The hype around memecoins is cooling down, it's time to turn our attention to the innovative practices in the crypto space.
Author: Ignas
Translated by: Luffy, Foresight News
I really enjoyed memecoins, but they have started to deteriorate. My Twitter feed is flooded with memecoin posts, drowning out many important crypto advancements. In fact, I'm glad about the recent market downturn because it has given me time to explore all of this. However, the downturn hasn't lasted.
In this article, I want to share 10 key developments in DeFi and the broader ecosystem that have caught my attention and that I believe you should also be closely following.
Avalanche 9000: Is L1 the new L2?
Avalanche has just launched Avalanche9000, its biggest upgrade yet, making it easier, cheaper, and more flexible to create L1 blockchains.
Is L1 the new L2? Avalanche's previous subnet model has disappeared. Now, developers no longer need to validate the mainnet or pre-stake 2000 AVAX. Instead, they only need to pay a small fee, significantly reducing the cost.
Sounds like Polkadot, with a bit of Cosmos, right?
Inspired by Ethereum's EIP-4844 (Proto-Danksharding making gas fees on L2s very cheap), it's as affordable as Avalanche L1 with Celestia-based Rollups, but with better interoperability and reliability.
This upgrade also introduces L1-only validators, allowing each L1 to manage its own rules, whether it's a PoS or PoA blockchain. This means better token economics and value spillover.
It reduces the cost of running a validator from 2000 AVAX ($100k) to 1.33 AVAX per month.
Avalanche has also launched Retro9000, a $40 million grant program. From gaming to DeFi, 700 L1s are in development.
Avalanche is attracting TradFi partners through tokenization and has successfully onboarded games like Off The Grid.
NEAR AI
You might say that Base and Solana are leading the AI agent trend through Virtuals and ai16z, but NEAR is quietly carving its own path in AI innovation.
NEAR has already supported agent-driven on-chain functionality and is developing more tools and capabilities.
The difference is in the native chain abstraction for multi-chain AI agents, making it easier for developers to build interconnected systems.
Additionally, NEAR Intents introduces a new transaction model to enable cross-chain settlement between AI agents, services, and users. I personally think the coolest part is the collaboration between Infinex and NEAR, where you can trade BTC, XRP, or anything else on a decentralized platform.
NEAR has also launched NEAR.ai, an AI assistant that can perform certain actions on behalf of users by connecting to other AI agents and cross-web2 and web3 services. You need a NEAR wallet to log in.
Honestly, the wallet experience on NEAR used to be pretty bad, but it's much better now (I recommend NEAR Mobile).
An interesting thing is that the social agents based on NEAR have started to host X accounts for each other.
Additionally, NEAR has launched a research center to explore new AI models and is collaborating with Delphi on an AI accelerator program to support builders in this space.
Notably, the privacy-preserving blind computation blockchain Nillion Network is building on NEAR, which could unlock the full potential of user-owned AI by enabling private LLM training and sensitive data inference.
Liquity v2 Launches
Why has LQTY risen 120% in a month?
- The general bullish market
- The launch of V2
The traditional DeFi lending model has its problems. Money markets like Compound and Aave set rates based on utilization, leading to unpredictable costs. Governance-based rate adjustments in MakerDAO are slow. Even Liquity V1's fixed-fee model couldn't adapt to market changes.
Liquity v2 solves this through user-set rates and BOLD (a stablecoin focused on decentralization, user control, and yield).
Borrowers open "Troves" to set their own rates: lower rates for saving, higher rates to avoid redemption. The Troves with the lowest rates will be redeemed first.
Liquity V2 has an LTV (loan-to-value) of up to 90% and leverage of up to 11x, extremely efficient.
Borrowers can use not only ETH, but also LSTs like wstETH and rETH as collateral to borrow BOLD while still earning staking rewards. So BOLD is fully backed by ETH and LSTs, redeemable at any time, and not exposed to TradFi risks.
