DeFi Week: Industry Highlights
All related sectors, including decentralized finance, continue to be impacted by volatility in the broader cryptocurrency market.
The world of smart contract finance is not having the best of times. As such, this week saw little change from previous weeks. The total value locked (TVL) of these protocols as a whole is $84.94 billion, according to DeFiLlama.
This is a far cry from the $100 billion barrier that separates good health from bad. Over the past month, the top 20 leading protocols remain in the red. Giants like Lido and EigenLayer remain at -22% and -19%, respectively, for the period. Within a week and 24 hours, the situation improves slightly, but still far from the previous figures.
This Week’s DeFi Sector Highlights
Taking into account the LTV data of the DeFi sector in the last 7 days, we review the news elements. Despite the sector’s bad moment from a trading point of view, some protocols and companies continued their development.
Thus, the second-layer protocol of Ethereum, Polygon, confirmed the launch of version 2.0 on September 4. This update will result from the migration of the MATIC token to a multi-yield token called POL. The goal of Polygon 2.0 is to unify the different scaling networks. This is achieved by applying zero-knowledge proof technologies. The result will be improvements in liquidity sharing and network composability.
MATIC broke out of a multi-month downtrend in July 2024. MATIC is currently trading at $0.4134. The layer 2 scalping token is likely to extend its gains by 20.90% and reach its target of $0.50. This is a key level for MATIC as it acts as a major support for MATIC between July 2023 and August 2024.
Other notable news has to do with UnitusFi’s integration with Chainlink Price Feeds to improve security. In doing so, they aim to improve trust in the DeFi lending sector. The collaboration aims to provide tempered data across multiple blockchain networks, including Polygon and Ethereum.
This integration will allow users to borrow money more safely and transparently. Chainlink’s pricing feeds are designed to earn the trust of users by increasing the accuracy and reliability of market data. Such collaborations in the cryptocurrency market point to a future where technology and security are paramount.
A third piece of news of great interest concerns the decentralized exchange, Uniswap. It announced a $2.35 million audit contest, the largest in the history of DeFi. Participants will have the opportunity to win substantial prizes for identifying critical vulnerabilities in Uniswap V3 smart contracts.
The contest is open to security professionals and hackers who can identify vulnerabilities in the Uniswap V4 code. Winners were determined based on the criticality of the vulnerabilities found and the quality of the report. This underlines the company’s commitment to security and stability, which will be priorities for the new version when it is officially released.
Uniswap V4 has introduced new “hooks” that can be used to enhance the placement of more specific liquidity pools for developers. These smart contract extensions that can update the configuration of a pool, and add variable fees tied to market events, or higher forms of a trade order, such as Time Weighted Average Price (TWAP). The flexibility provided by hooks opens up more opportunities for the development of highly specialized inverse trading models.
As mentioned above, the bad timing in terms of trading and activity does not diminish the development momentum of the DeFi sector.
By Audy Castaneda