Uniswap Stands Against SEC; Bitcoin Runes Hype Declines: Finance Redefined

In the past week, decentralized finance (DeFi) has been buzzing with excitement over the potential approval of a U.S.-based spot Ether exchange-traded fund (ETF). This anticipation has been mixed with concerns about DeFi’s regulatory environment. One of the week’s highlights was the popular decentralized exchange (DEX) Uniswap’s vow to challenge the U.S. Securities and Exchange Commission (SEC) in response to a Wells notice from the agency. Uniswap criticized the SEC’s case as “weak.”

Bitcoin Runes, a protocol that surged in popularity in April, has experienced a steep 84% drop in transactions since then. This notable decline comes after an initial period of extensive activity. Vitalik Buterin, co-founder of Ethereum, has advocated for the use of zero-knowledge (ZK) likes on the decentralized social media platform Farcaster. He believes this could combat preference falsification.

The DeFi market enjoyed a bullish week, reflected in a $10 billion increase in the total value locked in DeFi protocols, bringing the figure back above $100 billion. This positive trend follows weeks of market pressures.

Uniswap Labs, the team behind the Uniswap DEX, has publicly responded to the SEC’s Wells notice, suggesting a potential enforcement action. In a blog post dated May 21, Uniswap argued that the SEC’s legal arguments were weak. The company expressed its readiness to defend itself in court if necessary, citing previous successful defenses, including those of Grayscale and Ripple. Marvin Ammori, the chief legal officer, emphasized that the SEC’s case was fundamentally flawed by treating all tokens as securities.

Bitcoin Runes is facing significant challenges in maintaining its share of Bitcoin transactions. Since its launch on April 20, it has driven Bitcoin blockchain traffic on select days, mainly weekends. The launch coincided with Bitcoin’s fourth halving, which initially boosted transaction volumes and mining revenue, hitting an all-time high daily earnings of $107.7 million. The hype has since dwindled.

Vitalik Buterin, speaking on the decentralized social media platform Farcaster, backed X engineer Haofei’s announcement that “Likes” on the platform would become private. Buterin proposed taking this privacy initiative further by introducing ZK likes, which could help combat preference falsification—the misrepresentation of one’s true preferences due to social pressure or fear.

StarkWare has introduced a new framework called ZKThreads, aimed at enhancing the scalability and security of decentralized applications. Louis Guthmann, head of product/market strategy at StarkWare, highlighted that ZKThreads could prevent fund lockups, comparing it to the disaster that befell FTX. This development emphasizes the importance of layer-scaling technology in preventing such issues.

DeFi markets showed robust performance over the past week. Data indicates that the top 100 DeFi tokens by market capitalization enjoyed a period of positive trading, with most tokens recording gains on weekly charts. This market rally helped raise the total value locked in DeFi protocols above the significant $100 billion mark once again.

Thank you for staying updated with this week’s notable DeFi developments. Stay tuned for more stories, insights, and educational content next Friday as we continue to explore this fast-evolving space.