Author: Ignas | DeFi Research
Translated by: TechFlow
"Please forgive me, my enthusiasm for Meme coins has reached its peak."
I find myself obsessed with Meme coins, which has distracted me from keeping up with the developments in other cryptocurrencies. The recent market downturn has given me time to research these developments, but the downturn didn't last too long.
In this article, I want to share 10 developments in DeFi and the broader cryptocurrency ecosystem that have caught my attention and that I think you should also be closely following.
Avalanche 9000: Is L1 the new L2?
Avalanche has just launched Avalanche 9000, its largest upgrade ever, making it easier, cheaper, and more flexible to create L1 blockchains.
The old subnet model has been scrapped, and now developers no longer need to validate the mainnet or pre-stake 2000 AVAX, but instead pay a small ongoing fee, significantly reducing the costs.
This sounds a bit like Polkadot and Cosmos.
Inspired by Ethereum's EIP-4844 (which significantly reduces gas fees on L2s through Proto-Danksharding), Avalanche has made the costs of L1 comparable to 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 PoS or Proof-of-Authority blockchains, meaning better token economics and value accrual.
The cost of running a validator has dropped from 2K AVAX (around $100k) to 1.33 AVAX per month.
Avalanche has launched a $40 million Retro 9000 grant program, and there are currently 700 L1s in development, covering areas from gaming to DeFi. Avalanche has successfully attracted traditional finance partners through tokenization and has drawn in games like Off The Grid, seemingly carving out its own niche in the competition with Solana and Ethereum.
NEAR AI
While Base and Solana are leading the way in the AI agent space, NEAR is quietly carving out its own AI innovation path.
NEAR supports on-chain agent-based functionality and is developing more tools and capabilities.
Its unique aspect is the native chain abstraction of multi-chain AI agents, allowing developers to more easily build interconnected systems.
Additionally, NEAR Intents introduces a new transaction model, enabling cross-chain settlement between AI agents, services, and end-users. The most notable collaboration is between Infinex and Near, allowing users to trade assets like BTC and XRP on a decentralized platform.
NEAR has also launched NEAR.ai, an AI assistant that can represent user actions by connecting to other AI agents and cross-web2 and web3 services. While NEAR's wallet experience was previously poor, it has now seen significant improvements (I recommend using Near Mobile). This AI assistant functionality is similar to what Cortex Protocol is developing, so you may want to check that out as well.
Interestingly, NEAR-based social AI agents have started hosting X spaces with 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 developers in this space.
It's worth noting that the privacy-preserving blockchain Nillion Network is building on NEAR, bringing privacy technologies for training private LLMs and inferencing on sensitive data, which could unlock the full potential of user-owned AI.
Liquity v2 Launch
LQTY has surged 120% in a month.
There are two reasons for this: one is the overall bullish market sentiment, and the other is the release of V2. You can try out the testnet here.
Traditional DeFi lending models have some issues,
Protocols like Compound and Aave set interest rates based on utilization, making costs unpredictable;
And governance-based protocols like MakerDAO have slow adjustment speeds, with interest rates often stagnant due to governance delays.
Even Liquity V1's fixed-rate model was unable to adapt to market changes.
Liquity V2 solves this by allowing users to set their own rates and introducing BOLD, a decentralized, user-controlled, and yield-focused stablecoin.
Borrowers can open "vaults" to set their own interest rates - they can choose a lower rate to save on costs, or a higher rate to avoid liquidation. The vaults with the lowest rates will be prioritized for redemption.
With loan-to-value (LTV) ratios of up to 90% and leverage of up to 11x, Liquity V2 demonstrates extremely high efficiency.
Borrowers can not only use ETH, but also liquid staking tokens (LSTs) like wstETH and rETH as collateral, earning staking rewards while borrowing BOLD.
BOLD is therefore fully backed by ETH and LSTs, redeemable at any time, and avoids the risks of traditional finance.
Unlike USDC, BOLD does not rely on real-world assets (RWAs), avoiding counterparty risk and censorship risk. It maintains a $1 peg through a simple mechanism:
When $BOLD dips below $1, arbitrageurs will redeem ETH to push the price back up.
