Gate Decentralized Finance Daily ( October 20 ): HyperSwap launches TGE; Vitalik introduces GKR protocol

On October 20, the crypto market slightly warmed up, with BTC returning to $111,000 and ETH breaking through $4,000. The total DeFi TVL across the network rose to $154.897 billion, an increase of 3.05% in one day. Although locked-up funds continue to flow back in, DEX trading volume has dropped to $16.121 billion, indicating that short-term liquidity remains cautious. HyperSwap released the tokenomics for the SWAP token and announced the launch of TGE, becoming one of the core events in the market; at the same time, discussions on the centralized risks triggered by AI entities infiltrating DeFi trading have heated up again.

Overview of the DeFi Market

(Source: DeFiLlama)

Total DeFi TVL across the network: Today (October 20), the crypto market has slightly rebounded, with BTC currently trading around 111,000 USD and ETH returning above 4,000 USD; the current total DeFi TVL across the network is 154.897 billion USD, with a 24H growth of 3.05%.

DEX 24-hour volume: approximately $16.121 billion, a week-on-week decrease of 17.87%; the top three are: Uniswap ($5.984 billion), PancakeSwap ($2.274 billion), HumidiFi ($1.103 billion).

Popular Protocols and On-chain Performance

Based on TVL, the data of the top ten DeFi protocols is as follows:

(Source: DeFiLlama)

Among them, the performance of the top-ranked protocol data is as follows:

Aave: TVL approximately $39.98 billion, 24-hour rise 2.21%;

Lido: TVL approximately 34.53 billion USD, 24-hour rise of 4.42%;

EigenLayer: TVL approximately 17.138 billion USD, 24-hour rise of 4.44%;

Ethena: TVL approximately 12.176 billion USD, 24-hour drop of 0.69%;

ETH. fi: TVL approximately 10.145 billion USD, 24-hour rise 3.51%.

In addition, the top ten projects ranked by protocol fees in the past 24 hours are as follows:

(Source: DeFiLlama)

Among them, Uniswap's protocol fees in the past 24 hours reached 11.85 million USD, ranking second only to Tether (23.16 million USD); Aster's protocol fees in the past 24 hours reached 3.32 million USD, ranking fourth; Aave ranked fifth with 2.68 million USD.

Project News Review

1. Evgeny Gaevoy, founder of crypto market maker Wintermute, stated during The Block's podcast that he believes the “10.11” crash was the result of multiple factors. On one hand, there is indeed more leverage in the system; on the other hand, the market has seen more types of Tokens, more perpetual contract products, and more large platforms trading these perpetual contracts.

Looking back three or four years ago, we didn't have so many perpetual contract products with huge open interest and significant risk of collapse. In terms of market maturity, while it is indeed more complete and sophisticated than in the past, this development has also given rise to many issues.

It is still unclear who exactly “liquidated” and who suffered the greatest losses, but I suspect that many institutions with significant losses are actually operating long-short strategies, such as shorting Bitcoin while going long on certain altcoins. They thought this would hedge their risks, but instead, they were “slapped in the face” by the ADL mechanism.

During the “10.11” crash event, the DeFi market experienced a serious inventory issue. Our positions were on mainstream CEXs, but we couldn't transfer them out, so everything that could be sold on DeFi was sold out, and everything that could be bought on CEXs was bought, but we were unable to complete the asset transfer, resulting in a liquidity imbalance.

Gaevoy stated that while arbitrage can be done through lending or cross-market pricing, the risks are high and the operations are complex. In this incident, many competitors' risk control systems triggered circuit breakers, suspending DeFi trading. Nevertheless, he expressed satisfaction with the team's performance, stating “while we could have made more money, we indeed ran out of inventory.”

In addition, it stated that there is a common misunderstanding from the outside world that the company “often shorts,” but in reality, Wintermute has maintained a net long position for a long time and has been generally bullish on the market since 2022 or even earlier.

Gaevoy revealed that Wintermute has a venture capital department, investing in multiple projects and holding a large amount of Lock-up Position tokens, while also holding core assets such as BTC, ETH, HYPE, and SOL. He emphasized that the company could not actively crash the market, as that would harm the value of its own holdings.

