Introduction

June has been an eventful month in the crypto industry. It started quite harshly — with the SEC regulations. The largest U.S. regulator, the Securities and Exchange Commission (SEC), has filed lawsuits against the offer of one of the largest crypto exchanges Coinbase and Binance.

It was declared in the filed complaint that Coinbase has made billions of dollars since at least 2019 by acting as an intermediary in cryptocurrency transactions, evading information security protections designed to protect coverage. The SEC said that Coinbase traded at least 13 cryptocurrencies that had to be registered, including such prominent crypto assets as Solana, Cardano and Polygon, and others.

Apart from Coinbase, the SEC has also filed a lawsuit against foreign cryptocurrency exchange Binance and its founder and CEO, Changpeng Zhao. Binance and Zhao are accused of violating U.S. securities laws, including the unregistered offering and sale of crypto assets, illegal access to the platform for American investors, and unregistered exchange and brokerage activities. The SEC declares that Binance and Zhao defied federal securities laws, enriching themselves by a billion dollars and putting at high risk the investors' assets. The SEC also accuses Binance of illegitimate usage and mixing up of their clients' funds.

According to the provided statistics from Nansen and Glassnode, three cryptocurrency exchanges have suffered a net outflow of $4 billion from Monday to Thursday. A net outflow means that withdrawals exceed deposits.

Such an action from the SEC could be received as a sign of aggressive action towards cryptocurrencies to make crypto a federal securities laws subject. It sows uncertainty regarding the crypto industry regulation policy, but it also may attract more institutional investors and broader cryptocurrency adoption. 

However, the second half of the month was marked by more optimistic trends for the market. In particular, iShares, a division of the BlackRock Fund, applied to register a spot Bitcoin-ETF. BlackRock is an American investment corporation with over $10 trillion in assets. This event shows positive development in the market, and for the first time since the end of April, the price of BTC passed the $30,000 mark.

Now let's move on to observing the events that took place in the main market sector, and also follow the dynamics of key metrics. 

Layer 2

According to L2BEAT, TVL of all L2 solutions grew by 4.3%: from $9.4B to $9.8B. The major growth was due to the TVL of optimistic roll-ups increase, especially Arbitrum and Optimism. In total, they account for 84% of the TVL of all Layer 2 solutions. ZK rollups such as zkSync Era and Polygon zkEVM also showed a significant increase in TVL (over 21%), primarily as a result of expanded user activity waiting for airdrops from these projects.

Solving the problems of blockchain scalability, Layer 2 solutions are eagerly developing. So, only in June, a number of large projects announced the launch of their own L2 solutions.

The Frax Finance team that issued the Frax stablecoin has unveiled its second layer blockchain implementation strategy called Fraxchain. They claimed that the network will focus on building a platform for smart contracts with a primary focus on decentralized finance infrastructure. Fraxchain will bring the entire Frax ecosystem together. The network is expected to be ready by the end of the year.

BNB Chain has announced the launch of an L2 solution on Optimism — opBNB. The update will bring lower fees ($0.005) and higher throughput — 4000 transactions per second. opBNB will be compatible with the EVM, allowing easier moving of applications from the Ethereum network.

Polygon has announced the release of Polygon 2.0. Polygon 2.0 reimagines various aspects of the Polygon ecosystem, including protocol architecture, tokenomics, and governance. It is a system of L2 solutions based on ZK, cross-chain protocol integration, probability, unlimited scalability, and single-side liquidity. Polygon 2.0 makes Ethereum more scalable and broadens its capabilities. In the upcoming month, the team will unveil more details about the transition. There will be AMA sessions and posts with updated information. 

Exchanges (DEXes)

The combined TVL of DEX exchanges decreased by 9.2% over the month. Such a fall, in many respects, is caused by a decrease in the mem-coins trading volume. The trend for meme coins, which was actively developing in April-May, lost its relevance in June. It is worth noting the decrease in the DEX/CEX Spot Trade Volume Ratio — from the highest mark of 22% in May to the current 16.8% in June.

In June, Uniswap announced the upcoming launch of the protocol’s fourth version. The main goal of Uniswap v4 is to deliver providing of setting liquidity pools option and increase returns with "hooks". "Hooks" are contracts that help users to create rules for the pool's automatic management. For example, if the price of tokens falls to $X, the pool will be automatically closed, or, on the contrary, more liquidity will be added there. It empowers everyone to quickly respond to rapid changes in the market and easily build a competent risk management system.

Uniswap V4 has significant consequences for Uniswap itself and the DeFi sector. Above all, the upgrade should help Uniswap hold its place as an international decentralized exchange in terms of the trading volume. Hooks increase the efficiency of the protocol's capital use compared to the V3. Besides, they provide higher flexibility and gas use efficiency. These qualities are supposed to help Uniswap attract more orders from DEX aggregators as well as solidify its dominance in more highly liquid pairs like ETH/USDC, ETH/USDT, ETH/DAI, and more.

In addition, the ability to create various order types should help Uniswap become more competitive with centralized exchanges by attracting advanced DEX traders. Amid recent regulatory pressure on CEXs, Binance and Coinbase, this could help Uniswap to overtake its competitors.

The Uniswap V4 release is not scheduled yet, as the code has not been finished and audited yet. Amid the above-mentioned events, the price of the UNI token rose by 31% - from $4.3 to the current $5.64.

LSD

Liquid staking protocols continue to gain more popularity. At the moment of writing, about 9.8 million ETH, or 8.1% of the total circulating ETH supply, is locked up through liquid staking providers. And the share of liquid staking in the volume of total staked ETH is 43.4%. The largest LSD providers are Lido Finance with a market share of 79.5%, Coinbase - 11.3%, and Rocket Pool - 4.7%. Total TVL  increased by more than 10% over the month.

The development of the LSD market, in turn, has led to strong growth in the LSDfi sector. LSDfi is a DeFi protocol built on top of LSD. LSDfi allows holders of LSD tokens to receive additional income opportunities. LSDfi includes:

• Projects issuing stablecoins using LSD as collateral;

• Index LSD, which is a basket of LSD tokens enclosed in one ERC-20 token;

• Protocols that offer users various strategies to increase profitability, etc.

The total TVL of LSDfi at the end of June was $620 million, and the dynamics of the sector are exponential:

Lending

Over the month, TVL crypto lending protocols increased from $13.6 billion to $14.2 billion (+4.4%). The largest contributor to this growth of AAVE’s contribution is the Eastern Landing Protocol, TVL, which has changed by 7.31% and currently stands at $5.71 billion. In turn, the AAVE token price jumped up from $63 to $73. AAVE (V2 and V3) and Compound (V2 and V3) remain to be key landing markets within the Ethereum network.

Summing Up

• Despite difficulties and warnings about crypto market regulations, the crypto industry is continually increasing and developing. For the first time since April 2023, the BTC price passed over $30.000. Such key protocols as Uniswap V4, Polygon 2.0, opBNB, etc., announced some crucial updates.

• LSD protocols showed dashing TVL growth in June.  

  It was caused by Shanghai Upgrade which allows users to withdraw their staked  ETH. The beneficiary of this upgrade was a LSDfi sector, built upon liquid staking derivatives. The following protocols increase liquidity and effectiveness of capital on an account of earning and increasing the capital's yield.

• Layer 2 keeps up demonstrating positive growth dynamics in June. Many key protocols are currently developing their own L2 solutions. For instance, Fraxchain by Frax Finance, opBNB by BNB Chain, and Polygon 2.0 offer their own approach to blockchain scaling solutions.