Tag: Tvl

Bankless: Solana’s Resilience and Prospects Amid Market Challenges

by Blockchain News

Key Takeaways

Solana has recovered from a 93% market capitalization drop in 2022, showing a resurgence of ~111% year-to-date.

Priority fees and network upgrades have improved Solana’s uptime to 100% in 2023.

The ecosystem is diversifying with new use-cases like compressed NFTs and AI initiatives.

Upcoming developments like Neon EVM and Solang could further bolster Solana’s growth.

The Present: Overcoming Past Challenges

Network Status: Solana’s network faced significant challenges in 2022, including a 93% drop in market capitalization and a 96% reduction in total value locked (TVL). However, the network has shown resilience in 2023. Priority fees and network upgrades have contributed to a consistent 100% uptime year-to-date. Approximately 42% of daily fees now come from users prioritizing their transactions, a trend expected to continue.

Ecosystem Highlights: The Solana DeFi ecosystem is recovering, with a 41% growth in TVL when denominated in USD. Liquid staking derivatives have also played a role in this resurgence. The ecosystem is diversifying into other sectors like NFTs, gaming, and consumer-oriented applications, driven by technological advancements like state compression.

The Future: A Bright Horizon

Several upcoming developments could further strengthen Solana’s position:

Neon EVM: Went live in July, allowing Ethereum-based applications to operate on Solana.

Solang: A new compiler that enables Solidity-based projects on Solana.

AI Initiatives: A $10 million AI grant fund has been launched to expand into the AI sector.

Capital Injections: Solana is set to receive capital from recently launched growth initiatives like convertible grants, which transform into investments upon meeting specific milestones.

Conclusion

Solana has successfully navigated past challenges, emerging stronger in 2023. With a consistent 100% network uptime and diversification into new sectors, the future looks promising. Upcoming developments like Neon EVM, Solang, and AI initiatives could serve as catalysts for further growth.

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API3 Unveils Enhanced Data Feed Service to Bolster TVL on Polygon zkEVM

by Blockchain News

API3, a pioneering blockchain oracle provider championing the shift from conventional third-party oracle networks to first-party oracle solutions, has rolled out its managed data feed service. This service is designed to support the growth of Total Value Locked (TVL) on Polygon zkEVM, an initiative by Polygon Labs, a leader in developing Ethereum scaling solutions for Polygon protocols.

This development comes in the wake of Polygon zkEVM’s launch earlier this year, which aimed to harness the capabilities of zero-knowledge proofs while ensuring EVM equivalence. Since April 2023, API3 has been at the forefront, offering first-party oracle services to Polygon zkEVM. The recent unveiling of managed dAPIs on the API3 Market now empowers builders with access to multi-source, decentralized data feeds (dAPIs) delivered by first-party oracle nodes, complete with native-chain aggregation.

The DeFi landscape, with lending protocols and perpetual DEXs at its core, hinges on real-time market data. This data necessitates on-chain integration via an oracle. A significant portion of DeFi applications, representing tens of billions in TVL, predominantly rely on push-type oracles. However, existing blockchain oracles often come with high fees and limited source transparency, sometimes introducing vulnerabilities.

Addressing these challenges, API3 has crafted a novel push oracle solution centered around first-party architecture. This innovation facilitates DeFi protocols, currently using push oracles on other EVM chains, to seamlessly transition to Polygon zkEVM. The move is poised to accelerate the adoption and scaling of DeFi, potentially reaching the next billion users.

API3’s groundbreaking push oracle is constructed around the Airnode first-party oracle node. This design eliminates the need for intermediaries, paving the way for a safer and more efficient method to bring real-time market data on-chain. With features like native-chain aggregation and multi-source data feeds, developers can tap into more dependable data, minimizing downtime and enhancing data accuracy.

In a departure from traditional oracle designs that involve third-party node operators, API3’s first-party push oracle sources data directly from the origin. These oracle nodes, managed by the data providers themselves, ensure that cryptographically signed data is integrated onto the blockchain. This approach offers unparalleled data source transparency, setting a new industry benchmark.

