Weekly DeFi Index

This week, the market capitalisation and volume indices increased by +0.22% and +7.25%, respectively, while the volatility index dropped by -5.74%.

• SushiSwap (SUSHI) announced its full deployment on the HyperEVM network. This integration allows users to swap HyperEVM assets directly through the Sushi interface, expanding SushiSwap’s cross-chain capabilities.
• In the past week, the Compound DAO (COMP) approved two governance proposals: the launch of a WETH market on Linea and updated price feeds for key assets on the USDT market to support the implementation of Chainlink’s Secure Verifiable Randomness (SVR).

Chart of the Week

Ethereum's proof of stake (PoS) system is facing a significant challenge as over 2.65 million ETH, valued at around US$12 billion, are waiting to exit the validator set, causing exit wait times to exceed 46 days as of 13 September. This backlog was triggered by a large infrastructure provider, Kiln, exiting all of its validators as a precautionary measure following the security incidents that led to a $40 million loss for SwissBorg through an exploited API. 

Additionally, rising ETH prices and anticipation of staking for ETH ETFs approvals might lead to increased staking activity and profit-taking, further straining the validator queue. The Ethereum protocol's churn limit is currently capping validator entries and exits at 256 ETH per epoch (~6.4 minutes), contributing to delays and potential restaking of ETH waiting to exit, which further worsen the backlog.

News Highlights

• Tether unveiled a new stablecoin called USAT, designed specifically for US users and pegged 1:1 to the US dollar. The stablecoin is US-regulated and will be issued through Anchorage Digital Bank under the GENIUS Act.
• The Ethereum Foundation introduced the ‘Privacy Stewards of Ethereum’ (PSE) initiative, aiming to enhance privacy across the Ethereum network by introducing features like private transactions, decentralised identity solutions, and confidential voting. 
• Native Markets officially claimed the USDH stablecoin’s ticker from Hyperliquid following a competitive bidding process and community vote, beating competitors such as Paxos, Frax, and Sky. The project plans to deploy the first Hyperliquid Improvement Proposal (HIP) for USDH and an ERC-20 token soon. 
• The Avalanche Foundation is reportedly raising $1 billion to create digital asset treasury projects and accumulation initiatives by purchasing AVAX tokens at a discounted price. The fundraising includes a $500 million private placement led by Hivemind Capital, and another via a special-purpose acquisition vehicle involving Dragonfly Capital.
• Ethena Labs launched its synthetic stablecoins, USDe and staked USDe (sUSDe), on the Avalanche blockchain, marking a major cross-chain expansion. 
• Polymarket partnered with Chainlink to use its oracle infrastructure for faster, more accurate price-based market settlements. This integration aims to reduce resolution times from hours to near-instant and improve trust in prediction markets.
• Bitwise Asset Management filed for a new exchange-traded fund (ETF) focused on stablecoins and tokenisation, aiming to invest in both stocks and crypto assets.
• UBS, PostFinance, and Sygnum successfully tested cross-bank payments on Ethereum using deposit tokens, which are digital representations of bank deposits. The trial, conducted under the Swiss Bankers Association, demonstrated the feasibility of settling transactions on a public blockchain without relying on traditional payment systems.

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