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Articles by Luke Leasure
🟪 96.9% of days negative
The 10-year Treasury yield broke out to 5.12% on Wednesday, a level not seen since 2007. This was the largest single-day increase in yields in over a year and the second biggest single-day increase this year in the MOVE index, the measure of bond market volatility.
🟪 The Fastest Horse
Hello, accommodating readers! Byron is out this week, doing whatever Byron does when he’s not writing The Breakdown. Byron will be back next week for your regular scheduled programming. This week, you’re getting a taste of our other Blockworks newsletter, 0xResearch. You’ll get daily alpha and insights from our Blockworks Research analysts. BTC finished Wednesday roughly flat at -0.2%, as the S&P 500 (+1.08%) and Nasdaq (+1.54%) rallied Wednesday on sliding Treasury yields and tech gains.
Luke Leasure: Layer Zero’s infrastructure vulnerabilities highlight security gaps, Aave’s collateral oversight demands better risk management, and the dynamics of looping reshape DeFi borrowing | Unchained
Key Takeaways Layer Zero’s off-chain infrastructure vulnerability underscores the importance of secure deployment practices in DeFi. Aave’s oversight in collateral listing highlights the need for stringent risk management. Lending protocols’ pooled collateral design affects user borrowing behavior and market dynamics. Limited organic demand for borrowing ETH is primarily driven by shorting strategies. Users engage in ‘looping’ to maximize yield, leveraging pooled reserves.
Crypto indices track lower through the week
Crypto and risk assets continue to show weakness heading into year-end, not adding to the holiday spirit. Risk assets are in search of a floor, driven by fundamental flows supported by ETFs or protocol buybacks. Indices This week closes out with continued weakness across the board, and in crypto risk in particular. Both the S&P 500 and the Nasdaq 100 moved over a -1% lower this week, with gold being the one instrument showing strength.
Rangebound markets, resilient onchain lending
While crypto prices have shown a modest recovery in the short term, negative breadth and relative underperformance to TradFi benchmarks on the monthly suggests a prevailing bearish environment. Zooming out, we look at the secular growth trends within stablecoins and lending as durable sectors for multi-year growth. Indices Crypto markets remain rangebound after November's harsh selloff.
Downtrends in BTC, ETH and SOL as risk returns to market
Happy Friday. It was another rough week for crypto markets, with nearly every sector registering negative returns and a handful of long-tail "stablecoins" losing their peg. Weakness prevails across the board, with all of our tracked indices posting negative returns over the past week, except for DePIN. This weakness comes as the majors BTC, ETH and SOL have established a daily and weekly downtrend, while equity indices have reversed ~3%-5% off their highs, adding risk back to the market.
ūüü™ Crypto gets its fast lane
The signal sent from Valentia Island in Ireland via the first viable transatlantic telegraph cable in 1866 was so weak by the time it arrived at Heart's Content, Canada that it couldn‚Äôt be read by a standard telegraph receiver. Instead, a ‚Äúmirror galvanometer‚ÄĚ used tiny mirrors to effectively turn the faint electrical pulses into points of light on a wall ‚ÄĒ a point to the left was a dot and a point to the right was a dash (basically).
ūüü™ Luck of the draw
Welcome back to The Breakdown. Today we’ve called in David Canellis from the Empire newsletter to give us the latest on the prediction market battle between Kalshi and Polymarket. Notwithstanding the dominance of bitcoin, crypto has proven itself to be the exact opposite of a winner-takes-all space. In fact, the question needs to be: Can you imagine if FTX was the only CEX in crypto? Let’s get into it. I’m not here to tell you that crypto only has room for one prediction market app.
Risk management is paramount
This is a segment from the 0xResearch newsletter. To read full editions, . Following Friday's selloff, the AI index emerges as the strongest sector and the first to make new highs relative to pre-crash levels. While the AI index is up 26% in the past week, gold is up 4.43%, representing the only two indices we track that have made positive gains on a week-over-week basis. While the equity indices are down -1% on this timeframe, crypto indices remain much more damaged from the selloff.
ūüü™ Where might the sideways evolution of crypto lead us?
Hummingbirds can fly backwards because flowers evolved to attract insects with nectar. That‚Äôs not how we usually imagine Darwinian evolution, which is typically portrayed as a straight line of trial and error ‚ÄĒ flowers getting a little brighter; bees getting a little better at spotting them. But the hummingbird is proof that sometimes change happens sideways, through unpredictable cross-species interactions that reshape creatures not obviously related to the original adaptation.
Why would Base need a token?
This is a segment from the 0xResearch newsletter. To read full editions, . Whether or not Base would have a token has long been a discussion point ever since the L2 launched in mid-2023. On Monday at BaseCamp 2025, Jesse Pollak disclosed that Base is exploring the possibility of launching a token for the L2. By all metrics, Base is the leading L2.
Peeling back the onion on USDe's growth
We've all seen the USDe chart as of late. It's up and to the right, now crossing $11.4 billion in circulating supply. There are a few key reasons behind this, which aren't fully reconciled with sUSDe's 6-9% APY. Looking under the hood, the USDe market on Pendle for the September maturity now accounts for over $3.4 billion in USDe, 30% of USDe's circulating supply. Unlike sUSDe, USDe itself is not natively yield-bearing, and is intended to represent the value of $1.
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