Weekly DeFi Index

This week, the market cap, volume, and volatility indices dropped -15.44%, -23.49%, and -18.52%, respectively.

• Jupiter (JUP) rallied following news of a 7.5 million token buyback over the last three months. Additionally, a new governance proposal aims to increase fee buybacks from 50% to 70% to enhance token scarcity and bolster buy-side pressure.
• Chainlink (LINK) is partnering with major European and Korean banks on Project Pangea to deploy stablecoins for more transparent and efficient FX settlement.
• Main Street USD’s (msUSD) crash triggered a liquidity crisis and significant financial exposure for the Morpho lending protocol. The msY (a yield token minted by staking msUSD)/USDC market on Morpho hit 100% utilization, meaning nearly all msY supplied by lenders has been borrowed. Consequently, Morpho Blue’s Alpha USDC Delta V2 vault faced an estimated $18 million loss from msY/USDC market exposure following the msY token’s collapse.

Chart of the Week

U.S. total public debt outstanding hit a record $39.3 trillion in June. The crypto sector has become a major absorber of this debt, holding over $220 billion primarily through stablecoins and RWA tokenization. By comparison, Norway — the 14th-largest foreign holder of U.S. Treasuries — holds $214.7 billion.

Circle and Tether collectively hold approximately $205 billion in the U.S. Treasury securities to back their stablecoins. Meanwhile, tokenized U.S. Treasuries hit $15 billion, accounting for a historic 0.04% of total U.S. debt. Over the past 30 days, Circle’s tokenized money market fund, USYC, led the sector with $139 million in net inflows. In contrast, WisdomTree’s WTGXX and Securitize’s BUIDL saw the largest pullbacks, with $186 million and $158 million in net outflows, respectively.

News Highlights

• Ethereum's Glamsterdam upgrade entered its final development phase, locking in structural proposals like Enshrined Proposer-Builder Separation (ePBS) and Block-Level Access Lists (BALs). This overhaul clears the path for a 200 million gas-limit capacity target, expanding L1 throughput ahead of its expected mainnet activation in late 2026.
• Ethlabs, a new nonprofit launched by former Ethereum Foundation researchers, aims to advance Ethereum’s R&D. Supported by major corporate ether holders and key ecosystem figures, the initiative marks a strategic transition from the Ethereum Foundation’s centralized stewardship toward a "multi-node" development model, where independent entities collaboratively guide the network’s future.
• Japan’s SBI Group launched JPYSC, a trust-based stablecoin issued by Shinsei Trust and Banking Co., Ltd. Co-developed with Startale Group, SBI is the first Japanese institution to launch under the country's newly amended Payment Services Act, prioritizing institutional settlements.
• MoneyGram joined the Solana network as an active validator. The move signifies a deeper structural commitment as TradFi continues to adopt fast, low-cost stablecoin rails for international payment settlements.
• Synthetix governance proposed SIP-423 to retire its sUSD stablecoin. The proposal aims to freeze the contract and reimburse eligible holders with linearly vested SNX tokens at a conversion rate that honors sUSD's intended $1.00 value.
• Main Street’s msUSD stablecoin and its yield-bearing token msY lost their U.S. dollar pegs after verification provider Accountable terminated their agreement. Accountable stated that Main Street failed to meet its proof-of-reserves standards. Consequently, msUSD dropped sharply from approximately $1.00 to around $0.29, erasing roughly 71% to 90% of its value within 24 hours and reducing its market cap to roughly $30.5 million.
• Aztec Labs suffered a second exploit, losing $2.15 million from an immutable, deprecated smart contract. The incident was executed via false rollup proofs, reinforcing concerns over the security risks of abandoned on-chain infrastructure.
• Secret Network's cross-chain bridge to Axelar was drained of $4.67 million over a seven-day period because of a legacy infinite-mint vulnerability. The attacker successfully forged Cosmos IBC packets to mint unbacked tokens because the contract lacked proper incoming denomination validations.
• Ethereum L2 network Taiko halted block production after an attacker exploited its bridge to steal roughly $1.7 million. The attacker forged withdrawal proofs to drain funds from the bridge and token vault, likely using a leaked signing key.

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