Weekly DeFi Index

This week, the market cap surged +18.46%, while the volume and volatility indices dropped -20.20% and -36.29%, respectively.

• Trading in SpaceX‑linked perpetuals on Hyperliquid ($1.2 billion in 24-hour volume) generated substantial protocol fees, triggering automatic HYPE token buybacks and burns.
• A Uniswap (UNI) price surge was catalyzed by a bullish Standard Chartered forecast and ongoing supply reductions from the protocol's active UNIfication fee-burn mechanism.

Chart of the Week

Most decentralized stablecoins use a debt-based model: users lock up volatile assets like ETH as collateral to borrow USD, which risks liquidation during price crashes. To solve this, Vitalik Buterin proposed an option-based model that splits 1 ETH into a stable token and a volatile token, eliminating liquidations and the need for real-time price feeds (oracles).

1. The Split: Every 1 ETH is divided into:

• Token P (Stable): For retail users seeking a stable USD value, tracking the target fiat value provided the underlying asset price stays above the strike price at maturity
• Token N (Volatile): For speculators seeking leveraged upside exposure to ETH’s price movements above the strike price at maturity

2. The Guarantee: Combining 1 Token P and 1 Token N will always redeem 1 ETH from the smart contract. Since liabilities can never exceed holdings, insolvency is impossible.

3. Maturity Payout: At a set date, a secure oracle determines ETH's price:

• Token P receives ETH equal to its USD value (up to the strike price)
• Token N receives the remaining ETH

4. Rebalancing: Without forced liquidations, Token P is protected from flash crashes. Users maintain the $1 peg by occasionally trading old tokens for new ones.

The design offers zero forced liquidations and enhanced security through "slow" oracles. This system provides users with greater control over portfolio rebalancing, protecting trading strategies from front-running and MEV attacks.

News Highlights

• Crypto.com launched Tokenized Stocks in the App, allowing users to trade digital representations of Wall Street equities around the clock with a $1 minimum investment.
• LG Electronics completed an on-chain advertising network pilot built on a custom Arbitrum L2 network. Built to automate user engagement and ad inventory tracking, the project highlights traditional corporations' growing interest in Ethereum scaling infrastructure.
• Decentralized protocol Aerodrome introduced "Predictive Allocation," a major upgrade that turns liquidity provision into a prediction market. This shift moves away from rewarding past fee generation to directly incentivizing users who accurately forecast future liquidity demands.
• Polygon Labs will sunset its Polygon zkEVM Mainnet Beta sequencer on July 1, requiring all users and protocols to migrate funds and liquidity to Ethereum Layer-1 (L1) before this date.
• Bitcoin L2 network Botanix is shutting down operations after four years, citing insufficient market demand for Bitcoin-native DeFi. Users must withdraw assets by July 9, after which remaining assets will be permanently unrecoverable.
• Humanity Protocol announced a full token migration and a 1:1 airdrop of a new H token to compensate affected holders after a $36 million security exploit. Remediation includes automated distributions for standard accounts and a rigorous AML-compliant compensation fund for complex exposure cases.
• A hacker drained approximately $1.34 million from a deprecated Raydium AMM V3 program by exploiting a liquidity pool mint validation flaw. The attacker laundered the funds via Tornado Cash, and Raydium pledged full treasury compensation for the affected but inactive liquidity pools.
• Token of Power suffered a hostile takeover via an architectural misconfiguration. The attacker gained DAO voting control, minted 10 billion TOP tokens, drained $1.58 million in liquidity from a Balancer V1 pool, converted the assets to WETH, and laundered them through Tornado Cash.
• A deprecated version of the Aztec Connect bridge, decommissioned in 2023, was exploited for approximately $2.1 million. The vulnerability stemmed from a mismatch between zero-knowledge transaction verification and on-chain settlement; by manipulating the verification path, the attacker was able to generate and withdraw unbacked balances, as the smart contract failed to properly validate transactions against the zero-knowledge proof system.

Recent Research Reports

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. The latest crypto market insights are also available via the dashboard.

We’re all ears.

Your feedback has always helped us provide insightful crypto market trends. Tell us how we can improve this newsletter further by taking a quick survey below (it will only take less than a minute). Thank you!

Take our survey now

Author

Research and Insights Team

Get the latest market, DeFi & NFT updates delivered to your inbox:

Be the first to hear about new insights:

Disclaimer

The information in this report is provided as general market commentary by Crypto.com and its affiliates, and does not constitute any financial, investment, legal, tax, or any other advice. This report is not intended to offer or recommend any access to products and/or services. While we endeavour to publish and maintain accurate information, we do not guarantee the accuracy, completeness, or usefulness of any information in this report, nor do we adopt nor endorse, nor are we responsible for, the accuracy or reliability of any information submitted by other parties.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of, or located in a jurisdiction, where such distribution or use would be contrary to applicable law or that would subject Crypto.com and/or its affiliates to any registration or licensing requirement.

The brands and the logos appearing in this report are registered trademarks of their respective owners.