The Six-Protocol Crypto Civil War: HyperEVM vs. Ethereum

Ethereum's DeFi resurgence is driven by protocols like Aave, Pendle, and Ethena, with stablecoins like USDe enabling smoother leverage curves compared to the DeFi Summer era.
The crypto ecosystem is analyzed through six key protocols: Ethereum, Aave, Pendle, Ethena, HyperEVM, and Bitcoin, which form a tightly interconnected network.
- Ethereum dominates DeFi TVL (60%+), with Aave leading its ecosystem.
- HyperEVM actively integrates with other protocols (e.g., hosting USDe, partnering with Aave via Hyperlend).
- Bitcoin remains asset-centric, lacking deep ecosystem integration.
Aave emerges as Ethereum's lending infrastructure, while Pendle expands into derivatives, and Ethena builds DeFi-native stablecoins.
HyperEVM and Hyperliquid combine transactional and ecological strengths, positioning as Ethereum's top competitor.
The article highlights the synergy among these protocols, where collaboration amplifies capital efficiency but also risks systemic fragility.
DeFi's growth hinges on asset expansion (e.g., BTC/ETH adoption) and stable leverage models (e.g., YBS-based systems).
Competition persists, with Solana and others requiring more steps to integrate into the dominant EVM network.

Key takeaway: The six protocols form a high-efficiency web, where interdependence fuels growth but demands careful monitoring of leverage and ecosystem stability.

Ethereum has returned with DeFi, and Aave/Pendle/Ethena has made revolving loans a leverage amplifier. Compared with the on-chain stack based on ETH in DeFi Summer, the leverage increase curve supported by stablecoins such as USDe is more gradual.

We may be entering a long warm period, and the examination of on-chain protocols will be divided into two parts. The first is to involve more asset types, and external capital liquidity will be more abundant under the expectation of the Federal Reserve's interest rate cut; the second is to examine the extreme value of the leverage ratio, which corresponds to the process of safe deleveraging, that is, how individuals can exit safely and how the bull market will end.

This article focuses on on-chain protocol linkage. For an examination of external funds, please refer to the previous article: New Changes in Crypto Power Structure: Anchorage’s Iron Vault

Crypto Six Protocols: The Interaction between Ecosystem and Tokens

There are countless on-chain protocols and assets, but under the 80/20 rule, we only need to focus on parameters such as TVL/trading volume/token price. More specifically, we can focus on the smallest number of individuals that are indispensable to the on-chain ecosystem, and then examine their relationships in the ecological network to take into account the individual importance, ecological connectivity, and new protocols with the highest growth potential.

 Image Caption: DeFi TVL Overview

 Image source: @zuoyeweb3

In terms of DeFi TVL composition, Ethereum accounted for more than 60% of DeFi TVL in July, and Aave also accounted for more than 60% of the Ethereum ecosystem TVL. This is the 20% in the 80/20 rule. The remaining protocols must have a strong connection with the two to be included in the ranks of active and passive beneficiaries.

With the flywheel of the three revolving loan musketeers starting to take off, the degree of correlation between Ethereum, Aave, Pendle and Ethena is self-evident. If Bitcoin is added, WBTC, ETH and USDT/USDC are the de facto basic assets of DeFi. However, USDT/USDC is similar to Lido. They only have asset attributes and basically have no ecological value. Plasma, Stablechain, etc. have just begun to compete.

To make a slight distinction, a protocol can have multiple values. For example, Bitcoin basically only has asset value, that is, everyone needs BTC, but no one knows how to use the Bitcoin ecosystem. I don’t mean to say that BTCFi is a scam (I’m saving my life).

ETH/Ethereum has dual value. People need both ETH and the Ethereum network, including EVM and its extensive DeFi stack and development facilities.

Further classification based on assets and ecological value, examining the degree of "need" of each head protocol, one point is awarded for needed asset attributes and one point is awarded for needed ecological value, which can be summarized in the following table:

Pendle/Aave/Ethena/Ethereum/HyperEVM/Bitcoin are the six protocols with the strongest links. The relationship between any two of them can be coupled with each other, and at most one additional protocol or asset link is required.

Let's explain a little bit:

1. Ethena <> HyperEVM: USDe has been deployed to the HyperEVM ecosystem

2. Pendle <> HyperEVM: $kHYPE and $hbHYPE ranked first and third on the trend list

3. Aave <> HyperEVM: Hyperlend TVL accounts for 25% of HyperEVM ($500M vs. $2B). It is a friendly fork of Aave and promises to share 10% of its profits with Aave.

4. BTC/ETH are the two most traded currencies on Hyperliquid and can be deposited and withdrawn through Unit Protocol.

5. Pendle, Aave, and Ethena have become one, but USDe's asset attributes are recognized, and $ENA's ecological value is slightly inferior

6. Pendle's new product, Boros, uses funding rates as the basis for trading, with BTC and ETH contracts being the top choices.

7. Aave needs WBTC and various types of ETH, such as staking ETH. In particular, the ecological value of Ethereum as an infrastructure is needed by Aave/Pendle/Ethena, which is the on-chain support for ETH prices.

