Protocol Update
Is This DeFi's iPhone Moment?
Everyone is talking about mainstream adoption of DeFi.
What happened? Aave, the lending protocol, introduced a new mobile application for savings.
It's designed for mainstream users who aren't crypto natives. With the power of DeFi in the backend, it's offering a much better product than TradFi & Fintech apps.
Here's what stands out:
- 6% base savings rate. That's 15x higher than the TradFi savings rate of 0.4%.
- Easy deposits to the app from 12k+ bank accounts, debit cards, or crypto stablecoins.
- Security features like withdrawal whitelists, opt-in biometric recovery, and two-factor authentication.
- Up to $1M insurance protection per account. So your grandma doesn't have to worry about losing money via some hack. Even TradFi's FDIC only covers up to $250K.
- Many onchain benefits like self-custody, no minimum deposits or subscription fees, or such. Theoretically, we might see the Aave app providing more ways to manage finance and become a "neo-bank".
This feels like the first DeFi savings app that a regular person could actually trust. If Aave markets it well, it could play the role of a crypto neobank and pull in a massive audience.
(Btw, the 6% savings rate isn't permanent. But Aave is aiming to keep it that high.)
It addresses all the major concerns that crypto has.
- Crypto UX was a major blocker, not with the Aave app.
- Safety features and insurance up to $1M remove the "fear of losing money" with crypto.
- Yield is powered by Aave, a safe protocol proven over the years. No risky rehypothecation or degen looping.
The image below is an example of the sleek UX. It allows users to project their earnings.
The regulatory side would've been a concern with the app. But with the current US administration's attitude towards crypto, I don't think it'll be an issue. You have to KYC to use the app. But the regulatory side is still an unanswered question for me.
The structure behind $1M insurance is also an open question for me.
Due to the horrible market conditions, the $AAVE token didn't move. Market conditions drowned out the excitement. Short term noise aside, this is a strong long-term catalyst.
This is also one of the first times in a while that a crypto product gives regular people a real advantage, not just whales or crypto natives.
Aave savings app changes that. It provides tangible benefits to everyone. If marketed properly, I could see this app taking over the mainstream, just like how Polymarket (& Kalshi) took over the prediction market sector.
Right now, only iOS early access is available. If you're an Android guy, the waitlist is open.
Sponsored by EdgeX
EdgeX: The Rising Star in Perp Trading
Most successful crypto products are trading platforms: Uniswap, HyperLiquid, Pump.fun, and more. Now a new one has entered the spotlight.
EdgeX is a decentralized perpetual & spot trading platform. eStrategy is its liquidity engine, where users can deposit funds into market-making vaults.
The CEX-level performance, best-in-class liquidity, rapid ecosystem growth, and a top-tier mobile experience are driving its exponential growth.
- #1 revenue-generating perp DEX (~13M in last 7 days) among all pre-TGE perp DEXs
- Since April 2025, its TVL has increased from <$15M to ~$500M. That's a >3230% rise.
- Trading volume for perpetuals also increased massively, from ~$1.5B in March to ~$138B in October.
- According to an Artemis analysis, EdgeX has deeper liquidity for some assets than even HyperLiquid.
- It also has a respectable open interest rate at ~$819M at the time of writing.
EdgeX is a great platform to degen with perps. Additionally, they're also running a points/rewards program for a juicy airdrop.
Markets
What's Happening to Our Portfolio?
The crypto market is horrible now.
- $BTC has dumped to <$92k from $126k in October. That's ~27% crash.
- Over the last 43 days, crypto has erased -$1.16 trillion in market cap. That's a loss of ~$27B per day.
But if we look for reasons for this crash, there are no "fundamental causes". In fact, the fundamentals of the industry have been steadily increasing over this period.
Then why's the market crashing?
#1. ETF Outflows
This cycle was primarily driven by TradFi flows, especially for assets with ETFs, like BTC & ETH.
If we look at BTC ETF flows, it's been horrible since the October 10th crash. Since then, BTC ETF has seen a net outflow of >$4.15 billion.
It's the same picture for ETH ETFs as well.
Since TradFi started selling BTC heavily, the prices started to crash.
