Weekly DeFi Index

This week's market capitalisation index was negative at -4.44%, while the volume and volatility indices were positive at +8.80% and +27.72% respectively.

Check Price

• Rocket Pool's RPL token recently went through a high-volume rally, reaching prices above US$30. The rally could be driven by the Houston upgrade, which is expected to bring new features to the protocol. One of the key aspects of the upgrade is RPIP-32, which will allow addresses to deposit ETH on behalf of Rocket Pool nodes. This opens up the possibility of third-party pools, staking-as-a-service, and restaking protocols being built on top of Rocket Pool. Rocket Pool is also planning to update its tokenomics, removing the requirement for node operators to hold RPL tokens. Instead, RPL will be used more for governance and potential token burns.

• The significant movements of CRV and CVX were due to the liquidation of Curve’s founder Michael Egorov. This is explained in detail in the Chart of the Week section below. Following the drop, CRV token surged amid a proposal by the Curve community to burn 10% of the total CRV supply.

Chart of the Week

The Curve protocol has been roiled by the liquidation of loans tied to its founder, Michael Egorov. Data showed that Egorov's addresses have taken out a cumulative loan of nearly $100 million worth of stablecoins, mostly crvUSD, against $140 million in CRV collateral. This led to a 30% slide in the price of CRV with a new all-time low of approximately $0.23 on 13 June. As the price of CRV fell, these loans started getting automatically liquidated, leading to a spike in selling pressure on the token. Egorov acknowledged on X that his positions were liquidated with $10 million of bad debt incurred on the protocol, but said he has already repaid 93% of the loans and intends to repay the rest soon.

This is not the first time that Egorov's borrowed positions have created ripples in the market. Last year, Egorov borrowed $60 million worth of loans from the Aave lending protocol, which threatened to leave Aave with bad debt if Egorov was liquidated. A proposal to freeze the CRV market on Aave was passed in August 2023 to prevent the CRV token from being used to back new loans. In the same month, Egorov took action to pay down his debts. He sold 106 million CRV tokens in private deals for $46 million, using the proceeds to pay off the majority of his outstanding loans on Aave and other lending platforms. Egorov was then able to fully close out his debt to Aave in September 2023 by depositing 11 million USDT.

The yield optimiser Convex Finance’s CVX token saw a significant surge that may be attributed to the recent liquidation of Curve Finance’s founder. Convex Finance offers enhanced yield opportunities for CRV holders. By locking CRV tokens in Convex, users can earn veCRV, which grants them access to increased trading fees and a share of Curve's trading revenues. This mechanism attracts liquidity providers and incentivises them to stake their tokens in Convex, thereby increasing demand for CVX.

News Highlights

• Tether launched a new token minting platform called Alloy on the Ethereum network. Alloy allows users to create tokens collateralised by Tether's tokenised gold (XAUT). The first asset available on the platform is aUSDT, a synthetic token pegged to the U.S. dollar. Investors can mint aUSDT by depositing XAUT as collateral. The position needs to be overcollateralised, with the amount of new tokens minted capped at 75% of the collateral value. The asset issuance will be handled by regulated entities in El Salvador.

• The gaming blockchain Ronin announced the upcoming launch of Ronin zkEVM, a Layer-2 chain built with a modified Polygon Chain Development Kit (CDK). Ronin zkEVM will allow game studios to build their own zkEVM chains without setting up security and consensus.

• MetaMask launched a pooled staking service for Ethereum. This allows users to stake any amount of ether with validators operated by MetaMask's developer, Consensys.

• Eigen Labs, the company behind the EigenLayer protocol, announced the acquisition of the restaking platform Rio Network, including its liquid restaking token (LRT) technology.

• The XRP Ledger announced the upcoming launch of its XRPL EVM sidechain and chose Axelar as the bridge protocol for the new sidechain. This will allow users to convert their XRP into a wrapped version called ‘eXRP’, which will be used as the native gas token on the sidechain.

• Bitcoin Layer-2 network Stackswas halted for nine hours last Friday. The incident was attributed to a Bitcoin reorganisation and "unexpected miner behaviour". This network outage triggered a 12% drop in the STX token price during the period.

Recent Research Reports

• Points Farming – Development, Significance and Controversies: Points farming has become ubiquitous in crypto recently. The report looks into its development and case studies, Friend.tech and EigenLayer, before delving into its significance and controversies.

• SocialFi – Business Models and New Developments: SocialFi in Web3 empowers users with enhanced data control and direct creator compensation without intermediaries, leveraging blockchain for better user engagement and innovative monetisation methods. 

• Research Roundup Newsletter [May 2024]: We present to you our latest issue of Research Roundup, featuring our deep dives into points farming and SocialFi, and many more.

Interested to know more? Access exclusive reports by signing up as a Private member, joining our Crypto.com Exchange VIP Programme, or collecting a Loaded Lions NFT.

Recent University Article

• What Is Dogelon Mars (ELON) and How to Buy ELON: Dogelon Mars (ELON) charmed the crypto space with its Mars-colonising ambitions back in 2021 when it was launched. Now it’s back with some updates.

• What Is Streamr (DATA) and How to Buy It: Streamr democratises the Web3 data economy by allowing users to collectively monetise their data. Here’s how it works.

• What Is Arweave and How to Buy AR: Arweave utilises blockweave architecture and Proof of Access consensus to ensure permanent and sustainable data storage. Here’s how it works.

Author

Research and Insights Team

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