Weekly Update - Defi and Layer 1 & Layer 2 News (Week 33, 17/08/2022 - 23/08/2022)

Aug 24, 2022

This week's price, volume, and volatility indices were negative at-9.59%, -12.41%, and -27.80%, respectively.

Check the latest prices on Crypto.com/Price

FEI, one of the largest decentralised stablecoins, may cease operations. Fei Labs Founder Joey Santoro announced that the Fei (FEI) architecture will be shutting down because of "technical, financial and potential future regulatory risks." FEI maintains the peg using protocol controlled value (PCV), a mechanism to algorithmically manage a reserve of tokens. Santoro also published a proposal to redeem FEI tokens to DAI and to distribute protocol controlled value between TRIBE (the governance token of Fei Protocol) holders.
HUSD, a dollar-backed stablecoin issued by Stable Universal (a Huobi Capital invested company) broke from its peg on 17 August and traded at a low of US$0.85. This came after FTX CEO Sam Bankman-Fried and TRON Founder Justin Sun were revealed to be in talks to purchase a majority stake in the Huobi Global crypto exchange. However, HUSD clarified that the depeg was connected to liquidity issues after several account closures, including market maker accounts. It has since recovered the peg.
An attacker tried to exploit Near Protocol’s Rainbow bridge by submitting a fabricated block, but failed and lost 5 ETH. Rainbow validators’ automated security processes blocked the transaction and took away the safe deposit of 5 ETH put up by the attacker.

Overall, the L2 market dropped by -3.06% in the last 7 days. The TVL of all L2 categories followed the downtrend. Optimistic rollup projects fell by -4.10% and zero-knowledge rollup projects by -1.16%. Ethereum’s TVL plunged by -9.84%.

The TVL for all optimistic rollup projects were negative last week, and Boba Network dropped the most at -10.06%.

Similarly, almost all ZK rollup projects’ TVL plummeted except dYdX, which grew +14.07%.

Crypto.com DeFi Research