Prominent DeFi platforms like Aave, Compound, and various DEXs have historically depended on push oracles. But API3’s innovative push oracle is set to redefine the playing field. This model harmonizes the interests of data providers, networks, and dApps. The introduction of API3’s managed dAPIs heralds a new industry standard, granting direct access to a diverse range of real-world data, encompassing crypto, forex, equities, and commodities.

The DeFi ecosystem is already benefiting from the DAO-managed oracle service of API3. Platforms like QuickSwap Perps and Dovish, a perpetual swap protocol, are leveraging dAPIs for precise pricing. MantisSwap, a DEX focusing on stable assets trading, employs dAPIs to bolster their protection mechanism against stablecoin depegging, highlighting the enhanced security features of dAPIs for DeFi applications.

Tropykus, a lending and borrowing dApp that branched out from AAVE V2, utilized self-funded dAPIs for a swift launch on Polygon zkEVM. With dAPIs requiring minimal alterations to tried-and-tested code, developers gain a competitive edge, potentially enabling rapid deployment on emerging networks.

API3’s collaboration with Polygon zkEVM underscores the pivotal role oracles play in scaling Ethereum. The upcoming generation of blockchain oracles promises heightened security and transparency through first-party oracle solutions. API3 DAO remains enthusiastic about exploring the vast potential of decentralized finance as the capabilities of smart contracts come to fruition.

Jack Melnick, Head of DeFi BD at Polygon Labs, remarked, “It’s very exciting to see API3 deploying on Polygon zkEVM, enhancing the DeFi ecosystem with an innovative push oracle solution. The integration of managed dAPIs with Polygon’s scalable infrastructure marks a significant step towards a more transparent and secure future for decentralized finance.”

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Telegram’s TON Q2: Significant Account and Transaction Growth, Deflationary Measures, and Developments in DeFi, NFT, and Cross-Chain Solutions

by Blockchain News

In Q2 2023, The Open Network (TON) saw a 2.88 million total accounts and 173 million transactions, making it the 14th largest cryptocurrency by market capitalization. TON’s technology, ecosystem, and economy improved significantly, comparable to the previous quarter.

TON’s 2023.06 update introduces burn functionality, incinering 50% of network fees, potentially decreasing Toncoin supply. Additionally, a “Black Hole” mechanism permanently eliminates all Toncoin sent, potentially forming future deflationary measures.

In order to increase user involvement, a new smart contract called “The Locker” has been created. It enables users to lock up their Toncoin for a long time in exchange for rewards. Additionally, the network now allows users to send encrypted messages using TON wallets, guaranteeing secure communication even in the absence of conventional messaging servers.

Due to the Liquidity Mining Rewards Campaign, the network’s Total Value Locked (TVL) surged by 2200%, and more than $20 million has passed via the token bridge that was set up in the previous quarter. Staking and a decentralised cryptocurrency exchange have been added into the well-known TON wallet Tonkeeper, and other exchanges on TON have either been updated or just created.

Users now have the ease of earning staking rewards while also using their assets in DeFi thanks to the development of a liquid staking solution. The alteration of TON addresses to prevent asset loss from incorrect transactions and advancements in Non-Fungible Tokens (NFT), with well-known artists presenting their work and collecting royalties in Toncoin, are additional improvements.

TON has updated its virtual machine (TVM) and launched a new WebApp API in collaboration with Telegram. The system’s core has been optimized for optimization, security, and DDoS attack protection. Progress has been made in the development of the Rainbow cross-chain solution, which operates without intermediaries and private keys. Five TON contests have been conducted, with a prize pool over $200,000, and a large-scale Hack-a-TON program announced with a prize pool of 150,000 Toncoin. TON plans to introduce new cross-chain solutions, optimize tokenomics, stimulate growth in the DeFi segment, and conduct public stress testing of the blockchain in the next quarter.

Toncoin support has been added to a number of sites, including Changelly, Onramp, Mooli, CoinStats, and Chainalysis. Trust Wallet has integrated TON. Important partnerships have also been started with the cryptocurrency exchanges MEXC and BIT.com.