#2. Leverage Amplification
The ETF outflows aren't the only cause. The highly levered nature of crypto has a big role to play as well.
High leverage = high volatility. When degens long using leverage, market pumps. When the market moves against the longs, even a small price movement can cause massive liquidation cascades.
The record ~$20 billion liquidation cascade on October 10th is a notable example.
Even afterwards, we regularly see massive cascades. According to Kobeissei, over the last 16 days, we got 3 days with >$1B in liquidations.
This explains a huge part of the recent pain.
#3. 10/10 after effects
The October 10th crash was a new record in liquidation.
Massive liquidations usually expose weak balance sheets. Some funds might be insolvent and forced to sell assets quietly.
We don't have a public blowup yet, but there are signs of stress.
The crash of xUSD from Stream might trace back to this. There could be more.
#4. Old Whales are Selling
OG whales have been unloading size. Two reasons:
- They believe in the 4-year cycle theory, making it a self-fulfilling prophecy.
- With ETFs, they finally have the liquidity to offload their massive bags.
You can see the selling in the chart below.
There have been rumors of Strategy, the BTC treasury company, selling BTC as well.
It was partly driven by the company losing the mNAV premium. In other words, the company is valued lower than the value of BTC it holds in the balance sheet. Another reason was the Strategy moving BTC onchain.
But those are just rumors and speculations.
Michael Saylor, the founder, has categorically denied the rumour. In fact, he announced new buys just yesterday.
All of this shows the low confidence in the market.
#5. Macro & Fed
Rate cuts are good for crypto prices.
The market was expecting a rate cut in December. In late October, the Polymarket was giving a 90% probability for a 25bps decrease. Right now, Polymarket has given a 53% probability for no change in the rate cut.
Equities also bled, volatility spiked, and global risk assets de-levered together – crypto just moves faster and nastier.
The US government shutdown might've been another bearish factor. But there isn't a strong historical correlation with shutdowns and market pullbacks.
Are we in a bear market?
I think the question itself is misguided.
The traditional "bear market" assumed a 4-year cycle model. And it expects an 80% crash and a multi-year winter. But imo, 4-year cycle doesn't exist anymore.
Current conditions are better understood as a mid-cycle reset. Many smart people are saying the bottom is near.
Personally, I'm not buying alts. Focus on surviving.
🚀 DeFi Catalysts
Loopscale is an order-book-based credit market. It released the first credit product for permissioned RWAs on Solana
Yala is the issuer of the BTC-backed stablecoin $YU. The stablecoin has crashed overnight.
1inch introduced Aqua, a new liquidity protocol. It claims to allow users to share assets across multiple strategies without locking.
Jupiter has integrated with Robinhood Wallet. It'll enable the wallet users to explore, swap, and trade SPL tokens.
Neutrl went live. It introduced $NUSD, a synthetic dollar that grants access to institutional-grade OTC opportunities and delta-neutral yield.
Plasma has partnered with Daylight to launch GRID, a yield-bearing stablecoin issued by M0. It'll finance electricity production and earn a yield by selling it.
Based launched BasedPals. It claims to be the first ERC 8004-compliant AI Agentic NFT on Hyperliquid.
Zama Confidential Blockchain Protocol enables confidential smart contracts on existing chains. Its testnet is live, and it introduced the $ZAMA token.
📰 Industry News
Devconnect has started in Argentina. It'll be focusing on apps in the Ethereum ecosystem. We can expect some announcements and catalysts from the fair.
US Treasury and IRS have given crypto ETPs a clear path to stake digital assets and share staking rewards with their retail investors.
VanEck's Solana ETF, called $VSOL, went live. ETFs are very important to attract institutional flow.
🐦⬛ X Hits
- Upcoming ZEC FUDs.
- Hayes's take on the market.
- Next phase of the Sonic chain.
- DEX Auction Model from PropellerHeads.
- Framework for evaluating airdrop potential.
😂 Meme
Until next time,
Edgy
PS. If you have any questions about markets or crypto more broadly, ask by replying to this email. I might even write a post in the next newsletter based on your question.
Today's email was written by Edgy and Yayya.
DISCLAIMER: I'm NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing.
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