Is DeFi Market Expected to Recover? Let's Take a Look at Recent Updates from Established Protocols

While much of the market attention has been focused on NFTs, the metaverse, and emerging public chain protocols, the Ethereum DeFi protocols that surged during the DeFi Summer two years ago have been quietly working behind the scenes, bringing users a variety of new features and appearances. After recent updates, can the long-overlooked DeFi market experience a revival soon, bringing a new spring to coin prices?

This article will summarize the recent developments of some DeFi protocols, including Aave, Balancer, Sushiswap, Synthetix, and MakerDAO.

Aave

In mid-March this year, Aave launched Aave V3 on six blockchains including Polygon, Fantom, Avalanche, Arbitrum, Optimism, and Harmony. Aave V3 introduces three new features:

1. Portal: This feature facilitates cross-chain transactions, allowing assets to seamlessly transfer between Aave V3 markets on different chains to address liquidity disparities.

2. Efficient Mode: Also known as "E-Mode," it enhances the borrowing power of users by increasing the loan-to-value ratio when using similar assets as collateral, enabling borrowers to borrow more assets.

3. Isolated Mode: Assets newly listed with an Isolated label have borrowing limit restrictions and can only borrow specific assets such as stablecoins, ETH, and wETH. Additionally, they cannot be used as collateral alongside other assets.

While this feature may seem restrictive, Aave plans to expedite the process of adding new assets as collateral. As isolated assets stabilize and mature, borrowing limits will increase, and the isolation restrictions will be further lifted.

Balancer Introduces veBAL Token Model

Balancer launched a new token model veBAL on March 28th, which is an enhanced version of Curve's locking model. The new model officially started liquidity mining on Ethereum on April 7th. Liquidity providers of the 80/20 BAL/ETH pool can choose to lock their assets for a week to a year to receive veBAL for governance rights. BAL also implements a four-year token inflation halving model.

Sushiswap

Sushiswap announced its Trident project last year but recent updates were delayed, possibly due to internal issues.

The Sushiswap Trident test version is now live on Polygon. It is a production framework for building and deploying AMMs, aiming to allow anyone to create any type of AMM according to their needs.

Additionally, Sushiswap's token issuance platform MISO has been upgraded to a permissionless multi-chain token issuance platform. After testing, it is now available on Moonbeam Network, Moonriver Network, BNB Chain, Polygon, and Harmony. Users can choose the type of token to issue, auction methods (Dutch auction, batch auction, crowdfunding), issuance period, and more.

Synthetix

The derivative trading platform on the Synthetix protocol, Kwenta, launched a beta version of perpetual contracts on Layer2 Optimism mainnet in mid-March. Currently, it offers perpetual contracts for BTC, ETH, and LINK.

Note: Users who stake SNX tokens to mint sUSD can trade on this platform.

MakerDAO

To enhance its conservative and thin token economy, MakerDAO released a new governance token proposal in mid-March, suggesting the creation of a new token called stkMKR to replace MKR as MakerDAO's core governance token.

stkMKR is obtained through MKR staking but is non-transferable. Holders receive voting rights and a portion of MKR obtained through Surplus Auction is burnt. This distribution follows an automatic compounding model, allowing stkMKR to convert back to more MKR over time.

At 50% MKR staked, stkMKR has a total yield of about 3.25%, while at 20% staked, close to the current governance participation rate, the yield is 5.5%.

However, redeeming MKR requires a waiting period during which all stkMKR is burnt, and the corresponding MKR is held in custody without earning rewards or voting rights. After the unlocking period, users can reclaim their MKR from custody to regain liquidity.