8. The most unique thing here is that the Ethereum ecosystem only requires BTC, while the Bitcoin ecosystem does not require any external assets

9. Ethena and Bitcoin/BTC have no relationship yet

10. HyperEVM/Hyperliquid is the most proactive external ecosystem, giving people the feeling of "I'm joining this family"

According to statistics, these are the six most closely linked assets. The introduction of any other ecosystem and token requires more hypothetical steps. For example, Lido, which has the second largest TVL, has a weak relationship with Hyperliquid and Bitcoin. After Pendle "abandoned" LST assets and switched to YBS, Lido's ecological linkage properties within Ethereum will weaken.

Based on BTC's highest 7, we divide the six assets into three types of nodes according to their influence on other protocols. Please note that this is not a description of their asset value, but a ranking of their importance within the ecosystem:

BTC/ETH are the strongest infrastructures. BTC excels in value attributes, and ETH's ecological status is unshakable. If you add Solana to calculate the degree of connectivity, you will find that it is not as connected to Ethereum as Hyperliquid/HyperEVM. The core reason is the transaction attributes of Hyperliquid itself, which, combined with HyperEVM, is more in line with the EVM ecosystem.

• Insufficient interaction between Lido/Sky and the six existing protocols within Ethereum

• Solana/Aptos does not interact enough with the six existing protocols besides Ethereum

However, Solana needs to support its own DEX to be compatible with more external assets, which will naturally require one more hypothetical step, and it will also be more difficult for SVM to be compatible with the EVM ecosystem. In short, everything about Solana must develop independently.

 Image caption: Connectionism Image source: @zuoyeweb3

However, in the network of relationships, the synergy effect of the Ethereum ecosystem is the strongest. $1 of Ethena is hedged through ETH, and then enters Pendle and Aave for value circulation, and the Gas Fee generated on it becomes the value support of ETH.

Apart from Bitcoin, which naturally relies on BTC to complete the self-circulation and self-flow of value, ETH is closest to a closed value loop, but this is the result of proactive action, and the combination of Hyperliquid/HyperEVM is still on the way. It will take some time to complete the linkage between transactions (Hyperliquid) + ecology (HyperEVM) and $HYPE.

This is a hypothetical process of gradually increasing entropy. BTC only needs itself, ETH needs ecology and tokens, and $HYPE needs transactions, tokens, and ecology.

Is there an end to DeFi's expansion?

As mentioned earlier, Hyperlend needs to give Aave a share of profits, but Aave's influence is not limited to this. In fact, Aave is the protagonist of the circular loan initiated by Pendle and Ethena, and bears the leverage role of the entire circular system.

Aave is the closest to becoming the infrastructure on the Ethereum chain. This is not because of its highest TVL, but a comprehensive consideration of security and capital volume. For any public chain and ecosystem, the safest way to start a lending model is to fork Aave in compliance.

 Image Caption: Aave and Hyperlend profit sharing settings

 Source: @zuoyeweb3

In Hyperlend's fork template, 10% profit sharing is the basis, and in addition, 3.5% of its own tokens are allocated to Aave DAO and 1% to stAave holders. That is, Aave sells itself as a service to various ecosystems. This is where its ecological value and token value are linked.

But it is not without competitors. Maple has expanded to HyperEVM, and new forms of lending protocols such as Fluid and Morpho are also competing fiercely with new assets such as YBS. HyperEVM, as the strongest competitor of the Ethereum EVM ecosystem, may not always remain peaceful.

In terms of initiative, Bitcoin and HyperEVM are two absolute extremes. HyperEVM is siphoning traditional transaction types onto the chain through HIP3, connecting the liquidity of HyperCore and Hyperevm through CoreWriter, and supporting its own front-end agents through Builder Code.

In addition, Unit Protocol and Phantom are used to connect the funds of the Solana ecosystem and siphon all on-chain liquidity, which is also a way to expand infrastructure.

To summarize:

• Pendle is targeting all asset types that can be split, starting from fixed income, and expanding the derivatives market beyond perpetual contracts, that is, the interest rate swap market in a broad sense.

• Ethena uses the DeFi revolving loan model and treasury strategy to build a third stablecoin based on the core of $ENA, $USDe and $USDtb. The basic use of USDT/USDC is still trading and payment. USDe hopes to become a risk-free asset in the DeFi field.

• Aave is already the de facto lending infrastructure, and its status is closely tied to Ethereum

• Bitcoin and Ethereum represent the limits of the blockchain economic system. The extent of their expansion is the basis for the growth of DeFi. That is, how much BTC can be transferred to DeFi and how much growth space DeFi has.

• Hyperliquid/HyperEVM is already closely tied to the existing DeFi giants in terms of ecology. Although its TVL is far lower than Solana, its growth prospects are greater. Solana’s story is to defeat the EVM system from the perspective of the public chain.

Conclusion

The six encryption protocols examine the degree of mutual connection. This does not mean that other protocols lack value, but that high degree of collaboration will exponentially increase the freedom and utilization of funds, thereby benefiting all parties and achieving common prosperity.

Of course, if one loses, all will lose. This requires examining the subsequent development of DeFi's anchor change - switching from ETH to YBS. As a high-value asset, ETH is more aggressive in leverage. YBS, such as USDe, is naturally more price-stable (not value-stable). The DeFi lego based on it is more stable. Excluding extreme de-anchoring situations, the leverage and deleveraging curves can theoretically be gentler.

There are limited seats in the crypto pantheon, and the new chosen ones can only work hard, make friends with existing gods, and build the strongest protocol network in order to earn a place for themselves.