DeFi & L1L2 Weekly – 💱Ondo Finance Successfully Tests Near-Instant Conversion Between USDC and BUIDL

Ondo Finance tests instant conversion between BlackRock’s BUIDL and USDC. Ethereum’s Pectra upgrade to introduce smart contract functionality to wallets. EigenLayer removes staking caps on LSTs.

Weekly DeFi Index

This week’s market capitalisation index was negative at -29.46%, while volume and volatility indices were positive at +65.83% and +113.84% respectively.

Chart of the Week

Tokenised asset platform Ondo Finance successfully tested near-instant conversions between Circle’s USDC stablecoin and BlackRock’s new BUIDL token on 12 April. The transaction involved the redemption of US$250,000 worth of BUIDL tokens for USDC, demonstrating the USDC-to-BUIDL feature introduced by Circle. 

This development highlights the growing trend of traditional financial institutions like BlackRock entering the asset tokenisation sector, with the BlackRock USD Institutional Digital Liquidity Fund holding cash, U.S. Treasury bills, and repurchase agreements, represented by the Ethereum-based BUIDL token. Ondo Finance was one of the early adopters of the fund, using it as a backing asset for its OUSG token.

Consequently, Ondo Finance’s governance token ONDO experienced a significant increase of as much as 15% (from $0.77 to $0.89) a few days following the conversion.

• Uniswap has increased the fee it charges users for trading through its interface from 0.15% to 0.25% for most swaps. This change was implemented on 10 April, just hours after it announced that the SEC had issued a Wells Notice warning of an incoming lawsuit against the company.
• The Sushi DAO governance proposal to transfer more than $40 million in DAO-controlled treasury assets to a new Labs model has passed an initial community signal vote with 62.5% in favour, indicating support for the change in structure. However, the proposal has been criticised for alleged manipulation of voting power by the core development team, and an implementation vote is underway with 83% currently in favour.

News Highlights

• The Ethereum Pectra upgrade, expected by late 2024 or early 2025, will introduce EIP-3074, enhancing wallets by enabling smart contract functionalities like transaction bundling and sponsored transactions. Despite concerns about security vulnerabilities and the need for further improvements, developers are moving forward with the inclusion of EIP-3074 in the Pectra upgrade to improve user experience and functionality in Ethereum wallets.
• Restaking protocol EigenLayer is removing caps on all liquid staking tokens and unpausing restaking deposits from 16 April, marking the completion of its phased rollout.
• Ether.Fi, the largest liquid restaking service on EigenLayer, has inked a $500 million restaking deal with RedStone Oracles to help secure its data oracles, marking a significant step in the growth of its actively validated services (AVSs) ecosystem. 
• Solana has rolled out a new update to its validator client software to tackle congestion caused by spam transactions, which have slowed processing times and increased transaction drop rates. The update introduces a stake-weighted quality of service (SWQOS) prioritisation scheme to handle transactions from staked validators more efficiently.
• Ethena Labs, the entity behind the USDe synthetic dollar, released an attestation report showing that USDe remained fully collateralised despite market turbulence, with assets securing the issued tokens exceeding the token supply by $32.7 million.
• USDe and FDUSD briefly experienced depegs during a crypto market shake-up on 13 April, with USDe dropping to $0.965 while FDUSD fell to a low of $0.9557.
• Blockchain-based social application Friend.Tech experienced a surge in activity in anticipation of a potential FRIEND token distribution and the upcoming release of its second version.
• Crypto lending app Pac Finance reportedly caused $24 million in liquidations for users due to a sudden parameter change made by a developer wallet without prior notification. This change affected the loan-to-value ratio (LTV) for Renzo Restaked Ether (ezETH), causing the liquidation of a large number of leveraging farmers who violated the collateral rules.

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