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DeFi TVL Rebounds to the $54 Billion Mark, Eth-based MakerDAO Remains Dominant Lender

by Blockchain News

Fresh data from tracking service DeFi Llama shows that the total value locked (TVL) in decentralized finance (DeFi) protocols has rebounded to the $54 billion mark.

According to the data, the total TVL was down — between $53.7 and $53.29 billion — since October 12. In September, the TVL was down to $52.22 billion, the lowest since March 2022. 

Source: DefiLlama

As per the data, the largest DeFi lending platform across all chains remains the Ethereum-based MakerDAO, with a market dominance of 14.48% and $7.83 billion TVL. Lido is the second most dominant DeFi lender with a market cap of $6.11 billion, while the third is Curve Finance with $5.92 billion, Aave comes fourth with $5.19 billion, and Uniswap is fifth with $4.97 billion.

As it can be seen in the data, the value locked in Ethereum remains the largest, with around $31.2 billion, or just over 57% of the aggregate value locked today. Ethereum is followed by Tron’s $5.54 billion, Binance Smart Chain (BSC)’s $5.33 billion, and Avalanche’s $1.41 billion, among other DeFi protocols.

In simple terms, TVL measures the total value of all assets locked into DeFi protocols. TVL includes all the tokens deposited in all the functions that DeFi protocols offer, including staking, lending, and liquidity pools. In other words, the TVL is a measure of the funds deposited in smart contracts, and this figure is closely monitored by analysts as an indicator of investor confidence in the market.

Over the last two years, the cryptocurrency sector recorded a dramatic increase in the total value locked (TVL) across all DeFi platforms because of the boom associated with the bull market that attracted massive capital during that time. But all that changed in 2022.

As of March this year, the value locked in DeFi traded above the $200 billion mark. But things started turning worse in May amid a wider sell-off in global markets and waning interest in risky assets, such as cryptocurrencies. The total value locked in the crypto market declined from $160 billion in mid-April 2022 to $52.2 billion in September 2022, the lowest level since March 2022.

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DeFi Remains One of The Biggest Losers in H1

by Blockchain News

The crypto winter is almost wearing off based on several indices, and looking back to the outlook in the first half of the year. The Decentralized Finance (DeFi) ecosystem can be tagged as one industry’s biggest losing sectors. 

DeFi2.jpg

The combined Total Value Locked (TVL) in the DeFi ecosystem opened the year at a value of $169.1 billion, but at the time of writing, this value has dropped to $67.66 billion. The onslaught experienced over the past few months was encompassing, with investors exhibiting caution concerning their locked funds.

Decentralized Finance offers quite a lot of opportunities that tend to rival what the traditional financial ecosystem presents. One of these is lending; an offshoot adapted to decentralized and centralized lending platforms. This was one of the weak links that generally impacted the broader digital currency ecosystem in the second quarter (Q2) with the most prominent lending platforms crumbling with the liquidity pressure that was ushered in.

Meeting customers’ obligations became extremely difficult following the ripple effect of the Terra USD (UST) and LUNA token crash back in May. While the known decentralized lending platforms like Compound (COMP), JustLend (JST), and Venus (XVS) are still operating, the impact currently being felt is in the slump in their individual TVLs.

Compound, for instance, opened the year with a TVL of $8.92 billion, which is currently pegged at $3.08 billion. This plunge comes at more than a 150% slash and is representative of what most of the DeFi protocols faced in the first half of the year.

The outlook and projections for the rest of the second half of the year are bullish and are based in part on the forthcoming migration of Ethereum (ETH) from the Proof-of-Work (PoW) consensus model to the Proof-of-Stake (PoS) network. With this event, analysts are projecting that the positive upgrade for Ethereum can also serve as a good prop-up for other DeFi protocols.

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Nomad Lost Nearly $190m TVL in “Decentralized Robbery”

by Blockchain News

Cross-chain token bridge Nomad was breached on Monday, resulting in losing nearly all the total value of the cryptocurrency in the protocol for nearly $200 million.

