Gate Decentralized Finance Daily ( October 20, ): Wintermute discusses the "10.11" crash event; Vitalik introduces the GKR protocol.

On October 20th, the crypto market saw a slight rebound, with BTC returning to $111,000 and ETH breaking through $4,000. The total DeFi TVL on the network rose to $154.897 billion, an increase of 3.05% daily. Although locked-up funds continue to flow back, DEX trading volume has decreased to $16.121 billion, indicating that short-term liquidity remains cautious. HyperSwap released the SWAP tokenomics and announced the launch of TGE, becoming one of the core events in the market; meanwhile, discussions about the centralized risks triggered by AI integration in DeFi trading have heated up again.

Decentralized Finance Market Overview

(Source: DeFiLlama)

Total DeFi TVL across the network: Today (October 20), the crypto market has slightly rebounded, with BTC currently trading around $111,000 and ETH returning above $4,000; the total DeFi TVL across the network is currently $154.897 billion, with a 24H increase of 3.05%.

DEX 24-hour volume: approximately 16.121 billion USD, a week-on-week decrease of 17.87%; the top three are: Uniswap (5.984 billion USD), PancakeSwap (2.274 billion USD), HumidiFi (1.103 billion USD).

Popular Protocols and On-Chain Performance

Based on TVL, the data for the top ten DeFi protocols is as follows:

(Source: DeFiLlama)

Among them, the performance of the top-ranked protocol data is as follows:

Aave: TVL approximately 39.98 billion USD, 24-hour rise 2.21%;

Lido: TVL approximately 34.53 billion USD, 24-hour rise 4.42%;

EigenLayer: TVL approximately 17.138 billion USD, 24-hour rise 4.44%;

Ethena: TVL approximately $12.176 billion, 24-hour decline of 0.69%;

ETH. fi: TVL approximately 10.145 billion USD, 24-hour rise 3.51%.

In addition, the top ten projects ranked by protocol fees in the past 24 hours are as follows:

(Source: DeFiLlama)

Among them, Uniswap's protocol fees in the past 24 hours reached $11.85 million, second only to Tether ($23.16 million); Aster's protocol fees in the past 24 hours reached $3.32 million, ranking fourth; Aave ranked fifth with $2.68 million.

Project News Overview

1. Evgeny Gaevoy, the founder of the crypto market maker Wintermute, stated during his appearance on The Block's podcast that he believes the “10.11” crash was the result of multiple factors. On one hand, there is indeed more leverage in the system; on the other hand, the market has also seen more types of tokens, more perpetual contract products, and more large platforms trading these perpetual contracts.

Looking back three to four years ago, we did not have so many perpetual contract products with huge open interest and hidden risks of massive crashes. In terms of market maturity, although it is indeed more complete and sophisticated than in the past, this development has also given rise to many problems.

It is still unclear who has “liquidated” and who has suffered the biggest losses, but I suspect that many institutions with significant losses are actually running long-short strategies, such as shorting Bitcoin while going long on certain altcoins. They thought this would hedge their risks, but instead, they were “smacked in the face” by the ADL mechanism.

During the “10.11” crash event, there was a serious inventory issue in the DeFi market. Our positions were on mainstream CEXs, but we couldn't transfer them out, so we sold all that could be sold on DeFi, and bought everything that could be bought on CEX, but we couldn't complete the asset transfer, falling into a liquidity imbalance.

Gaevoy stated that although arbitrage can be done through lending or cross-market pricing, it carries high risks and is complicated to operate. In this incident, many competitors' risk control systems triggered circuit breakers, halting DeFi transactions. Nevertheless, he expressed satisfaction with the team's performance, stating “Although more money could have been made, the inventory was indeed used up.”

In addition, it also stated that the outside world generally misunderstands the company's “frequent short selling,” but in reality, Wintermute has maintained a net long position for a long time and has been bullish on the market overall since 2022 or even earlier.

Gaevoy revealed that Wintermute has a venture capital department that has invested in multiple projects and holds a large amount of Lock-up Position tokens, as well as core assets such as BTC, ETH, HYPE, and SOL. He emphasized that the company cannot actively dump, as that would harm the value of its own holdings.

