Whats up, accommodating readers! Byron is out this week, doing no matter Byron does when he’s not writing The Breakdown. Byron will probably be again subsequent week to your common scheduled programming.
This week, you’re getting a style of our different Blockworks e-newsletter, 0xResearch. You’ll get day by day alpha and insights from our Blockworks Analysis analysts.
Markets appear befuddled by the Trump administration’s schizophrenic social media pronouncements on the Iran Conflict, netting out to not a lot. The S&P 500 (+0.3%) and Nasdaq 100 (+0.2%) closed modestly greater Monday, with crypto-native sectors buying and selling broadly in line. BTC completed -0.4% on the session, leaving the key beta indices clustered tightly round flat — L1s +0.2%, L2s -0.5%, Solana Ecosystem +0.4%, Ethereum Ecosystem +0.4%. A quiet tape, with the motion concentrated in two idiosyncratic strikes on the prime of the leaderboard.
Modular (+4.3%) topped the cross-sector desk, however the transfer appears to be like idiosyncratic. DYM was the first driver, and I would not learn this as a thematic sign for the modular thesis broadly.
DeFi (+3.1%) was one other standout sector, pushed nearly solely by Ondo. ONDO closed up roughly +11% on the day, breaking decisively away from the remainder of the DeFi basket within the last 4 hours of buying and selling (seen within the DeFi part chart).
The catalyst was SEC headlines on tokenization reported by Bloomberg, which Ondo may very well be uniquely positioned to capitalize on — the agency controls a considerable chunk of the tokenized fairness market, has a no-action letter pending with the SEC since April, and is scheduled to start manufacturing trades inside the DTCC consortium in July alongside BlackRock and Goldman.
Different RWA-adjacent names participated extra modestly — the broader RWA index was +1.0%, suggesting the transfer was a single-name re-rating moderately than a sector-wide tokenization repricing. The Perps Index (+3.9%) and DEXs (+1.6%) rounded out the inexperienced, in line with DeFi-adjacent power moderately than a directional crypto bid.
On the draw back, Crypto Miners (-2.9%) and Bittensor Ecosystem (-2.5%) lagged, with AI (-1.0%), Trade Tokens (-0.8%), and Buyback Leaders (-0.8%) additionally within the purple. Miners diverging this difficult from the broader Crypto Equities Index (+0.3%) is value flagging, however I haven’t got a clear catalyst — may very well be Leopold Aschenbrenner FUD, as FinTwit pundits had been reading too much into the March hedging conduct of Mr. “Ash burner.”
In sum, a comparatively quiet day, punctuated by name-specific information (ONDO on tokenization, DYM on modular) moderately than a directional bid or any clear thematic rotation.
Ethena’s USDe development marketing campaign on Kamino and Jupiter Lend is proving how rapidly Solana lending markets can scale new stablecoin merchandise. As of Could 18, roughly $530M is deposited into every market, for a mixed $1.06B in deposits lower than per week after launch.
Each markets allow customers to loop USDG in opposition to USDe, with max yields at the moment round 20% and borrow capability just about maxed out. Ethena seeded each markets with roughly $200M of USDG liquidity, giving customers fast capability to leverage the USDe carry commerce.
The launch can also be notable from a curation standpoint. Jupiter Lend’s market is being curated by Bitwise, seemingly the primary instance of an ETF issuer curating a DeFi lending vault, whereas Kamino’s market is curated by Sentora.
The early traction throughout each markets has been a tailwind for USDe provide development on Solana, which has added roughly $560M since launch. Over the identical interval, USDG provide has fallen from $1.55B to $662M.
For now, demand seems constrained by USDG borrowing capability moderately than person urge for food. We ran an hourly evaluation on Kamino to raised perceive how the market has behaved.
Our pattern runs from Could 12 at 19:00 UTC via Could 18 at 18:00 UTC.
USDG provide was seeded at roughly $200M on Could 12 at 19:00 UTC, however remained principally idle till the general public announcement on Could 13 at 15:00 UTC. Demand appeared nearly instantly: in that hourly bucket, USDG excellent loans jumped from about $366K to $18.5M. By Could 14 at 19:00 UTC, the reserve was close to capability.
As soon as the market grew to become capacity-constrained, the subsequent $50M of USDG liquidity on Could 16 was absorbed far quicker. USDG provide rose by about $50M at 12:00 UTC, and utilization was again close to 100% by 13:00 UTC.
Total, USDG utilization spent roughly 93 hourly observations above 99.9%, ending at 99.98% utilization with solely about $46.3K of idle liquidity in opposition to roughly $250M equipped.
This has created very excessive gross leverage. Utilizing USDG borrow divided by USDe deposits as a debt-to-collateral ratio, the market ended at 89.5%, implying roughly 9.6x mixture leverage. The max noticed ratio was 91.6% on Could 13 at 18:00 UTC, implying roughly 11.9x mixture leverage.
The market is successfully clearing on USDG borrow capability. Demand to borrow in opposition to USDe collateral seems ample, however the binding constraint is how a lot USDG may be borrowed. As soon as USDG utilization reaches 100%, new entrants can not lever until somebody repays or new USDG capability seems.
For Solana lending markets, this can be a good early signal: liquidity confirmed up, customers wished to loop, and borrow capability was stuffed nearly instantly. However it’s value being clear about what’s rising right here. This isn’t broad, natural lending depth but. It’s extremely environment friendly leverage formation round a selected stablecoin yield commerce.
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