When $BOLD exceeds $1, lower borrowing rates will attract more supply to stabilize the price.
Users depositing to the stability pool receive 75% of the protocol revenue in the form of BOLD and ETH, while the remaining 25% is used for Protocol Incentivized Liquidity (PIL) to support BOLD's liquidity in the DeFi ecosystem.
An important change in Liquity V2 is its Forkonomics model.
As one of the most frequently forked DeFi protocols, Liquity now requires teams to obtain permission to use its code and airdrop tokens to LQTY holders. In return, these teams can receive Liquity's support, shared security resources, and potential LQTY rewards.
This model helps forked projects get better support while mitigating security risks as BOLD expands cross-chain.
Liquity V2 is currently live on the Base Sepolia testnet for testing.
Pendle's New Protocol - Boros
Most people thought Pendle V3 was just another fork or a minor update. It turns out Pendle's ideas are quite different.
Pendle has recently launched a brand new protocol called Boros, focusing on margin yield trading. In simple terms, Boros allows users to trade yields with leverage.
The core of Boros is the funding rate - the cost of borrowing in perpetual futures contracts. In the past, funding rates have been difficult to effectively hedge or trade, and Boros is designed to solve this.
With Boros, users can:
Hedge the volatility of funding rates to get more stable returns.
Speculate on the ups and downs of funding rates to potentially generate higher yields.
For example, protocols like Ethena that rely on funding rate profits can use Boros to lock in stable returns, while speculators can profit from the fluctuations in funding rates.
Why are funding rates important?
Here is the English translation of the text, with the terms in <> retained as is:The daily trading volume of perpetual contract exchanges reaches 1500 billion to 2000 billion US dollars, and the funding rate is the core of these markets. However, this field has received little attention in DeFi.
The emergence of Boros has made the funding rate a tradable asset, providing new investment tools for protocols, market makers, and traders.
Pendle has achieved comprehensive coverage of yield trading through V2 and Boros:
V2 focuses on the tokenization of on-chain yields, such as staking, RWAs, and BTCfi.
Boros focuses on funding rates and off-chain opportunities.
It is worth mentioning that Pendle has not launched a new token, but continues to use $PENDLE and vePENDLE.
These two tokens support both V2 and Boros, and the revenue distribution remains unchanged - 80% is allocated to vePENDLE holders, 10% to the protocol treasury, and 10% for operations.
As the credit narrative cools down, Boros arrives on time.
Zircuit
Perhaps the most confusing Layer 2 network in the crypto space.
Zircuit recently completed its first and second season airdrops on November 20, distributing 300 million Tokens for users to claim. They seem to have been very generous in airdropping to each collaborating protocol.
What's next for Zircuit? How do they plan to maintain user engagement and create actual use cases for their Token?
The answer seems to be the hottest topic right now: artificial intelligence.
Zircuit is developing a new product called Gud AI.
This is an AI Agent similar to AIXBT, capable of discovering investment opportunities. You can follow it on X. There is also a native AI Token $GUD, which uses a fair launch and requires staking $ZRC.
For a new Layer 2 network, this is a good strategy.
Zircuit is a Layer 2, but it has taken a different approach from other Layer 2 infrastructures. It not only focuses on scalability, but also on security, efficiency, and usability.
A key feature of Zircuit is Sequencer-Level Security (SLS). Most blockchains only detect malicious transactions after they have been executed, while SLS can identify threats before they reach the chain.
In the era of Ethereum's mega-staking, Zircuit's LRTs are worth watching, attracting over $2 billion in TVL. Zircuit has gained momentum in its mainnet's second phase, which is now live, including:
Bridging functionality from Ethereum. The bridging speed is exceptionally fast, taking only a few minutes. Since its launch, the net inflow of funds into Zircuit has surged to $300 million.
Some native DeFi dApps, such as ZeroLend and Elara Labs for lending, Ocelex and Dodo for swapping and liquidity mining.
Recently, Zircuit distributed 2% of its supply to over 190,000 EigenLayer stakers. 
Zircuit is supported by Binance Labs, Pantera Capital, and Dragonfly Capital.
