Weekly DeFi Index

This week's market capitalisation and volume indices were positive at +12.21% and +8.40%, respectively, while the volatility index was negative at -43.65%.

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Chart of the Week

Tether's USDT stablecoin has recently surpassed US$100 billion in circulation and market cap, becoming the first stablecoin to reach this size. The company has dominated the stablecoin market, with USDT making up approximately 70% of the $144 billion sector.

To maintain user security and protect funds in case of extreme scenarios, Tether recently launched a blockchain recovery tool that allows users to migrate USDT between blockchains. The tool operates independently of specific blockchains, allowing Tether to utilise multiple blockchains as a transport layer while ensuring the stability and availability of USDT.

From a market standpoint, the market cap of USDT and USDC has increased recently, highlighting nearly $9 billion (7.28%) of inflows since the launch of spot Bitcoin ETFs on 11 January 2024. Prior to this, both stablecoins saw a $9.8 billion (8.91%) increase in 2023.

News Highlights

• Ethereum Layer-2 network Blast officially launched its mainnet on 29 February, a few hours ahead of its schedule. Over $400 million in ETH has been withdrawn from Blast after the launch. The TVL of the Blast mainnet is currently around $2.6 billion at the time of writing.

• Over a week after it first unveiled Circle STARKs, StarkWare unveiled a new cryptographic prover named Stwo at ETHDenver, designed to significantly speed up transaction processing on Layer-2 networks like Starknet. The prover generates proofs that enhance security and efficiency by linking networks and facilitating faster transactions. 

• OP Labs introduced the Superchain Savings Estimator, a tool designed to compare transaction fees on OP Stack chains before and after the activation of the Dencun upgrade. The tool allows users to input any transaction hash to simulate cost savings. 

• The ‘Delta hardfork’, implemented across various Optimism-based chains like OP Mainnet, Base, and Zora, has significantly reduced fixed overhead costs for Layer-1 fees, resulting in major fee reductions as projected (estimated to reduce from 6% to 11% for more active chains and over 90% for less active ones). This update focused on minimising Layer-1 fees incurred by chain operators, with the introduction of Span Batches, a feature that consolidates Layer-2 blocks.

• Astar Network launched ‘Astar zkEVM’ on March 5, integrating as the first Layer-2 chain into Polygon's AggLayer. Astar zkEVM is a zero-knowledge Layer-2 chain that facilitates cross-chain transactions between Astar and Polygon blockchains. It is integrated with AggLayer, a solution that connects blockchains utilising zero-knowledge proofs with other networks within Polygon's ecosystem.

• Frax Finance is considering reintroducing rewards for token stakers in the following weeks — an event that could generate substantial revenue for participants. This follows a prior halt in rewards and aligns with Uniswap's similar proposal to reward UNI holders, with Frax Finance expecting significant revenue from this initiative. 

• Seneca Protocol, a DeFi lending platform and stablecoin issuer, suffered an exploit on 28 February, resulting in losses estimated at $6.4 million. The hack involved a flaw in the protocol's "performOperations" function, allowing the attacker to drain significant funds. The hacker has returned over $5.3 million of the stolen amount, with investigations still currently ongoing.

• Decentralised exchange WOOFi was recently hacked at a value of approximately $8.5 million through a flash loan exploit, prompting the team to pause activities in affected pools for investigation. The attack involved managing the WOO token's price through an oracle on Arbitrum, resulting in about 2,000 ETH being siphoned by the attacker.

Recent Research Reports

• DePIN: Crypto’s Rising Narrative: DePIN is currently one of crypto’s hottest narratives. We introduce what DePIN is, how it works, and the current market landscape.

• Restaking and EigenLayer: Recent Developments: EigenLayer is seeing significant TVL growth and ecosystem developments. Multiple liquid restaking protocols have also emerged.

• AI Tokens: Exploring the AI token market through the lens of emergent decentralised AI solutions of today.

Recent University Articles

• Bitcoin STAMPS: What They Are and How to Mint One: The Bitcoin STAMPS protocol is an innovative method that allows for the embedding of image data onto the Bitcoin blockchain. Here’s how it works.

• Intent-Centric Design for Blockchain: What It Is and Why Everyone Is Talking About It: Intent-centric systems allow users to delegate tasks to solvers, creating efficiency, reducing transaction fees, and enhancing privacy.

• What Is Ethereum’s EIP-4844 Update? How Proto-Danksharding Can Reduce Gas Fees: Learn about Ethereum’s Cancun-Deneb upgrade, a major protocol update to reduce gas fees and enhance scalability through Proto-Danksharding.

Author

Research and Insights Team

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