LWID: Venus $3.7M Exploit, Aave Reducing Buybacks

DeFi📈

• Pendle introduced a one-click PT looping feature designed to simplify leveraged yield strategies, enabling users to boost returns from around 5% to over 20% APY through automated looping.

  • Pendle also introduces limit-order incentives, rewarding users with PENDLE for placing orders near the implied APY range, even if the orders are not filled. This feature covers USDG, sUSDe, srUSDe, and jrUSDe markets on Ethereum, offering up to 50% APR for this strategy.

• HyperLend partnered with Hyperion DeFi to launch compliance-gated private lending pools on HyperEVM, enabling institutional borrowers to access credit using HYPE as collateral.

• Aave DAO cuts annual AAVE buyback budget by 40% to $30M due to 25% revenue decline and 2026 deficit concerns, while Sky DAO slashes SKY buybacks from 75% to 7.5% to strengthen capital reserves as USDS supply exceeds $11B.

• Katana launches KAT pre-staking on Ethereum for early users who pre-deposited or used DeFi apps before the mainnet launch. Pre-stakers gain exclusive benefits and rewards for supporting the protocol during its initial phase.

• Across Protocol proposed transitioning from a DAO to a U.S. C-corp, allowing ACX holders to exchange tokens for equity or redeem them for $0.04375 USDC per token, a 25% premium to the one-month average price.

• Origin Protocol bought back 18M+ OGN in 2026, about 12% of the circulating supply, funded by protocol fees and distributed to xOGN stakers earning up to 14% APY.

• Lido launched two simplified vaults — EarnETH and EarnUSD — powered by Mellow Protocol, consolidating its previous vault offerings (GGV, stRATEGY, DVV) into a single ETH and single USD vault. Both auto-compound daily across protocols like Aave, Morpho, Pendle, and Gearbox.

• Midas partnered with M1 Capital, a $190M AUM hedge fund, to launch mM1-USD, a tokenized multi-strategy fund offering onchain exposure to market-neutral strategies such as arbitrage, recursive lending, and basis trading through a single yield-bearing asset.

• Glider, an automated portfolio protocol, launched the Base Boosted Portfolio for top on-chain assets selected by market cap and liquidity, offering boosted rewards on Base for a limited 30-day period, offering more than 20% APR.

Stablecoins/RWA🪙

• Sonic Labs Launches USSD, a native USD stablecoin built on Frax Finance infrastructure and backed 1:1 by institutional-grade assets, including tokenized Treasuries from BlackRock, Superstate, and WisdomTree.

• Ethena updated the sUSDe unstaking mechanism, replacing the fixed 7-day cooldown with a dynamic 1–7 day model tied to the amount of liquid stablecoins backing USDe, with the current cooldown reduced to 1 day.

• Neutrl introduced instant unstaking for sNUSD, allowing users to convert sNUSD to liquid NUSD immediately with a 1% fee instead of waiting for the standard 10-day cooldown.

• Theo opened the thUSD Genesis vault with a $100M cap, allowing users to deposit USDC or thBILL on Ethereum or Arbitrum for a 6-week lock to mint thUSD and earn ~8.3% APR from its delta-neutral gold carry strategy.

• Jupiter partnered with xStocksFi to enable trading of 70+ tokenised stocks with liquidity via Atomic RFQ during market hours and on-chain liquidity through xChange on weekends.

• Gains Network launches WTI and XAU RWA trading pairs across Arbitrum, Base, Polygon, ApeChain, and MegaETH with 20% fee discounts for 7 days.

Prediction Markets🔮

• Hyperliquid deployed HIP-4 on testnet, introducing fully collateralised binary outcome markets based on HyperCore mark prices, with the initial mainnet release planned as 1-day BTC and HYPE markets without leverage or liquidations.

• Linera launched the beta for a short-term prediction platform, allowing users to bet on BTC, ETH, and SOL price movements over 1–5 minute intervals while earning Portal Points through leaderboard competitions and trading activity.

• World Liberty Finance USD1 launches prediction market integration with Myriad Markets, creating the first fully USD1-powered prediction platform.

Issues⚠️

• Venus Protocol suffered a $3.7M exploit where attackers manipulated Thena (THE) token supply caps across 8 blockchains to borrow multiple assets, exposing critical vulnerabilities in the protocol’s risk management framework.

• $vHYPE (which represents the $HYPE stake by @ventuals) experienced a massive depeg because users were unable to withdraw funds due to the 500k $HYPE required to open a HIP-3 being locked up, dropping as low as $9 or 0.2388 $HYPE.

• Aave reported a misconfiguration in its CAPO oracle that triggered wstETH E-Mode liquidations, causing about 345 ETH in losses. No bad debt occurred; affected users will be fully reimbursed, and the oracle parameters have since been corrected.

• Aave saw a user execute a $50M USDT swap for AAVE through its interface, receiving only 324 AAVE due to extreme slippage. The user confirmed a slippage warning before proceeding. Aave founder Stani Kulechov said the team will return $600K in fees collected from the transaction.

• Upshift vault on Mezo paused withdrawals after Velar PerpDEX exploit on Feb 20 drained the BTC/MUSD pool. The curator recalled funds across protocols to maximize depositor redemptions, protecting the $323M TVL strategy.

• Compound Finance users face phishing risk as the official website redirects to a suspicious domain impersonating the app

News🗞️

• Mastercard launched the Crypto Partner Program, bringing together more than 85 crypto companies, including Solana, Aptos, Monad, etc, payment providers, and financial institutions to collaborate on standards and real-world digital asset use cases such as remittances and B2B payments.

• BlackRock launched $ETHB on Nasdaq, the first U.S. spot Ethereum ETF to incorporate staking. Unlike its existing $ETHA product, $ETHB offers staking rewards of 3–4% annually, with 70–95% of holdings staked via Coinbase.

• Steakhouse Finance embeds Morpho lending directly into Ramp Network’s fintech app, allowing USDC earning without leaving the platform.

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