[Crypto.com] DeFi & L1L2 Weekly (10/01/2024)

TVL of Ethereum L2 networks reached a record-high of nearly $21B in January 2024. Ethereum developers confirm Dencun upgrade testnet dates. Paxos is exploring PYUSD deployment on Aave to boost liquidity.

Weekly DeFi Index

This week’s market cap and volume indices were negative at -11.77% and -11.34%, respectively, while the volatility index was positive at +37.53%.

Chart of the Week

Ethereum Layer-2 networks are experiencing an increase in total value locked (TVL) at the start of the year, reaching a record high of US$20.83 billion on 5 January, according to L2Beat. This represents a significant year-on-year growth of 312%, starting from approximately $5.05 billion in January 2023.

TVL of Top Chains

Top DEX by Chain

News Highlights

• The testnet schedule for the Ethereum Dencun upgrade has been confirmed during its latest All Core Devs Execution (ACDE) call. It is set to be implemented on the Goerli, Sepolia, and Holesky testnets, with the upgrades scheduled for January 17, January 30, and February 7, respectively. Discussions were also held around priorities for the next upgrade following Dencun, dubbed Prague-Electra.
• Stablecoin issuer Paxos is seeking to deploy PayPal’s PYUSD stablecoin on the Aave lending protocol to boost its liquidity and venture into the DeFi space. Aave is currently conducting an initial temp check to decide on PYUSD’s onboarding. 
• Unisat Wallet announced its plans to adhere to the Ordinals Jubilee upgrade, ensuring that BRC-20 tokens remain integrated within the Ordinals system. This move has been met with criticism, and it sparked broader discussions around the evolution of the BRC-20 token standard. 
• Arbitrum Orbit, which allows developers to build dedicated chains using Arbitrum technology, has introduced support for custom gas tokens, allowing select ERC-20 tokens (that meet the technical criteria) to be used for transaction fees on its networks. 
• Ethereum Layer-2 network Starknet has approved the implementation of the Alpha version 13.0 update, which will introduce the ability to pay transaction fees using both STRK and ETH. The network plans to eventually transition to exclusively using STRK for transaction fees in the future. 
• Manta Network unveiled its upcoming airdrop called Into The Blue. It seeks to reward long-term users and supporters of Manta with an immediate airdrop of 50 million MANTA tokens, equivalent to 5% of the total supply.
• Orbit Bridge, a bridging service of the cross-chain protocol Orbit Chain, suffered a hack which resulted in the loss of over $81 million worth of ETH and stablecoins. The hackers funded a wallet using the privacy protocol Tornado Cash before attacking Orbit Chain’s Ethereum vault, and the stolen funds were then transferred to multiple Ethereum wallets.
• DeFi protocol Gamma Strategies suffered an exploit, resulting in a loss of around $3.4 million. Security firm BlockSec’s analysis points to a critical vulnerability in the protocol’s ‘accounting mechanism’ as the root cause. This allowed the attacker to manipulate the prices of specific liquid staking tokens and stablecoin vaults, and to withdraw an excessive amount of tokens.

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