Finance redefined: second layer growth and SEC scrutiny, September 19-23

Welcome to the latest edition of the decentralized finance, or DeFi, newsletter from UKTN.

In a week where DeFi’s parabolic growth continued elsewhere, U.S. Securities and Exchange Commission chairman Gary Gensler threatened to attack stablecoins.

What you are about to read is the reduced version of this newsletter. For the full breakdown of DeFi developments over the past week - released much faster than Cardano smart contracts - subscribe at the bottom of this page.

Layer two defines the future

This week, analytical data revealed that DeFi continues to be one of the fastest growing sectors in the crypto economy, as evidenced by increases in total locked-in value, or TVL, on protocols. . Some of the biggest gains have been seen over cross-chain compatible networks and layer two protocols which provide a lower cost environment.

Part of the Avalanche network, Trader Joe is a protocol that has seen significant inflows since the launch of an improved cross-chain bridge. It allows Ethereum-based tokens and applications to migrate to its ecosystem, which resulted in a 53.96% increase in TVL this week.

The recent emergence of layer two technologies such as Arbitrum, Optimism, and a Bridge to the Avalanche Ecosystem is revolutionizing the way investors, builders and developers interact with various protocols.

Each facilitates fast, low-cost transactions that improve the fundamentals of the DeFi ecosystem while making it easier for retail investors to capitalize on opportunities.

The United States against the SEC

U.S. investment firms Invesco and Galaxy Digital Funds have teamed up this week to file a registration statement with the SEC seeking approval for the sale of Bitcoin exchange-traded funds (ETFs).

If approved by the SEC, the Invesco Galaxy Bitcoin ETF will be registered as a securities offering with the option to be listed on traditional national stock exchanges in the United States. According to the filing, the trust will use “robust physical barriers to entry, electronic surveillance and continuous roaming patrols” to protect Bitcoin’s privacy.

Likewise, the US company Amplify ETFs has also filed a registration with the SEC, in this case, to add a DeFi-centric open ETF fund offering to Amplify ETF Trust. The approval of the FORM N-1A filing will allow the company to issue an unlimited number of new shares to US investors.

SushiSwap denies reports of billion dollar bug

One of the developers behind the popular decentralized exchange SushiSwap has dismissed an alleged vulnerability reported by a white hat hacker rummaging through his smart contracts.

According to media reports, the hacker claimed to have identified a vulnerability that could endanger more than $ 1 billion in user funds, saying he made the information public after attempts to contact developers of SushiSwap resulted in inaction.

However, the pseudonymous developer of SushiSwap quickly took to Twitter to dismiss the claims, with the Mudit Gupta platform’s “Shadowy Super-Coder” pointing out:

“It’s not a vulnerability. No funds at risk. If the rewarder runs out of rewards, LP withdrawal will fail, but anyone (not just sushi) can reload the rewarder in an emergency. Sushi can also simply remove the remunerator.

Token performance

DeFi’s TVL fell sharply 16.08% this week to $ 105.15 billion, alongside the decline in major DeFi tokens.

Analysis of data from UKTN Markets and TradingView reveals that the top 20 DeFi tokens by market cap suffered heavy losses through the last seven days, with just three tokens printing bullish price action.

Avalanche (AVAX) took first place on the podium for bullish gains this week with a respectable 13.7%. After a final day push, Ren crossed the green line, but still far second with 0.64%, while Dai topped the numbers in third with 0.34%. When a stablecoin is in the top three, that’s when you know it’s been a bad week!

Do you want to continue your studies? Read these additional stories:

Thanks for reading our conspectus of DeFi’s biggest stories this week. Join us again next Friday for a series of stories, developments and fresh ideas from the world of DeFi.