Original author: Nianqing, ChainCatcher
Original editor: TB, ChainCatcher
A new consensus is growing stronger: the era of PvP has temporarily come to an end.
Pump.funs revenue in the past 24 hours has fallen by more than 90% from its historical peak of $15.38 million on January 25. The wave of celebrity coin issuance has become the last accelerator before the crazy racing car memecoin loses control. The Libra incident may mark the end of the great era of Memecoin. The key is that the mentality of players has changed, and P Xiaojiang finally cant P anymore.
Then, Bitcoin returned to the range starting with 8, and altcoins collectively fell. There is a saying that goes, the ambitions have temporarily ended, and preservation has become the current priority. This saying is very appropriate for the current investment strategy in the crypto market. If the market chases hot money in the rising stage of the bull market, investors prefer more stable annual interest products and stable hedging strategies in the downward market.
Although DeFi veteran Andre Cronje believes that those who participate in Meme Coin are a group that does not care about DeFi or even blockchain at all, so Meme Coin has not taken away any attention. But after the end of PvP, funds are indeed looking for other high-yield opportunities, and DeFi is beginning to show signs of recovery.
In just two months since Sonic went online at the end of December last year, its on-chain TVL has increased rapidly from 0 to about 700 million US dollars. Its ecological Dex project Shadow Exchange has achieved rapid money-making due to high annualized mining, and the token price has leaped from a few dollars to hundreds of dollars.
Launching high APY DeFi arbitrage has almost become one of the strategies of new public chains recently. According to Deflama data, in addition to Sonic, emerging high-performance public chains focusing on DeFi such as Berachain, Sei, and Soneium have achieved an increase in TVL in the overall market decline in the past week, and this is inseparable from the high annual interest rate accumulation strategy. In addition, interest-bearing products of protocols such as Pendle and Morpho are also being sought after.
Shadow Exchange: The Golden Shovel of Sonic Ecosystem
In addition to Sonics ecological incentives and subsidies, Shadows success is also due to its innovative gameplay. In the last round of DeFi Summer, AC proposed the ve(3, 3) model, and this time, Shadow improved on ve(3, 3) and proposed x(3, 3).
Simply put, (3, 3) is an agreement for everyone to work together to grow bigger and stronger:
You buy tokens and lock them up to do things for the platform, like providing liquidity and supporting development;
The longer you lock your tokens, the more rewards you will receive, and the platform will become more valuable because of your support.
Theoretically, if you lock your tokens together with everyone else and the token price goes up, everyone will make money.
But ve(3, 3) has a problem: the lock-up period is too rigid, and it takes several years to get high returns. The risk is very high and the rules are not flexible. Therefore, Shadows x(3, 3) adds some new tricks to the old mechanism, and the core is flexibility + incentive:
Lock up and exchange for tickets: You take Shadows token $SHADOW to the platform to lock up and exchange it for $xSHADOW. $xSHADOW is like a membership card. With it, you can share the platforms profits (such as transaction fees) and vote on how to play the platform.
You can exit the market at any time, but there is a price: the old mechanism takes several years to unlock, but x(3, 3) is different. You can get back $SHADOW anytime you want. The price is that if you don’t lock up for a certain period of time, you will be fined, and these fines will be distributed to those “honest people” who continue to lock up.
The longer you lock your tokens, the more you earn: The longer you lock your tokens, the higher the value of your $xSHADOW tokens and the more rewards you will receive.
Rebasing motivates long-termists: the fines paid by those who run away will allow those who stay to earn more. This is called re-basing, which makes those who stay more motivated.
At present, Shadow has verified the explosive power of the x (3, 3) model in the liquidity track. The trading volume on the platform has exceeded 1.4 billion US dollars in the past week, and the TVL has exceeded 130 million US dollars. There are nearly 2,000 liquidity pools, and the APR of some early pools is ridiculously high .
So, how does the Shadow staking pool achieve high APY?
Shadows high APY pool mainly relies on issuing reward tokens xSHADOW to attract users. At the beginning, in order to encourage more people to mine, the rewards were in the high emission stage, and the annualized return calculated based on this was naturally high, which could easily reach hundreds or even thousands of points. In addition, Shadow uses the centralized liquidity mechanism of Uniswap V3. The narrower the range of liquidity provided, the more concentrated the rewards obtained, and the higher the APY looks. But as more people and chips participate, the rewards are gradually diluted, and the APY naturally decreases.
Moreover, there is a lot of water behind the high APY. The xSHADOW of the staking reward actually has unlocking restrictions, and some rewards need to be locked for 6 months before they can be fully taken out. In addition, you also need to bear the risk of impermanent loss. If the price of the pool fluctuates greatly, once the big players sell, they also face the risk of loss. In addition, some users complained that the APY displayed on the Shadow front end is calculated based on the narrowest price range. Many investors cannot calculate the real income and are easily deceived by false highs.
