Happy Friday, DeFi readers!

This week…

$STRK claims go live at $30B FDV

Starknet officially launched claims for its controversial $STRK airdrop this week, setting a new record for the largest airdrop in terms of total value distributed.

$2 billion in STRK was unlocked for claims on opening day, as the token traded at a significant market cap of over $30 billion. 

The airdrop plan experienced backlash from the community last week, with criticism over eligibility requirements and team/investor token unlocks – however only small changes were made to account for validators.

The team has since decided to reduce the amount of tokens due to be unlocked for contributors and investors in the coming months, from 13.4% to just 0.64%.

Optimism rewards NFT artists with fourth airdrop

Ethereum layer-2 Optimism has launched its fourth airdrop, focusing on NFT artists and distributing over 10.3 million OP tokens, valued at approximately $40.8 million, to 22,998 addresses. 

Eligibility for the airdrop was extended to users who created NFTs on the Ethereum Mainnet or Optimism's Superchain between January 10, 2023, and January 10, 2024, with rewards based on the gas spent on minting or trading their NFTs. 

This initiative, part of Optimism's ongoing effort to support the artist community within the web3 ecosystem, allows users to claim their tokens until February 13, 2025, underscoring the network's commitment to fostering creativity and engagement on its platform.

Ethena’s USDe offers 27% returns

New stablecoin protocol Ethena has generated significant interest by offering a 27% annualized yield to holders of its USDe stablecoins, a return derived primarily from shorting ether futures alongside staking ether to validators. 

Since its public launch, the platform has seen over $287 million of USDe minted, with the yield's calculation based on a rolling seven-day basis and the possibility of changes due to market conditions. 

Despite concerns from parts of the crypto community about the sustainability of its yield generation model, Ethena has attracted substantial inflows and plans to address potential risks with a structured approach to managing its funds and an initial insurance fund to safeguard against adverse market movements.

MetaMask integrates Blockaid security alerts

MetaMask has finalized its integration with Blockaid to offer default security alerts across multiple networks, aiming to protect users from the rising number of thefts and scams in the web3 space, with an estimated $1.7B lost in 2023 due to such activities. 

This enhancement is expected to prevent significant asset losses, promoting wider crypto adoption by adding a privacy-preserving layer of security that alerts users about potentially malicious transactions. 

The initiative, which saw a beta launch on October 31 and subsequent expansion across major networks including Ethereum, Linea, BNB Chain, Polygon, Arbitrum, Optimism, and Avalanche, is part of MetaMask's broader efforts to improve security and facilitate easier crypto onboarding and integration with mainstream financial platforms.

Ethena’s USDe and 27% returns – is it sustainable?

As the new and interesting USDe stablecoin by Ethena pops up with a massive 27% APY, the first question that reflexively comes to mind is…

Is it sustainable?

The immediate comparison for most seasoned crypto users is to the infamous TerraUSD-LUNA collapse, which promised 19% returns on its UST stablecoin. Being a poorly-designed algorithmic model, it eventuated in a death-spiral of its LUNA backing, leaving a huge hole in the ecosystem.

But this particular comparison doesn’t fit. USDe isn’t an algorithmic model, safe from any similar fate.

USDe is backed by staked ETH, and short positions against the value of that ETH – and unlike UST, those large returns aren’t promised. They are designed to be variable, as a combination of ETH staking returns and volatile perpetual futures funding rates.

In fact, the massive 27% return currently quoted may be nothing more than a blip in the timeline of true long-term returns provided by the token. Anyone familiar with perpetual swap funding rates will be able to tell you that they are just as variable as asset prices themselves – and they can change at the whim of a market swing.

Not only are the current funding rates (and therefore USDe returns) a product of the recent ETH rally, but they have the potential to disappear or even turn negative under certain market conditions.

So, should you pick up USDe as a long-term investment for a crypto “cash” position? Unlikely.

You may get some decent returns in the short-run; but everything else is just speculation.

Interest Rates

DAI

Highest Yields: Nexo Lend at 10% APY, Aave at 5.0%

MakerDAO Updates

DAI Savings Rate: 5%

ETH Stability Fee: 6.49%

WBTC Stability Fee: 6.45%

USDC

Highest Yields: Aave at 10.1% APY, Nexo at 10%

Top Stories

Former Fidelity Digital Assets Head Joins Advisory Board of Ethereum L2 Layer N

Hack VC closes $150 million for new venture fund, eyes web3, AI startups

UK seeks to lock in new stablecoin rules within next six months: Bloomberg

Circle to cease minting USDC on Tron network effective immediately

Stat Box

Total Value Locked: $76.75B (up 4.6% since last week)

DeFi Market Cap: $90.40B (down 0.3%)

DEX Weekly Volume: $21.95B (up 16%)

DAI Supply: 4.92B (up 0.4%)

Bonus Reads

[Savannah Fortis – Cointelegraph] – AMD hardware accelerators to support blockchain interoperability

[Samuel Haig – The Defiant] – Avalanche Stages Comeback Amid Growth In Memecoins, GameFi, and RWAs

[Vishal Chawla – The Block] – Fuel Labs unveils 'Rollup OS' strategy ahead of Q3 2024 mainnet release

[Omkar Godbole – CoinDesk] – Restaking Protocol Kelp DAO Brings Liquidity to EigenLayer Points