But it has not yet been listed on Binance :) I believe they will eventually be listed.
Starknet
Despite the STRK airdrop facing significant FUD, it is undeniable that Starknet has made significant progress recently.
They are breaking the boundaries of Layer 2 networks and are worth a deeper look.
One major initiative is the launch of native Token STRK staking. This is the first Layer 2 network to provide native staking functionality, and it is now live on the mainnet.
Bitwise, a company managing $11 billion in crypto assets and with over $3.5 billion in staked ETH, has also entered the Starknet ecosystem by supporting STRK staking.
On the technical side, deployment costs are now only $5, and verification fees are less than $1. Through the efforts of different teams, it is now even possible to verify SNARK proofs. This opens up opportunities for developers to build real-world ZK-driven applications, such as private identity verification or secure document verification.
Deployment costs are now only $5, and verification fees are less than $1. This opens up opportunities for developers to build real-world ZK-driven applications, such as private identity verification or secure document verification.
They have also released v 0.13.3 update, which reduces blob gas costs by 5 times through smarter compression and block compression. As Ethereum's blob usage increases, this maintains low fees. Looking ahead, Starknet plans to make more efficiency upgrades on their network. Even Vitalik has been generous with his praise.
Another exciting step is their progress on a trust-minimized Bitcoin bridge (PoC bridge enabled by OP_CAT), developed in collaboration with sCrypt. This indicates that a connection between Starknet and Bitcoin is possible - a huge interoperability advancement that could unlock some interesting use cases.
Mode AI
After the airdrop, Mode has further developed through two major initiatives: the launch of veMODE and the AIFi ecosystem.
Mode is the first project to introduce a vote-escrowed (ve) governance model through veMODE on the OP-stack Layer 2 network. Users can stake MODE or MODE/ETH liquidity Tokens to gain voting power, with longer staking times granting higher voting power (up to 6x).
Unlike voting for specific pools, veMODE is more focused on the protocol, aiming to promote the development of the entire ecosystem.
In the third quarter, Mode will distribute $2 million in OP incentives through this system. Future plans include introducing a bribery market and even using AI agents to simplify the participation process, allowing AI to vote on behalf of users.
Mode's uniqueness lies in its focus on AIFi.
With a $6 million grant from Optimism, Mode is bringing AI agents into DeFi to simplify and scale on-chain interactions. These agents can handle tasks such as yield farming, risk management, and governance, with minimal human intervention.
Mode's AIFi ecosystem consists of three layers:
AI-secure L2 Sequencer: Detecting and blocking malicious transactions before they enter the blockchain.
On-chain agent infrastructure: Deploying agents in collaboration with partners like Giza, Olas, and RPS AI, with Mode's Dapp Intents SDK enabling agents to learn and execute advanced strategies.
AI-driven interfaces: Tools like Mode's AI-driven wallet, simplifying interactions to make DeFi more user-friendly.
To kickstart the AIFi ecosystem, Mode has launched an AI Agent App Store, a platform for discovering AI agents designed for DeFi. Some notable agents include:
Giza's ARMA: Optimizing USDC yields in money markets.
Olas' MODIUS (upcoming): An AI-driven liquidity farming strategist.
Brian: Enhancing DeFi experiences through natural language prompts.
Sturdy V2: An AI-driven yield vault, optimizing investment returns.
So, Near, Mode, and Zircuit are timely entrants into the AIFi metaverse.
Polkadot
In a month, DOT has risen by 75%. What's behind this?
In recent months, the activity on the Polkadot network has reached new highs. Monthly transaction count has hit a new record high, and key metrics like fees, active users, and transaction volume are also growing - fees have grown 300% year-over-year, with active users and transaction volume also on the rise.
A key driver of this momentum is Polkadot 2.0.
In the past, running a parachain was very costly, around $16,700 per month. With the launch of Polkadot 2.0, this cost has dropped to $1,000-$4,000. Projects now use DOT to rent blockchain space, creating stable demand for the Token.
According to governance, some revenue may be burned, reducing Token supply. This creates a virtuous cycle - higher demand for $DOT, potential supply reduction, and a stronger overall ecosystem. (Detailed link reference)
Polkadot is also building better connections to the broader blockchain space.
