Welcome to the latest edition of Cointelegraph'due south decentralized finance newsletter.

Read on to find why nearly half of the liquidity providers on Uniswap v3 are losing majuscule due to impermanent loss.

What y'all're near to read is the smaller version of this newsletter. For the full breakup of DeFi'southward developments over the last week, subscribe below.

Acala wins Polkadot'southward debut parachain sale

Decentralized finance protocol Acala was appear as the winning project in Polkadot'due south inaugural parachain auction this week, beating fellow competitor Moonbeam to the finish line with a seismic full of 32.five million DOT ($one.28 billion) raised from 24,934 contributors.

Acala is a multi-functional DeFi platform built on Polkadot that enables developers to build smart contract applications with cross-chain capabilities, as well as being compatible with Ethereum. Its acme investors include Digital Currency Group, Polychain Capital and Alameda Inquiry, among others.

In the instance of Acala, all of the proceeds from the crowdloan initial coin offering are classified equally "crypto debt" and, therefore, must exist paid back by the projection following the conclusion of the rental agreement.

Related: DFG piles $12.6M into Astar Network's Polkadot parachain bid

Iota Foundation ready to launch staging network and reward token

The Iota Foundation, an open-source, nonprofit entity endeavoring to support the Iota ecosystem, appear the upcoming launch of a staging network, Shimmer, this week alongside an accompanying token asset, SMR.

Shimmer is a layer-i sandbox platform that volition enable builders and developers to exam the efficiency and compatibility of their decentralized applications inside the DeFi and NFT infinite, prior to deployment on the Iota mainnet.

Expected to launch in early on-2022, the network volition besides facilitate community governance confirmations for Iota's big-scale network upgrades, including the upcoming programmable multi-asset ledger, smart contracts, full decentralization and sharding.

Related: Iota launches beta smart contracts to foster interoperability

Well-nigh 50% of Uniswap v3 liquidity providers are in the ruddy

A research report published this week by Topaz Blue and the Bancor Protocol revealed that almost half, 49.5%, of liquidity providers on Uniswap v3 have experienced financial losses due to impermanent loss, a mutual occurrence on automated market place makers when supplying two-sided, volatile liquidity pairs.

An instance of this would arise if, for example, a user has supplied equal values of Tether (USDT) and Ether (ETH) in United states dollars to a liquidity pool and the toll of ETH goes up.

This would mean that arbitrageurs — investors who often work in accordance with financial institutions to do good from toll discrepancies in the market — will remove ETH from the puddle to sell at a college price. This leads to a decrease in the U.S.-dollar value of the user's position and, consequently, an impermanent loss.

The report suggested that, based upon current statistics, it may well exist more profitable to merely hodl the market, as opposed to actively participating in liquidity services, stating:

"The user who decides to not provide liquidity tin look to grow the value of their portfolio at a faster charge per unit than 1 who is actively managing a liquidity position on Uniswap v3."

Related: Bancor releases no-liquidation lending with Vortex as AMMs continue diversification

Token performances

Belittling data reveals that DeFi's total value locked has decreased 7.89% across the week to a figure of $160.47 billion.

Data from Cointelegraph Markets Pro and TradingView reveals DeFi'due south top 100 tokens by marketplace capitalization performed indifferently across the last seven days.

Avalanche (AVAX) secured the podium's pinnacle spot with thirty.11%. Curve DAO Token (CRV) came in second with 0.67%, while Maker (MKR) came 3rd with 0.34%.

Analysis and hot topics from the terminal week:

  • Airdrop rumors effect in a swarm of activity on MetaMask Swap and Polygon
  • The ability of inexpensive transactions: Tin Solana'due south growth outpace Ethereum?
  • 'We want to build Minterest as a fairer financial system,' says CEO Josh Rogers

Thanks for reading our summary of this week's about impactful DeFi developments. Bring together usa again next Friday for more stories, insights and education in this dynamically advancing infinite.