Unlike USDC, BOLD is not dependent on RWAs, avoiding counterparty and censorship risks. Its peg to $1 is maintained through a simple mechanism:
If $BOLD falls below $1, arbitrage will encourage redeeming for ETH.
If $BOLD rises above $1, lower borrowing rates will increase supply.
Stablecoin pool depositors can earn 75% of the protocol revenue from BOLD and ETH liquidations, with the remaining 25% used to incentivize BOLD liquidity in DeFi.
A huge change is Liquity V2's Forkonomics, as Liquity is one of the most forked protocols in DeFi.
Now, forking teams need to obtain a license to use the Liquity code (and airdrop to LQTY holders), but in return, they get Liquity's support, access to the liquidity network, shared security resources, and potential LQTY rewards.
It's a win-win: forked protocols get better support, and BOLD can expand cross-chain without the usual risks of hacks or mismanagement.
Liquity v2 has been tested on the Base Sepolia testnet.
Pendle's New Protocol: Boros
Most people thought Pendle V3 was just a minor update. But it turns out Pendle had a completely different idea. Pendle has launched Boros, a sister company aimed at bringing yield trading to new frontiers.
Boros is built specifically for leveraged yield trading. Let me repeat that: you can use leverage to trade yield rights.
It mainly focuses on funding rates, the cost of borrowing or lending in perpetual contract positions.
The problem? Until now, there hasn't been an effective way to hedge or trade these funding rates. This is where Boros comes in. With it, traders can:
- Hedge their funding rate exposure to lock in predictable returns
- Use leverage to speculate on funding rate fluctuations
Take Ethena as an example - its profitability heavily depends on funding rates. With Boros, Ethena can hedge the volatility and lock in its yields. At the same time, speculators can profit from the rise and fall of funding rates.
You might ask, why funding rates?
Perpetual contract exchanges handle $150-200 billion in daily trading volume, and funding rates are the core of how these markets operate. Yet, they've been overlooked in DeFi.
Boros makes funding rates tradable. This means protocols, market makers, and traders can now integrate funding rate strategies into their portfolios.
Pendle has evolved into a full-fledged yield trading platform. V2 and Boros complement each other perfectly:
- V2 focuses on tokenized on-chain yields, such as staking, RWA, and BTCfi
- Boros focuses on funding rates and off-chain opportunities
In line with Pendle's usual practice, they will not be issuing new tokens.
The $PENDLE and vePENDLE tokens will provide support for both V2 and Boros. The revenue distribution also remains unchanged: 80% allocated to vePENDLE holders, 10% to the protocol treasury, and 10% for operations.
With the airdrop hype gradually cooling down, the launch of Boros is timely.
Zircuit
This may be the most confusing Ethereum L2.
Zircuit recently concluded its first and second season airdrops on November 20, distributing 300 million tokens. They were very generous in providing airdrops to each partner protocol.
What are Zircuit's next plans? How will they maintain user engagement and create real use cases for the token?
The answer seems to be the hottest topic right now: AI. Zircuit is developing a new product called Gud AI.
It is an AI agent similar to AIXBT that can uncover alpha. There is also a native AI token $GUD, which users need to stake $ZRC to obtain.
Zircuit is an L2, but it has adopted a new approach to implementing L2 infrastructure. It not only focuses on scalability, but also on security, efficiency, and usability.
One of Zircuit's key features is Sequencing-Level Security (SLS). While most blockchains only detect malicious transactions after they have been executed, SLS can even identify them beforehand.
In the era of Ethereum restaking, Zircuit's LRT is very attractive, attracting over $2 billion in TVL. Zircuit's mainnet Phase 2 is accelerating, with the following already launched:
Bridging between Zircuit and Ethereum. The cross-chain process only takes a few minutes, with lightning-fast speed. Since its launch, Zircuit's net deposits have soared to $300 million.
Native DeFi dApps, such as ZeroLend and Elara Labs for lending, Ocelex and Dodo for trading and liquidity mining.
