This week in DeFi, discussions surfaced around the possibility that increased adoption by Wall Street participants could initiate the crypto market’s inaugural prolonged “supercycle,” causing digital asset valuations to exceed the traditional four-year cycle duration.
As the foremost smart contract blockchain, Ethereum’s native Ether (ETH) token seems poised to gain from “Wall Street engaging with the blockchain,” according to BitMine, the leading corporate stockholder of ETH.
Despite the optimistic outlook, Ether’s price experienced a 13% drop over the past week, slipping below the $4,000 threshold for the first time since Aug. 8, as per data from Cointelegraph.
In the broader cryptocurrency landscape, the Hyperliquid (HYPE) token’s vesting plan will distribute approximately $11.9 billion in HYPE tokens over the next two years for the team, marking a potential “first true test” for the token’s resilience, according to BitMEX co-founder Arthur Hayes’ family office fund, Maelstrom, commented on Monday.
Termed a “Sword of Damocles” moment, this will introduce around $500 million worth of monthly unlocks, with just about 17% expected to be absorbed through buybacks, leaving approximately $410 million in prospective supply overhang, according to researcher Lukas Ruppert from Maelstrom.
A whale wallet identified as “0x316f” withdrew $122 million worth of HYPE tokens on Monday, shortly after Maelstrom’s caution regarding the impending sell pressure.
Ethereum bulls promote supercycle; Wall Street remains cautious
The cryptocurrency realm may undergo its first extended cycle due to enhanced institutional capital and trading products within the Web3 sector, rendering digital asset investments more accessible.
Some investors foresee a crypto “supercycle” that could overturn the conventional four-year crypto market cycle tied to the Bitcoin (BTC) halving, allowing digital asset valuations to escalate beyond this traditional timeline.
For Ether, the world’s second-largest cryptocurrency, the supercycle might be triggered by Wall Street’s increasing adoption of blockchain technology, according to BitMine Immersion Technologies, the largest corporate Ethereum holder.
The primary catalyst for Ether could be “Wall Street engaging with the blockchain,” as reported by BitMine.
Despite the enthusiasm surrounding a potential supercycle, not every Wall Street entity is optimistic about Ether’s price direction.
Citigroup, a U.S. investment bank, has determined a year-end price target of $4,300 for Ether, considerably below ETH’s historical peak of $4,953 on Aug. 24.
“Current prices are exceeding activity estimates, possibly propelled by recent buying pressure and interest in use-cases,” Citi noted in a Monday memo accessed by Reuters.
Ether has appreciated by about 108% over the last six months, trading at $4,177 at the time of writing, according to TradingView data.
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Circle investigates “reversible” USDC transactions straying from crypto principles
Circle, the second-largest stablecoin issuer globally, is reportedly considering reversible transactions to help retrieve funds from fraud and hacks, seemingly contradicting one of crypto’s core tenets: that transactions are final and beyond centralized control.
Circle president Heath Tarbert informed the Financial Times on Thursday that the company is exploring methods that could enable transactions to be reversed in instances of fraud or hacks, while still ensuring settlement finality.
“We are contemplating [. . .] whether there’s a possibility for transaction reversibility, right, but simultaneously, we desire settlement finality,” Tarbert explained to the FT. “Thus, there’s an inherent tension between enabling immediate transfers while maintaining irrevocability […].”
Conflict with crypto principles
Advocates for reversibility claim it could assist scam victims and enhance mainstream trust in stablecoins. Nonetheless, the concept challenges the decentralized framework that defines crypto, where transactions are permanent and impervious to unilateral modifications by issuers or validators.
Cointelegraph has reached out to Circle for comments regarding the specifics of transaction reversibility and the criteria to be utilized for determining reversals.
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Vitalik advocates for open-source infrastructure in health, finance, governance
Ethereum co-founder Vitalik Buterin has called for open-source, verifiable infrastructure across critical sectors such as healthcare, finance, and governance, cautioning that centralized systems threaten to undermine trust and security.
In a blog post on Wednesday, Buterin asserted that as digital infrastructure becomes integral to daily life, reliance on closed, non-transparent systems escalates the risks of exploitation and monopolization.
“Civilizations that have benefited the most from new technological waves are those that produced the technology, rather than merely consuming it,” Buterin observed, adding, “openness and verifiability can mitigate global fragmentation.”
Buterin envisions a future where verifiable devices form the foundation of global systems. “By default, it seems we will get digital computing solutions created and operated by centralized corporations,” he cautioned. “However, we can strive for a superior alternative.”
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BlackRock generates $260 million in annual revenue from Bitcoin, Ether ETFs
BlackRock’s crypto-centric exchange-traded funds (ETFs) have evolved into a substantial revenue source, yielding $260 million for the world’s largest asset manager, establishing a “benchmark” model for traditional investment funds aiming for profitable business structures.
BlackRock’s Bitcoin and Ether ETFs are generating $260 million annually, with $218 million from Bitcoin ETFs and $42 million from Ether offerings, as per data shared Tuesday by Leon Waidmann, head of research at the nonprofit Onchain Foundation.
The success of BlackRock’s crypto-focused ETFs may encourage other investment giants from traditional finance (TradFi) to unveil regulated cryptocurrency-based trading products, with BlackRock’s crypto ETFs acting as a “benchmark” for institutions and traditional pension funds, Waidmann highlighted.
“This is no longer an experiment. The world’s largest asset manager has demonstrated that crypto can be a significant profit center. This represents a quarter-billion-dollar business, established almost instantaneously. For context, many fintech unicorns take a decade to achieve that,” Waidmann remarked.
Waidmann likened the ETFs to Amazon, which initially focused on books before expanding to various products. He described the ETFs as the “entry point into the crypto world.”
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Aster leads perpetual DEX surge to $70 billion daily trading volume
Perpetual trading volumes on decentralized exchanges (DEXs) have surged to a record high of $70 billion on Thursday, propelled by Aster, a new derivatives platform on BNB Chain.
Perpetual DEXs hit unprecedented volumes on three consecutive days as decentralized perpetuals activity intensified. On Tuesday, overall volume for perp DEXs reached $52 billion, followed by $67 billion on Wednesday.
The volume exceeded $70 billion on Thursday, showcasing renewed dynamism in the decentralized finance (DeFi) derivatives markets.
Aster led the pack with nearly $36 billion in 24-hour trading volume, comprising over 50% of the total perp DEX activity that day, outpacing competitors like Hyperliquid and Lighter, both achieving volumes exceeding $10 billion.
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DeFi market overview
According to data from Cointelegraph Markets Pro and TradingView, most of the 100 largest cryptocurrencies by market capitalization ended the week positively.
The Story (IP) token experienced a decline of over 30%, marking the steepest drop in the top 100, followed by memecoin launchpad Pump.fun’s (PUMP) token, which fell over 29% weekly.
Thanks for reading our summary of this week’s most significant DeFi developments. Join us next Friday for more stories, insights, and education on this rapidly evolving space.
