DeFi News
23 MIN
Nov 17, 2023

Crypto Digest: The Month of October in Review

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DeFi TVL Updates

Key DeFi Stats for October:

In October, the TVL slightly increased in dollar terms from around $39B to $41B for the whole DeFi market. DEX 30day volumes have significantly risen in dollar terms from $35.2B in September to $60B in the past 30 days. Stablecoin market cap stayed flat at ~$125B with the top two USDT ($85B) and USDC ($23B) accounting for about 85% of the total market cap.

Here are the rankings of decentralized finance (DeFi) projects based on Total Value Locked (TVL). TVL is a measure of the total assets locked in a DeFi protocol:

  • Lido Finance has held the number one spot in terms of TVL since January of this year, surpassing the previous leader, MakerDAO. Lido Finance's TVL is approximately $17 billion, up $3 billion from last month.
  • AAVE took the second spot, with a TVL close to $5.5 billion.
  • Arbitrum Bridge rose to third place with a TVL of $5.1 billion.
  • MakerDao slid to fourth place with a $5 billion TVL and
  • Uniswap is in the fifth position with a TVL of around $3.4 billion.

Source: Token Terminal. TVL of top protocols

Macro View

The State Of The US Economy

We looked at various economic indicators and their potential implications for the U.S. stock market and broader economy. Here’s a breakdown of the main points:

The state of the macroeconomy seems mixed with both positive and negative indicators.

  • Liquidity Indicators: The liquidity conditions are range bound, with a recent mild drop due to the Treasury General Account buildup. This implies that there is not a significant change in the amount of money available in the financial system for lending and investment, which can be a sign of a stable but cautious market environment.
  • Global Liquidity: The global liquidity, as measured by the global broad money supply denominated in dollars, is moderate. This suggests that international liquidity is neither tight nor overly abundant, influenced by the rate of money supply growth and currency exchange rates, particularly the dollar's strength.
  • U.S. Business Cycle: The business cycle in the U.S. is in a state of limbo, with soft indicators such as PMIs (Purchasing Managers' Index) and employment metrics like temporary workers and overtime hours. Many year-over-year metrics are mildly negative when adjusted for inflation, indicating that the economy is not in a strong expansion phase.
  • Leading Indicators and GDP Growth: The Conference Board leading indicators have stabilized, although at low levels, which could suggest that future economic activity is not expected to grow significantly. However, the reported GDP growth for Q3 2023 is at 4.9% annualized, which is the highest in nearly two years, signaling strong economic activity during that period.
  • Sectoral Differences: There is a divergence in economic performance across sectors. Interest rate-sensitive sectors are struggling due to tight monetary policy, presumably as a result of higher interest rates which make borrowing more expensive. Conversely, the U.S. federal government’s deficit spending, partly due to these higher interest rates, is providing a stimulus to the economy, benefiting sectors like travel, restaurants, and cash-rich companies.
  • Mixed Outlook: The overall outlook is very mixed. Loose fiscal policy (government spending) is stimulating parts of the economy, while tight monetary policy (interest rates and money supply control) is suppressing other parts. This indicates a dichotomy where the government's spending is helping to keep the economy afloat but the measures to control inflation and ensure financial stability are having a cooling effect on some sectors.

In summary, the macroeconomic environment has both encouraging signs, like high GDP growth, and cautionary ones, like the softness in leading business indicators and the dichotomy in sectoral performance. This suggests that the economy is in a delicate balance, with policies and external factors pulling in different directions.

Source: U.S. BUREAU OF LABOR STATISTICS, All Items, Not Seasonally Adjusted

Regulations Update

Court Upholds Ripple's Partial Victory Over SEC

On Oct 3rd, Judge Analisa Torres of the Southern District Court of New York upheld Ripple Labs' partial victory by denying the SEC's request for an interlocutory appeal. This refusal to allow an immediate appeal follows Judge Torres' nuanced application of the Howey test to Ripple's XRP token sales, differentiating between direct sales to institutional investors and broader market distributions. While the SEC argued for a misapplication of the test, Judge Torres confidently maintained that her findings were a "direct application of Howey to the unique facts and circumstances of this case." This ruling highlights the individualized nature of cryptocurrency legal challenges, reaffirming the court's previous differentiation from the SEC v. Terraform Labs case. The implication is clear: the SEC must wait until the district court case concludes to seek an appeal, a scenario that reinforces the court's stance on the distinct legal treatment of crypto assets.

