Recent Trends and Thoughts in the DeFi Market

1. The sUSD Pegging Issue Continues

sUSD has been continuously de-pegged since the beginning of the year, recently falling below $0.9. This is due to the introduction of the "delegated pool" mechanism after the SIP-420 proposal was passed. Although this mechanism has improved SNX minting efficiency, it has also led to some issues:

• The market lacks confidence in SNX-sUSD's intrinsic collateral.
• The increase in sUSD supply has caused an imbalance in the Curve pool.
• Users no longer actively manage their debts and cannot arbitrage to anchor.

Solving the peg issue requires project parties to increase the demand for sUSD or implement incentive measures. However, the market still has doubts about the acceptance of such algorithmic stablecoins, and the impact of the LUNA incident lingers. From a design perspective, Synthetix's solution is relatively advanced, but it may be too early for its emergence.

2. The veCAKE Governance Mechanism Faces Challenges

The veCAKE model was originally designed to prevent governance attacks but has faced centralization sanctions. Pancake accuses the Cakepie protocol of directing CAKE incentives to inefficient pools through governance power, harming the platform's interests.

However, Cakepie's behavior does not violate the principle of the ve mechanism. This reflects the current insufficient competition for governance rights, and better solutions may be to encourage market competition or set incentive caps, etc.

3. veToken Model Efficiency Evaluation Method

A well-known developer proposed a quantitative method for assessing the efficiency of the veToken model:

• Measure the number of tokens locked through specific protocols
• Compare the situation of using the same number of tokens to support the "premium pool" and to buy back and destroy.
• Compare the efficiency of token reduction in two scenarios

According to its experience, the veToken model is about three times more efficient in reducing token circulation than direct destruction.

4. Continuous Growth of RWA Business

The tokenization of real assets ( RWA ) business has been experiencing continuous growth recently:

• The total scale is close to 2.5 billion USD, with a 24% increase over 7 days.
• The latest $500 million growth may come from the Spark protocol under MakerDAO.
• Attracted a new group of investors

However, the RWA business has not yet been well integrated into the Decentralized Finance ecosystem and is showing a disconnection from the market.

5. The United States Abolishes the DeFi Broker Act

The United States has officially abolished the IRS DeFi cryptocurrency broker rules, which is seen as a significant boon for DeFi. This move may release more space for application innovation, with a more lenient regulatory attitude.

6. Uniswap Launches a New Round of Liquidity Mining

Uniswap has launched a new round of liquidity mining on Unichain, offering a reward of $5 million in UNI tokens. It involves 12 token pools including USDC, ETH, COMP, and others. This is the first large-scale liquidity incentive from Uniswap since 2020.

7. Euler extends to the Avalanche chain

The lending protocol Euler has recently expanded to the Avalanche chain:

• TVL increased by 50% in one month, entering the top ten lending protocols.
• The growth mainly comes from incentives such as Sonic, Avalanche, and EUL.

8. Cosmos IBC Eureka Launch

Cosmos IBC Eureka officially launched:

• Based on the IBC v2 protocol
• The gas consumed by the transaction will burn ATOM
• Support cross-chain between Cosmos and EVM chains
• Currently, only Ethereum mainnet and Cosmos mainstream assets are supported.
• In the past week, Cosmos hub has seen cross-chain inflows of 1.1 billion dollars.

This brings new growth momentum to ATOM, but its sustainability still needs to be observed.

9. Token Buyback Trends

• AaveDAO officially starts buying back tokens
• Pendle proposes to list PT token on Aave

10. Berachain Ecosystem Update

Berachain Latest News:

• Update the POL reward distribution rules, with a maximum allocation ratio of 30% for a single Reward Vault.
• Introduce a new Guardian Committee to review RFRV
• OlympusDAO adjusts its strategy to maintain high incentives
• Yearn's yBGT token lands on Berachain

After experiencing rapid growth, Berachain has entered a correction period, and the official team has made adjustments regarding incentive distribution. It is necessary to keep an eye on more protocol integrations and changes in TVL.