Weekly DeFi Index

This week's market cap, volume, and volatility indices were positive at +7.23%, +97.17% and +159.73%, respectively.

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Chart of the Week

During the Ethereum Community Conference (EthCC) in Paris, Ethereum co-founder Vitalik Buterin shared details on the account abstraction feature and the current challenges around its implementation. His proposed solutions include utilising ‘paymasters’, an account abstraction extension that enables users to pay fees with “whatever coins that they are transferring”, as well as signature aggregation, which can help save on gas and data. 

The Ethereum community has iterated on many account abstraction ideas over the years. Most recently, ERC-4337 was put forward to provide a universal account abstraction standard using only smart contracts without protocol changes. Instead, it relies on a separate mempool of UserOperation objects and miners running custom code or connecting to a bundle marketplace. 

• DEX aggregator 1inch (1INCH) rose by more than 58% before receding on Monday, with its trading volume hitting US$597 million — the highest level since October 2021. Alongside this spike in trading volume, $3.37 million in leveraged 1inch short positions were liquidated over the past 24 hours, according to CoinGlass. However, there was no catalyst for the move.

• Synthetix (SNX) revealed plans for a new derivatives front-end to its decentralised trading infrastructure dubbed Infinex. It offers features similar to centralised exchanges, such as a non-custodial central limit order book. Users can access it with simply a username, email, and password.

News Highlights

• Decentralised exchange Uniswap unveiled UniswapX, a new blockchain protocol for trading across automated market makers (AMMs) and other liquidity sources. Launching as an ‘opt-in beta’ on the Uniswap Labs interface for the main Ethereum network, UniswapX features “better prices” through aggregated liquidity sources along with gas-free swapping, protection against maximal extractable value, and no-cost failed transactions.

• On 16 July, Aave announced the launch of GHO, its native, decentralised, and over-collateralised stablecoin backed by various digital assets, on the Ethereum mainnet. GHO reportedly achieved a total minting value of $2 million within 48 hours after its launch. 

• Polygon announced a revamp of its MATIC token, to be rebranded as POL as the network transitions to Polygon 2.0. The upgraded POL token will accrue staking fees from securing Polygon’s Proof-of-Stake chain, while reaping the rewards from other blockchains.

• zkSync Era recently unveiled its latest upgrade dubbed Boojum. Boojum is a STARK-powered proof system which will lower the hardware barrier to help secure zkSync and make it capable of being run on consumer-grade GPU hardware. 

• Ethereum Layer-2 scaling solution Starknet deployed the Quantum Leap upgrade on its mainnet, designed to increase the number of transactions per second (TPS) and reduce onfirmation times for the blockchain.

• Layer-2 blockchain Mantle Network announced the launch of its mainnet during EthCC in Paris, which will follow a six-month testnet phase. This move comes after the network’s merger with BitDAO in May, creating a unified DAO-led Web3 ecosystem known as the Mantle Ecosystem. 

• The team behind blockchain development firm ConsenSys announced the rollout of the alpha version of its Layer-2 network Linea to the Ethereum mainnet.

Recent Research Reports

• Research Roundup Newsletter [June 2023]: We present to you our latest issue of Research Roundup, featuring trending market insights in June, charts of the month, and our latest research exploring ZK rollups and Layer-0 protocols.

• The Development of ZK Rollups: Zero-knowledge rollups (ZK rollups) are still in their nascent stage. However, as the technology evolves, various methods to achieve compatibility with the Ethereum Virtual Machine (EVM) have emerged.

• Layer-0: Infrastructure for Customised Blockchains: Layer-0 protocols are the infrastructure that customised Layer-1 blockchains can be built on. We explore notable projects like Cosmos, Polkadot, Avalanche, LayerZero, and zkLink.

• Alpha Navigator: Quest for Alpha [June 2023]: Asset classes finished the first half of 2023 strongly, with crypto in the lead. Decelerating US inflation readings could ease market concerns for the time being, while BTC options implied volatilities remain muted.

Recent University Articles

• What Is XRP (Ripple)?: One of the largest cryptocurrencies by market cap, XRP is used by financial institutions, corporations, and end users across the globe for fast payments. Read on to learn more about this altcoin.

• What Is Shorting? How to Short the Crypto Market: Shorting is a way to potentially profit from declining prices. Learn about what shorting means and how it works.

• Introduction to Ethereum Layer-2s: Learn all about Ethereum Layer-2 scaling technologies and how they work.

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