Recent Trends and Thoughts in the DeFi Field

sUSD Continuous De-pegging Issue

sUSD has recently experienced a severe de-pegging phenomenon, with prices dropping below $0.9. This is due to the "delegated pool" mechanism introduced by the SIP-420 proposal passed earlier this year. This mechanism reduces collateral requirements, allowing debt to be linearly transferred to the protocol and eliminating the liquidation risk for borrowers. However, there are still concerns in the market regarding endogenous collateral, coupled with increased minting efficiency leading to a rise in sUSD supply, which has severely destabilized the Curve pool.

Solving the decoupling issue requires increasing the demand for sUSD or enhancing incentives. Although Synthetix's design is relatively advanced, the market's attitude towards algorithmic stablecoins remains unclear. The impact of the LUNA incident still exists, which poses a trust challenge for algorithmic stablecoins backed by endogenous collateral.

veCAKE Governance Attack Incident

Recently, a protocol called Cakepie is facing expulsion due to allegations of abusing governance power. Pancake believes that Cakepie is directing CAKE emissions to liquidity-inefficient pools, harming the platform's interests. However, this action does not violate the operational principles of the ve mechanism.

This matter has sparked discussions about the design of the ve model. The founder of Curve proposed a quantitative assessment method to compare the efficiency of veCAKE locked through Cakepie with that of directly supporting "high-quality pools" and repurchasing and burning CAKE. According to Curve's experience, the efficiency of the veToken model in reducing token circulation is about three times that of direct destruction.

BUIDL Continues to Grow

BUIDL has seen significant growth recently, increasing by 24% in 7 days, approaching a breakthrough of $2.5 billion. This growth does not stem from Ethena, but may originate from the Spark lending protocol under MakerDAO. The physical asset business maintains a growth momentum, but has not yet integrated well into the DeFi ecosystem, showing a disconnect from the market and retail investors.

Improvement of the DeFi Regulatory Environment

The United States has officially abolished the IRS's DeFi cryptocurrency broker rules, which is seen as a significant positive for the DeFi industry. The easing of regulatory attitudes may provide space for more application innovations.

Uniswap Launches a New Round of Liquidity Mining

Uniswap has launched the Unichain liquidity mining program, offering $5 million in UNI token rewards, involving 12 asset pools. This is Uniswap's first large-scale liquidity mining activity since 2020, aimed at guiding liquidity to Unichain.

Euler Expansion and TVL Growth

The Euler protocol has expanded to the Avalanche network, and its Total Value Locked (TVL) has entered the top ten lending protocols. The TVL increased by 50% within a month, primarily due to incentives from Sonic, Avalanche, and EUL.

Cosmos IBC Eureka Launch

Cosmos has launched the Eureka update based on IBC v2. New features include the destruction of ATOM for gas consumed per transaction, and support for cross-chain interactions between Cosmos and EVM. Currently, it supports the Ethereum mainnet and mainstream assets in Cosmos, but has not yet expanded to L2 networks. This update introduces new value drivers for ATOM.

Other Decentralized Finance Updates

• AaveDAO has officially started to buy back tokens
• Pendle proposed the plan to launch the PT token on Aave.
• Berachain updates the POL reward distribution rules and introduces a new guardian committee.
• OlympusDAO adjusts its strategy to respond to the new Berachain rules.
• Yearn's yBGT lands on Berachain

Berachain has entered a period of adjustment after experiencing high growth, and the official has made modifications to the incentive distribution issues. Despite a recent outflow of TVL, the chain still maintains a high level of DeFi activity. In the future, we will continue to monitor the integration of more protocols and changes in TVL.