G20 Embraces IMF-FSB Framework for Crypto Oversight Amidst Innovation Concerns

The G20's embrace of the "G20 Roadmap on Crypto Assets," a framework crafted by the IMF and FSB, marks a significant step towards standardized global regulation of the crypto sphere. This framework outlines robust policy recommendations to mitigate financial instability and macroeconomic risks posed by cryptocurrencies and DeFi systems. Key suggestions include empowering regulatory authorities, instituting comprehensive governance by crypto entities, developing robust risk management practices, and ensuring transparent data reporting and user information. The framework also emphasizes adherence to the FATF Standards to combat money laundering and terrorism financing. While this move aligns G20 nations with global standards and addresses systemic risks, it has drawn criticism for potentially curbing the innovative momentum of DeFi by focusing heavily on the risks rather than the opportunities presented by this burgeoning sector.

Coinbase Stands Firm Against SEC in Latest Legal Maneuver

Coinbase has filed a forceful reply brief in support of its motion for a judgment on the pleadings, a legal step aimed at dismissing the SEC's lawsuit against the cryptocurrency exchange. In this critical document, Coinbase reaffirms its stance that the SEC is overstepping its regulatory boundaries by broadly interpreting the term "investment contract" to include crypto asset transactions on its platform. Coinbase anchors its argument on established case law, which, they assert, clearly defines an investment contract as necessitating a post-sale contractual obligation tied to a financial interest in a business entity—something the SEC has not convincingly claimed in their suit. This move sets the stage for a consequential oral argument scheduled for January 2024 before Judge Katherine Polk Failla, who is no stranger to crypto-related legal disputes. As the crypto community watches closely, Coinbase's challenge to the SEC's approach could influence the regulatory landscape for digital assets significantly.

Institutional Update

Institutions Embrace Bitcoin

"I don't own any bitcoin to be frank but I should," billionaire investor Stan Druckenmiller.

Institutional interest in Bitcoin has maintained a robust momentum, as evidenced by the record-setting $15.4 billion in open interest for Bitcoin options on October 27th. This trend is further reinforced by the substantial growth at the Chicago Mercantile Exchange (CME), where total open interest soared to $3.58 billion by October 30th. Notably, the CME marked a significant achievement by surpassing 100,000 BTC in open interest for the first time, overtaking Bybit and OKX to become the second-largest exchange for standard Bitcoin futures and perpetual futures, with only Binance ahead.

MicroStrategy acquired an additional 155 BTC for $5.3 million and now holds 158,400 BTC with around $1B in unrealized gains. 

HSBC is Building a Decentralized Identity Solution With Polygon ID

HSBC, one of the world's largest banking and financial services institutions, is exploring the use of decentralized identity (DID) technology in partnership with Polygon ID. Here are the key points of their initiative:

Decentralized Identity (DID) Concept: DID offers a more secure and private way to manage online identities. It allows consumers to have a single, secure identity that they can use across various platforms, giving them control over what information they share and with whom.

Polygon ID: This is a set of DID tools that focuses on privacy, decentralization, and user data self-sovereignty. It uses cryptographic proofs (including zero-knowledge proofs) and blockchain technology to secure the exchange of verifiable credentials. Polygon ID supports the W3C open-source identity standard and can be integrated with both public and private ledgers. These features were key reasons why HSBC chose Polygon ID for their prototype.

HSBC's Use Case: HSBC Labs is developing a DID solution for internal account opening, powered by Polygon ID. When a customer opens an account with HSBC, the bank conducts Know Your Customer (KYC) checks and creates a verified credential. This credential can then be used for various transactions, such as logging into an HSBC account, making purchases, applying for loans, dealing with carbon credits, and more.

