{"id":125314,"date":"2020-12-03T14:12:11","date_gmt":"2020-12-03T11:12:11","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/finance-redefined-whats-a-defi-merger-anyway-nov-25-dec-2\/"},"modified":"2020-12-03T14:12:11","modified_gmt":"2020-12-03T11:12:11","slug":"finance-redefined-whats-a-defi-merger-anyway-nov-25-dec-2","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/finance-redefined-whats-a-defi-merger-anyway-nov-25-dec-2\/","title":{"rendered":"# Finance Redefined: What\u2019s a DeFi merger, anyway? Nov. 25\u2013Dec. 2"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3be780c6e79\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3be780c6e79\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/finance-redefined-whats-a-defi-merger-anyway-nov-25-dec-2\/#The_comparison_with_a_corporate_merger\" >The comparison with a corporate merger<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/finance-redefined-whats-a-defi-merger-anyway-nov-25-dec-2\/#The_financial_aspect_of_Yearns_%E2%80%9Cmergers%E2%80%9D\" >The financial aspect of Yearn\u2019s \u201cmergers\u201d<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/finance-redefined-whats-a-defi-merger-anyway-nov-25-dec-2\/#In_other_news\" >In other news<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Finance Redefined: What\u2019s a DeFi merger, anyway? Nov. 25\u2013Dec. 2 <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjAtMTIvMTA0NjI0MTQtMDRhZS00OTY5LTgzOGEtZTRiODdiYzdkZjNlLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a136f3a>The biggest events in DeFi this week all involved Yearn.finance, the yield farming optimization protocol. I covered the first, Pickle Finance, in my last installment.<\/p>\n<p>Since then, we\u2019ve seen integrations with Cream Finance, a lending protocol similar to Compound; Cover Protocol, an insurance provider that recently paid out users for the Pickle hack; Akropolis, another protocol primarily dealing with yield optimization; and as the most significant of all, SushiSwap, the decentralized exchange born as a Uniswap parasite.<\/p>\n<p>The Yearn ecosystem now includes all the major building blocks of DeFi (yield, lending, exchange of assets), especially thanks to the Cream and SushiSwap integrations.<\/p>\n<p>But I\u2019m sure many will have questions about what\u2019s going on here. How can there be mergers among decentralized protocols? Who decides on them? Are they actual mergers?<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_comparison_with_a_corporate_merger\"><\/span>The comparison with a corporate merger<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>I think that the key to understanding these events is looking at what h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ens during a traditional corporate merger.<\/p>\n<p>From a practical perspective, two companies merge for fairly obvious reasons. For horizontal mergers, it\u2019s usually about expanding total market share and consolidating development. Think about Fiat-Chrysler merging with the Peugeot-Citroen group, or any other car company merger \u2014 their cars become virtually the same after the union.<\/p>\n<p>A vertical merger instead unites different companies into one vertically integrated stack \u2014 for example Disney joining with ABC back in the 90s. Their products are usually different but may be still part of the same supply chain, thus benefiting from being combined as part of a single company.<\/p>\n<p>We saw both types among Yearn\u2019s five mergers. Akropolis and Pickle Finance are very much like the car company mergers. The absorbed protocols will build their \u201ccars\u201d (yield strategies) on Yearn\u2019s platform, making them functionally the same. At most there should be some differences in taste \u2014 similar to how an Audi targets a different niche despite usually having the same platform as a Volkswagen. Maybe Pickle\u2019s strategies will have higher risk than Yearn\u2019s?<\/p>\n<p>The vertical merger is what we saw with Cover, Cream and SushiSwap. Here we see pretty clear synergies between Yearn and each of these protocols. Yearn yield strategies will now use Cream lending to enter leveraged positions, and if they need to swap some tokens, they\u2019ll use SushiSwap. Finally, Cover will provide insurance on these products for those who want it.<\/p>\n<p>But the thing is that these product integrations are not enough to constitute a merger on their own. For example, Renault and Nissan have been <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/en.wikipedia.org\/wiki\/Renault%E2%80%93Nissan%E2%80%93Mitsubishi_Alliance\">sharing<\/a> <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> for the entirety of the 21st century without formally entering into a merger. <\/p>\n<p>An actual merger requires either the creation of a new integrated company where the existing shareholders are bundled together or, at the very least, one company \u201cbuys\u201d all of the other\u2019s circulating shares by exchanging them with its own. Only the SushiSwap integration comes somewhat close to this definition.