Nomad.png

In a statement published on Twitter, the trading platform confirmed the hacking incident:

“We are aware of the incident involving the Nomad token bridge. We are currently investigating and will provide updates when we have them.”

The protocol also warned that “impersonators posing as Nomad and providing fraudulent addresses to collect funds,” adding, “We aren’t yet providing instructions to return bridge funds. Disregard comms from all channels other than Nomad’s official channel.”

As a sort of cross-chain bridges, the protocol allows users to swap various tokens, such as Ethereum (ETH), Avalanche (AVAX), Evmos (EVMOS), Milkomeda C1, and Moonbeam (GLMR).

Citing the data from DeFi Llama, a Defi tracking data platform, the total value locked (TVL) of Nomad reached up to $190 million before the exploit, according to the online media outlet Cryptonews. The platform showed the TVL of Nomad remains less than $11,000 at the time of writing.

nomad tvl.jpg

Source: DefiLlama

Another cybersecurity platform BlockSec estimates the total loss in this incident is estimated around $150 million worth of Tether (USDT). The monitoring platform suggested that some loopholes among functions might exist in Nomad’s verification procedure: “Since an uninitialized storage slot is always considered as zero, the attacker can actually pass any message that has never shown before to bypass the verification procedure.”

Anonymous Terra researcher FatMan described the incident as “the first decentralized robbery,” adding that “all one had to do was copy the first hacker’s transaction and change the address, then hit send through Etherscan.”

Online media CoinDesk explained that bridges typically function by locking up tokens in a smart contract on one chain and then reissuing those tokens in “wrapped” form on another chain.

In addition, If the smart contract where tokens are initially deposited gets sabotaged in terms of Nomad’s situation, the wrapped tokens might no longer have any protection, resulting in losing their values.

Last month, Nomad announced it has secured a strategic investment of $22.4 million in April from various investors, including OpenSea, CoinBase Ventures, Crypto.com and Polygon. 

Ironically, the latest security loophole might make the company feel embarrassed to keep its words and pursue ambitions as Nomad showed its determination by setting its primary goal to “create a safer crypto ecosystem where blockchains can communicate seamlessly and securely with each other,” according to its press release.

The company estimated that more than $1.5 billion was stolen this year by hackers exposing vulnerabilities in cross-chain bridges, indicating that the industry is in need of security-first solutions that maximize the safety of users, funds, and messages.

Image source: Nomad, DefiLlama

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Crypto Bloodbath Spills to DeFi as TVL Nosedives

by Blockchain News

When the digital currency ecosystem records as much as a plunge below $1 trillion in combined market capitalization, the Decentralized Finance (DeFi) ecosystem can certainly not be spared.

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While Bitcoin (BTC), the industry’s legacy coin, has skidded back to its lowest level since December 2020, the DeFi Total Value Locked (TVL) has also plunged in tandem, dropping to $83 billion at the time of writing.

For context, the DeFi TVL was pegged at around $114 billion, as reported by Blockchain.News back in May was a figure which was considered very low considering its prior leaps. 

The spill-over in the crypto ecosystem into the DeFi world is unprecedented, and it explains the growing lack of faith amongst both retail and institutional investors in the ability of the DeFi protocols and their underlying products to help print marginal profits. 

MakerDAO (MKR) still maintains its 9.67% dominance in the DeFi industry atop an $8.03 billion in Total Value Locked. Curve Finance (CRV), Aave (AAVE), and Lido Finance (LDO) trailed Maker in that order with respect to their relevance, but not without an encompassing minimum drop of 25% from all three protocols.

Bad But Not All is Worse

While the outlook of the DeFi ecosystem looks very bad, the trends are not completely worse for all of the protocols as some are maintaining a positive growth even amidst this encompassing uncertainty. 

Frax Finance (FRX) is amongst the protocols with a marginal growth per its TVL upshoot. With a daily change of 0.21% and a weekly change of 2.48%, it is evident that investors consider the protocol one of the most resilient for now. 

