Tag: DeFi

Merkle plans to return the full $180M raised to investors, framing the move as responsible capital management.

Farcaster co-founder Dan Romero said on January 22 that the decentralized social protocol is not shutting down, pushing back against online claims that followed its acquisition by Neynar earlier this week.

He also said Merkle, Farcaster’s parent entity, plans to return the full $180 million it raised to investors.

The comments came after days of heated debate on X, where critics framed the Neynar deal as a quiet wind-down, while supporters argued it was an orderly transition that keeps the protocol alive and returns capital.

What Farcaster’s Founders and Backers Are Saying

Romero said Farcaster recorded about 250,000 monthly active users in December last year and more than 100,000 funded wallets, adding that the protocol “works and will continue to work.”

He added that Neynar, a venture-backed startup that has built core infrastructure for Farcaster since its early days, plans to shift the network in a more developer-focused direction.

Romero announced the acquisition on January 21, noting that ownership of the protocol contracts, code repositories, the Farcaster app, and Clanker would move to Neynar over the coming weeks.

This transition follows a significant strategic pivot in December 2025, when Farcaster announced it was ditching its social graph to embrace a wallet-driven growth model, making in-app wallet functionality the core product.

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On investor returns, Romero said Merkle would give back the full $180 million raised over five years, describing the move as part of an effort to be responsible with capital. He also addressed personal criticism directly, saying he bought his house using proceeds from Coinbase’s IPO, not Farcaster funds.

Several investors backed that account. Antonio García Martínez, an early user and investor in both Farcaster and Neynar, called shutdown claims “complete bullshit” and defended Farcaster’s original goal of building a permissionless social network where users control their data. Balaji Srinivasan also confirmed that money was being returned to investors, adding that Romero was already financially independent before founding Farcaster.

Critics Question Leadership, Governance, and Outcomes

Other users were unconvinced. Some questioned how a company that raised $150 million in a 2024 round led by Paradigm could sell to a firm that raised far less. Builder LogicCrafterDz argued that Farcaster’s problems came from leadership and limited community input, saying Neynar’s takeover only works if governance and incentives become more open.

More aggressive criticism came from accounts accusing Romero of cashing out while growth stalled. Linda Xie, an early Coinbase colleague and Farcaster investor, rejected those claims, saying they contained “many inaccuracies” and that she would work with Romero again. Other developers and users pointed to the difficulty of building social networks at scale, citing the struggles of platforms like Threads and Mastodon.

For now, the debate reflects a split crypto audience. Some see the handover and investor refunds as a rare, orderly outcome, while others view it as a costly experiment that fell short of expectations.

Amidst incentives, stronger collateral, and rising prices, DeFi lending surged in Q3, capturing a record 55.7% market share during the quarter.

DeFi lending reached a new record in the third quarter, according to a new report from Galaxy Digital’s research team, which found that the dollar-denominated value of outstanding loans on decentralized finance (DeFi) applications rose by $14.52 billion, or 54.84%, to $40.99 billion at the end of Q3.

When combined with centralized finance (CeFi) lenders, total outstanding crypto-collateralized loans rose to $65.37 billion in Q3, up $21.12 billion from the previous quarter. This is a new all-time high after surpassing the earlier peak of $53.44 billion from Q4 2021 by $11.93 billion.

DeFi Lending Explodes to Record Highs

Galaxy Research, in its latest report, attributed the continued expansion of DeFi lending to several factors. This includes the growth of “points farming” and airdrop incentive programs, which encourage users to keep loans open even under market stress. Increasing use of improved collateral assets such as Pendle PTs, which allow users to loop stablecoin strategies at favorable loan-to-value ratios, is also another factor, in addition to rising crypto asset prices, which increase borrowing capacity as collateral values appreciate.

The report, however, warned that there is potential for double-counting in the combined CeFi and DeFi lending totals, as some CeFi entities borrow through DeFi protocols before lending those assets to off-chain clients, which makes it difficult to separate on-chain and off-chain exposures.

With the increase in DeFi activity, this sector’s lending dominance over CeFi venues climbed to a new all-time high of 62.71% at the end of Q3 2025, up from 59.83% in Q2 2025 and higher than the previous peak of 61.99% in Q4 2024.

Meanwhile, the crypto-collateralized portion of collateral debt position (CDP) stablecoin supply fell by $658 million, or 7.4%, quarter-over-quarter, though the report again noted possible double-counting involving CeFi entities that mint CDP stablecoins to fund loans to off-chain borrowers.

Overall, total crypto-collateralized lending expanded by $20.46 billion in Q3, reaching a new all-time high of $73.59 billion. By quarter’s end, DeFi lending applications accounted for 55.7% of the market, up 588 basis points from Q2 2025. During the same period, CeFi venues held 33.12%, down 36 basis points, while CDP-backed stablecoin supply represented 11.18%, down 547 basis points.

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Combined, DeFi lending apps and CDP stablecoins gave on-chain lending venues a 66.88% market share, slightly above the prior all-time high of 66.86% set in Q4 2024. The report also highlighted that DeFi lending remained resilient despite volatile market conditions, as outstanding borrows hit a daily record of $43.82 billion on October 7 before easing by only 11.55% to $38.76 billion by October 31.

Key Industry Moves

In Q4, however, major players invested in strengthening the lending ecosystem. For instance, in October, Ripple partnered with Immunefi to boost the security of the proposed XRPL Lending Protocol and launched a global “Attackathon” that invited elite Web3 security researchers to stress-test the system ahead of an upcoming validator vote.