In terms of risk management, Wintermute has set strict limits: long positions do not exceed 25% of net assets, and the capital proportion on a single platform does not exceed 35%. Gaevoy stated that this strategy allowed the company to successfully weather the FTX collapse and multiple hacker attacks, and he said, “Unless the top five trading platforms disappear at the same time, we can survive.”

2. According to Forbes, by 2025, autonomous AI agents have become one of the hottest narratives in the crypto industry, expanding overnight from an experimental novelty to a market valued at $13.5 billion. An AI agent named “Truth Terminal” convinced renowned venture capitalist Marc Andreessen to donate $50,000, which propelled the market capitalization of the GOAT Token to $1.2 billion.

Currently, there are over 11,000 AI agents operating on the Virtuals Protocol platform, executing trades and managing portfolios with minimal human intervention.

But there is a problem that almost no one is willing to face. These AI intelligences were originally intended to enhance the efficiency of Decentralized Finance, yet they are often highly centralized themselves. The vast majority rely on closed-source models from companies like OpenAI and Anthropic, thus forming a centralized monopoly at the expense of user data and trading volume.

In an industry built on transparency, AI intelligences simultaneously represent the most market-demanding products in the crypto world to date—and the most serious ideological contradictions. The question is no longer “Will AI intelligences reshape the crypto industry?” but rather—they already are. Security researchers warn that many AI intelligences deployed on blockchain networks use unaudited smart contracts, and most delegate the decision-making process to centralized AI services.

When an agent executes a DeFi strategy worth 100,000 USD, the real decision-making reasoning actually takes place on the servers of OpenAI or Google—these “black box” systems cannot be reviewed or verified by anyone.

3. The DEX protocol HyperSwap based on the Hyperliquid network has released the tokenomics for the SWAP token. The total supply cap for the SWAP token is 100 million, and the TGE will start on October 20.

25% will be used for community genesis distribution (fully unlocked), 25% will be used for investor genesis distribution (fully unlocked), 25% will be used for future liquidity mining issuance (of which 15 million Tokens will be unlocked linearly over 36 months, and the remaining 10 million Tokens will be unlocked linearly over 12 months), 8% will be allocated to existing and future core contributors (12 months cliff unlock, followed by 1 year linear unlock), 10% will be used for future trading activity airdrops (unlocked after 6 months), 3% will be allocated to the advisory team (linear unlock after 1 year post-genesis), 2.5% will be used for HyperSwap liquidity pool, and 1.5% will be used for HIP-2.

In the future, 25% of the Token issuance will be distributed in the form of xSWAP, which is a locked version of the SWAP Token. xSWAP can be exchanged for SWAP at a ratio of 1:1 after a maximum lock-up period of 6 months.

· Accounts with leverage below 5 times will receive a 100% subsidy;

· Accounts with leverage higher than 5 times will receive partial non-subsidy based on the leverage multiple and market conditions;

· Users with BTC lending positions reduced passively due to ADL: 100% subsidy;

· Funds recharged before settlement: 100% issued;

· All settlement fees: 50% rebate.

4. According to relevant pages, pump.fun has created the X account Spotlight aimed at “accelerating ICM (Internet Capital Markets)” and may launch related functionality updates.

5. Ethereum founder Vitalik Buterin published an article this morning introducing the GKR protocol. GKR is a core protocol for achieving rapid proofs such as ZK-EVM and zk-ML, suitable for computations involving “multi-layer low-order processing + extensive application of repetitive functions” (like hashing and neural networks), requiring no commitment to the intermediate layer, but only to the input and output, significantly improving efficiency. By reducing the computational load of each round of sumcheck (such as Gruen's trick) and optimizing batch processing with Poseidon2, it is theoretically proven that the overhead of Poseidon hashing is only 15x (traditional STARKs are 100x), and in practice can be less than 10x, with the overhead approaching zero as the data volume increases.

Overview of Major Leading DeFi Projects

Ethereum DEX 24-hour trading volume ranks first, at approximately $5.292 billion, with the top three projects being:

Uniswap ($4.146 billion), Fluid ($587.74 million), Curve Finance ($244.17 million);

Solana DEX 24-hour trading volume ranks first, at approximately 3.686 billion USD, with the top three projects being:

HumidiFi ($1.103 billion), Meteora ($1.045 billion), Raydium ($490.26 million);

BSC DEX ranks third in 24-hour trading volume, approximately $2.835 billion, a week-on-week decrease of 30.12%; the top three projects are:

PancakeSwap ($1.885 billion), Uniswap ($790.59 million), four.meme ($8.805 million).

