Recent Trends and Thoughts in the Decentralized Finance Ecosystem

sUSD Continuous De-Pegging Issue

Since the SIP-420 proposal was approved at the beginning of the year, sUSD has experienced a de-pegging phenomenon, recently falling below $0.90. The proposal introduced a "delegated pool" mechanism, reducing the collateralization ratio to 200%, allowing debts to be transferred linearly to the protocol, and users can avoid repayment. This improved the minting efficiency of SNX, but also brought about problems:

• The market lacks confidence in SNX-sUSD endogenous collateral.
• The increase in sUSD supply has severely disrupted the Curve pool.
• Users no longer actively manage their debts and cannot arbitrage through the market.

To solve the de-pegging issue, the key lies in increasing the demand for sUSD or providing incentives. However, the market still has doubts about algorithmic stablecoins, and the impact of the LUNA incident lingers. From a design perspective, the synthetix solution is relatively advanced, but whether it can gain market acceptance remains uncertain.

veCAKE Governance Attack Incident

A certain protocol uses veCAKE voting rights to direct CAKE emissions to inefficient pools, which is seen as a "parasitic" behavior and has been eliminated. While this result does not violate the principles of the ve mechanism, it has sparked controversy. The ve model was originally designed to prevent governance attacks, but it has been subject to centralized sanctions.

The incident exposed the potential risks of the ve model. A better approach would be to wait or promote market competition, such as setting incentive caps for pools and encouraging more people to compete for voting rights. The founder of Curve proposed a quantitative assessment method to determine whether behavior is beneficial by comparing the efficiency of locking and burning.

BUIDL continues to grow

BUIDL has grown by 24% in seven days and is about to break $2.5 billion. The recent $500 million increase may come from the lending protocol Spark under MakerDAO. The RWA business continues to grow, but its integration with the Decentralized Finance ecosystem is low, showing a state of "disconnection from the market and irrelevant to retail investors."

The United States Abolishes the DeFi Broker Act

The U.S. President has signed a bill to officially repeal the IRS DeFi cryptocurrency broker rules. This is a significant positive development for Decentralized Finance, indicating a loosening of regulatory attitudes that may unleash more innovative applications.

Uniswap Launches New Round of Liquidity Mining

Uniswap guides liquidity for Unichain, launching a $5 million UNI token reward program involving 12 trading pairs. This is Uniswap's first large-scale liquidity mining since 2020.

Euler Expands to Avalanche

The Euler protocol has expanded to the Avalanche chain, with TVL increasing by 50% in one month, entering the top ten lending protocols. The growth mainly comes from incentives like Sonic, Avalanche, and EUL.

Cosmos IBC Eureka Launch

Eureka based on IBC v2 is officially launched, supporting cross-chain transactions between Cosmos and EVM, with gas consumed for each transaction being burned as ATOM. Currently, it supports Ethereum mainnet and mainstream assets in Cosmos. In the past week, the cross-chain inflow to Cosmos hub has reached 1.1 billion USD, introducing a new value growth point for ATOM.

Other Decentralized Finance Updates

• AaveDAO officially begins repurchasing tokens
• The Pendle proposal will list the PT token on Aave.
• Berachain updates POL reward distribution rules, introduces Guardian Committee
• Projects like OlympusDAO and Yearn are actively laying out the Berachain ecosystem.

The DeFi ecosystem is undergoing a new round of innovation and adjustment, with various projects actively responding to challenges and exploring new development directions. The improvement of the regulatory environment may bring new development opportunities to the industry.