Uniswap's Controversial Moves; A Week of Bulls, Bears and Recoveries in DeFi Sector
Summary:
This week's major developments in the decentralized finance (DeFi) sector include Uniswap's controversial 0.15% swap fee and a KYC feature, the launch of Ethereum layer-2 solution "Scroll,' and Platypus Finance recovering 90% of assets lost in a recent exploit. Despite most top 100 DeFi tokens showing a bullish trend, the total value locked declined by about $2 billion. The Ethereum liquid staking derivatives finance ecosystem saw significant growth this year, with a surge of 58.7x since January.
Welcome to Finance Redefined, your indispensable guide to the world of decentralized finance (DeFi), where we report on the crucial developments over the past seven days. The recent week was marked by significant happenings in the leading decentralized exchange, Uniswap, which caught attention due to its introduction of a 0.15% swap fee from Oct. 17 and caused stir owing to open-source hook integrated with Know Your Customer (KYC) protocols.
In other important DeFi news, Platypus Finance successfully reclaimed 90% of funds lost due to a security breach on Oct. 12. Meanwhile, the Ethereum layer-2 solution "Scroll," which is a zero-knowledge Ethereum Virtual Machine (zkEVM), initiated its mainnet.
The week displayed a bullish trend among the top 100 DeFi tokens by market capitalization, primarily due to a surge in market activity on Friday. The majority of these tokens traded positively, reflecting double-digit weekly gains. Regardless, the total value locked (TVL) didn’t mirror the price increase, showing a dip of about $2 billion.
The Ethereum back-end for financial services based on liquid staking derivatives (LSDFi) has exhibited impressive growth this year, with users opting to stake their Ether (ETH) instead of selling. Despite ETH withdrawing availability with the Ethereum Shapella update in April 2023, CoinGecko, a crypto data analyst firm, reported a remarkable 58.7x growth in the LSDFi sector since January. By August 2023, LSDFi protocols made up 43.7% of the total staked 26.4 million ETH with Lido staking pool taking the major chunk at nearly a third of the entire staked market.
The significant player in the zkEVM market, Scroll, has verified the launch of its mainnet, giving an added option to developers and existing applications on Ethereum considering migrating to the newly rolled out scaling solution.
In aftermath of the recent cyberattack, DeFi project Platypus Finance reported recovery of 90% of stolen assets. The protocol’s net loss was confined to 18,000 Avalanche (AVAX), worth about $167,400 at that time. Given that the hacker returned the assets voluntarily, Platypus Finance committed that it wouldn't press for any legal action.
Decentralized exchange Uniswap implemented a 0.15% swap fee on certain tokens in its wallet and web application starting Oct. 17. The list of affected tokens includes ETH, USD Coin (USDC), Wrapped Ether (wETH), Tether (USDT), Dai (DAI), Wrapped Bitcoin (WBTC), Angle Protocol’s agEUR, Gemini Dollar (GUSD), Liquidity USD (LUSD), Euro Coin (EUROC) and StraitsX Singapore Dollar (XSGD). It was later clarified that both recipient and sending tokens need to be part of the list for ensuring applicability of the fee.
An open-source hook on Uniswap v4 that allows users' KYC checks before participating in token pools has been met with controversy within the crypto sphere, with critics voicing concerns about the potential for regulations to whitelist decentralized finance protocols.
In terms of the DeFi market overview, most of the top 100 DeFi tokens by market capitalization experienced a positive week, according to data from Cointelegraph Markets Pro and TradingView. However, the total value stashed in DeFi protocols descended to $43.81 billion.
That concludes our recap of the most influential DeFi news over the past week. Please tune in next Friday for more analyses, news pieces, and information about this complex and rapidly evolving sector.
Published At
10/20/2023 7:25:00 PM
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