Yield+ is designed to build economic activity on EOS through incentivizing DeFi dApps that increase TVL and generate yield. The Yield+ working group produces a monthly report to provide insight into the growth and impact of this program.
The Month of the Long Knives
March saw a drastic, but not unexpected, change in the Yield+ program, as the audit requirement for qualification kicked in. Participation dropped to 6 dApps by the end of April, although all those left remained eligible for rewards. TVL in EOS dropped by 20% and the decline in the EOS price over the month compounded the TVL drop in USD terms to 30%.
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.
Top 5 dApps Change in TVL
EOS (m) t-1EOS(m) tΔΔ EOSΔ USDvaultdefi 10.02 8.91 -11%-1.12 -1.16 swapdefi 7.95 6.52 -18%-1.43 -1.49 lenddefi 4.12 4.03 -2%-0.08 -0.09 dfsdeveloper 3.51 3.25 -7%-0.26 -0.27 danchorsmart 3.99 3.19 -20%-0.80 -0.83Cumulative TVL
The contraction in number of dApps did not overly affect the relative dispersion of TVL.
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. Absolute TVL does not play a role at this point and drops out the calculations.
We display the trends of the two other components, Entropy and TVL to Market Cap Ratio below and the overall Factor that we observe to test the efficacy of the programme.
Entropy remained stable despite the elimination of many dApps.
The TVL to Market Cap ratio declined as predicted.
The Total Factor remained relatively stable considering the shock factor.
EOS price and TVL appear highly correlated which would indicate that a normalised amount of TVL from dApps closing recycled to remaining dApps.
Log returns confirm the correlation.
The trend is depicted below of TVL/MC since inception with the audit requirement dragging down the trend.
Wider Market
Below we have plotted TVL performance in EOS against Ethereum, and then a basket of other chains ‘RoW’ comprising Binance Smart Chain, Tron, Artbitrum, Polygon, Avalanche, Optimism, Fantom and Solana.
EOS underperformed dramatically with the dApp reduction. TVL on Ethereum reduced by 2% whilst remained stable on other chains.
The data this month is quite dramatic given the specific removal of dApps that were unable to provide an audit report. In isolation, not much can be read into the analysis, other than to reflect on the longer term positives for the EOS network on how its assets are utilised.
Conclusion
The program has operated for 8 months, and whilst we have seen positive trends throughout, the market back-drop, and lack of sophisticated capital in the asset class generally, does not allow for much visibility at this point.
The funding program for this period has ended. We would encourage the program, if it is to continue, to move to an algorithmic, dynamic allocation model as detailed in the original Yield+ report. In addition, we would like to see more steps to incentivise specific factors and results that are common to the overall commercial model of the EOS blockchain, such as GameFi and so on. A review of the structural changes in the overall markets, such as the ZK capital stacking, would also be helpful.
Report presented by 0rigin.one
EOS Network
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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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