DeFi & L1L2 Weekly — 📈 Ethena’s USDe overtook Sky’s USDS to become the third-largest stablecoin; EigenLayer upgraded its restaking rewards

Ethena’s USDe overtook Sky’s USDS to become the third-largest stablecoin. EigenLayer upgraded its restaking rewards. Movement launched its mainnet and MOVE token.

Weekly DeFi Index

This week’s DeFi indices showed mixed movements, with the market capitalisation index declining -4.37% , while volume and volatility indices grew +21.59% and +68.51%, respectively.

• Sushi DAO‘s CEO, Jared Grey, unveiled plans for 2025 that include new product launches to enhance trades on the decentralised exchange (DEX). Grey’s roadmap also aimed to bridge the platform beyond Ethereum to Solana and other blockchain ecosystems to strengthen its presence. Additionally, the team plans to diversify its treasury by liquidating a portion of the SUSHI tokens that are held.

Chart of the Week

Ethena Labs’s synthetic dollar, USDe, is now the third largest stablecoin, surpassing MakerDAO’s USDS (previously DAI) after doubling its market capitalisation since 1 November. USDe’s market cap rose to US$5.5 billion, surpassing USDS’s $4.6 billion. The asset remains behind USDT’s cap of $138.3 billion and USDC’s $40.9 billion. 
Unlike fiat-backed stablecoins like USDT and USDC, which are widely used for various purposes , 77% of USDe tokens are staked to generate yields. USDe offers competitive returns through Ethereum staking rewards, with holders of sUSDe — the staked version of USDe — earning an annual percentage yield (APY) of 27%, according to Ethena.

News Highlights

• EigenLayer, the restaking protocol on Ethereum, unveiled Rewards v2, an upcoming protocol upgrade slated for January 2025, which would enhance the flexibility and customisation of rewards within the ecosystem. The upgrade introduces three key enhancements that would allow third-party protocols using actively validated services (AVSs) to reward validators based on performance while letting them set their own fees.
• The Movement Network Foundation announced the launch of the Movement Mainnet, an Ethereum scaling solution that uses the Move Virtual Machine to settle transactions with a finality time of one second. The announcement also shared details about the upcoming MOVE token generation event.
• The Sui Foundation announced its integration with Phantom Wallet, a non-custodial multi-chain cryptocurrency wallet, which would provide Sui users with a reliable and secure wallet solution. Accessible through a browser extension or mobile app, the integration would enhance wallet functionality for Sui users while attracting new participants.
• Sky, previously known as MakerDAO, received criticism for its reliance on an externally owned account (EOA) to manage $756 million of USDC reserves within its lite peg stability module (PSM). Critics argued that relying on a custodial model could expose the funds to potential exploits or insider misuse.
• Solana-based DEX aggregator Jupiter approved a proposal to airdrop $860 million of JUP tokens to community voters. Led by Jupiter’s founder, Meow, the proposal seeks to drive long-term participation and includes a comprehensive roadmap for the airdrop.
• The team behind the meme coin launchpad pump.fun is restricting access for its UK users after the Financial Conduct flagged the platform as unauthorised. This marks the platform’s first public restriction after previous criticism about its lax moderation. Its live streaming feature was also removed after several violent and disturbing streams gained attention.
• Decentralised finance (DeFi) platform, Instadapp, published a proposal on its governance forum detailing plans to restructure its governance and tokenomics while introducing incentives to promote the adoption of its new dapp, Fluid. The proposal suggests rebranding from Instadapp to Fluid, migrating INST to FLUID, and allocating 12% of the project’s treasury to support growth initiatives.

Recent Research Reports

• Ethereum Pectra Upgrade: The Pectra upgrade aims to address Ethereum’s mainnet performance with three key objectives: fix existing network issues, improve user experience, and prepare for future upgrades.
• Alpha Navigator: Quest for Alpha [November 2024]: Our latest issue of Alpha Navigator, an institutional-focused report, covers macro trends, market-neutral pair trades, style factor screening, and event-driven ideas.
• Tokenised BTC: This report provides a comparative overview of tokenised BTC, examining the key benefits and challenges associated with different models, as well as the disruptive impact of new market entrants like CDCBTC.

Recent University Articles

• What Are XRP ETFs — Plus What to Know About the Pending SEC Applications: The first Ripple ETF proposals were filed in October 2024. Here’s what to know about a potential XRP ETF.
• What Are Crypto Baskets and How Do They Work?: Crypto Baskets in the Crypto.com App allow traders to diversify their portfolio with just a few clicks. Here’s how to set up a Crypto Basket.
• What Is Crypto.com’s Wrapped Bitcoin (CDCBTC) and How Does It Work?: CDCBTC is a tokenised version of bitcoin which allows users to unlock DeFi opportunities. Here’s how it works.

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