In terms of risk management, Wintermute has set strict limits: long positions not exceeding 25% of net assets, and no single platform accounting for more than 35% of funds. Gaevoy stated that this strategy allowed the company to successfully weather the FTX collapse and multiple hacking attacks, and added: “Unless the top five trading platforms disappear at the same time, we can survive.”

2. According to Forbes, by 2025, autonomous AI entities have become one of the hottest narratives in the crypto industry, expanding overnight from an experimental novelty concept into a $13.5 billion market. An AI entity named “Truth Terminal” convinced well-known venture capitalist Marc Andreessen to donate $50,000, which propelled the market value of the GOAT Token to $1.2 billion.

Currently, there are over 11,000 AI agents running on the Virtuals Protocol platform, executing trades and managing portfolios with minimal human intervention.

But there is a problem that very few are willing to confront. These AI entities were originally intended to enhance the efficiency of DeFi, yet they are often highly centralized themselves. The vast majority rely on closed-source models from companies like OpenAI and Anthropic, thereby creating a centralized monopoly at the expense of user data and trading volume.

In an industry grounded in transparency, AI entities simultaneously represent the most market-demanding products in the crypto world to date—and the most severe ideological contradictions. The question is no longer whether AI entities will reshape the crypto industry, but rather—they already are. Security researchers warn that many AI entities deployed on blockchain networks use unaudited smart contracts, and most delegate the decision-making process to centralized AI services.

When an agent executes a $100,000 DeFi strategy, the real decision-making reasoning actually occurs on the servers of OpenAI or Google—these “black box” systems cannot be reviewed or verified by anyone.

3. The DEX protocol HyperSwap based on the Hyperliquid network has released the tokenomics for SWAP. The total supply cap for SWAP tokens is 100 million, and the TGE will start on October 20.

25% will be used for community genesis distribution (fully unlocked), 25% will be used for investor genesis distribution (fully unlocked), 25% will be used for future liquidity mining issuance (of which 15 million Tokens will be unlocked linearly over 36 months, and the remaining 10 million Tokens will be unlocked linearly over 12 months), 8% will be allocated to existing and future core contributors (12 months cliff unlock, then linear unlock over the next year), 10% will be used for future trading activity airdrops (unlocked after 6 months), 3% will be allocated to the advisory team (linear unlock after 1 year post-genesis), 2.5% will be used for HyperSwap liquidity pool, and 1.5% will be used for HIP-2.

In the future, 25% of the Token issuance will be distributed in the form of xSWAP, which is a locked version of the SWAP Token. xSWAP can be redeemed for SWAP at a ratio of 1:1 after a maximum lock-up position of 6 months.

· Accounts with leverage below 5 times receive a 100% subsidy;

· Accounts with a leverage higher than 5 times will receive partial non-subsidy based on the leverage multiple and market conditions;

· Users with BTC lending positions who were passively reduced due to ADL: 100% subsidy;

· Funds recharged before settlement: 100% distributed;

· All settlement fees: 50% rebate.

4. According to relevant pages, pump.fun has created the X account Spotlight aimed at “accelerating ICM (Internet Capital Markets)” and may launch related feature updates.

5. Ethereum founder Vitalik Buterin introduced the GKR protocol this morning. GKR is a core protocol for achieving fast proofs for ZK-EVM, zk-ML, and other applications, accommodating computations that involve “multi-layer low-order processing + a large number of repetitive function applications” (such as hashing and neural networks), without the need to commit to intermediate layers, only requiring a commitment to input and output, significantly improving efficiency. By reducing the computational load of each round of sumcheck (such as Gruen's trick) and optimizations like Poseidon2 batch processing, it is theoretically proven that the overhead of Poseidon hashing is only 15x (traditional STARKs are 100x), and it can actually be less than 10x, with the overhead approaching zero as the data volume increases.

Overview of Major Leading DeFi Projects

Ethereum DEX 24-hour volume ranks first, at about 5.292 billion USD, with the top three projects being:

Uniswap ($4.146 billion), Fluid ($587.74 million), Curve Finance ($244.17 million);

Solana DEX 24-hour trading volume ranks first, approximately 3.686 billion USD, with the top three projects being:

HumidiFi ($1.103 billion), Meteora ($1.045 billion), Raydium ($490.26 million);

BSC DEX ranks third in 24-hour trading volume, approximately 2.835 billion USD, with a week-on-week decrease of 30.12%; among them, the top three projects are:

PancakeSwap ($1.885 billion), Uniswap ($790.59 million), four.meme ($8.805 million).

