Week in DeFi: USDC Depeg Sparks DeFi Crisis, LSD Still In and Cosmos MEV in Focus
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Week in DeFi: USDC Depeg Sparks DeFi Crisis, LSD Still In and Cosmos MEV in Focus

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Created 2w ago, last updated 2w ago

As SVB collapsed and USDC depegged over the weekend, how is DeFi impacted? Find out about this and more in our weekly roundup of the latest DeFi news and alpha.

Week in DeFi: USDC Depeg Sparks DeFi Crisis, LSD Still In and Cosmos MEV in Focus

Table of Contents

Circle-backed stablecoin, USDC, depegs swiftly as part of Circle’s cash reserves are disclosed to be held at Silicon Valley Bank. Liquid staking derivatives (LSDs) are still the in-thing as Liquid Collective and Index Coop release two new LSD products. Finally, miner extractable value (MEV) makes its way to the Cosmos ecosystem with two protocols making their move.
Let’s see what went down this past week in DeFi.

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Overview: Silicon Valley Bank and Macro Wreak Havoc

Total Value Locked (TVL) across all chains fell almost 12% to $42.53 billion across the week as macroeconomic indicators came in hotter than expected, combined with Fed chairman Jerome Powell’s comments on higher rates to come and for a longer time. Additionally, the Silicon Valley Bank crisis sparked panic as users questioned the collateralization of their stablecoins, particularly Circle’s USDC. While most chains saw a decline, Telegram’s L1, TON, and Cosmos-based Kava both saw significant increases in TVL.

Source: Defillama.com

Welcome to Alpha Central

Hercules DeFi shares how to use Etherscan as well as tips on how to find whale wallets and undervalued gems with complementary tools such as DeBank, Arkham Intel, Dexscreener and more.
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RektFencer shares all things Kava, a Cosmos-based Ethereum Virtual Machine (EVM) compatible blockchain that has been thrown into the spotlight momentarily for the week.
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Ardizor with a hot list of projects with potentially life-changing airdrops that you might be overlooking.
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Ethereum: LSDs Are Still Cool

Panic strikes the DeFi ecosystem as USDC depegs after fears of Circle discloses $3.3 billion in reserves stuck in Silicon Valley Bank. Lending protocols, Aave and Compound, as well as DAI issuer, MakerDAO, take emergency measures to limit the risk to their protocols.
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Coinbase and Bitcoin Suisse launched Liquid Collective this week, to bring a new liquid staking derivative to Ethereum, LsETH. Beyond the traditional functions of an LSD, LsETH also provides coverage from slashing as well as being KYC/AML compliant.
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DAI issuer, MakerDAO, reviews a proposal as well to increase their investment in US Treasuries from the current $500 million to $1.2 billion. The investment looks to increase long term revenue streams for the protocol.

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Structured products protocol, Index Coop, releases their own LSD product as well, Gitcoin Staked ETH (gtcETH), which utilizes a basket of staked ETH across Lido, Stakewise, and Rocketpool to generate yield, which is used to fund public goods via Gitcoin.
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Multichain DeFi management tool, InstaDapp, launches their own wallet too, just one week after Uniswap dropped theirs. Known as Avocado, it uses account abstraction to enable unique features such as a unified cross-chain experience and gas fees paid in USDC across all chains, among several other innovative features.
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Centralized exchange, Coinbase, drops Wallet-as-a-Service (WaaS), allowing companies to deploy customizable wallets fully on-chain that can be secured using solely username and password without the need to worry about seed phrases.
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Maverick Protocol goes live too, bringing their one-of-a-kind Dynamic automated market maker (AMM) model to Ethereum. Maverick claims to allow users to earn higher fees than with the current Uniswap concentrated liquidity model as Maverick allows users’ positions to dynamically adjust along parameters set by users.
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XS Finance launches LongSwap, bringing MEV attack-protected time-weighted AMM pools to DeFi. This means that users can allow tokens to be swapped over a specified duration without fearing the risk of MEV or sandwich attacks.
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L2s: Leverage, Leverage Everywhere