Hyperbridge connects Polkadot to networks like Ethereum and BNB, enhancing cross-chain interoperability and opening new possibilities for developers. The network itself has proven its strength, processing over 3.3 million transactions per day - showing it is ready for large-scale applications like gaming and beyond.
DeFi is also growing on Polkadot.
Hydration has seen a 50% increase in active users since October, with fees doubling to reach an all-time high.
If you're coming from ETH or Solana DeFi, you may enjoy Hydration. It integrates trading, lending, and stablecoins into a single application chain.
Its Omnipool simplifies liquidity and supports single-sided deposits, reaching a total value locked (TVL) of over $68 million. Hydration's stablecoin 2-pool (USDT-USDC) offers up to 36% APY and vDOT rewards.
Hydration has just launched Borrowing, a fork of Aave V3 on Polkadot that prioritizes on-chain liquidation at the start of each block.
This mechanism reduces borrower losses and prevents front-running attacks. Liquidation penalties are converted to protocol revenue, benefiting HDX stakers and governance decisions.
dYdX
The decentralized exchange (DEX) space for perpetual contracts is highly competitive, with frequent leadership changes, such as dYdX, GMX, Vertex, and now HyperLiquid.
However, I believe the real losers are the centralized exchanges (CEXs) that are gradually losing market share to the rapidly innovating DEXs.
While Hyperliquid gained significant attention after a successful airdrop, dYdX has chosen a more retail-oriented strategy, launching dYdX Unlimited and a series of new features: Instant Market Listing, MegaVault, and the Affiliate Program.
With Instant Market Listing, users can create and trade markets immediately, without the need for governance approval or long waiting periods. The process is very simple: select a market, deposit USDC into the MegaVault, and start trading.
This is a significant advantage that centralized exchanges cannot provide.
MegaVault is the core of the entire system, providing liquidity for all markets by pooling USDC.
It funds the markets, while depositors can earn passive income. Half of the dYdX protocol fees flow into the MegaVault, making liquidity provision profitable. This is similar to Jupiter's JLP Vault.
dYdX has also launched an Affiliate Program, paying lifetime USDC commissions for referrals. Bybit's rapid growth has been partly attributed to its affiliate program.
In terms of trading rewards, $150 million in DYDX tokens are distributed monthly, along with a $100,000 USDC MegaVault depositor pool.
As a result, dYdX has achieved some impressive numbers, with over $40 million in trading volume and an annualized yield of 51%.
Aptos
Following Sui, Aptos, a Move-based blockchain, has seen rapid growth in TVL and DeFi, with TVL surpassing $1 billion for the first time, a 19-fold year-over-year increase.
As the TradFi wave rises on Aptos, BlackRock has expanded its BUILD fund on Aptos, the only integrated non-EVM chain.
Franklin Templeton has also extended its on-chain US government money market fund to Aptos, one of seven blockchains it supports.
Bitwise and Libre have launched their tokenized funds on the blockchain.
Tether launched its native USDT on Aptos in August. Since then, the USDT supply on Aptos has steadily grown from around $20 million to approximately $142 million.
Following Tether, Circle has also announced the launch of native USDC and a Cross-Chain Transfer Protocol (CCTP), with support from Stripe's crypto products on Aptos.
With the injection of native stablecoins, Aptos' ecosystem metrics have improved, maintaining a TVL of over $1 billion and adding 1 million new users.
Some DeFi milestones on Aptos include:
A 2700% (28x) growth in daily DEX trading volume on Aptos over the past year.
Aries Markets, the top lending protocol on Aptos, has reached a new TVL high, with over $800 million in total deposits and $450 million in borrowings.
emojicoin dot fun, a pumpdotfun on Aptos, launched its mainnet and reported 16,700 unique addresses within 24 hours of launch.
I suspect APT is following in the successful footsteps of SUI, performing exceptionally well. I believe SUI, APT, and other L1s are competing with Solana for the execution layer market, while ETH remains the industry benchmark.
Please let me know if you find any errors or have any feedback!