By November, ecosystem expansion continued as leading stablecoin issuer Tether made a strategic investment in Ledn, a Bitcoin-backed lending platform, in a bid to strengthen self-custody, financial resilience, and broader institutional adoption.

While denying any wrongdoing, Maple said that it plans to pursue available remedies aggressively to ensure Core is held responsible.

Core Foundation has issued a detailed statement commenting on its dispute with Maple Finance after the Grand Court of the Cayman Islands granted an injunction against Maple over alleged breaches of commercial agreements related to the development of lstBTC, a Core-powered liquid-staked Bitcoin token.

The injunction was granted after the Court found a “serious issue to be tried” regarding Maple’s alleged misuse of Core Foundation’s confidential information and breach of a 24-month exclusivity clause. Under the order, Maple is prohibited from launching or promoting syrupBTC, its allegedly competing product, and from dealing in CORE tokens without prior written consent pending arbitration.

Partnership Gone Wrong

According to Core Foundation, the partnership began in early 2025, and both parties collaborated on lstBTC, a Bitcoin yield product designed to keep BTC securely custodied at firms like BitGo. Core said it invested significant financial and technical resources into development, marketing, and subsidies, and noted that the partnership’s public launch at Consensus Hong Kong in February 2025 was well received.

At that time, Maple Finance reportedly managed less than $500 million in assets, and Core stated that early revenue and traction from the Bitcoin Yield product beginning in April 2025 contributed to Maple’s rapid growth. Core alleged that by mid-2025, Maple began using its confidential information and work product while simultaneously accepting Core’s resources to develop syrupBTC, which it considers a directly competitive product in breach of exclusivity.

In a judgment dated September 26 and published on October 30 of this year, Justice Jalil Asif KC held that damages would not be an adequate remedy due to the risk of Maple dealing in or shedding CORE tokens and the potential head start Maple would gain by launching its competing offering.

Core Foundation also stated that Maple had brought over $150 million in Bitcoin to the early OTC version of the yield product, and that, based on Maple’s representations, the Bitcoin was expected to be held in fully bankruptcy-remote segregated portfolios at reputable custodians.

It added that the BTC Yield product included CORE price protection via third-party put options, and that it had paid out millions of dollars on these protections until Maple’s alleged breaches, at which point Core sought the injunction and terminated the agreements. Core Foundation said Maple has since indicated it must declare an impairment affecting Bitcoin lenders, but Core said it is unclear why Maple cannot return the Bitcoin or whether Maple has the right to impair it, while citing its understanding that the assets were held with licensed custodians.

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Core described Maple’s position as concerning and said it is pursuing legal action.

Response

In response, Maple Finance said it “stands firmly in defense of lender rights” and stressed that there is no impact on its broader business operations. The on-chain asset manager denied any wrongdoing and tweeted,

“Core Foundation’s actions are directly against lender interests. Maple denies any allegations of wrongdoing on its part and will be pursuing all available remedies aggressively to ensure Core Foundation is held responsible for the consequences of their actions.”

NYSE owner ICE pours $2 billion into Polymarket, as it gears up for a long-awaited US market comeback.

Intercontinental Exchange (ICE), the operator of the New York Stock Exchange, announced a major strategic investment in Polymarket, a decentralized prediction market platform that aggregates probabilities for global events spanning politics, sports, and culture.

Under the agreement, ICE will invest up to $2 billion in the company, which will place Polymarket’s pre-investment valuation at $8 billion.

Polymarket Gets Wall Street Validation

Beyond the capital infusion, ICE will serve as a global distributor of Polymarket’s event-driven data and plans on offering customers sentiment metrics on topics relevant to financial markets.

The two entities will also collaborate on future tokenization projects. In its official press release, ICE stated that the cash-based investment is not expected to materially affect its 2025 financial results or anticipated capital return plans. Management is set to provide further details regarding the move during ICE’s third-quarter earnings call, which is scheduled for October 30.

Following the development, ICE Chair & Chief Executive Officer, Jeffrey C. Sprecher, commented,

“Our investment blends ICE, the owner of the New York Stock Exchange, which was founded in 1792, with a forward-thinking, revolutionary company pioneering change within the Decentralized Finance space. Shayne Coplan has assembled a team at Polymarket to create a user-driven company relentlessly focused on product, building usage and distribution. There are opportunities across markets which ICE together with Polymarket can uniquely serve and we are excited about where this investment can take us.”

Redemption Arc

Polymarket, founded by Coplan in 2020, allows users to trade shares on potential event outcomes, with smart contracts facilitating peer-to-peer trades. Its markets, covering politics, business, culture, and sports, expand as participation rises. Its operations have not been without controversy.

On November 13 last year, FBI agents raided Coplan’s Manhattan apartment. They demanded access to his phone and devices, shortly after the platform correctly forecasted Donald Trump beating Kamala Harris with 58.6% odds. Later, no charges were filed.

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Polymarket had previously paid $1.4 million to the CFTC in 2022 for registration issues and had since remained inaccessible to US users. To facilitate reentry, it purchased a regulated exchange and clearing house, QCEX, earlier this year. The firm also expanded politically by bringing Donald Trump Jr. onto its advisory board and securing investment from his venture firm.

Meanwhile, new research by New York-based data scientist Alex McCullough revealed that Polymarket achieves roughly 90% correctness across multiple time frames. Using a Dune dashboard, McCullough tracked predictions one month, one week, one day, 12 hours, and four hours before market resolution, and found accuracy rose to 94.2% in the final four hours. Historical analysis removed outliers and considered markets above 50% probability. However, biases like herd behavior, low liquidity, and acquiescence were also flagged, which slightly inflated the odds.