DeFi & L1L2 Weekly — 📈 The DeFi lending TVL reached a record of US$56 billion; the US Senate passed the GENIUS Act to regulate stablecoins

The DeFi lending TVL reached US$56 billion with Aave accounting for over 50%; the GENIUS Act which regulates stablecoins was passed; the XRP Ledger will launch an EVM-compatible sidechain in Q2.

Quick Take

• The Total Value Locked (TVL) of DeFi lending platforms reached US$56 billion; Aave dominates the market with a share of over 50%. 
• The US Senate passed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, setting strict compliance rules for issuers of US stablecoins.
• XRP Ledger will launch an Ethereum Virtual Machine (EVM)-compatible sidechain in Q2 2025, merging Ethereum smart contracts with XRPL.
• Uniswap introduced smart wallet functionality with gasless, maximal extractable value (MEV)-resistant swaps via EIP-7702.
• Maple Finance partnered with Lido to offer stablecoin loans backed by staked Ether (stETH) collateral.
• Polkadot’s community is debating a proposal to convert 500,000 DOT into Threshold Bitcoin (tBTC) through a year-long dollar-cost average (DCA) strategy.
• Cardano’s co-founder Charles Hoskinson proposed converting $100 million in ADA to stablecoins and BTC to boost DeFi liquidity. 
• Ondo Finance launched tokenised US treasuries on the XRP Ledger, targeting institutional users with 24/7 access. 

Weekly DeFi Index

This week, the market capitalisation and volatility indices decreased by -13.29% and -6.33%, respectively, while the volume index increased by +14.99%.

Chart of the Week

The DeFi lending market reached a record high of $56 billion in TVL on 11 June, surging by 16.6% year-to-date. This growth followed remarks by the Chair of the US Securities and Exchange Commission (SEC), Paul Atkins, about exempting DeFi platforms from regulatory barriers to accelerate on-chain product launches. Aave dominates the market with a 50% share in TVL, and the platform saw a 31.13% increase from $19.71 billion in early May to $25.84 billion in mid-June,  followed by Morpho (7.9% share in TVL) and JustLend (6.3% share in TVL). 

News Highlights

• The US Senate passed the GENIUS Act, a bill setting strict reserve, transparency, and compliance rules for US stablecoin issuers. It also opens the door to a broader range of financial institutions including banks, fintechs, and major retailers. The bill is now headed to the House of Representatives for voting. Meanwhile, the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act, its companion bill in the House, is under consideration.
• Ripple’s XRP Ledger will introduce an EVM-compatible sidechain in Q2 2025, merging Ethereum smart contracts with the XRP Ledger ecosystem. The sidechain is live on a testnet and is pending a mainnet launch after testing and validator integration. Using Axelar as a bridging solution, it will support asset transfers with gas fees paid in wrapped XRP.
• Uniswap Wallet launched smart wallet functionality which uses EIP-7702 smart contracts to enable one-click swaps and batched transactions that include both swaps and approvals to reduce transaction costs and complexity. Built on the Uniswap Trading API, the integration offers gasless, MEV-resistant trading to enhance user experience. 
• Maple Finance partnered with Lido Finance to offer stablecoin loans backed by stETH collateral. This collaboration allows institutions to borrow funds without selling stETH and retaining Ethereum staking rewards. 
• Polkadot’s community is split on a proposal to convert 500,000 DOT tokens into tBTC via a year-long dollar cost average strategy to create a BTC reserve. Aiming at diversification and long-term stability, the plan faces scepticism as the value of DOT would face additional pressure on its current price. The community will ultimately decide on the proposal through a vote.
• Cardano’s co-founder Charles Hoskinson proposed converting $100 million in ADA from the project’s $1.2 billion treasury into stablecoins and BTC to enhance Cardano’s DeFi liquidity. This move aims to improve Cardano’s low stablecoin-to-TVL ratio from below 10% to around 33 to 40%. The proposal will be addressed at the upcoming Rare Evo event.
• Ondo Finance launched its tokenised US treasuries OUSG on the XRP Ledger, targeting institutional users with 24/7 access via Ripple’s $389 million RLUSD stablecoin.

Recent Research Reports

• Interest Rate Derivatives and Pendle: Pendle Finance innovates by allowing users to tokenise and trade the yield component of yield-bearing assets separately from the principal, unlocking new liquidity and yield management strategies.
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