Shadow has been online for less than two months and is still in its early stages. Coupled with Sonics ecological subsidies and airdrop expectations, it is difficult for high APY to be sustained for a long time. As the locked-in volume (TVL) increases and more participants participate, the rewards will be diluted. In addition, investors must also consider risks such as unlocking discounts, impermanent loss, and price fluctuations. Therefore, the stablecoin trading pairs on Shadow are more popular because of their low impermanent loss, but the APY is also relatively low.
It is worth mentioning that Solidly, the DeFi protocol that initially applied the ve(3, 3) model, failed to sustain due to issues with its release mechanism and liquidity management. Although its model has been improved by protocols such as Velodrome, the sustainability flaws of the (3, 3) economic model still exist.
Infrared: BearChain’s “liquidity engine”
Before introducing Stride, it is necessary to first mention the overall situation of the current BeraChain DeFi ecosystem. BeraChain launched its mainnet on February 6. Only 20 days after its launch, its DeFi ecosystem has risen rapidly. The current ecosystem TVL has exceeded 3 billion US dollars, ranking above public chains such as Base, Arbitrum, and Sui. Multiple DeFi protocols on BeraChain, such as Infrared, Stride, BEX (Berachain Exchange), Bend, Berps, Honeypot, etc., have launched high APY liquidity staking pools.
In addition, Berachain has designed a BGT incentive system around its core consensus mechanism PoL, which aims to encourage users, validators and project parties to participate through BGT (Bera Governance Token). When the mainnet was first launched, only a few pools of the official DEX BeraHub could get BGT, such as WBERA/HONEY and USDC.e/HONEY. These are default vaults to lay the foundation for the ecosystem. It is still in the first stage of governance, that is, PoL is fully open, and any project can apply to have its own pool get $BGT. The voting rights are in the hands of BGT holders. At present, it is still in the early participation stage, and the income and subsidies are relatively higher. With the addition of more pools, the distribution of BGT will gradually be diluted.
Currently, the leading liquidity staking protocol of BearChain is Infrared, with an on-chain TVL of over 1.4 billion US dollars and the highest liquidity pool APY of 120%.
Infrareds explosive growth and high APY are inseparable from the money-making effect of the Berachain mainnet bonus period. Berachains governance token BGT is soul-bound and cannot be bought or sold. It can only be earned by providing liquidity. Infrared is equivalent to the ticket office of Berachain. By depositing liquidity (such as BEXs LP tokens) into the vault, you can exchange it for iBGT and get $BGT rewards. Infrared also cooperates with multiple DeFi protocols within the ecosystem to ensure the liquidity and nesting income of iBGT in the entire ecosystem.
In addition, Infrared is a Build-a-Bera incubation project supported by the Berachain Foundation, and received investment from YZi Labs (Binance Labs) in June last year.
Currently, Infrared is still growing by relying on official coin distribution, validator dividends and leveraged gameplay. However, all high APY projects have risks. Like Shadow, Infrared users also face high risks such as profit dilution, impermanent loss and price volatility.
Yei Finance: Sei Ecosystem’s “Stablecoin Mining Artifact”
Although Yei Finance’s APY is not particularly high compared to the previous protocols, its stable investment still attracts many conservative investors to mine.
Yei is the leading lending protocol in the Sei ecosystem, focusing on depositing USDC for mining, and also offering WSEI (wrapped SEI) rewards. It is positioned as Seis income aggregator. Recently, Yei has also launched the SolvBTC pool, providing Bitcoin income opportunities, which is relatively rare in DeFi.
The APY of the stablecoin USDC pool on Yei exceeds 20% (of which about 5.7% is stablecoin income and 14.9% is WSEI), which is currently the largest pool on the platform. Stability + high yield has attracted a large number of conservative investors.
In December last year, Yei Finance completed a US$2 million seed round of financing, led by Manifold, with participation from DWF Ventures, Kronos Research, Outlier Ventures, Side Door Ventures and WOO.
Sonex: DeFi Hub on the Sony Chain
Soneium is an Ethereum Layer-2 blockchain jointly developed by Sony Block Solutions Labs and Startale, based on Optimisms OP Stack. Soneium was officially launched on January 14, 2025. According to L2Beat data, Soneiums TVS (total guaranteed value) has exceeded US$70 million (SolvBTC assets are double-counted).
Similar to the situation of Bearchain, as an early-launched ecosystem, Soneium has a rich variety of incentives and subsidies for its ecosystem. For example, Soneium launched the Soneium OG Badge in early February. The event ends at 12:00 noon on February 27th, Beijing time. If you complete 45 transactions on Soneium (why 45? Because Soneium was launched on January 14th, and the participation event will end on February 27th, which is exactly 45 days), you can get the Soul Bound Badge, and this early participant badge will receive many benefits, such as ecological airdrops.
