This past week witnessed significant developments across the decentralized finance (DeFi) and blockchain ecosystems. From protocol upgrades and governance proposals to new product launches and market challenges, the industry continues to evolve at a rapid pace. Here’s a detailed overview of the most impactful updates.
BendDAO Addresses Liquidity Crisis with New Proposal
BendDAO, a prominent NFT lending platform, recently faced a severe liquidity shortage due to declining NFT market conditions. Many users had borrowed ETH using NFTs as collateral, but few were depositing ETH back into the pool, creating a significant supply-demand imbalance.
On August 19, crypto analyst Cirrus highlighted the looming liquidation risks, noting that NFTs worth over 32,000 ETH were used as collateral on BendDAO. Numerous Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) NFTs were nearing their liquidation thresholds.
By August 22, 28 NFTs from collections like BAYC, MAYC, Doodles, and Clone X were undergoing liquidation auctions. In response, the BendDAO community introduced and passed proposal BIP#10 on August 23. This proposal included several key changes:
- Gradually adjusting the liquidation threshold to 70%
- Reducing auction duration from 48 hours to 4 hours
- Setting the base ETH interest rate to 20%
- Allowing community voting to manage bad debt scenarios
The adjustments, along with a potential liquidity injection of 10,000 ETH from Web3 fund ABCDE, helped stabilize the lending pool.
Synthetix Proposal Aims to Cap SNX Supply
Synthetix, a leading synthetic asset platform, saw its founder Kain Warwick propose SIP-276, which aims to set a maximum supply cap of 300 million SNX tokens. This move would effectively halt inflation once the supply reaches this limit.
Currently, the total supply stands at approximately 293 million SNX. If the proposal passes, inflation rewards will continue for ten more cycles, minting around 6.7 million additional tokens. Warwick argued that inflationary rewards were initially necessary to bootstrap the network but are no longer essential, as stakers can now earn sufficient yields through atomic swaps.
Data from Crypto Fees indicates that Synthetix generates an average of $158,857 in weekly fees, showcasing its sustainable fee model.
Evmos Prepares for Major Upgrade with Fee Sharing and DApp Store
Evmos, an Ethereum Virtual Machine (EVM)-compatible blockchain in the Cosmos ecosystem, announced plans to upgrade to v8.0.0. The update includes two major features:
- A feesplit module that allows validators and contract deployers to share transaction fees
- A DApp Store to catalog registered smart contracts
The feesplit mechanism draws inspiration from EIP-1559 but redistributes fees instead of burning them. Initially, fees will be split 50/50 between validators and deployers, with future adjustments possible via governance.
However, on August 26, Evmos delayed the upgrade due to necessary refinements, encouraging users to vote against the current proposal (Prop #50) until a revised version is ready.
Ethereum Adopts ERC-3475 for Bond Issuance
Ethereum’s EIP-3475 has been approved as a new API standard, known as ERC-3475. Unlike ERC-20, this standard supports multi-layered pools, enabling more efficient liquidity provision and management. It facilitates the issuance of bonds and financial derivatives like futures and options on the Ethereum blockchain.
This innovation could significantly reduce the time and cost associated with traditional bond issuance, which often involves intermediaries and takes over a week to complete. 👉 Explore more strategies for blockchain-based finance
X2Y2 Introduces Optional Royalty Payments
NFT marketplace X2Y2 sparked controversy by launching a "custom royalty" feature, allowing buyers to choose whether to pay 100%, 50%, or 0% in royalties to creators. While the platform claims this won’t affect seller proceeds, many project developers expressed concerns, arguing that it undermines creator incentives and benefits primarily the marketplace.
MakerDAO Advances Real-World Asset Collateralization
MakerDAO passed proposal MIP6, integrating tokenized real estate loans from Robinland (RBLD) as collateral within its protocol. Robinland will issue RBL tokens, representing bundled real estate loans, which can be used to generate DAI.
Additionally, MakerDAO proposed withdrawing 25 million DAI from the RWA-009 vault managed by HVBank. This decision aims to mitigate counterparty risk due to limited DAI/USD market liquidity. The proposal will expire if not passed within 30 days.
Lido Finance Expands to Loopring for ETH Staking
Lido Finance, a liquid staking solution for Ethereum 2.0, now supports ETH staking on Layer-2 platform Loopring. Users can stake ETH to receive wrapped stETH (wstETH) on Loopring’s platform or wallet. While wstETH cannot be redeemed for ETH until after the Merge, it can be traded on supported markets or swapped via liquidity pools on Curve and 1inch.
UXD Protocol Launches Algorithmic Stablecoin on Optimism
UXD Protocol introduced its algorithmic stablecoin, UXD, on Optimism’s devnet. Users can mint and redeem UXD using ETH on optimism.uxd.fi. The project also partnered with Perpetual Protocol to support delta-neutral positions using ETH perpetual contracts.
Sushi Prepares for Major Governance Overhaul
SushiSwap is expected to vote on "The Meiji Restoration" proposal within the next two weeks. This initiative aims to:
- Decentralize and simplify governance
- Reform SUSHI tokenomics
- Enhance liquidity pools and reduce circulating supply
The proposal introduces a ve-token model similar to Curve’s veCRV but separates governance from speculation. Holders can lock SUSHI for oSUSHI (governance tokens) or Meiji DAO shares.
Sui Blockchain Launches Explorer for Devnet
Sui, a new blockchain developed by former Meta staff, launched Sui Explorer—a tool for users and developers to inspect and analyze on-chain data. The explorer provides real-time metrics, asset tracking, and debugging capabilities. Currently, Sui has over 16,000 nodes operating across 60 countries.
Meta Introduces New Identity System for Metaverse
Meta announced Meta Accounts and Meta Horizon Profiles, replacing social media logins for accessing its metaverse platforms. While users can still use Facebook or Instagram to create Meta Accounts, Oculus accounts will be phased out by January 1, 2023.
CEO Mark Zuckerberg also revealed that Meta’s next VR headset, focused on social interactions in virtual environments, will launch in October.
Frequently Asked Questions
What caused BendDAO’s liquidity crisis?
The liquidity shortage resulted from a combination of declining NFT prices and an imbalance between ETH borrowing and lending. Many users collateralized NFTs to borrow ETH, but few supplied ETH to the pool, leading to insufficient liquidity for withdrawals.
How does ERC-3475 improve bond issuance?
ERC-3475 enables the creation of bonds and derivatives on Ethereum by using multi-layered pools for better liquidity management. It reduces issuance time and eliminates intermediaries, lowering costs compared to traditional finance.
What are the implications of X2Y2’s custom royalty feature?
While it offers buyers flexibility, the feature has drawn criticism for potentially reducing royalty payments to creators. This could discourage artists from launching new projects if they anticipate lower earnings.
How does Lido’s staking on Loopring work?
Users can stake ETH on Loopring’s Layer-2 platform to receive wstETH, a wrapped version of staked ETH. This allows participation in staking while benefiting from lower transaction fees on Layer-2.
What is the goal of Sushi’s Meiji Restoration proposal?
The proposal aims to decentralize governance, improve tokenomics, and boost liquidity. It introduces a ve-token model to align incentives between stakeholders and protocol growth.
Why did Evmos delay its v8.0.0 upgrade?
The team identified areas for improvement based on testnet feedback and decided to refine the upgrade before proceeding. This ensures a smoother rollout and better user experience.