Circle (@circle) launched cirBTC on Ethereum on June 8, a 1:1 BTC-backed ERC-20 where each unit sits in segregated, regulated custody at a Circle entity, marking a new product line for Circle beyond the stablecoin categories. The tokenized Bitcoin market currently exceeds $10 billion in total supply across all wrapped formats, one of the most actively used collateral asset classes in DeFi, yet still represents under 2% of Bitcoin's total market cap. The vast majority of Bitcoin value sits idle, never deployed as collateral or generating yield. For any issuer that can solve the custody and trust problem convincingly enough to attract that capital, the addressable market is orders of magnitude larger than what exists today. WBTC and @coinbase cbBTC are the two dominant wrapped Bitcoin formats on Ethereum, together representing the majority of tokenized Bitcoin supply deployed in DeFi. The protocol that makes most of that supply productive in DeFi is @aave, being the primary collateral venue where wrapped BTC is usded as the basis for borrowing, leverage, and liquidity strategies. Looking at the top 50 Ethereum holders of WBTC ($5B) and cbBTC ($2.5B), Aave V3 absorbs $3.1B (41% of combined supply), more than Morpho Blue, L2 bridges, Compound, SparkLend, and all DEXes combined. There is already an ARFC to onboard cirBTC on both Aave V3 Core and Aave V4 Core on Aave governance, also bringing DeFi utility to Circle new asset. Running in parallel on Aave V4, @babylonlabs is integrating Trustless Bitcoin Vaults into Aave V4. Under this model, users lock native BTC directly on the Bitcoin blockchain in Taproot UTXOs and use that position as collateral to borrow stablecoins on Aave V4 through a dedicated Babylon Core Lending Spoke, without wrapping, bridging, or giving up custody at any point. Babylon has already secured 51k BTC trustlessly. This is the first major native BTC collateral primitive on Aave V4. Bitcoin's market cap stands at $1.32 trillion. The entire tokenized BTC market represents roughly $10 billion in deployed supply, under 2% of that total. Every incremental unit of Bitcoin that moves into regulated wrappers like cirBTC, or gets deployed trustlessly through primitives like Babylon's native BTC vaults, expands the total productive capacity of DeFi in a way that hardly any new stablecoin or synthetic asset can replicate.

Borrow rates are attractive across the three major reserves on Aave V3 (USDC, USDT, WETH). Stablecoins are borrowable at 3.71–3.95% with $601M in liquidity available, and WETH at 2.10% with $597M available to borrow. WETH, USDT and USDC are the three largest reserves on Aave V3 Core, with $7.5B in deposits and ~$1.2B in combined available liquidity, making it one of the prime venues for large borrowers in DeFi.

~3k Coinbase Loans users were liquidated this week so far on Morpho, with $65M in Bitcoin collateral liquidated, making it the 2nd highest week by users liquidated and 3rd by value since the product launched. Liquidations are a normal and expected part of any DeFi lending product and the numbers here are not abnormal relative to the size of the book (around 4% of total collateral). In DeFi, users interacting with lending protocols generally understand the liquidation mechanic and have accepted it as part of the product design. Nevertheless, the dynamic is different in a consumer crypto lending app. A retail user who deposits cbBTC, borrows stablecoins against it, and gets liquidated during a price drawdown will likely not frame it as a risk they consciously accepted and in many cases, they simply won't come back. This is especially true when the product lacks mechanics that are more UX decisions than protocol ones: a push notification when approaching the liquidation threshold, an automatic collateral top-up option, or a clear in-app warning showing exactly how far the price can move before the position is at risk. For crypto lending to make a real dent in consumer finance, the core design challenge is building the UX/UI rails that adapt a protocol mechanic to what a normal consumer user expects from a financial product

Sick data analysis on top of Herd!!! Gonna see if we can add this in as a view toggle :)

WETH liquidity on @aave Core Market has fully normalized since the mid-April liquidity crunch. Liquidity is now above pre-event levels and it's the again the deepest liquidity pool for WETH in DeFi.

Great research from @sealaunch_ highlighting growth of RWAs from $2.6B to $33.7B and what is next. Its clear to me that all financial be onchain- the question is how fast will that happen. We built @aave Horizon to support the future of finance. Quickly becoming the largest RWA market for tokenized securities. "That is why products like @aave Horizon matter as a top destination for RWA collateral: it recently surpassed $520M in market size and $170M in borrows"

We wrote an overview of the RWA asset class showing how it grew from $2.6B to $33.7B in roughly two years, but also how much room is still left to grow and the opportunities that lie ahead.

Aave V4's Hub-Spoke architecture is more relevant now than ever. In a market where LSTs, RWAs, vaults, and synthetic assets are multiplying, it fundamentally changes how DeFi lending manages risk at scale. Users interact with @aave directly with Spokes, while the Hub is where liquidity sits. Every spoke encodes a specific borrowing intent (ETH leverage, stablecoin strategies, gold, forex) each with its own caps, liquidation parameters, and oracle scope. This matters because in V3, every new asset listing competed for the same cap budget inside a shared solvency boundary, forcing more conservative defaults across the entire venue. In V4 each hub has a different risk profile. Core handles general-purpose depth, Prime isolates bluechip collateral for suppliers who don't want utilization risk on their ETH or BTC, and Plus Hub lets Ethena strategies scale behind their own solvency boundary without touching Core's parameters. The diagram below maps how liquidity flows between them.

Total crypto protocol revenue (excluding stablecoin issuers and chains) is now a $5.5B/year industry, 10% YoY. In the past year, new revenue-generating categories emerged (launchpads, derivatives, Telegram bots, prediction markets) all reaching revenue PMF. The pie has grown but it's still small relative to what's coming. If crypto keeps disrupting industries with 10x better solutions, the case for charging fees gets stronger, not weaker. Tokenization unlocks new verticals and composability effects that don't exist yet and will have a positive n effect in revenue generating protocols. → revenue.sealaunch.xyz/catego…

Liquidity on @aave is now back at normal levels. On Core Market, WETH has $448M available and USDC and USDT combined have $400M liquidity. Utilization is back in the 89-92% range across all three. Across other major reserves, utilization is also back to healthy levels.

Great work from @PanteraCapital by @sui414, @0xallyzach and @FranklinBi mapping the $ 320B tokenized asset market. The Tokenization Progress Index scores assets across issuance, transferability and composability, a useful framework to better understand tokenized assets in a market where every bank now has a tokenization strategy. A reminder that not all tokenized assets have the same characteristics or onchain maturity. Today, 77.6% of tokenized assets score below 2.5/5, meaning they are distributed onchain but not onchain native. Happy to have contributed a little feedback during the review process.

Prediction markets are now the 4th largest category in crypto by revenue, generating as a category $25.1M in the last 30 days. The main driver is @Polymarket that generated $20 in 30 days, 82% of the category.