Customer Identity Wallet: This wallet would allow users to provide their personal information (like name, date of birth, address, passport number, etc.) to establish trust, prove eligibility, or complete transactions. It can draw on identity issuers ranging from government agencies to credit bureaus and utilities.

Open Source and Interoperability: A key aspect of Polygon ID that appealed to HSBC is its open-source technology, adherence to open standards, and interoperability with Ethereum's private and public ledgers. This compatibility is essential for traditional finance and the emerging field of institutional decentralized finance.

Broader Implications: HSBC's adoption of DID solutions like Polygon ID reflects a larger trend in the financial industry towards decentralized, secure, and user-controlled identity management. This approach is expected to lead to a safer and more efficient customer experience, especially as more regulated financial institutions embrace these open standards.

Capital Raises in October

Source: ICO Analytics
  • Blockaid, a Web 3.0 Cybersecurity firm, raised $33M in a round led by Rabbit Capital. Some other investors in this round include Sequoia, Variant, Greylock etc. 
  • Blackbird, a restaurant discovery and rewards platform built on Coinbase’s Base chain, raised $24M in a Series A round led by a16z. Previously they raised $11M in seed capital in Oct last year with investors including Multicoin Capital and Circle Ventures. 
  • SynFutures, a decentralized futures exchange built on Solana blockchain, raised $22M in series B round led by Pantera Capital.  
  • Membrane Labs, an enterprise-grade lending and trading platform for digital assets, raised $20M with investors such as Breven Howard and Point72 Ventures.  
  • Neon Machine, the game studio behind FPS game Shrapnel, raised $20M from Polychain Capital and a few others. This game is based on the avalanche blockchain. 

This month the raises have been fairly distributed among different categories such as a cybersecurity space, restaurant industry, digital asset trading, and a gaming company. It seems like money is pouring into the entire Web 3 space. Lastly, $129M was raised in October by the top 5, whereas September saw $154M raised as opposed to $465M in August and $214M in July. 

Other Noteworthy News/Events in October

We are thrilled to present our latest research report, Stablecoin Landscape and the Remittance Use Case, as a result of a collaboration with leading entities in the digital currency sphere. This endeavor brings together the combined expertise of:

  • The Hedera Network - Globally recognized as the most sustainable public ledger for the decentralized economy. With an impressive ecosystem fostered by a global community, it boasts governance by a diverse council that includes industry heavyweights such as Google, IBM, Deutsche Telekom, Avery Dennison, Boeing, and many more.
  • Myna - Renowned for being at the forefront of cryptocurrency accounting and professional services, offering holistic solutions from compliance to forensic accounting.
  • UnoCoin Exchange - India's pioneering and preeminent cryptocurrency exchange platform.
  • Glo Dollar - A brainchild of the Glo Foundation, this initiative is dedicated to harnessing blockchain technology to combat extreme poverty.
  • Brale - Esteemed stablecoin issuer in the crypto space.

Ensuring the depth and accuracy of our research, the report has undergone rigorous reviews by Ethereum Enterprise Alliance (EEA).

Whether you're looking to understand the basics of stablecoins, learn about the various regulations around its issuance and use, or gain insights into stablecoin remittance applications and partnerships, our latest research report promises to be an invaluable resource.

Download the Full Report Here

Thailand’s KBank acquires crypto exchange business Satang

Kasikornbank (KBank), one of Thailand's largest banks, took a significant step into the cryptocurrency industry by acquiring a majority stake in the local crypto exchange Satang. Here are the key details:

Acquisition Date and Stake: The acquisition was announced on October 30. KBank acquired 97% of the shares in the operator of Thailand's Satang crypto exchange.

Value of the Transaction: The acquisition was valued at 3.7 billion Thai baht, which is approximately $103 million.

