Recent Trends and Thoughts on the DeFi Ecosystem

sUSD Continuous Depegging Issue

Since the approval of the SIP-420 proposal, sUSD has experienced a continuous depegging phenomenon, recently even dropping below 0.9 USD. The proposal introduced a "delegated pool" mechanism aimed at improving sUSD minting efficiency, but it has also brought some issues:

1. The market still has doubts about the SNX-sUSD intrinsic collateral.
2. The increase in sUSD supply has led to an imbalance in the Curve pool.
3. Users no longer actively manage debt and are unable to stabilize stablecoin prices through arbitrage.

The ability to return to the peg largely depends on whether the project can increase the demand for sUSD. Although Synthetix's design is relatively advanced, the market remains cautious towards algorithmic stablecoins following the LUNA incident.

veCAKE Governance Controversy

Recently, the veCAKE model has encountered a governance attack, leading to the liquidation of the cakepie protocol. Pancake believes that cakepie has guided CAKE emissions to inefficient pools through governance rights, harming the platform's interests. However, this action does not violate the principles of the ve mechanism.

Some perspectives suggest that this reflects the issue of insufficient competition in governance rights. A better solution might be to set a cap on pool incentives or encourage more people to participate in vecake competition, among other things.

The founder of Curve proposed a quantitative assessment method to compare the effectiveness of CAKE locked through Cakepie with that directly used for buyback and burn. He stated that the veToken model on Curve is about 3 times more efficient than direct burn.

BUIDL Growth Trend

The BUIDL protocol has shown strong performance recently:

• TVL 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.
• RWA business continues to grow, but its correlation with the retail market is low.

Improvement of Regulatory Environment

The United States has officially repealed the IRS DeFi crypto broker rules, which is seen as a significant boost for the DeFi industry. A more relaxed regulatory attitude may open up space for more innovative applications.

New Developments in Uniswap

Unichain has launched a liquidity mining program, offering a reward of $5 million in UNI tokens, involving 12 trading pairs. This is the first large-scale liquidity mining activity conducted by Uniswap since 2020.

Euler Expansion

The Euler protocol has expanded to the Avalanche chain, and its TVL has entered the top ten lending protocols. The recent growth is mainly due to the incentives from platforms like Sonic, Avalanche, and EUL.

Cosmos Ecosystem Update

IBC Eureka officially launched, based on the IBC v2 protocol, supporting cross-chain interactions between Cosmos and EVM. The new mechanism introduces ATOM burning, which is expected to enhance the value of ATOM. In the past week, cross-chain inflows into the Cosmos hub reached $1.1 billion.

Other Decentralized Finance Updates

• AaveDAO has begun implementing a token buyback plan.
• Pendle proposes to list PT token on Aave
• Berachain updates POL reward distribution rules and introduces a new guardian council.
• Projects like OlympusDAO and Yearn actively participate in the Berachain ecosystem construction.

The DeFi ecosystem continues to evolve, with projects constantly innovating in governance, cross-chain, and liquidity management. The market's acceptance of new mechanisms and their long-term sustainability are worth ongoing attention.