New Consensus Is Emerging: The PvP Era Has Temporarily Come to an End

A new consensus is becoming increasingly strong: the PvP era has temporarily come to an end.

Author: Nianqing, ChainCatcher

Editor: TB, ChainCatcher

A new consensus seems to be increasingly forming: the PvP era has temporarily come to an end.

Pump.fun's revenue has dropped by more than 90% over the past 24 hours compared to the historical peak of $15.38 million on January 25. The celebrity token craze is the last accelerator to push the memecoin crazy ride to its peak. The Libra incident may mark the end of the great era of Memecoins. The key point is that the mentality of the players has changed, and even the small "P" players can no longer "P" themselves.

As a result, Bitcoin has returned to the $8,000 range, and altcoins have collectively plummeted. There is a saying that ambition temporarily fades, and preserving oneself has become the current priority. This statement is particularly fitting for the current investment strategy in the crypto market. If the bull market's rising phase saw the market chasing hot money, in a downturn, investors prefer more stable annual yield products and prudent hedging strategies.

Although DeFi veteran Andre Cronje believes that those participating in meme coins are a group that is completely indifferent to DeFi or even blockchain, so meme coins have not stolen any attention. However, after the end of PvP, funds are indeed looking for other high-yield opportunities, and DeFi is beginning to show signs of recovery.

Sonic has achieved a rapid increase in on-chain TVL from $0 to approximately $700 million in just two months since its launch at the end of December last year. Its ecological Dex project, Shadow Exchange, has rapidly attracted capital through high annualized mining rewards, with token prices soaring from a few dollars to hundreds of dollars.

Launching high APY DeFi liquidity has almost become one of the recent strategies for new public chains. According to Defillama data, besides Sonic, emerging high-performance public chains focused on DeFi, such as Berachain, Sei, and Soneium, have seen an increase in TVL over the past week despite the overall market downturn, thanks to high annual yield accumulation strategies. Additionally, yield products from protocols like Pendle and Morpho are also in high demand.

Shadow Exchange: The "Golden Shovel" of the Sonic Ecosystem

The success of Shadow, in addition to Sonic's ecological incentives and subsidies, is largely due to its innovative gameplay. During the last DeFi Summer, Cronje proposed the ve(3,3) model, and this time, Shadow has improved upon the ve(3,3) model, proposing x(3,3).

In simple terms, (3,3) is an agreement for everyone to work together to grow stronger:

However, ve(3,3) has a problem: the locking time is too rigid, requiring several years to achieve high returns, which poses significant risks and inflexible rules. Thus, Shadow's x(3,3) adds some new twists to the old mechanism, with the core being "flexibility + incentives":

Currently, Shadow has already validated the explosive potential of the x(3,3) model in the liquidity track. The trading volume on the platform over the past week has exceeded $1.4 billion, and its TVL has surpassed $130 million. The liquidity pools have approached 2,000, with some early pools having an APR that is outrageously high.

So, how does Shadow's high APY staking pool achieve this?

Shadow's high APY pools primarily attract users by distributing the reward token xSHADOW. Initially, to incentivize more people to mine, the rewards were in a "high emission" phase, leading to high annualized returns, sometimes reaching hundreds or even thousands of points. Additionally, Shadow uses Uniswap V3's concentrated liquidity mechanism. The narrower the range for providing liquidity, the more concentrated the rewards, making the APY appear higher. However, as more participants and tokens enter, the rewards gradually get diluted, and the APY naturally declines.

Moreover, there is quite a bit of "water" behind the high APY. The staking rewards of xSHADOW have actual unlocking restrictions, with some rewards requiring a 6-month lock to be fully withdrawn. Additionally, you need to bear the risk of impermanent loss. If the pool's price fluctuates significantly, large holders selling off can also lead to loss risks. Furthermore, some users have complained that the APY displayed on Shadow's front end is calculated based on the narrowest price range, making it difficult for many investors to understand the actual returns, easily falling prey to "inflated" figures.

Shadow has been online for less than two months and is still in its early stages. Coupled with Sonic's ecological subsidies and airdrop expectations, it is challenging for the high APY to be sustained for long. As the locked amount (TVL) increases and more participants join, the rewards will