A version of this article appeared in our The Decentralised newsletter on December 3. Sign up here.
GM, Tim here.
DeFi users are transacting with stablecoins more than ever.
Hyperliquid mints millionaires with token airdrop.
Court says the US government was wrong to sanction Tornado Cash.
$700bn stablecoin volume
Crypto stablecoins have smashed another record, registering over $700 billion in transfer volume in November.
Data compiled by payments behemoth Visa shows Tether’s USDT accounted for $500 billion of the volume. Tron was the most popular chain for stablecoin transfers, registering $314 billion in volume compared to rival Ethereum’s $247 billion.
If stablecoins keep their $700 billion monthly pace, they could facilitate $8.4 trillion of transfers over the next year, rivalling Visa’s $12.3 trillion of transfers in 2023.
The surge comes after the total stablecoin market cap, a measure of the number of stablecoins in circulation, hit an all-time high of $193 billion.
Fintech players like PayPal and Robinhood, as well as crypto giant Ripple, are all getting in on the action by launching their own stablecoins.
Tron’s low fees and speed — as well as its ties to Tether and Binance — have made it a popular choice for users looking to transact with stablecoins.
Although Tron dominates other blockchains in facilitating transfers, the number of stablecoins on the blockchain is declining.
Last month, USDT on Tron fell by $2 billion. In the same period the supply of USDT on Ethereum grew by $20 billion — a 31% increase.
The shifting metrics highlight the differing use cases for stablecoins on each blockchain.
While Tron users appear to be primarily using stablecoins for payments, those holding them on Ethereum are using them to take on leverage via lending protocols like Aave.
Hyperliquid’s airdrop
Hyperliquid, a decentralised perpetual exchange, on Friday distributed more than $1 billion in HYPE tokens to the project’s early users.
In the days since, HYPE has almost tripled in value as DeFi investors rushed to get exposure.
Hyperliquid has dominated onchain perpetual futures trading since its February 2023 launch. It has facilitated over $437 billion in trading volume, almost double that of SynFutures, the next biggest DeFi perpetuals exchange.
Ashwath Balakrishnan, head of consulting at Delphi Creative, said Hyperliquid’s success could spark a DeFi resurgence.
“It’s not an unsound prediction,” he told DL News. “It’ll be a lot easier to see it coming because we’ll see profit taking on HYPE and bridge flows to other chains with DeFi.”
Onlookers have compared Hyperliquid and its token airdrop to rival perpetuals exchange dYdX, which conducted its own airdrop in September 2021.
Hyperliquid’s token already trades at a $2.9 billion market value, well above dYdX’s peak value of $1.8 billion.
Tornado Cash users win
A US court has ruled that the Office of Foreign Assets Control, or OFAC, was wrong to sanction DeFi privacy protocol Tornado Cash.
On November 26, an appeals court in Texas reversed a lower court ruling and said the smart contracts utilised by Tornado Cash to anonymise crypto transactions are not covered by existing law.
“We hold that Tornado Cash’s immutable smart contracts… are not the ‘property’ of a foreign national or entity,” the three-judge panel wrote. “OFAC overstepped its congressionally defined authority.”
Crypto privacy advocates said the decision affirmed their longstanding argument that automated smart contracts should be treated differently than developers or DAOs or any other entity managing an anonymising platform like Tornado Cash.
To be sure, the court recognised the importance of addressing online national security threats.
The judges said it was clear that a North Korean-linked hacker group had laundered $7 billion in illicit proceeds from crypto thefts through Tornado Cash.
But the panel found that the law invoked to sanction Tornado Cash — the 47-year-old International Emergency Economic Powers Act — was ill-suited to “target modern technologies like crypto-mixing software.”
This week in DeFi governance
VOTE: Arbitrum DAO mulls proposal to standardise initiative reporting
VOTE: ZKsync DAO votes to reduce the network’s transaction execution delay
VOTE: CoW DAO votes to slash solver that lost $76,783 in November
Post of the week
DefiLlama’s 0xngmi puts dYdX’s fall and the rise of other perpetual futures exchanges like Hyperliquid into perspective.
hyperliquid went from 27% dominance of the dex perps market to 37% now in just the last 4 days
dominance chart since mid 2023, blue is dydx, hyperliquid is purple pic.twitter.com/gOoPI2kt7o
— 0xngmi (@0xngmi) December 1, 2024
Got a tip about DeFi? Reach out at tim@dlnews.com.
