Happy Friday, DeFi readers!

This week…

First ERC-404 Token Spikes to $260M Market Cap

A novel Ethereum token standard, ERC-404, has been introduced on the network, with the first token using the standard surging to a $260 million market cap.

ERC-404 merges the characteristics of ERC-20 fungible tokens and ERC-721 NFTs, aiming to address the challenges of liquidity and shared ownership in the NFT market.

Pandora was launched just a week ago on February 2, available for trading both on Uniswap and NFT marketplaces such as Blur. The token includes built-in fractionalization, a rarity component for NFTs and mechanisms for automatic NFT minting or burning upon token transactions.

New SEC definition of “dealer” may rope in DeFi

The U.S. Securities and Exchange Commission (SEC) has expanded the definition of a dealer, a move that may require DeFi platforms or services as dealers.

This expansion is part of a broader effort to bring more financial operations, including those dealing with crypto securities, under its regulatory purview, despite objections from the crypto and DeFi communities regarding the feasibility and implications of such regulations. 

Critics including SEC Commissioners Mark Uyeda and Hester Peirce, argue that this rule creates regulatory confusion and is impractical for the DeFi sector, with some calling the rule "misguided and unworkable" and hostile towards the industry.

Wormhole announces airdrop & tokenomics plan

Cross-chain protocol Wormhole has announced an airdrop for its native “W” token, as well as a plan to lock 82% of the tokens to be released over four years – aiming for a decentralized governance model. 

The W token will have a total supply of 10 billion, with an initial circulating supply of 1.8 billion, allocated across various groups including guardian nodes, the community, ecosystem partners, core contributors, strategic participants, and the foundation treasury. 

The move comes after Wormhole secured a $225 million funding round, valuing the company at $2.5 billion despite previously suffering one of the largest hacks in DeFi history in 2022.

Ethereum’s Dencun upgrade scheduled for March 13

Following extensive testing across various testnets, the Ethereum network is set for the Dencun upgrade on March 13, at slot number 8626176.

Dencun will implement “proto-danksharding” – an important scalability upgrade – through EIP-4844. This will also introduce “blob transactions” – transactions that include large chunks of data (blobs) that are not immediately executed, but made available for use by layer-2 platforms.

The estimated time for the upgrade is around 8:55 am American Eastern Time.

Dencun is coming

Dancun will be a significant upgrade for Ethereum, involving proto-danksharding – a precursor to the full implementation of danksharding. It's part of Ethereum's ongoing efforts to improve scalability and reduce gas fees through more efficient data handling and transaction processing.

Here's a breakdown of its key aspects:

1. Scalability Improvement: Proto-danksharding aims to increase the Ethereum network's capacity to handle a larger volume of transactions. By doing so, it addresses one of the main challenges faced by Ethereum – its limited throughput, which can lead to network congestion and high transaction fees during peak times.

2. Data Sharding: The core idea behind proto-danksharding (and danksharding) involves sharding the blockchain's data. Sharding is a database partitioning technique that splits the network's data into smaller, more manageable pieces (shards), which can be processed in parallel. This parallel processing capability significantly increases the network's throughput.

3. Blob Transactions: One of the key features introduced with proto-danksharding is the concept of "blob transactions." These are transactions that include large chunks of data (blobs) that are not immediately executed but are made available for use by layer 2 scaling solutions. Blob transactions aim to improve the efficiency of data storage on the Ethereum network, enabling it to support more complex applications and use cases without compromising on speed or increasing costs.

4. EIP-4844: Proto-danksharding is closely associated with Ethereum Improvement Proposal (EIP) 4844, which outlines the technical specifications for implementing blob transactions. EIP-4844 proposes a way to include these blobs in Ethereum blocks in a way that optimizes data availability and security while maintaining the network's decentralized nature.

5. Foundation for Full Danksharding: Proto-danksharding serves as an intermediary step towards the full implementation of danksharding. The full danksharding upgrade is expected to introduce even more significant improvements to Ethereum's scalability by fully implementing shard chains that can process transactions and smart contracts in parallel.

By laying the groundwork for full danksharding, Dencun represents a crucial step in Ethereum's evolution towards becoming a more efficient, scalable, and user-friendly platform.

Interest Rates

DAI

Highest Yields: Nexo Lend at 10% APY, Aave at 4.9%

MakerDAO Updates

DAI Savings Rate: 5%

ETH Stability Fee: 5.00%

WBTC Stability Fee: 5.54%

USDC

Highest Yields: Nexo at 10% APY, Compound at 9.1%

Top Stories

EigenLayer Lifts Staking Cap, TVL Soars Past $3B

Dymension Launches Mainnet With $300M Airdrop

February will see $800 million of unlocks from Avalanche, Optimism, Aptos and more

Solana network restarts after outage that lasted five hours

Stat Box

Total Value Locked: $64.46B (up 12% since last week)

DeFi Market Cap: $80.48B (up 4.4%)

DEX Weekly Volume: $13.19B (down 12%)

DAI Supply: 4.87B (down 0.4%)

Bonus Reads

[Vivian Nguyen – The Block] – Pyth Network unveils second phase of token airdrop for over 160 dapps

[Tim Copeland – Crypto Briefing] – GoDaddy and Ethereum Name Service team up to offer free domain usage in ENS

[Vishal Chawla – The Block] – Frax launches Layer 2 network Fraxtal with partner apps

[Bhushan Akolkar – Coinspeaker] – Farcaster Protocol Clocks 400% Surge in Daily Active Users amid Frames Launch