Research Summary
The report discusses the recent developments in the DeFi sector, focusing on the rise of decentralized stablecoins, particularly Frax Finance and MakerDAO. It also highlights the performance of Radix and Chainlink, and the setback faced by Mixin Network due to a hacking incident. The report further provides insights into the latest developments in DeFi, including Chainlink’s Cross-chain Interoperability Protocol and Coinbase’s potential BASE token.
Key Takeaways
Decentralized Stablecoins Gaining Traction
- Frax Finance and MakerDAO’s Performance: Frax Finance and MakerDAO, creators of decentralized stablecoins $FRAX and $DAI, have seen their tokens rise by 12.5% and 17.5% respectively over the past week. This is attributed to the growing interest in decentralized stablecoins.
- Frax V3 and MakerDAO’s RWA Strategy: Frax Finance’s upcoming Frax V3 launch and MakerDAO’s increased exposure to real-world assets (RWA) have contributed to their recent success. Frax V3 will allow FRAX holders to earn a yield from US Treasuries and other yield sources, while MakerDAO’s RWA strategy has made it the second most profitable DeFi protocol.
Radix’s Major Network Upgrade
- Release of Babylon: Radix has released Babylon, a major network upgrade that aims to address some of the biggest issues in DeFi. This has resulted in a 14% increase in the value of $XRD over the past week.
- Features of Babylon: Babylon includes the launch of the full Radix stack for DeFi, including the Radix Wallet, Scrypto programming language, and Cerberus consensus protocol. These features aim to simplify the complexity of writing secure smart contracts and improve user experience.
Chainlink’s Web3 Services Platform
- Chainlink’s Performance: Chainlink, the project behind the largest decentralized oracle network, has seen its token LINK rise by over 16% in the past week. This is due to the upcoming SmartCon conference and the recent launch of Chainlink’s CCIP product on two more chains.
- CCIP’s Potential: Chainlink’s Cross-chain Interoperability Protocol (CCIP) allows developers to build cross-chain applications. It has recently attracted interest from traditional finance giants like Swift for tokenization experiments.
Setback for Mixin Network
- Hacking Incident: Mixin Network, one of the top 6 largest decentralized blockchains by TVL, suffered a hacking incident that resulted in a $200M loss. This led to a 50% drop in the ecosystem TVL and a decrease in the Mixin token price from over $210 to $170.
- Impact on Decentralization: The hacking incident, which was due to an attack on the database of Mixin Network’s cloud service provider, raises questions about the decentralization of the network.
Actionable Insights
- Investigate the Potential of Decentralized Stablecoins: The rise of Frax Finance and MakerDAO suggests that decentralized stablecoins could be a promising area in the DeFi sector. Their strategies of leveraging real-world assets and launching new iterations of their protocols could be worth exploring.
- Consider the Impact of Major Network Upgrades: The success of Radix’s Babylon upgrade indicates that significant network improvements can positively impact a project’s performance. The potential of these upgrades to address key issues in DeFi should be considered.
- Assess the Risks Associated with Centralized Databases: The hacking incident at Mixin Network highlights the potential risks associated with reliance on centralized databases in decentralized blockchains. This underscores the need for robust security measures in DeFi projects.
