This week in DeFi, a debate emerged about whether growing adoption among Wall Street participants may lead to the crypto market’s first extended “supercycle,” resulting in digital asset valuations rising beyond the historic four-year cycle’s time frame.
As the leading smart contract blockchain, Ethereum’s native Ether (ETH) token could be set to benefit from “Wall Street running into the blockchain,” according to BitMine, the largest corporate holder of ETH.
Despite the optimistic prediction, Ether’s price fell 13% over the past week, dropping below the $4,000 level for the first time since Aug. 8, Cointelegraph data shows.
In the wider cryptocurrency market, the Hyperliquid (HYPE) token’s vesting schedule will distribute about $11.9 billion HYPE tokens over 24 months for the team, which may be the “first true test” for the resilience of the token, BitMEX co-founder Arthur Hayes’ family office fund, Maelstrom, said on Monday.
In what it dubbed a “Sword of Damocles” moment, it will introduce about $500 million worth of monthly unlocks, of which only about 17% will be absorbed by buybacks, leaving about $410 million in potential supply overhang, according to Maelstrom researcher Lukas Ruppert.
Whale wallet “0x316f” withdrew $122 million worth of HYPE tokens on Monday, shortly after Maelstrom’s warning of the incoming sell pressure.
Ethereum bulls tout supercycle; Wall Street is skeptical
The cryptocurrency market may experience its first extended cycle due to more institutional capital and trading products in the Web3 industry, making digital asset investments more accessible.
Some investors predict a crypto “supercycle” that may invalidate the theory of the four-year crypto market cycle related to the Bitcoin (BTC) halving, and see digital asset valuations rise beyond this historic time frame.
For the world’s second-largest cryptocurrency, Ether, the supercycle may be catalyzed by Wall Street’s growing adoption of blockchain technology, according to BitMine Immersion Technologies, the world’s largest corporate Ether holder.
The first major driver for Ether may be “Wall Street running into the blockchain,” according to BitMine.
Despite the optimism around a potential supercycle, not all Wall Street participants are bullish on Ether’s price trajectory.
US investment bank Citigroup has set a $4,300 year-end price target for Ether, which is significantly below ETH’s all-time high of $4,953 on Aug. 24.
“Current prices are above activity estimates, potentially driven by recent buying pressure and excitement over use-cases,” Citi wrote in a Monday note seen by Reuters.
Ether has risen by about 108% in the past six months and traded at $4,177 at the time of writing, TradingView data showed.
Circle explores “reversible” USDC transactions in break from crypto ethos
Circle, the world’s second-largest stablecoin issuer, is reportedly examining reversible transactions to help recover funds from fraud and hacks, which appears to counter one of crypto’s founding principles: That transactions are final and beyond centralized control.
Circle president Heath Tarbert told the Financial Times on Thursday that the company is examining mechanisms that could allow transactions to be rolled back in cases of fraud or hacks, while still maintaining settlement finality.
“We are thinking through [. . .] whether or not there’s the possibility of reversibility of transactions, right, but at the same time, we want settlement finality,” Tarbert told the FT. “So there’s an inherent tension there between being able to transfer something immediately, but having it be irrevocable […].”
Clash with crypto ethos
Supporters of reversibility argue it could help scam victims and bolster mainstream trust in stablecoins. Still, the idea challenges the decentralized model that underpins crypto, where transactions are permanent and immune from unilateral changes by issuers or validators.
Cointelegraph has asked Circle for comment on the details of transaction reversibility and the parameters that would be used to decide on reversals.
Vitalik calls for open-source infrastructure in health, finance, governance
Ethereum co-founder Vitalik Buterin called for open-source, verifiable infrastructure across critical sectors, including healthcare, finance and governance, warning that centralized systems risk eroding trust and security.
In a Wednesday blog post, Buterin argued that as digital infrastructure becomes embedded in everyday life, relying on closed, opaque systems increases the danger of abuse and monopolization.
“The civilizations that gained the most from new waves of technology are not the ones who consumed the technology, but the ones who produced it,” Buterin wrote, adding that “openness and verifiability can fight against global balkanization.”
Buterin said he envisions a world where verifiable devices form the backbone of global systems. “By default, we will likely get digital computer things that are built and run by centralized corporations,” he warned. “But we can try to steer toward a better alternative.”
BlackRock raking in $260 million in annual revenue from Bitcoin, Ether ETFs
BlackRock’s cryptocurrency-based exchange-traded funds (ETFs) have become a revenue-generating machine, bringing in $260 million in revenue for the world’s biggest asset manager, signaling a “benchmark” model for traditional investment funds seeking lucrative business models.
BlackRock’s Bitcoin and Ether ETFs are generating $260 million in annualized revenue, including $218 million from Bitcoin ETFs and $42 million from Ether products, according to data shared Tuesday by Leon Waidmann, head of research at the nonprofit Onchain Foundation.
The profitability of BlackRock’s crypto-focused ETFs may drive more investment giants from the traditional finance (TradFi) space to launch regulated cryptocurrency-based trading products, with BlackRock’s crypto ETFs serving as a “benchmark” for institutions and traditional pension funds, Waidmann said.
“This isn’t experimentation anymore. The world’s largest asset manager has proven that crypto is a serious profit center. That’s a quarter-billion-dollar business, built almost overnight. For comparison, many fintech unicorns don’t make that in a decade.”
Waidmann compared the ETFs to Amazon, which started with books before scaling to everything. He said the ETFs are the “entry point into the crypto world.”
Aster leads perp DEX surge to $70 billion daily trading volume
Perpetual trading volumes on decentralized exchanges (DEXs) surged to an all-time high of $70 billion on Thursday, driven by Aster, a new derivatives platform on BNB Chain.
Perpetual DEXs surged to record volumes on three consecutive days as decentralized perpetuals activity heated up. On Tuesday, the overall volume for perp DEXs hit $52 billion, followed by $67 billion on Wednesday.
The volume topped $70 billion on Thursday, highlighting renewed momentum in the decentralized finance (DeFi) derivatives markets.
Aster topped the leaderboard with almost $36 billion in 24-hour trading volume, which was over 50% of the total perp DEX activity on Thursday. The platform outpaced rivals like Hyperliquid and Lighter, both recording volumes of more than $10 billion.
DeFi market overview
According to data from Cointelegraph Markets Pro and TradingView, most of the 100 largest cryptocurrencies by market capitalization ended the week in the green.
The Story (IP) token fell over 30% marking the week’s biggest decline in the top 100, followed by memecoin launchpad Pump.fun’s (PUMP) token, down over 29% on the weekly chart.
Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically advancing space.