Post-Acquisition Changes: Satang Corporation will be renamed Orbix Trade Company Limited. KBank's crypto business will be divided into three divisions: Orbix Custodian (a custody platform), Orbix Invest (a venture arm), and Orbix Technology (a blockchain technology developer).

Satang is a significant player in Thailand's cryptocurrency business, operating a crypto exchange and offering other digital asset services. Satang’s founder, Poramin Insom, is known for launching the privacy-focused cryptocurrency Firo (FIRO), formerly known as Zcoin.

This acquisition follows KBank's launch of a $100 million fund in September 2023, aimed at Web3, fintech, and artificial intelligence. KBank is reportedly Thailand’s second-largest lender by assets, following Bangkok Bank.

On-Chain Metrics & Data

Bitcoin Update

October for BTC was ‘Uptober’. 


In October, Bitcoin (BTC) experienced a significant surge, marking its strongest monthly rally since January. This increase was driven by optimism surrounding the potential approval of Bitcoin ETFs in the U.S. Bitcoin's value rose by over 27%, reaching a 17-month high of $35,000, after previously stabilizing around $27,000 in early October. Matrixport, a crypto investment services firm, observed that the surge was partly due to traders 'panic buying' to avoid missing out on the rally. This was evidenced by elevated funding rates in the BTC derivatives market.

Additionally, several factors contributed to this price increase, including sector-specific momentum, short liquidations, and macroeconomic factors, as reported by CoinMetrics, a crypto analytics firm. Joel Kruger, a market strategist at LMAX Group, suggested that the October breakout to a new yearly high could lead to further significant gains, with a target of around $40,000 in the coming weeks.

In our previous month’s DeFi Research News, we mentioned this: 

“Historically bitcoin's strongest performance occurs in Q4 of the year, returning an average of 35% over the past nine years, with October returning an average of 20% in the past seven out of nine years. So our next months update might be slightly more positive than this one.”

Well, it played out better than we expected. 

Ethereum update

The price of Ethereum went up from ~$1650 to $1800. Ether (ETH) has significantly lagged behind Bitcoin (BTC) in performance this year, and this pattern may persist. 


This could be attributed to the fact that it is much clearer that BTC Spot ETFs are poised to get approved prior to any ETH Spot ETFs. 

Ethereum Staking Landscape Gets Some Lashback

In 2023, Ethereum's staking landscape, particularly around Lido Finance, has shown signs of strain. While Lido initially rose to prominence for enabling investors to stake Ethereum (ETH) and receive a liquid proxy token (stETH) for trading, it is now grappling with challenges. Despite its success, Lido is nearing a critical threshold of 33% of total ETH staked, raising concerns about potential centralization and governance issues. The community's reaction was evident when the Arbitrum network denied Lido's application for an incentive program, signaling growing skepticism. Furthermore, Lido faced operational setbacks, including the slashing of 20 Ethereum validators due to procedural errors and the decision to discontinue its staking service on Solana due to financial unviability. These developments indicate emerging tensions within the Ethereum staking ecosystem and raise questions about the balance between innovation and centralization in decentralized finance (DeFi).

A look at the top DeFi protocols based on the fees generated

And finally let’s look at the top 5 DeFi/NFT protocols/ecosystems with the most fees generated over 30 days, which generally translates to the most active protocols. In some cases, the protocols take a % of the fee as revenues (eg. Lido Finance) in other cases its distributed almost entirely to the Liquidity Providers Stakeholders (eg. Uniswap Liquidity Providers) hence their revenue varies based on such parameters. 

Here are the top 5 protocols for the month of October in terms of Fees generated:

Image by Coinchange, data sourced from Token Terminal

Lido continues to occupy the #1 spot. was at #2 last month has fallen beyond the top 5. Uniswap got pushed to #2 as a result and MakerDAO came in at #3 GMX, a decentralized perpetual exchange was #4 and lastly, AAVE stuck to its #5 spot for 3 months in a row! 

If you enjoyed this research report, please hit the smiling face, and if you want to earn passive income on your crypto, sign up for an Earn Account today!

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