Gate DeFi Token Market Data

According to the data from Gate's market page, the price performance of the top ten tokens in the DeFi sector is as follows:

(Source: Gate DeFi Market Trends)

As of October 20, the cryptocurrency market has rebounded overall, with DeFi sector tokens rising more than falling, specifically:

UNI is currently priced at 6.44 USD, with a 24-hour rise of 4.88%;

AAVE is currently reported at 232.67 USD, with a 24-hour rise of 6.26%;

WLFI is currently reported at 0.133 USD, with a 24-hour rise of 0.83%;

MORPHO is currently reported at 1.95 USD, with a 24-hour rise of 1.04%;

INJ is currently priced at 8.83 USD, with a 24-hour rise of 3.34%;

MYX is currently reported at 2.72 USD, with a 24-hour decline of 1.58%;

CRV is currently priced at 0.5729 USD, with a 24-hour increase of 4.77%;

SYRUP is currently reported at 0.3705 USD, with a 24-hour decline of 10.88%;

FF currently reports at 0.1324 USD, with a 24-hour rise of 4.96%.

Market Trend Analysis

TVL Slightly Bounces Back, Mainstream Protocols Perform Steadily The total TVL of the network has risen to 15.4897 billion USD, an increase of 3.05%. The inflow of funds is mainly concentrated in leading protocols such as Aave (+2.21%), Lido (+4.42%), and EigenLayer (+4.44%). ETH.fi also rose by 3.51%, indicating that the LSD and re-staking sectors continue to have growth momentum. In contrast, Ethena slightly fell by 0.69%, showing that the short-term volatility of yield-bearing assets is still present.

DEX volume declines, market activity weakens The 24-hour DEX trading volume is approximately $16.121 billion, a week-on-week decrease of 17.87%, with more funds concentrated in Uniswap ($5.984 billion), PancakeSwap ($2.274 billion), and HumidiFi ($1.103 billion). Among the chains, the Solana ecosystem shows the highest activity, with Meteora and HumidiFi contributing $1.045 billion and $1.103 billion in trading volume, respectively.

HyperSwap TGE Boosts Market Sentiment The DEX protocol HyperSwap based on the Hyperliquid network announced its SWAP Token distribution plan and confirmed that the TGE will launch on October 20. The total token supply is 100 million, with 25% allocated for community genesis distribution, 25% allocated to investors, and the remainder will be unlocked linearly or airdropped. This move is seen as a new round of liquidity stimulation signal for the DeFi sector.

AI Narratives are Gaining Popularity but Risks are Increasing According to Forbes, the market value of AI entities has reached 13.5 billion USD, with some projects like the GOAT Token skyrocketing due to AI automated trading models. However, analysis indicates that AI strategies in DeFi largely rely on closed-source services such as OpenAI and Anthropic, resulting in a centralized decision-making process that is unaudited, potentially becoming a point of systemic risk.

Analyst's Viewpoint

Structural recovery but funds remain cautious Analysts believe that the recent rise in TVL reflects a positive market response to the rebound of BTC/ETH, but the decline in DEX volume indicates a weakening of speculative activity. Overall, DeFi liquidity remains defensive, mainly concentrated in blue-chip protocols and re-staking, yield-generating assets.

HyperSwap TGE may become a short-term catalyst The token issuance of HyperSwap brings new expectations for liquidity injection in DeFi, and some funds are expected to flow back from the ETH ecosystem into the Hyperliquid system, but the linear unlocking arrangement of the token may also bring periodic selling pressure.

The AI track still has potential, but transparency is a bottleneck Analysts point out that the explosion of AI agents represents the direction of DeFi strategy automation, but centralized reliance and lack of auditing issues will become major concerns limiting growth. In the future, if on-chain verification mechanisms can be introduced, the AI narrative may reshape the competitive landscape of DeFi.

Conclusion

Overall, on October 20, the DeFi market showed signs of mild recovery, with an increase in TVL and robust mainstream protocols, but the decline in volume reflects that the market is still in an adjustment phase. HyperSwap TGE and AI entity risks run parallel, becoming the two core events driving and balancing the DeFi market. Short-term funds may maintain structural rotation, with security and transparency becoming the key focus for investors.