Original author: Ignas | DeFi Research
Original translation: TechFlow
“Forgive me, my enthusiasm for Meme Coin has reached an extreme.”
I find myself obsessed with Meme Coin, and it has affected my attention to other cryptocurrency developments. The recent market drop gave me time to study these developments, but the drop didn’t last long.
In this post, I want to share 10 developments in the DeFi and broader cryptocurrency ecosystem that have caught my attention and that I think you should pay close attention to as well.
Avalanche 9000: L1 is the new L2?
Avalanche just launched Avalanche 9000, its biggest upgrade ever, making it easier, cheaper, and more flexible to create L1 blockchains.
The old subnet model has been eliminated and now developers do not need to validate the mainnet or pre-stake 2,000 AVAX, but instead pay a small ongoing fee, significantly reducing costs.
This sounds a bit like Polkadot and Cosmos.
Inspired by Ethereum EIP-4844 (which drastically reduces gas fees on L2 via Proto-Danksharding), Avalanche makes L1 costs comparable to Celestia-based rollups, but with better interoperability and reliability.
The upgrade also introduces L1-only validators, allowing each L1 to manage its own rules, whether it is a PoS or Proof of Authority blockchain, which means better token economics and value enhancement.
The cost of running a validator dropped from 2K AVAX (~$100K) to 1.33 AVAX per month.
Avalanche has launched a $40 million funding program, Retro 9000, and currently has 700 L1s in development, covering everything from games to DeFi. Avalanche has successfully attracted traditional financial partners through tokenization and attracted games like Off The Grid, and seems to have found its position in the competition between Solana and Ethereum.
NEAR AI
While Base and Solana are leading the way in AI agents, NEAR is quietly pioneering its own path in AI innovation.
NEAR supports agent-based on-chain functionality and is developing more tools and features.
Its uniqueness lies in the native chain abstraction of multi-chain AI agents, which enables developers to build interconnected systems more easily.
In addition, NEAR Intents introduces a new transaction model that enables cross-chain settlement between AI agents, services, and end users. The most notable collaboration is the one between Infinex and Near, which enables users to trade BTC, XRP, and more on a decentralized platform.
NEAR also launched NEAR.ai , an AI assistant that can act on behalf of users by connecting to other AI agents and across web2 and web3 services. While Near’s wallet experience used to be poor, it has improved a lot now (I recommend using Near Mobile ). This AI assistant is similar to what Cortex Protocol is developing, so check it out.
Interestingly, social agents based on NEAR are starting to host each others X-spaces.
Additionally, NEAR launched a research center to explore new AI models and partnered with Delphi on an AI accelerator program to support developers in this field.
Notably, the blind computing blockchain Nillion Network is being built on NEAR, bringing privacy-preserving technology to the training of private LLMs and inference of sensitive data, which could unlock the full potential of AI for users.
Liquity v2 released
LQTY is up 120% in a month.
There are two reasons: one is the overall bullish market, and the other is the release of V2. You can try the testnet here.
There are some problems with the traditional DeFi lending model.
Money markets like Compound and Aave set interest rates based on utilization, making costs difficult to predict;
Governance protocols like MakerDAO are slow to adjust, and interest rates often stagnate due to governance delays.
Even Liquity V1’s fixed-rate model was unable to adapt to market changes.
Liquity V2 solves this problem with user-set interest rates and BOLD, a stablecoin focused on decentralization, user control, and yield.
Borrowers can open “vaults” to set their interest rates – they can choose a lower rate to save costs, or set a higher rate to avoid redemption. Vaults with the lowest interest rates will be redeemed first.
With loan-to-value ratios (LTV) of up to 90% and leverage of up to 11x, Liquity V2 demonstrates extreme efficiency.
Borrowers can use not only ETH, but also Liquid Staking Tokens (LST) like wstETH and rETH as collateral and continue to earn staking rewards while lending 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 the $1 peg through a simple mechanism:
When $BOLD falls below $1, arbitrageurs will push the price back up by redeeming ETH.
