Welcome to another week of Castle Chronicle.
This week we witnessed another major CEX hack: Bitget, which was hacked for over $350 million. Since 2024, one major CEX exploit has occurred every year.
But not everything last week was bad; the SEC released clear FAQs on crypto securities laws, suggesting how tokens should be classified.
With this, we also cover:
Launch of Ondo Intelligent Portfolio, which includes curated investment strategies.
Aave v4 deposits are at ATH, and AAVE burn is coming soon.
Ethena expanded USDe backing to an equity perps basis, which could boost yield and attract more deposits.
Variational announced tokenomics and is airdropping 32% of its supply.
Aerodrome and Velodrome are getting merged into AERO
Hyperliquid AQAv2 in 4 days.
And more
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Bitget hacked for over $350 million
Last Friday, Bitget, one of the largest centralised exchanges (CEX), was hacked for over $350 million, making it the 5th-largest CEX hack.
The attackers exploited a vulnerability in a third-party product to harvest credentials and spoof transaction data, tricking the exchange into approving the transfers, meaning no private keys were essentially compromised.
However, the situation is much better now, and the exchange is slowly rolling out redemptions for different networks.
It has already opened them for BTC and major EVM networks.
Ondo Launches Intelligent Portfolio
Ondo Finance last week launched a new onchain product category: Ondo Intelligent Portfolios, curated investment strategies delivered as single onchain transferable tokens.
The launch marks the first time model portfolio strategies have been made available to onchain investors through a single token. Three custom portfolio strategies addressing three specific needs across income, allocation, and thematic investments:
BLKHIon: Ondo High Income Powered by BlackRock
BLKDIGon: Ondo Diversified Growth Powered by BlackRock
BLKGRWon: Ondo High Growth Powered by BlackRock
Explore other portfolios here.
Diversified, professionally constructed portfolios have historically required brokerage accounts and traditional fund structures. Now, delivered as peer-to-peer transferable tokens from Ondo, these onchain portfolios become accessible to eligible non-US investors in permitted jurisdictions through the wallets, exchanges, and DeFi applications they already use.
Ondo Intelligent Portfolios can unlock novel capabilities:
Programmatic rebalancing
Full composability with DeFi
Complete transparency onchain
Multiple asset classes in a single token
What this means for investors
Combining institutional portfolio allocations with DeFi-native flexibility provides investors with a new product category that is:
Simple. Instant access to a professionally curated portfolio, delivered in the convenience of a single token.
Precise. Exact exposure to targeted investment allocations underpinned by tokenised stocks.
Flexible. Freely transferable and fully composable in DeFi, removing the friction of traditional fund structures.
Transparent. Every holding, weight, and rebalance is fully visible onchain to holders in real time.
Accessible. 24/7 global access (outside of restricted jurisdictions) and without minimums, lockups, or intermediaries.
Efficient. Programmatic by design with sophisticated strategies that scale seamlessly and at low cost.
To summarise, Ondo intelligent portfolio essentially encapsulates different user demands, which can now be accessed in a DeFi native fashion. Learn more about them in detail here.
The growth of Aave v4 and burn soon?
Aave V4 deposits are growing quickly, now sitting at $1.33B across 8 hubs and 24 spokes.
The hub-and-spoke model is the key change in V4. Hubs act as a shared liquidity base, while Spokes are individual markets that can draw liquidity from a hub under their own risk settings. This solves three major problems:
Idle liquidity: Liquidity can be utilised across multiple spokes within the same hub, reducing fragmentation.
Market bootstrapping: Any spokes launched under a hub gain access to the same liquidity base as other spokes, rather than scaling from zero.
Risk Segmentation: Each spoke runs with independent parameters (collateral factors, access control, etc.), and the hub limits how much each spoke can add and draw through caps, helping contain the risk at the spoke level.
Two of the most interesting hubs listed at the moment are:
EtherFi cash on Optimism, powering borrows for its users. It has reached $308m in deposits, with $34m in borrowed assets.
Coinbase stocks on Base, which enables borrowing against tokenised equities. It has reached over $8m in deposits, with borrowing demand still in the early stages.
Stani teased changes to Aavenomics 3.0 and enabling token burns. Aave bought back 250k tokens but paused the buyback earlier this year due to the KelpDAO incident. In their prior buyback program, they didn’t burn the tokens; instead, they directed them to the treasury.
$USDe expansion to equity perps basis, and why it is bullish for $ENA
Ethena is extending USDe’s backing to equity-basis trading on Binance, meaning Ethena will hold spot bStocks from Binance and create short positions in the same asset to hedge and earn from positive funding rates, which have averaged ~11% annualised on Binance.
USDe currently has a $4.9 billion supply and has exposure across crypto basis and lending. Adding equity basis could boost the yield Ethena depositors earn because funding rates on tokenised equities pay more, which would in turn attract more flows and push USDe supply higher.
Also, once supply hits $7.5 billion, ENA buybacks will begin.
However, the yield increase depends on positive carry costs for equities on Binance; some of the mean has already turned negative, reflecting that positive costs cannot be assumed and positions will unwind once they turn negative.
On the Radar
Variational is airdropping 32% of its $VAR supply following more of a $HYPE genesis path. Moreover, the team stated that the revenue directed to the treasury will be used to buy back and burn $VAR.
The SEC cleared the air around crypto securities law, stating that buybacks do not make a commodity a security and that wrapped assets of these commodities aren’t securities either. Petro covered it in detail.
Paxos launches PAXGy, a yield-bearing gold token that sources yield from institutional gold lending, enabling looping strategies onchain for the first time.
Aerodrome and Velodrome are getting merged into Aero, with Robinhood and Arbitrum as the first-day deployment. In September, revenue peaked at a year-high of $14.5 million, with positive annualised net token flow. Even with revenue similar to Uniswap, it currently trades at 1/7th of UNI’s market cap.
Hyperliquid AQAv2’s first payment hits in 4 days and is estimated to reach $200 million annually, accruing value monthly to $HYPE.
Vitalik released a piece recently framing Ethereum as a Cryptographic World Computer. The piece notes that Ethereum will enable offchain compute while keeping verification onchain. By shifting complex computations offchain, the DeFi experience becomes especially optimised. Cryptographic covers the piece in detail.
Agentic Bank Run Soon? As AI grows and starts handling broader financial decisions, it could push users’ funds from banks that don’t provide huge returns to other venues, leaving banks without funds to lend out, disrupting the economy. This is essentially the end state of the machine economy, and most of these actions will happen onchain because it is cheaper, with the infrastructure controllers becoming the key tokens.
Derive’s share of options volume rose from 0.9% to 5% recently. It is increasingly expanding the options market while taking market share from other major players.
Arbitrum introduced PGA (Priority Gas Auctions) and FF (Fast Feed), phasing out Timeboost. Both features help boost transaction priority and speed up the latest block updates. All of this revenue goes to the Arbitrum treasury.
As Q3 nears its end, it has been the best quarter for net inflows into ETH and BTC ETFs since Q4 2025.
DePIN tokens are catching the bid, with GRASS being up 90% in the last 30 days.
That’s a wrap.
See you next week.
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Disclaimer: This newsletter includes a sponsored segment produced in collaboration with Ondo.
In our newsletter, we may discuss projects or tokens in which we hold positions. While we aim to provide informative content, our views are not financial advice. Please conduct your research and consult professionals before making investment decisions. Crypto markets are volatile, and past performance doesn’t guarantee future results. Invest responsibly, and be aware of the risks. Your capital is at risk, and we do not accept liability for any losses.