Recently, Zircuit allocated 2% of its supply to over 190,000 EigenLayer token holders.
Zircuit is backed by Binance Labs, Pantera Capital, and Dragonfly Capital, but has not yet been listed on Binance.
Starknet
The STRK airdrop faced FUD, but it is undeniable that Starknet has made significant progress recently. They are breaking through the technical boundaries of L2, and are worth watching.
A major initiative by Starknet is the launch of native token STRK staking functionality. This is the first L2 to provide native staking functionality, and it is now live on the mainnet.
Bitwise, a crypto asset management firm with over $11 billion in assets, has over $3.5 billion in ETH staking assets, and it has also entered the Starknet ecosystem by supporting STRK staking.
From a technical perspective, the deployment cost is only $5, and the verification cost is less than $1. Moreover, through the joint efforts of multiple teams, verifying SNARK proofs has become possible. This provides developers with the opportunity to build real-world ZK-driven applications, such as private identity verification or secure document validation.
They have also released the v0.13.3 update, which reduces blob gas costs by 80% through smarter block compression. As Ethereum's blob usage increases, Starknet can maintain lower fees. Looking ahead, Starknet plans to make more efficiency upgrades, and even Vitalik has not hesitated to praise them.
Another exciting development is their progress in developing a trustless Bitcoin cross-chain bridge (PoC bridge supporting OP_CAT) using sCrypt. This indicates that the connection between Starknet and Bitcoin is becoming possible, which is a significant step forward in interoperability and may unlock some interesting use cases.
Mode AI
After the airdrop, Mode has taken two major steps: veMODE and the AIFi ecosystem.
Mode is the first OP Stack L2 to introduce a ve governance model through veMODE. You can stake MODE or MODE/ETH liquidity tokens to gain voting power, and the longer the staking duration, the greater the voting power (up to 6x).
veMODE does not vote for specific pools, but focuses on the protocol, aiming to develop the entire ecosystem. In the third quarter, $2 million in OP rewards will be distributed through this system.
But what truly sets Mode apart is its focus on AIFi.
With a $6 million grant from Optimism, Mode is bringing AI agents into DeFi to simplify and expand on-chain interactions. These agents can handle tasks such as yield farming, risk management, and even governance, all with minimal human input.
Mode's AIFi ecosystem is built on three layers:
- AI-secure L2 sequencer: Detecting and blocking malicious transactions before they enter the blockchain.
- On-chain agent infrastructure: Partners like Giza, Olas, and RPS AI help deploy agents, while Mode's Dapp Intents SDK allows agents to learn and execute advanced strategies.
- AI interfaces: Mode's AI wallet and other tools simplify interactions, making DeFi more accessible.
To kickstart the AIFi ecosystem, Mode has launched an AI Agent App Store, a platform focused on DeFi AI agents. Some outstanding agents include:
- Giza's ARMA: Optimizing USDC yields in money markets.
- Olas' MODIUS (upcoming): AI-driven liquidity mining strategist.
- Brian: Making using DeFi as simple as a conversation through natural language prompts.
- Sturdy V2: AI-driven yield vault that optimizes returns.
So, NEAR, Mode, and Zircuit have seized the opportunity to enter the AIFi space.
Polkadot
DOT has risen 75% in a month - what's the reason?
Over the past few months, Polkadot network activity has reached new highs. Monthly transaction count has hit a record high, and key metrics like fees, active users, and transaction volume have also seen significant growth. The annual growth rate for fees alone is 300%, with active users and transaction volume also steadily increasing.
An important driver of this momentum is Polkadot 2.0.
Previously, the cost of running a parachain was high, around $167,000 per month. With the launch of Polkadot 2.0, this cost has dropped to $1,000-$4,000. Now, projects can lease block space using DOT, creating stable demand for the token.
According to governance, a portion of the revenue may be burned, reducing the token supply. This creates a virtuous cycle: increased demand for DOT, potentially reduced supply, and an overall stronger ecosystem.
