Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you the most significant developments from the past week.

This week, the World Economic Forum (WEF) backed a “sandbox-first approach” for DeFi adoption, urging regulators to use regulatory sandboxes to build innovation and manage risks in DeFi.

In other news, IDA Finance announced its integration with Chainlink’s blockchain services for its upcoming HKDA stablecoin, aiming to improve transparency and security in cross-chain operations.

WEF backs “Sandbox-first approach” for DeFi adoption

The World Economic Forum (WEF) has urged regulators and policymakers to conduct DeFi-related innovations and experiments with regulatory sandboxes.

The statement from the WEF aims to focus on risk mitigation and the assurance of transparency to create a tailored approach to DeFi’s regulation. 

In its assessment of nine economies worldwide, the WEF identified this need for countries like the United States, the United Kingdom, Japan and the United Arab Emirates.

The WEF said that countries adopting “a nimble, sandbox approach” had shown signs of advancing DeFi innovation by addressing inherent risks in the DeFi ecosystem.

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IDA integrates HKDA stablecoin with Chainlink for secure cross-chain use

On Oct. 9, IDA Finance, a Hong Kong-based issuer of digital assets, announced that it would be integrating Chainlink’s blockchain services into its forthcoming HKDA stablecoin.

The collaboration aims to improve transparency and security of cross-chain operations by integrating Chainlink’s oracle services into the Hong Kong dollar-backed stablecoin.

As part of the integration, implementing Chainlink’s Proof-of-Reserves (PoR) technology will enable onchain verification of assets backing IDA Finance’s HKDA stablecoin.

By establishing a medium for the monitoring of HKDA’s collateral, the PoR technology will help mitigate risks of insufficient reserves and function to provide credibility and security for holders.

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Trump crypto project proposes Aave link in governance proposal

World Liberty Financial (WLF), a crypto project launched by former US President Donald Trump, has submitted a governance proposal to Aave, confirming plans to build on the DeFi platform.

The WLF project proposed launching its service as an Aave v3 instance on the Ethereum mainnet, with the protocol acting as the platform’s back end.

The Trump-backed project offered AaveDAO, the governance group of Aave tokenholders that oversee the protocol, 20% of the fees it generates and 7% of the supply of the platform’s governance token, WLFI.

WLF said that the proposal’s success would increase liquidity for the stablecoins, Ether ( ETH ) and Wrapped Bitcoin ( WBTC ) it plans to host as it expands Aave’s user base.

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Arrington Capital-backed RedStone launches Bitcoin staking oracles

On Oct. 8, RedStone Oracles, a provider of oracle data to smart contracts, launched staking oracles designed to explicitly use Bitcoin ( BTC ) staking.

The new implementation will allow users to stake their BTC in exchange for BTC-based liquid-staking tokens (LSTs) like Lombard Staked BTC (LBTC) on the Ethereum blockchain.

Marcin Kaźmierczak, the co-founder and chief operating officer at RedStone, informed Cointelegraph that the development marked the first time BTC LSTs could be used in DeFi for lending and other uses.

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EigenLayer eyes consumer adoption post-EIGEN unlock, founder says

On Oct. 7, Sreeram Kannan, the founder of EigenLayer, told Cointelegraph that the protocol prioritizes onboarding consumer Web3 applications after the Oct. 1 unlock of staking of its native token EIGEN.

According to Kannan, EigenLayer will initially target applications in crypto-native segments, including DeFi and gaming, before expanding beyond Web3.

“We’re starting with the inside-out approach, focusing on high-throughput consumer apps like DeFi and gaming, but once we grow a little bigger and have critical mass, we’ll go outside and start targeting broader consumer markets.”

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DeFi market overview

According to Cointelegraph Markets Pro and TradingView data, the 100 largest cryptocurrencies by market cap ended the week with gains and losses, still processing the losses of early October.

Of the top 100, the Coinbase Wrapped Staked ETH ( CBETH ) token rose 38.29% as the week’s biggest gainer, followed by Zcash ( ZEC ), which rose 29.85%.

Total value locked in DeFi. Source: DefiLlama

Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically advancing space.