Numoen goes live on Arbitrum this week, bringing constant leverage, no-liquidation products to users. This means that users can take a 2x leveraged position on any asset, long or short, without liquidation risk.
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Polynomials announces Power Perpetuals, bringing constant 4x leverage on-chain. Designed by the researchers at Paradigm, Power Perpetuals allow for ETH2 and BTC2 among others. The platform will also be delta-hedged via Synthetix.
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Arbitrum-based money market protocol, Tender.fi faces a $1.6 million hack, which fortunately was revealed to be a white-hat hack. The hacker has since returned the funds, less a small sum of 62 ETH as a bounty.
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Synthetix-powered perpetuals trading platform, Kwenta, launches options on their platform, opening with BTC and ETH options in partnership with options platform, Lyra. The feature is now live on both Optimism and Arbitrum.
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Perpetuals decentralized exchange (DEX), RabbitX also launches on StarkNet, bringing perpetuals trading to the zero-knowledge rollup.
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Polygon: DeFi Heavyweights Expand Over to Polygon

Compound deployed the Compound III market on Polygon this week, bringing more efficient lending rates to the Polygon sidechain with WETH, WBTC and MATIC as supported collaterals.
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Curve Finance yield-boosting protocol, Convex Finance, expands to Polygon, not long after their expansion to Arbitrum. This furthers their reach over the Curve Finance ecosystem across chains.
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Binary options protocol, Buffer Finance, deploys on Polygon as well, allowing Polygon users to trade short-term volatility and hedge against high leverage volatile positions.
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Binance Smart Chain: PancakeSwap V3

Binance Smart Chain’s (BSC) top DEX, PancakeSwap, announces an airdrop campaign involving their CAKE token as well as exclusive NFTs, leading up to their V3 launch on 1st April. V3 aims to bring more competitive trading fees, better liquidity provision experience and trading incentives to the platform.
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Avalanche’s best performing DEX, Trader Joe, is now live on BSC, not long after their successful deployment on Arbitrum. This brings Trader Joe’s innovative Liquidity Book model to BSC and is part of Trader Joe’s larger omnichain vision for the protocol.
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Avalanche: A Network of Gaming Subnets

Esports team, TSM, and competitive gaming application, Blitz, will be partnering with Avalanche to set up a gaming-focused subnet, bringing Web3 features to millions of gamers. The subnet is planning to expand into an elastic subnet in the future, allowing users to validate the subnet too.
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Multichain AMM, Balancer, completed the voting process on BIP-206, passing the proposal to launch Balancer on the Avalanche blockchain with a resounding 99.99% voting in favor.
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Fantom: Concentrated Liquidity, Coming Soon

SpiritSwap announces the upcoming launch of concentrated liquidity on Fantom. A concept that was popularized by Uniswap V3, concentrated liquidity brings increased capital efficiency and higher fees earned by savvy liquidity providers to the platform.
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Cosmos: MEV in Focus

Focusing on bringing MEV infrastructure to the Cosmos, Skip Protocol releases their new product, Protocol-Owned Builders. This allows protocols to customize their own mempool and the block building process as well as reduce centralization and censorship risks..
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Duality announces full-on-chain MEV capture as well, through the modification of the original Cosmos’ Tendermint consensus mechanism. This would allow value captured in MEV to be returned to users, reducing value lost to MEV hunters on-chain.
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DeFi-focused Cosmos-based L1, Berachain, drops Polaris, a generalized framework from bringing EVM compatibility to any consensus layer. The current iteration is customized to meet the needs of the Cosmos SDK, which could push forward a wave of new EVM compatible Cosmos L1s.
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Delphi Labs AMM, Astroport deploys on Cosmos-based Injective, bringing their AMM services to the finance-focused L1.
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Another Week, Another Airdrop

Analytics platform, Dune, quells rumors of a Dune airdrop, stating that there are “no plans for a Dune token”, much to the dismay of airdrop farmers.

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Macro is certainly doing no favors to the market. Coupled with widespread stablecoin depegging, the market certainly feels rough right now, but builders keep their heads down and keep shipping. Stay tuned for next week’s edition and keep supporting your favorite projects, degens!
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