Weekly DeFi Index

This week's market capitalisation index was positive at +0.99%, while volume and volatility indices were negative at -16.90% and -13.82% respectively.

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Chart of the Week

Ethena Labs, the creator of stablecoin USDe, announced ‘Season 2’ of staking with improved rewards. As of 8 April, users can lock in Ethena’s native token ENA for a minimum of seven days. Users who lock 50% or more of their ENA relative to their balance of USDe will receive a reward boost of 50%. A minimum US$5,000 ENA position is required for users to receive the boost. Additionally, the ENA lock initial cap will be $200 million, to be adjusted to increase going forward.

Moreover, Ethena Labs have also incorporated Bitcoin as a backing asset into their synthetic dollar-pegged offering. This move aims to scale USDe’s supply from its current $2 billion mark, and USDe’s Bitcoin collateral has exceeded $500 million less than a week after its introduction.

Immediately following Ethena Labs’ announcement, ENA’s price spiked 19%, increasing from $1.09 to $1.31. Launched in December 2023, the Ethena protocol has now reached a total value locked (TVL) of $2.20 billion and has seen a 6.5% increase after the announcement.

News Highlights

• Restaking protocol EigenLayer launched its mainnet on 9 April, successfully completing its guarded launch phase. Its TVL has now surpassed $13 billion, making it the second-largest DeFi protocol in Ethereum.

• Frax Finance recently passed a governance vote to allocate $250 million of Ethena Labs's USDe to a new liquidity pool. This move is part of Frax's Singularity Roadmap and will enable the creation of an automated market operation (AMO) for minting new FRAX tokens backed by over-collateralised debt.

• Ethereum staking protocol Lido saw its market share dip below 30% as of 4 April from 32% recorded in December 2023. The decline helped alleviate concerns about Lido's growing influence on the Ethereum ecosystem, as the community feared that any entity controlling over 33% of the market could affect various aspects of the blockchain.

• Over $24 million in Solana (SOL) is currently locked within Lido's staking protocol due to a faulty smart contract, causing difficulties in withdrawals and highlighting potential risks in DeFi systems. Lido's discontinuation of its Solana service in October 2023 has left at least 112,900 SOL locked (worth approximately $24 million at the of reporting), affecting 31,588 users.

• 75.3% of non-vote transactions on Solana failed on 4 April. The network is experiencing a high rate of failed transactions amid massive trading volumes (activity driven by meme coins and dominated by bots) that have led to network congestion. Solana developers are targeting 15 April to implement a fix for an ‘implementation bug’ that caused the transaction failures. 

• dYdX experienced a significant outage on 8 April, due to the inclusion of the wrong version of a bug fix during a scheduled v4 upgrade which resulted in a halt in block production for approximately 9.5 hours. It resumed block production after releasing a fix for the bug and gaining enough validator support.

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Research and Insights Team

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