Gate DeFi Section Token Market Data

According to the data on Gate's market page, the price performance of the top ten tokens in the DeFi sector is as follows:

(Source: Gate DeFi Market Trends)

As of October 20, the cryptocurrency market has rebounded overall, with tokens in the DeFi sector seeing more rises than falls, specifically:

UNI is currently reported at 6.44 USD, with a 24-hour rise of 4.88%;

AAVE is currently reported at 232.67 USD, with a 24-hour increase of 6.26%;

WLFI is currently reported at 0.133 USD, with a 24-hour rise of 0.83%;

MORPHO is currently reported at 1.95 USD, with a 24-hour rise of 1.04%;

INJ is currently reported at 8.83 USD, with a 24-hour rise of 3.34%;

MYX is currently reported at 2.72 USD, with a 24-hour drop of 1.58%;

CRV is currently at 0.5729 USD, with a 24-hour rise of 4.77%;

SYRUP is currently at 0.3705 USD, with a 24-hour decline of 10.88%;

FF is currently reported at 0.1324 USD, with a 24-hour rise of 4.96%.

Market Trend Analysis

TVL Slight Rebound, Mainstream Protocols Perform Steadily The total TVL across the network has risen to $154.897 billion, an increase of 3.05%. Fund inflows are primarily concentrated in leading protocols such as Aave (+2.21%), Lido (+4.42%), and EigenLayer (+4.44%). ETH.fi also rose by 3.51%, indicating that the LSD and re-staking sectors continue to show growth momentum. In contrast, Ethena saw a slight decline of 0.69%, indicating that yield-bearing assets are still experiencing short-term volatility.

DEX volume declines, market activity weakens The 24-hour DEX trading volume is approximately $16.121 billion, a week-on-week decrease of 17.87%. Funds are more concentrated in Uniswap ($5.984 billion), PancakeSwap ($2.274 billion), and HumidiFi ($1.103 billion). Among various chains, the Solana ecosystem has the highest activity, with Meteora and HumidiFi contributing $1.045 billion and $1.103 billion in trading volume, respectively.

HyperSwap TGE Boosts Market Sentiment The DEX protocol HyperSwap based on the Hyperliquid network announced the SWAP token distribution plan and confirmed that the TGE will start on October 20th. The total token supply is 100 million, with 25% allocated for community genesis distribution, 25% for investors, and the remaining will be unlocked linearly or airdropped. This move is seen as a new round of liquidity stimulus signal for the DeFi sector.

AI Narratives Heat Up but Risks Increase According to Forbes, the market value of AI entities has reached $13.5 billion, with some projects like the GOAT Token skyrocketing due to AI automated trading models. However, analysis indicates that AI strategies in DeFi largely rely on closed-source services such as OpenAI and Anthropic, resulting in a centralized decision-making process that is unaudited and could become a potential systemic risk point.

Analyst Opinions

Structural Recovery but Cautious Capital Analysts believe that the recent rise in TVL reflects the market's positive response to the rebound of BTC/ETH, but the decline in DEX volume indicates a weakening of speculative activity. Overall, DeFi capital remains defensive, primarily concentrated in blue-chip protocols, re-staking, and yield-generating assets.

HyperSwap TGE may become a short-term catalyst The token issuance of HyperSwap brings new expectations for liquidity injection in DeFi, and some funds are expected to flow back from the ETH ecosystem to the Hyperliquid system, but the linear unlocking arrangement of the token may also bring temporary selling pressure.

The AI track still has potential, but transparency is a bottleneck Analysts point out that the explosion of AI agents represents the direction of DeFi strategy automation, but centralized dependence and lack of auditing issues will become major concerns that hinder growth. In the future, if on-chain verification mechanisms can be introduced, the AI narrative may reshape the competitive landscape of DeFi.

Conclusion

Overall, on October 20, the DeFi market showed signs of moderate recovery, with an increase in TVL and stable mainstream protocols, but the decline in volume reflects that the market is still in an adjustment phase. HyperSwap TGE and AI entities run parallel risks, becoming two core events that drive and balance the DeFi market. Short-term funds may maintain structural rotation, with safety and transparency becoming key points of ongoing investor attention.