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Gm all, happy Tuesday. Risk assets across crypto and equities posted a strong recovery on Monday following Friday’s massive selloff, but Tuesday’s trading begins with some of this recovery being given back. Despite the carnage, names that have no major CEX listings show relative strength. One such name is MetaDAO, whose new ICO platform has shown promising initial results, with the Avici ICO slated to open today.

The big day has arrived!

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Make sure to catch the livestream to watch Boccaccio, the Blockworks Research analysts and:

• Guy Young from Ethena

• Paul Faecks from Plasma

talk all about stablecoins, onchain credit and dominating DeFi.

Watch live DAS coverage on the 0xResearch Twitter and YouTube channels.

Following Friday’s selloff, the AI index emerges as the strongest sector and the first to make new highs relative to pre-crash levels. While the AI index is up 26% in the past week, gold is up 4.43%, representing the only two indices we track that have made positive gains on a week-over-week basis. While the equity indices are down -1% on this timeframe, crypto indices remain much more damaged from the selloff. Solana Ecosystem tokens and Launchpads are amongst the hardest hit, still down -24% from the prior week’s levels. Within these two worst performing sectors, CLOUD is the only name to have made positive gains over the past week, up +41%.

Unfortunately, within the AI Index, the breadth of the recovery does not demonstrate health. Of all of the components we track in our AI index, TAO is the only name to have registered positive gains over the past week (up +29%), while all the rest remain negative. The breadth of the recovery will be important to monitor in the wake of the selloff, with a broader recovery suggesting a healthier market and more favorable recovery. 

— Luke

While declining volatility and variance has long been a persistent feature of crypto markets on a year-over-year-basis, Friday’s price action presented a counterfactual to this trend. The distribution in the tails were in fact fat, more so than many would have thought possible. As the long tail of returns can still be realized, unfortunately in this case it was to the downside, systems that can effectively manage this risk become increasingly important to continue to support growth in risk taking on these markets. 

While CEX performance was throttled, particularly for perpetual futures, several onchain systems proved resilient. Aave has grown into the preeminent money market for lending and borrowing activities, accounting for 60% market share in this category and over $75 billion in deposits and $30 billion in active loans prior to this event. The absolute value of this capital is enormous, and the risk management of it is paramount.

Friday’s selloff led to the liquidation of $193 million in loan value on Aave. Over 80% of this liquidated loan value was denominated in stablecoins. While the scale of this liquidation was significant, it was actually smaller than the values liquidated during August 2024 of $272 million and February 2025 of $204 million.

Aave was less impaired from this event given the fact that the long tail of most alts are not eligible collateral on the market, dissimilar from perps DEXs where these alts may compose a significant share of the platform’s open interest.

In addition, and perhaps most significantly, risk curators for Aave now long ago made a small but critical decision regarding the risk management of USDe within the system. The decision made was to hardcode the USDe price to match the USDT price within Aave’s risk management system. While the decision drew controversy as impairment of USDe’s reserves could lead to bad debt for lenders, it simultaneously protected borrowers from liquidations during tail events as exhibited on Friday, where the USDe price on Binance fell beneath $0.70. As the scale of sUSDe and USDe-type PTs grew into the billions in recent months, with much of this collateral borrowed against at very high LTVs, this subtle but critical risk management decision protected the platform from the billions in liquidation value that would have occurred otherwise during an event like Friday’s.

— Luke

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Katana was built by answering a core question: What if a chain contributed revenue back into the ecosystem to drive growth and yield?

We direct revenue back to DeFi participants for consistently higher yields.

Katana is pioneering concepts like Productive TVL (the portion of assets are actually doing work), Chain Owned Liquidity (permanent liquidity owned by Katana to maintain stability), and VaultBridge (putting bridged assets to work generating extra yield for active participants).

Top of mind

Despite the selloff, relative strength abounds in projects that have no major CEX listings. One such case is MetaDAO, whose META token has continued to make new highs. MetaDAO has evolved from a fringe futarchy governance experiment to a crowdsale platform for “unruggable ICOs,” enabling high-quality founders to raise capital by sending a credible signal to the market about enforceable token holder rights.

The recent ICO of Umbra, performed on MetaDAO’s ICO platform, proved successful. The team set a cap of $3 million to be raised in the ICO, with over $154 million offered in commitment to the raise. Given the oversubscription, ICO participants received a pro-rata share of their commitment at a $3 million FDV, with the remainder of the funds returned. In the week since launch, UMBRA now trades at a $12 million FDV, giving ICO participants a 4x return on their committed capital. 

Up next on the MetaDAO platform, beginning today, is the Avici ICO. Avici aims to offer core financial services like spend cards, credit lines and mortgages fully onchain, seeing that the crypto ecosystem lacks native infrastructure for reputation-based, undercollateralized lending. Avici’s public beta launched in August 2025, having generated over $1.2 million in Visa spend volume and attracted nearly 4,000 monthly active users with 70% retention. Long-term, Avici envisions a complete neobank with payroll integration, decentralized credit scoring, and mortgage issuance. The project’s ICO allocates 0% to insiders, with the team funded through a monthly treasury allowance of $100K approved by a futarchy-style governance model. The ICO aims for a $2 million minimum raise.

MetaDAO’s new futarchy-AMM gives the platform a promising avenue for monetization. From just the UMBRA launch, the AMM has generated about $50K in revenue over the past four days of trading. As a higher quantity of projects seek to perform their ICO on this platform, this new model can offer promising monetization, offering good justification for the META token’s recent 400% increase and continued relative strength.

— Luke

1. The Liquidity Vacuum of  Crypto's $19 Billion Collapse: When Market Makers Become Market Breakers

The Oct. 10-11 crypto crash was exacerbated not just by external shocks but by a mass, coordinated withdrawal of liquidity by market makers — who, rather than stabilizing the market, accelerated its collapse by vanishing precisely when liquidity was most needed. As order books emptied and forced liquidations overwhelmed exchanges, Auto-Deleveraging (ADL) mechanisms triggered en masse, forcibly closing profitable hedges and compounding losses for thousands of traders in a destructive feedback loop. 

2. The Largest Liquidation Day in Crypto History

Per Wintermute’s market note, Last Friday’s announcement of 100% U.S. tariffs on Chinese imports triggered a massive risk-off event across global markets, causing a record $19 billion in crypto leveraged liquidations—the largest single-day wipeout in history. The spot market experienced a synchronized 55-minute crash across tokens, with liquidity vanishing and quickly returning as prices rebounded sharply, while BTC and ETH showed the most resilience. Perpetual futures and options markets were severely stressed, with DEXs undergoing real-world stress tests, Deribit hitting all-time volume highs, and the incident underscoring the importance of managing leverage in volatile conditions.

3. LIVE | Market Crash: What Happened and What’s Next

Doug Colkitt joins Jason Yanowitz on a live Empire episode to break down the dynamics of Friday’s market crash. They discuss the mechanics of risk management and auto-deleveraging on perpetual futures platforms, and how these mechanisms played a role in the price action. Additionally, they discuss the key implications of this event for crypto markets across DeFi, DEX, and CEX venues going forward. 

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