Executive Summary

DeFi has exploded in the past two years and has nearly $112b currently participating on chain (TVL). The sheer movement of capital has created incredible yield opportunities.

Compared to other chains, Harmony has failed to capture a meaningful proportionate foothold in DeFi outside of gamified dApps. If Harmony can capture more of the DeFi marketshare, they will gain several advantages:

1. Increased TVL on-chain inherently creates buzz and curiosity, which would help bring the next million users to Harmony.
2. Increased yield-opportunities on-chain
   1. This will give native projects on Harmony a better “on-chain bank account” and help make their treasuries sustainable.
   2. Add diversified on-chain tools for the 1Wallet’s 20% yield objective.
   3. Give smaller investors yield opportunities that they may have been unable to access on other chains due to gas cost.
3. Boost the utility of the $ONE token to speed up the path to zero inflation.

Harmony can increase their DeFi footprint by incubating a native protocol, Pipe, that harnesses mechanisms from some of the most successful DeFi protocols to date. Namely: Curve, Balancer, and Votium. Pipe aims to be the “liquidity arm” of Harmony, building tools that consider and bolster the Harmony ecosystem first.

Background

How_to_DeFi_Advanced.pdf

Definitions

• Gauge voting: Token holders directing where rewards should be sent.
• veToken: “vote escrow token” A non-transferrable voting token obtained by locking a Token for a period of time. A veToken is used to participate in gauge voting. They have pros/cons.
• EVM: Ethereum ****Virtual Machine. EVM chains allow builders to use the same coding language on multiple chains, making it easy to move projects from chain to chain.
• TVL: Total Value Locked
• Impermanent loss: The loss of funds from providing liquidity to a pool and then removing that liquidity after the price changes of tokens in the pool versus if one were to hold both tokens.
• Providing liquidity: Depositing equal $ amount of two tokens into a trading pool on a DEX. People who provide liquidity, receive a token back called an “LP token” which represents their share of the pool. This LP token allows them to withdraw original tokens from the pool.