When $BOLD exceeds $1, lower borrowing rates attract more supply, stabilizing the price.
Users who deposit into the stability pool can receive 75% of the protocol revenue (in the form of BOLD and ETH), while the remaining 25% is used for protocol incentive liquidity (PIL) to support the liquidity of BOLD in the DeFi ecosystem.
An important change in Liquity V2 is its Forkonomics model.
As one of the most frequently forked protocols in DeFi, Liquity now requires teams to obtain permission to use its code and airdrop tokens to LQTY holders. In return, these teams can get support from Liquity, shared security resources, and potential LQTY rewards.
This model can not only help forked projects gain better support, but also allow BOLD to avoid security risks when expanding across chains.
Liquity V2 is currently being tested on the Base Sepolia test network.
Pendles New Protocol - Boros
Most people thought Pendle V3 was just another fork or a minor update. It turns out that Pendle had something completely different in mind.
Pendle recently launched a new protocol , Boros , which focuses on margin trading. In simple terms, Boros allows users to trade yield with leverage.
At the heart of Boros is the funding rate - the cost of borrowing money in a leveraged perpetual contract. In the past, funding rates have been difficult to hedge or trade effectively, and Boros is designed to solve this problem.
With Boros, users can:
Hedge against fluctuations in funding rates and gain more stable returns.
Use leverage to speculate on the rise and fall of funding rates to obtain potentially higher returns.
For example, protocols like Ethena that rely on funding rates for profitability can lock in stable returns through Boros, while speculators can profit from fluctuations in funding rates.
Why is Funding Rate Important?
Perpetual swaps exchanges trade $150-200 billion per day, and funding rates are at the heart of these markets. Yet this area has received little attention in DeFi.
The emergence of Boros makes funding rates a tradable asset, providing new investment tools for protocols, market makers, and traders.
Pendle has full coverage of revenue trading with V2 and Boros:
V2 focuses on 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 did not launch a new token, but continued to use $PENDLE and vePENDLE.
Both tokens support both V2 and Boros, and the revenue distribution remains the same - 80% to vePENDLE holders, 10% to the protocol treasury, and 10% for operations.
When the integral narrative cools down, Boros arrives right on time.
Zircuit
Perhaps the most confusing layer 2 network in crypto.
Zircuit recently completed its Season 1 and Season 2 airdrops on November 20th, distributing 300 million tokens for users to claim. They seem to be very generous in airdropping to each of their partner protocols.
What’s next for Zircuit? How do they plan to keep users engaged and create real-world use cases for their tokens?
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 that can find investment opportunities. You can follow it on X. There is also a local AI Token $GUD, which uses a fair launch and requires staking $ZRC.
This is a good strategy for a new layer 2 network.
Zircuit is a Layer 2, but it takes a different approach than other Layer 2 infrastructures. It focuses not only on scalability, but also on security, efficiency, and availability.
One of Zircuit’s key features is Sequencer-Level Security (SLS) . While most blockchains detect malicious transactions only after they are executed, SLS can identify threats before they reach the chain.
In the era of heavy staking on Ethereum, LRTs on Zircuit are noteworthy, attracting over $2 billion in TVL. Zircuit is gaining momentum in its Mainnet Phase 2, which is now live and includes:
Bridge functionality from Ethereum. The bridge is incredibly fast, taking only a few minutes. Net deposits into Zircuit have jumped to $300 million since launch.
Some native DeFi dApps such as ZeroLend and Elara Labs for lending, Ocelex and Dodo for exchange and liquidity mining.
Recently, Zircuit distributed 2% of its supply to over 190,000 EigenLayer heavy stakers.
Zircuit is backed by Binance Labs, Pantera Capital, and Dragonfly Capital.
Still not listed on Binance though :) I think they will eventually.
