise across crypto projects generally as a result of the systemic shock from FTX and the contagion experienced now, for example Digital Currency Group. This is exacerbated by broader financial market conditions as macroeconomic worries weigh on capital markets.

It’s worth mentioning that the phase of markets in both crypto and traditional finance has changed.  The cheap money phase drove specific risk away, reduced volatility and increased correlation between all assets.  The market’s capital allocation methodology will change significantly now where those investors who are able to select specific opportunities will outperform those looking to passively capture a yield-driven trend.  We foresee the same effect in crypto as a result of both the macro environment and its maturity point which we compare to Nasdaq 2001-3.  Winners will emerge based on their fundamental value, but the majority of the boom time assets will die off.  

EOS has positioned itself to be part of the winning group.

EOS Network

The EOS Network is a 3rd generation blockchain platform powered by the EOS VM, a low-latency, highly performant, and extensible WebAssembly engine for deterministic execution of near feeless transactions; purpose-built for enabling optimal Web3 user and developer experiences. EOS is the flagship blockchain and financial center of the Antelope framework, serving as the driving force behind multi-chain collaboration and public goods funding for tools and infrastructure through the EOS Network Foundation (ENF).

EOS Network Foundation

The EOS Network Foundation (ENF) was forged through a vision for a prosperous and decentralized future. Through our key stakeholder engagement, community programs, ecosystem funding, and support of an open technology ecosystem, the ENF is transforming Web3. Founded in 2021, the ENF is the hub for EOS Network, a leading open source platform with a suite of stable frameworks, tools, and libraries for blockchain deployments. Together, we are bringing innovations that our community builds and are committed to a stronger future for all.

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