Welcome to the latest edition of Cointelegraph’s Decentralized Financial Newsletter.

Read on to find out why nearly half of the liquidity providers on Uniswap v3 are losing their capital due to temporary losses.

What you are about to read is a smaller version of this newsletter. For full details on what DeFi has done over the past week, sign up below.

Acala wins Polkadot’s first Parachain auction

Decentralized Financial Protocol Acala was announced this week as the winner of Polkadot’s first Parachain auction, beating competitor Moonbeam with a sensational DOT 32.5 million ($ 1.28 billion) raised by 24,934 contributors.

Acala is a cross-functional DeFi platform based on Polkadot that enables developers to create intelligent contract applications with cross-chain capabilities and compatibility with Ethereum. The top investors include the Digital Currency Group, Polychain Cash and Alameda Study.

In the case of Acala, all proceeds from the community’s initial coin offering are classified as “crypto debt” and the project must be returned as such for rental after the end of the contract.

With over 32 million DOT contributed by over 81,000 community members, Acala won the first Parachain auction on @Speckle!

Thank you to everyone who attended this historic event. (1/3) pic.twitter.com/CL2jCwA9Re

– Acala – Polkadot DeFi Hub (@AcalaNetwork) November 18, 2021

Related: DFG places $ 12.6 million in Astar Network’s Parachain Polkadot offering

Iota Foundation wants to start staging network and reward tokens

Iota Basis, an open source nonprofit that is working hard to support the Iota ecosystem, announced this week the upcoming launch of the Shimmer staging network along with accompanying token asset SMR.

Shimmer is a layer-one sandbox platform that enables building owners and developers to test the effectiveness and compatibility of their decentralized applications in the DeFi and NFT area before they are deployed on the mainnet Iota.

The network is scheduled to launch in early 2022 and will also facilitate validation of community governance for Iota’s large-scale network upgrades, including a programmable multi-asset ledger, smart contracts, fully decentralized and decentralized.

Related: Iota launches beta smart contract to drive interoperability

Almost 50% of Uniswap v3 liquidity providers are in the red

A research report released this week by Topaz Blue and Bancor Protocol found that nearly half, 49.5%, of the liquidity providers on Uniswap v3 have suffered financial losses due to temporary losses, volatile liquidity pairs.

Such a case would occur, for example, if a user had provided the liquidity pool with the same values ​​of Tether (USDT) and Ether (ETH) in US dollars and the ETH price were to be increased.

This means that arbitrageurs – investors who often work among financial institutions to benefit from arbitrage in the market – are taking ETH out of the pool and selling it at a lower price. This results in a decrease in the US dollar value of the user’s location and hence a permanent loss.

The report suggests that, based on up-to-date statistics, it may be more beneficial to simply get into the market rather than actively engaging in liquidity services, noting:

“Users who choose not to provide liquidity can expect to add value to their portfolio faster than someone who is actively managing a liquidity position on Uniswap v3.”

Related: Bancor is making non-liquidation loans with Vortex, while AMM continues to diversify

Token representation

Analytics data shows that the total value of DeFi banned has decreased 7.89% for the whole week to $ 160.47 billion.

Data from Cointelegraph Marketplaces Pro and TradingView show the top 100 DeFi tokens by market capitalization made indifferent by past seven days.

Avalanche (AVAX) secured the top spot with 30.11%. Curve DAO Token (CRV) takes second place with 0.67 percent, while Maker (MKR) took third place with 0.34 percent.

Analysis and hot topics of the last week:

Thank you for reading our roundup of this week’s most influential DeFi developments. Come back next Friday for more stories, insights, and education in this dynamically evolving space.

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