Starknet
Although the STRK airdrop was met with a lot of FUD, it is undeniable that Starknet has made significant progress recently.
They are pushing the boundaries of layer 2 networks and are worth watching closely.
One of the major initiatives is the launch of staking for the native token STRK. This is the first layer 2 network to offer native staking functionality and is now live on the mainnet .
Bitwise, a firm that manages $11 billion in crypto assets and has 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 just $5, and verification costs less than $1. Through the efforts of different teams, even SNARK proofs can now be verified. This opens up opportunities for developers to build real-world ZK-powered applications, such as private identity verification or secure document verification.
Deployment costs are now just $5, and verification costs less than $1. This opens up opportunities for developers to build real-world ZK-powered applications, such as private identity verification or secure document validation.
They also rolled out the v 0.13.3 update, which reduced blob gas costs by 5x through smarter compression and block compaction. This keeps fees low as Ethereum’s blob usage increases. Going forward, Starknet plans to have more efficiency upgrades on top of it. Even Vitalik was generous in his praise.
Another exciting step is their progress on a trust-minimized Bitcoin bridge (OP_CAT-enabled PoC bridge), developed in partnership with sCrypt. This demonstrates that a connection between Starknet and Bitcoin is possible - a huge step forward for interoperability that could unlock some interesting use cases.
Mode AI
After the airdrop, Mode further developed by launching two major initiatives: veMODE and AIFi Ecosystem.
Mode is the first project to introduce the voting custody (ve) governance model in the OP-stack layer 2 network through veMODE . Users can stake MODE or MODE/ETH liquidity tokens to obtain voting rights. The longer the stake period, the higher the voting rights (up to 6 times).
Unlike voting for a specific pool, veMODE is more focused on the protocol and aims to promote the development of the entire ecosystem.
In Season 3, Mode will distribute $2 million in OP incentives through this system. Future plans include introducing a bribe market and even using AI agents to simplify the participation process, enabling AI to vote for users.
What makes Mode unique is its focus on AIFi.
With $6 million in funding from Optimism, Mode is bringing AI agents to DeFi to simplify and scale on-chain interactions. These agents can handle tasks including yield farming, risk management, and governance with little to no human intervention.
Mode’s AIFi ecosystem consists of three layers:
AI-secure L2 Collator: Detect and block malicious transactions before they enter the blockchain.
On-chain Agent Infrastructure: Working with partners such as Giza, Olas, and RPS AI to deploy agents, Mode’s Dapp Intents SDK enables agents to learn and execute advanced policies.
AI-powered interfaces: Tools like Mode’s AI-powered wallet make DeFi easier to use by simplifying interactions.
To kick-start the AIFi ecosystem, Mode launched the AI Agent App Store, an AI agent discovery platform designed for DeFi. Some of the prominent agents include:
Giza’s ARMA: Optimizing USDC’s returns in currency markets.
MODIUS by Olas (coming soon): An AI-driven yield farming strategist.
Brian: Making the DeFi experience more interactive through natural language prompts.
Sturdy V2: An AI-driven yield vault that optimizes return on investment.
Thus, Near, Mode, and Zircuit entered the AIFi metaverse at the perfect time.
Polkadot
In one month, DOT has gained 75%. What is the reason behind this?
Activity on the Polkadot network has reached new heights in recent months. The number of monthly transactions has hit an all-time high , and key metrics such as fees, active users, and transaction volume are growing—fees alone have increased 300% year-over-year, and active users and transaction volume are also climbing.
A big reason driving this momentum is Polkadot 2.0.
In the past, the cost of running a parachain was high, around $16,700 per month. With the launch of Polkadot 2.0, this cost has dropped to $1,000 to $4,000. Projects now use DOT to lease block space, creating a steady demand for tokens.
Depending on governance, some revenue may be destroyed, reducing the token supply. This creates a positive cycle - higher demand for $DOT, potential reduction in supply, and a stronger overall ecosystem. ( Detailed link reference )
Polkadot is also building better connections with a wider range of blockchains.
