DeFi & L1L2 Weekly – 💸 Ethena’s USDe faces $120 million in redemptions; Crypto.com DeFi Wallet integrates with Kiln DeFi

Ethena’s USDe stablecoin faces $120 million in redemptions. Crypto.com DeFi Wallet integrates with Kiln DeFi. Ripple partners with OpenEden to enter the tokenised US Treasury market.

Weekly DeFi Index

The market capitalisation was negative at -23.50%, while the volume and volatility indices were positive at +69.39% and 96.17% respectively.

• Aave generated US$6 million in revenue during a recent crypto market plunge, primarily from processing liquidations. The sell-off, triggered by the Bank of Japan’s interest rate hike and a US jobs report, led to over $350 million in liquidations on DeFi protocols. Aave’s platform withstood the market stress, securing $21 billion in value across various markets. Notably, a $7.4 million wrapped ether (WETH) position was liquidated, contributing significantly to Aave’s revenue.
• Lido Finance launched Lido Institutional, an institutional-grade liquidity staking solution designed for large clients like custodians and asset managers. This middleware solution aims to provide the reliability and security needed for enterprise-level staking while allowing for liquidity and utility in various institutional strategies.

Chart of the Week

Ethena’s USDe stablecoin, a synthetic dollar, faced nearly $120 million in redemptions during a market consolidation. This volatility led to over $1 billion in liquidations on centralised exchanges and $400 million on DeFi protocols.

Despite the redemptions, USDe maintained its $1 peg, albeit briefly dipping to $0.997. Its supply has increased to over 3.1 billion tokens since April. Ethena founder Guy Young confirmed the system’s successful processing of over $50 million in redemptions, highlighting its resilience.

USDe differs from traditional stablecoins by using derivative hedging strategies and collateral in ETH and BTC instead of direct fiat backing. It also employs a cash-and-carry strategy to generate yields, recently accepting BTC as collateral alongside ETH and liquid staking tokens.

News Highlights

• Kiln, a leading enterprise-grade staking platform, launched Kiln DeFi, enabling its integrators to facilitate stablecoin rewards via DeFi lending protocols like Aave, Morpho, and Compound. Crypto.com DeFi Wallet is the first integrator to launch with Kiln DeFi, highlighting the benefits of the Kiln DeFi infrastructure.
• Ripple partnered with OpenEden to enter the tokenised U.S. Treasury market, which is currently dominated by Ethereum. OpenEden will offer tokenised Treasury bills (T-bills) on the XRP Ledger, converting them into digital TBILL tokens. 
• Ronin Bridge was temporarily paused after a white hat hack drained $12 million in tokens, including 4,000 ETH and $2 million in USDC. The exploit was reported by ethical hackers, prompting Ronin Network to pause operations shortly after identifying the issue. Developers are in discussions with the hackers about returning the funds. This incident follows a significant $625 million exploit in 2022, raising ongoing security concerns in the crypto space.
• An attacker exploited a vulnerability in IBC hooks on the Terra blockchain, stealing approximately $1 million in tokens. The exploit took advantage of a flaw that allowed unauthorised access to token transfers, highlighting reservations regarding cross-chain communication.

Recent Research Reports

• Crypto Market Sizing Report H1 2024: Global crypto owners reached 617 million by the first half of 2024.
• Ethereum L2 Interoperability – The Super Chains: Our latest report looks into how Ethereum L2-based solutions like ZKsync’s Elastic Chain, Polygon’s AggLayer, and Optimism’s Superchain address scalability and interoperability challenges.
• Exploration of Web3 Socials: We have seen a surge in interest in decentralised Web3 Socials in 2024. Our report looks into its recent developments, including Solana’s Actions and Blinks, as well as Farcaster and Lens on Ethereum.

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 Articles

• What Is Fully Diluted Valuation (FDV)?: Fully diluted valuation (FDV) is a key metric to look into before buying cryptocurrency — here’s what it means and how to gauge it.
• How to Make the Most of Your Cronos (CRO) Holdings: Interest, rewards, and rebates: CRO, the Cronos token, offers lots of perks to Crypto.com users. Here’s how to receive them.
• Stop-Loss and Take-Profit Levels in Crypto Trading: Learn how stop-loss and take-profit levels are used to manage crypto trading risks.

We’re all ears.

Your feedback helps make our reporting more insightful. Tell us how we can improve this newsletter by taking the survey below. It will take less than a minute of your time. Thank you!

Authors

Research and Insights Team

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.