Sonex is the leading DeFi project in the Soneium ecosystem, supported by Sony Block Solutions Labs and Startale. Positioned as an AI-driven DEX and all-around DeFi platform, it is one of the first projects incubated by the Soneium mainnet. It was launched on the mainnet on January 28, less than a month ago. Last month, Sonex also announced that it had successfully raised $1 million in seed round financing in less than 60 days, led by Outliers Fund, with participation from Baboon VC, Taisu Ventures, Nonagon Capital, Flow Traders, Gate Ventures and Lootex.
Sonexs staking pool currently has many high APY liquidity pools, which are mainly stablecoins and ETH. Recently, Sonex launched the Astar Contribution Score (ACS) activity. From February 20 to May 30, participating in ASTR staking on Sonex can get dual incentives of tokens and points.
The Soneium mainnet has only been online for a month and is still in the bonus period, so the APY and points returns are the highest. Choose popular staking pools and avoid pools with low depth. Currently, Sonex currently has a points reward program, and its points may be directly related to airdrops.
Morpho: A multi-chain DeFi “smart fund”
On February 27, Coinbase announced the launch of MORPHO. Morpho was originally a lending protocol for the Ethereum network. Its core is optimizing lending pools. It adds a layer of smart matching to traditional protocols such as Aave and Compound. Simply put, it matches borrowers and depositors as much as possible peer-to-peer (P2P) to reduce idle funds and increase yields. However, as a relatively old DeFi protocol, it is far less well-known than Aave, Compound, etc. because it is based on other protocols.
In early 2024, Morpho started a new journey by launching Morpho Blue, a new decentralized lending base layer, moving from a pure DeFi protocol to DeFi infrastructure. Morpho Blues lending markets are independent. Unlike multi-asset pools, liquidation parameters for each market can be set without considering the riskiest assets in the basket. As a result, suppliers can lend at a higher LLTV while taking the same market risk as when supplying to a multi-asset pool with a lower LLTV. The collateralized assets are not loaned to borrowers. This alleviates the liquidity requirements required for liquidations to function properly in current lending platforms and enables Morpho Blue to provide higher capital utilization.
In addition, Morpho Blue is fully autonomous, so there is no need to introduce fees to pay for platform maintenance, risk managers, or code security experts. It is worth noting that Morpho Blue has a permissionless asset listing function, and anyone can create a custom lending market, such as assets, interest rates, liquidation rules, etc., which makes the financial efficiency of its ecosystem simple and efficient. Blue also supports permissioned markets, enabling a wider range of use cases, including RWA and institutional markets.
Morpho Stack has been deployed on multiple new chains, including Polygon POS, Arbitrum, Optimism, Scroll, Ink, World Chain, Fraxtal, Unichain, Mode, Hemi, Corn, Sonic and other new chains (it should be noted that the deployment under the multi-chain framework is limited to infrastructure, these new chains have not yet been launched on the Morpho App and will not receive MORPHO rewards).
Currently, Morphos total deposits exceed $5.3 billion. According to DefiLlama data, Morpho Blues total TVL has risen rapidly in recent months and is now close to $3 billion. Currently, there are multiple asset pools on Morpho Blue, and the popular pools are still dominated by stablecoins.
Pendle: The bond market for DeFi
Pendle is a DeFi protocol that allows users to tokenize and trade the future returns of yield assets. By separating the principal and yield components of an asset, Pendle uses more advanced yield management strategies, including fixed income, speculation on future yield changes, and unlocking liquidity from staked assets, introducing traditional financial concepts such as interest rate derivatives into the DeFi space.
Generally speaking, compared to other exchanges that mainly trade the price of coins, Pendles trading object is more like APY, that is, playing with future earnings now. It allows users to split the earnings-generating assets into Principal Tokens (PT) and Yield Tokens (YT), and then trade them separately. For example, if you have stETH (Lidos pledged ETH), you can use Pendle to divide it into PT (get the principal back at maturity) and YT (earn future earnings), and then buy and sell it at will. This flexibility allows users to lock in fixed income and speculate on earnings expectations.
Pendle established the fixed income market last year and has seen its TVL grow 20x in the last year to nearly $5 billion.
There are many arbitrage opportunities on Pendle, such as arbitrage through PT discount. In the market, the transaction price of PT is usually lower than its maturity value (discounted trading). You can buy PT at a low price, hold it until maturity, and earn the difference in the middle; YT is a yield token, and it earns the future income of the underlying assets. If the market expects the income to rise, you can buy YT at a low price and gamble to earn high income; in addition, there are arbitrage spaces such as PT-YT spread. Relatively safe is pledge mining, you can also participate in U-based PT pool arbitrage, APY is usually more than 10%. But all arbitrage needs to take into account risks such as impermanent loss, long lock-up period, and price volatility.
(Investment involves risks. Please be cautious and rational. This article does not provide any investment advice.)