<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"defi_newsletter\"><\/template><\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_financial_aspect_of_Yearns_%E2%80%9Cmergers%E2%80%9D\"><\/span>The financial aspect of Yearn\u2019s \u201cmergers\u201d<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In the case of SushiSwap, the collaboration will involve exchanging part of each other\u2019s treasuries for the partner\u2019s tokens. The two protocols are still very much independent, and you will note that \u201cexchanging part of the treasuries\u201d is not \u201creplacing all SUSHI with YFI or vice versa.\u201d <\/p>\n<p>The lack of actual financial relationships is perhaps the biggest reason why none of these mergers \u2014 except for SushiSwap \u2014 were ever put to a vote. You don\u2019t really need to throw in any DeFi term to explain what happened here. More than true mergers, these are simply tight partnerships \u2014 in the corporate world, partnerships are usually not decided by shareholders.<\/p>\n<p>Indeed, I am somewhat curious why these \u201cmergers\u201d were necessary in the first place. Yearn strategies are using other platforms like Maker and Curve perfectly fine without any merger \u2014 that\u2019s what the permissionless nature of DeFi is all about. Although in Maker\u2019s case Yearn did need to request access to Maker\u2019s oracle.<\/p>\n<p>Perhaps the bigger point is what will come next: The union of development teams to build new products. That, once again, can also happen in the context of a partnership.<\/p>\n<p>I suppose \u201cmerger\u201d sounds much cooler than \u201cpartnership,\u201d though a \u201cDeFi protocol partners with another DeFi protocol\u201d headline is just as interesting, in my opinion. But it\u2019d also be weird in a sense \u2014 how can a decentralized protocol partner with another? Well, it\u2019s all about the development teams\u2019 decisions to do that. That shouldn\u2019t be too surprising. Every decentralized team is still a list of names and surnames just like the staff of a traditional company.<\/p>\n<p>The question of whether a \u201cdecentralized\u201d development team <em>should<\/em> be taking these types of decisions is a philosophical debate I\u2019d rather leave to the readers.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"In_other_news\"><\/span>In other news<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>Compound liquidators feast after Dai jumps to $1.3 on precisely the exchanges referenced by its oracle.<\/li>\n<li>Research finds DeFi indices are not as diversified as it seems. Bonus: an analysis on what a DeFi index is.<\/li>\n<li>1inch collects $12 million in <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/watch-movies-tv-seriess\/\" data-internallinksmanager029f6b8e52c=\"8\" title=\"Watch Movies &amp; TV Series\" target=\"_blank\" rel=\"noopener\">Series<\/a> A funding.<\/li>\n<\/ul>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener noreferrer\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/finance-redefined-what-s-a-defi-merger-anyway-nov-25-dec-2\" target=\"_blank\" rel=\"noopener noreferrer\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Finance Redefined: What\u2019s a DeFi merger, anyway? Nov. 25\u2013Dec. 2 &#8221; The biggest events in DeFi this week all involved Yearn.finance, the yield farming optimization protocol. I covered the first, Pickle Finance, in my last installment. Since then, we\u2019ve seen integrations with Cream Finance, a lending protocol similar to Compound; Cover Protocol, an insurance&#8230;<\/p>\n","protected":false},"author":1,"featured_media":125315,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/s3.cointelegraph.com\/uploads\/2020-12\/10462414-04ae-4969-838a-e4b87bc7df3e.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74868,74891,4965],"class_list":["post-125314","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-defi","tag-ethereum","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/125314","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=125314"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/125314\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/125315"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=125314"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=125314"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=125314"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}