Crypto Credit’s Balancing Act: Innovation Races Against the Threat of Collapse
- DeFi platforms are deleveraging post-crash while maintaining strong demand for Bitcoin and Solana borrowing amid market volatility. - Recent $93M Stream Finance loss and $20B liquidation event exposed systemic risks, prompting risk reassessments and stablecoin collapses. - RedStone's Credora platform aims to standardize DeFi credit ratings across lending pools to address transparency and counterparty risks. - Regulatory scrutiny over KYC rules and smart contract exploits like Balancer's $128M hack intens
According to a
Recent disruptions have highlighted how delicate this balance is. Stream Finance’s $93 million loss and the $20 billion liquidation event in October have prompted lenders to reevaluate their risk strategies. Following Stream’s collapse, Elixir—a DeFi liquidity provider—halted support for its deUSD stablecoin after its value plummeted by 90%, as reported by a
Flowdesk pointed out that returns in safer lending pools have narrowed but still surpass traditional benchmarks, including the
Regulatory challenges and technical weaknesses are adding further complexity. The October downturn, together with a $128 million exploit on Balancer’s V2 pools, has increased attention on the security and governance of smart contracts. Meanwhile, U.S. lawmakers’ proposals to broaden KYC requirements to include non-custodial wallets have raised concerns about DeFi activity moving offshore, as discussed in a
Despite these headwinds, areas like blockchain gaming and DeFi continued to drive Web3 participation in October, making up 46.3% of decentralized app usage. NFT trading also saw a resurgence, with $546 million in trades during October, signaling ongoing strength in both speculative and practical applications.
Looking forward, Flowdesk cautioned that if bearish conditions persist, returns may fall closer to those of traditional assets, putting pressure on lenders’ profits. The growing institutional use of tokenized assets, such as
As the industry consolidates, the tension between innovation and prudence will shape the future of crypto credit. For now, the situation remains unstable, with each leveraged trade and risk review potentially setting the stage for new volatility.
---
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Bitcoin News Update: Bitcoin Drops Under $100K Amid Diverging Analyst Opinions on Market Direction
- Bitcoin dropped below $100,000 on Nov. 7, driven by macroeconomic risks and $2B+ ETF outflows amid U.S.-China tensions and Fed inaction. - Analysts highlight $113,000 as critical resistance and $100,000 as key support, with breakdowns risking $88,000 liquidation levels. - Institutional views diverge: Ark Invest cut targets to $120,000 while JPMorgan raised fair value to $170,000 amid shifting adoption narratives. - Market eyes December's "Santa Rally" potential but recovery hinges on Bitcoin holding abov
Bitget Connects Speculation and Risk Control through STABLEUSDT Futures
- Bitget launched STABLEUSDT pre-market futures with 25x leverage, offering 24/7 trading since Nov 6, 2025. - The contract features 4-hour funding settlements and 0.00001 tick size to enable flexible positioning. - As the world's largest UEX, Bitget aims to boost market depth for emerging tokens through strategic liquidity initiatives. - Partnerships with LALIGA/MotoGP and a $2M loan program highlight its mission to democratize crypto access. - Risk warnings emphasize volatility concerns for leveraged prod
Token Unlock Releases and Large Holder Sell-Offs Drive Ethena's 80% Value Decline
- Ethena's ENA token dropped 80% to $0.31 amid massive unlocks and whale selling, with 45.4% of tokens released in November. - Robinhood listing and Binance's USDe buyback program offer limited support as 6.8B tokens circulate and 5.99B remain locked until 2026. - USDe's $8.9B TVL and multi-chain expansion highlight potential, but technical indicators signal a possible 37% further price decline. - Analysts warn ongoing unlocks, whale activity, and crypto market volatility could prolong ENA's bearish trend
Web3 Rewards Program Fuels Surge in TWT and 1INCH
- Trust Wallet's TWT and 1INCH tokens gain momentum as Trust Premium loyalty program boosts user engagement and on-chain activity surges. - TWT trading volume rises to $32.98M while 1INCH hits $110.86M weekly volume, supported by technical indicators and ecosystem integrations. - TWT stabilizes above $1 with key resistance at $1.2935, while 1INCH tests $0.2330 level amid bullish MACD and RSI signals. - Trust Premium's tiered rewards and 1inch integration create flywheel effects, linking user activity direc