Hyperbridge connects Polkadot to networks like Ethereum and BNB, enhancing cross-chain interactions and opening up new possibilities for developers. The network itself has proven itself to be robust, processing over 3.3 million transactions per day — showing it is ready for large-scale applications such as gaming and beyond.
On Polkadot, DeFi is also growing.
Hydration active users have increased 50% since October and fees have doubled to an all-time high.
If you come from DeFi on ETH or Solana, you might like Hydration. It integrates trading, lending, and stablecoins into one application chain.
Its Omnipool simplifies liquidity and supports one-sided deposits, with a total locked value (TVL) of more than $68 million. Hydrations stablecoin 2-pool (USDT-USDC) offers up to 36% annualized yield and vDOT rewards.
Hydration has just launched Borrowing, a fork of Aave V3 on Polkadot that prioritizes on-chain liquidations at the start of each block.
This mechanism reduces borrowers’ losses and prevents front-running attacks. Liquidation penalties are converted into protocol revenue, benefiting HDX stakers and governance decisions.
DX
The perpetual contract decentralized exchange (DEX) field is highly competitive, with leaders frequently changing, such as dYdX, GMX, Vertex, and now HyperLiquid.
However, I believe the real losers are the centralized exchanges (CEXs) that are losing market share to rapidly innovating decentralized exchanges.
While Hyperliquid received a lot of attention after its successful airdrop, dYdX chose a more retail-oriented strategy with the launch of dYdX Unlimited and a host of new features: instant market listings, MegaVault, and an affiliate program.
With Instant Market Listing, users can create and trade markets instantly, without governance approval or long waits. The process is simple: select a market, deposit USDC into MegaVault, and start trading.
This is a significant advantage that centralized exchanges cannot provide.
MegaVault is the core of the entire system, providing liquidity to all markets by pooling USDC.
It funds the market while depositors can earn passive income. Half of the dYdX protocol fees flow into the MegaVault, making liquidity provision profitable. This is very similar to Jupiters JLP Vault.
dYdX also launched an affiliate program that pays lifetime USDC commissions for referrals. Bybit’s rapid growth is partly due to its affiliate program.
In terms of trading rewards, $1.5 million in DYDX tokens will be distributed monthly, as well as a MegaVault depositor pool of up to 100,000 USDC.
As a result, dYdX has achieved some great results, with over $40 million in trading volume and an annualized return of 51%.
Aptos
Following Sui, Aptos, a Move-based blockchain, has grown rapidly in TVL and DeFi, with TVL exceeding $1 billion for the first time, a 19-fold year-on-year increase.
As the TradFi wave on Aptos picks up, BlackRock has expanded its BUILD fund on Aptos, the only non-EVM chain integrated.
Franklin Templeton is also expanding its on-chain U.S. government money fund to Aptos, one of the seven supported blockchains.
Bitwise and Libre launched their tokenized funds on the blockchain.
Tether launched its native USDT on Aptos in August. Since then, the supply of USDT on Aptos has grown steadily, from about $20 million to about $142 million.
After Tether, Circle also announced the launch of native USDC and Cross-Chain Transfer Protocol (CCTP), and received support from Stripes crypto products on Aptos.
With the injection of native stablecoins into Aptos, various indicators of the ecosystem have improved, TVL has continued to remain above US$1 billion, and 1 million new users have joined the ecosystem.
Some of the DeFi milestones on Aptos include:
Daily DEX trading volume on Aptos has grown 2700% (28x) over the past year.
Aries Markets, the top lending protocol on Aptos, reached a new TVL high with over $800 million in total deposits and over $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 footsteps of SUI’s success and performing very well. I think SUI, APT and other L1s are competing with Solana for the execution layer market, while ETH remains the industry benchmark.
If you find any bugs or have feedback, please let me know!