Solana-based AMM protocol, Atrix, Maple Finance, and Spool Protocol have also shown far more resilient growths on the weekly chart compared to the reality in the broader crypto ecosystem.

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TVL, network outages, or derivatives: What’s behind Solana’s (SOL) 60%+ drop?

by Cointelegraph

The past couple of months have not been kind to cryptocurrencies. The sector’s aggregate market capitalization plunged 50% from a Nov. 10 peak at $2.87 trillion to the current $1.44 trillion. Solana’s (SOL) downfall has been even more brutal, presently trading at $88 after a 66% correction since its $260 all-time-high.

Pinning the underperformance exclusively to the recent network outages seems too simplistic, and it doesn’t explain why the accelerated decoupling over the past week, so let’s take a look at what might be going on.

Solana/USDT at FTX (blue) vs. Total crypto capitalization (orange). Source: TradingView

The Solana network suffered four incidents in the span of a few months. According to the project’s developers, a sudden spike in the number of computing transactions caused network congestion which crippled the network.

Interestingly, the network struggles with congestion since the developers advertise a 50,000 transaction per second (TPS) capacity. The latest incident on Jan. 7 has been attributed to a distributed denial-of-service (DDoS) attack, but data shows us that network attacks are less relevant than dApps use.

Cyber Capital chief investment officer Justin Bons criticized the network’s security, mentioning that DDoS can be used to “temporarily gain proportional-staked control over the network by attacking other stakeholders.”

Sergey Zhdanov, chief operating officer of crypto exchange EXMO UK, also said DDoS attacks and similar outages “don’t really influence the trust of the network” and should be disregarded. Zhdanov makes a point comparing Ethereum network fees surpassing $50 as a similar hiccup, but not significant enough to cause investors to abandon it for good.

Solana’s main decentralized application metric started to display weakness earlier in November after the network’s total value locked (TVL), which measures the amount deposited in its smart contracts, began to linger at $15 billion.

Solana network Total Value Locked, USD. Source: DefiLlama

Notice how Solana’s dApp deposits saw a 44% decrease in 3 months, as the indicator reached its lowest level since Sept. 8. As a comparison, Fantom’s TVL currently stands at $9.5 billion, a 79% increase in 3 months. Another dApp scaling solution competitor, Terra, saw a 60% TVL hike to $16 billion.

Not even the $10 million raised by Solana’s decentralized finance (DeFi) application Hubble Protocol in early January was enough to recover investors’ confidence. Crypto heavyweights like Three Arrows, Digital Currency Group, Delphi Digital and Crypto.com Capital backed the launch of the crypto-backed stablecoin and zero-interest borrowing platform.

TVL and the number of active addresses dropped

Total value locked is no longer the primary metric that reflects strong fundamentals, meaning a 66% price correction has other factors at play than just a reduced TVL. To confirm whether dApps use has effectively decreased, investors should also analyze the number of active addresses within the ecosystem.

Solana dApps 30-day on-chain data. Source: DappRadar

As shown by DappRadar data on Jan. 28, the number of Solana network addresses interacting with most decentralized applications dropped by 18% to 32%, except for the non-fungible token (NFT) marketplace Magic Eden.

The lesser interest on Solana dApps was also reflected in its futures open interest, which peaked at $2 billion on Nov. 6, but recently faced a steep correction.

Solana futures aggregate open interest. Source: Coinglass

The above chart shows how derivatives traders’ interest in Solana plunged 75% in less than 3 months. That is especially concerning because a smaller number of futures contracts might reduce the activity of arbitrage desks and market makers. For example, it is common for participants to self-limit their exposure to 20% of the asset volume or open interest.

Derivatives data could be a consequence, but not the cause

It’s probably impossible to pinpoint the correlation and causation between SOL’s price drop, the decrease in the network’s dApps use, and the fading interest from derivatives traders. However, none of those indicators point to a price recovery anytime soon.

The data above suggests that Solana holders should be less concerned about momentary outages and focus on the ecosystem’s use versus competing chains. As long as the ecosystem remains healthy, investors have no reason to lose trust due to temporary network outages.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.