Welcome to Finance Redefined, your weekly source of vital insights into decentralized finance (DeFi) – a newsletter designed to bring you the most important events from the past week.
The past week in DeFi witnessed BNB Chain’s announcement of native liquid staking on its BNB Smart Chain (BSC). This move aims to help participants in the ecosystem secure the network while maintaining the liquidity of their assets.
Chainlink, a DeFi protocol, launched a cross-chain protocol that enhances interoperability across nine blockchain networks, making cross-chain smart contracts more accessible.
Additionally, Arkham Research raised concerns about several DeFi wallets that have millions of dollars stuck in DeFi bridge contracts.
BNB Chain to introduce native liquid staking on BSC
BNB Chain has revealed plans to introduce native liquid staking on its BNB Smart Chain as part of its transition to migrate the functions of the BNB Beacon Chain to BSC, which will eventually be shut down.
According to a statement provided to Cointelegraph, BNB Chain announced that the BNB Beacon Chain will be fully closed by June 2024. However, the company will transfer its features to BSC before the shutdown.
BNB Chain stated that enabling liquid staking on BSC will allow ecosystem participants to secure the network while maintaining the liquidity of their assets. Although an exact date for the rollout of the liquid staking feature was not provided, BNB Chain mentioned that it will occur in April or May.
Chainlink introduces a new protocol to enhance cross-chain interoperability
Chainlink’s Cross-Chain Interoperability Protocol (CCIP) has now become widely available to promote better connectivity across different blockchains. This protocol enables developers to utilize CCIP for cross-chain token transfers and smart contract messaging across various blockchain networks.
Moreover, developers will have the ability to send and trigger function calls on smart contracts deployed on different blockchains, thereby increasing the interoperability of cross-chain smart contracts.
Sergey Nazarov, co-founder of Chainlink, stated that the general availability of CCIP on the mainnet will facilitate faster and easier implementation for developers, ultimately strengthening cross-chain connectivity.
EigenLayer faces a potential yield crisis
EigenLayer, the largest restaking protocol on Ethereum in terms of total value locked (TVL), may be on the verge of a significant yield crisis, according to industry experts.
Due to the rapid growth of EigenLayer’s TVL, the protocol may be surpassing the capacity of its Actively Validated Services (AVS), which could lead to a substantial reduction in yield. Chudnov, a pseudonymous builder at 3Jane derivatives exchange, expressed concerns regarding this issue.
EigenLayer removed the limits on all liquid staking tokens (LSTs) on April 16, as announced in an X announcement. The protocol was launched on the mainnet on April 10.
When users stake an LST via EigenLayer, it is automatically delegated to a node operator, who uses the deposits to secure an AVS on EigenLayer while receiving staking rewards. A portion of these rewards is then passed on to the user. However, AVS on the protocol require significantly less staked Ether for security, which could result in future problems.
Wallets associated with Coinbase and Vitalik Buterin have funds “stuck” in bridge contracts
Numerous crypto whale wallets, holding assets ranging from six to seven figures, are currently trapped in multiple DeFi bridge contracts.
According to Arkham Research, most of these bridge protocols are native contracts, requiring users to manually retrieve their funds, which many of these whales have forgotten. The firm has tagged and urged the linked users to check if they can access and retrieve funds that have been stuck for months.
One of these whale wallets belongs to Vitalik Buterin, the co-founder of Ethereum, who has over $1 million worth of assets stuck for more than seven months. Another wallet linked to Coinbase has also been forgotten for several months, while other wallets have unclaimed assets for over two years.
DeFi market overview
Data from Cointelegraph Markets Pro and TradingView indicates that DeFi’s top 100 tokens by market capitalization experienced a bearish week, with most of them trading in the red on the weekly charts. The total value locked in DeFi protocols has fallen below $100 billion.
Thank you for reading our summary of the most impactful DeFi developments of the week. Join us next Friday for more stories, insights, and education on this rapidly evolving space.