Polkadot is also establishing better connections with other blockchains.
Hyperbridge is connecting Polkadot to networks like Ethereum and BNB, facilitating cross-chain interactions and opening up new possibilities for developers. The network itself has proven to be robust, processing over 3.3 million transactions in a day, indicating its suitability for large-scale applications like gaming.
DeFi on Polkadot is growing.
Hydration is on the rise, with a 50% increase in active users since October and fees reaching double their historical highs. If you're coming from ETH or Solana DeFi, you might enjoy Hydration. It integrates trading, lending, and stablecoins into a single application chain. Its Omnipool simplifies liquidity and supports single-sided deposits, with a TVL of over $68 million. Hydration's stablecoin 2 pool (USDT-USDC) offers up to 36% APY and vDOT rewards.
Hydrationde1 stats page
Hydration has just launched Borrowing, a fork of Aave V3 on Polkadot with the functionality of on-chain liquidation prioritized at the start of each block. This mechanism reduces losses for borrowers and prevents front-running attacks. Liquidation penalties will be converted into protocol revenue, benefiting HDX stakers.
dYdX
The competition in the perpetual contract DEX space is intensifying, with leadership also changing hands......dYdX, GMX, Vertex, and now HyperLiquid. However, I believe the real losers are the CEXes that have been outpaced by the rapidly innovating new DEXes.
While HyperLiquid has taken the lead after a successful airdrop, dYdX has chosen a more retail-friendly approach, launching dYdX Unlimited, which includes a suite of new features: Instant Market Listing, MegaVault, and the Affiliate Program.
With Instant Market Listing, anyone can create a market instantly without governance approval or long waiting periods. It's simple: choose a market, deposit USDC into the MegaVault, and start trading. This is a significant advantage that CEXes cannot provide.
The MegaVault is the core of the system, pooling USDC to provide liquidity for all markets.
The MegaVault provides capital for the markets, while depositors earn passive income. Half of the dYdX protocol fees flow into the MegaVault, making the liquidity supply profitable. This is very similar to the Jupiter JLP Vault.
dYdX has also launched an Affiliate Program, which provides USDC commissions to referrers for life. Bybit's rapid growth was partly due to its referral reward program.
Trading rewards distribute $1.5 million in DYDX tokens monthly, and there is a pool of up to 100,000 USDC for MegaVault depositors. As a result, dYdX has seen some impressive achievements, with a TVL exceeding $40 million and an APY of 51%.
Aptos
Aptos, the MOVE language blockchain, is the second-fastest growing in terms of TVL and DeFi after Sui, with its TVL surpassing $1 billion for the first time, a 19-fold increase year-over-year.
Riding the TradFi wave on Aptos, BlackRock has launched the BUILD fund on Aptos, which is the only non-EVM chain selected by BlackRock.
Franklin Templeton has also expanded its on-chain US government money market fund to Aptos (one of the seven supported chains).
Bitwise and Libre have already launched their tokenized funds on Aptos.
Tether launched its native stablecoin USDT on Aptos in August. Since then, the USDT supply on Aptos has been increasing, currently around $142 million.
Following Tether, Circle announced the launch of native USDC and the Cross-Chain Transfer Protocol (CCTP), supported by Stripe's crypto products on Aptos.
With native stablecoins entering Aptos, ecosystem metrics are steadily rising, with TVL maintained above $1 billion and 1 million new users joining the ecosystem.
DeFi on Aptos has also seen milestone-like progress:
Last year, daily DEX trading volume on Aptos grew by 2,700%.
Aries Markets, the top lending protocol on Aptos, has hit new highs, with total deposits exceeding $800 million and total borrows over $450 million.
emojicoin dot fun, the meme coin launchpad on Aptos, reported 16,700 unique addresses joining within the first 24 hours of mainnet launch.
My intuition is that APT is following in the footsteps of SUI. I believe SUI, APT, and other L1s are chasing Solana, as they are competing on the execution layer.
