Latest Developments and Thoughts on the DeFi Ecosystem

Recently, a series of important events have occurred in the DeFi field, ranging from regulatory easing to governance attacks, from stablecoin depegging to the development of new chain ecosystems, presenting a complex and ever-changing landscape. This article will sort out and analyze these events, exploring their impact on the future development of DeFi.

sUSD Peg Deviation Issue

Since the approval of the SIP-420 proposal, sUSD has shown a significant decoupling phenomenon, recently even falling below 0.9 dollars. This proposal introduced the "delegated pool" mechanism, aiming to improve SNX minting efficiency and reduce liquidation risks. However, this design has also brought some issues:

1. The market still lacks confidence in SNX-sUSD's endogenous collateral.
2. The increase in sUSD supply has led to a severe imbalance in the Curve pool.
3. Users no longer actively manage debt and cannot anchor through market arbitrage mechanisms.

The ability of sUSD to regain its peg largely depends on the project's team to enhance demand or increase incentives. Although Synthetix's design is relatively advanced, the market's attitude towards algorithmic stablecoins remains cautious, and the impact of the LUNA event is still ongoing.

veCAKE Governance Attack Incident

Recently, the Cakepie protocol faced sanctions from Pancake, sparking discussions about the ve model design. The controversy centers on whether Cakepie has abused its governance power to direct CAKE emissions to low-efficiency pools.

This event reflects the complexity of the ve mechanism operation. From a design perspective, the behavior of Cakepie does not violate the principles of the ve mechanism, but it is seen as detrimental to the interests of Pancake. This situation is similar to the relationship between Curve and Convex, highlighting the issue of insufficient competition in governance rights.

Possible solutions may include:

• Wait for or promote market competition
• Set the pool incentive limit
• Encourage more participants to compete for vecake voting rights

The founder of Curve proposed a quantitative assessment method to evaluate the rationality of Cakepie behavior by comparing the efficiency of veCAKE locking with the direct burning of CAKE. This method shows within the Curve ecosystem that the veToken model is approximately 3 times more efficient than direct token destruction.

BUIDL Continuous Growth

The RWA business continues to maintain a strong growth momentum, growing by 24% in 7 days, soon to surpass $2.5 billion. The latest $500 million growth may come from the Spark lending protocol under MakerDAO. However, the RWA business currently seems to be somewhat disconnected from other parts of the DeFi ecosystem, presenting a state of "disconnection from the market and irrelevant to retail investors."

Improvement of DeFi Regulatory Environment

The United States has officially abolished the IRS DeFi crypto broker rules, which is a significant positive development for the DeFi industry. Although the market reaction has been relatively muted, this move may release more space for DeFi innovation and is expected to promote the emergence of more application scenarios.

Uniswap New Developments

Uniswap has launched the Unichain liquidity mining program,投入500万美元UNI代币奖励12个池子. This is the first large-scale liquidity mining conducted by Uniswap since 2020, aimed at guiding liquidity to Unichain. The program involves multiple mainstream tokens and is expected to attract a large number of users to participate.

Euler Expansion and Growth

The Euler protocol has expanded to the Avalanche chain, with its TVL growing by 50% in a month, entering the top ten lending protocols. The growth is mainly driven by incentives, including support from projects like Sonic, Avalanche, and EUL.

New Developments in the Cosmos Ecosystem

Cosmos IBC Eureka officially launches, based on the IBC v2 protocol, introducing a token burn mechanism for ATOM and supporting cross-chain interaction between Cosmos and EVM chains. Recently, the cross-chain inflow of funds to the Cosmos hub reached 1.1 billion USD, bringing new growth momentum to ATOM. This development is expected to improve the value correlation between ATOM and ecosystem development.

Decentralized Finance项目治理动向

1. AaveDAO officially starts repurchasing tokens.
2. Pendle proposed to launch the PT token on Aave.

Berachain Ecosystem Adjustment

Berachain has updated the POL reward distribution rules, introduced a new guardian committee, and attracted multiple projects to settle in. Although the recent TVL has declined, it still maintains a high level of activity, and its ecological development is worth continuous attention.

Overall, the DeFi sector is experiencing rapid transformation and adjustment. From improvements in the regulatory environment to the application of new technologies, from the refinement of governance mechanisms to the development of cross-chain ecosystems, DeFi is progressing towards a more mature and diversified direction. However, issues such as the de-pegging of stablecoins and governance attacks remind us that DeFi still faces numerous challenges, requiring industry participants to work together to continuously optimize and innovate.