This year DeFi was shaken by two big forces: (1) a few huge back to back hacks due to OpSec and (2) the overhang of AI models getting scary good especially at cybersecurity. I’ve always held this belief wrt open source code, but it also applies to systems - you can control the surface area of what is exposed - so you can just simply focus on shrinking it and reinforcing it. We’ve spent huge effort from the beginning of the year, pre DeFi hacks, across every domain of Kamino - cloud, frontend, OpSec, smart contracts, risk, monitoring. Break glass admins, dns monitoring, ai risk aware multisig watch, circuit breakers, internal dashboards. Multi level orchestration for bug finding - pipeline of AI agents looking for bugs, verifying, creating proof of concepts, building report. Lots of this is internal / invisible work, and generally I am strongly against publicly announcing it until it’s fully done. Just before that we went through a full market oracle hardening process that kept us resilient to temporary depegs and provider outages and at the same time through deprecating bad tokens. The work continues with things that are even more exciting and achievable due to the productivity boost that even our most ai-skeptical devs have observed. I have not lost faith in what DeFi should be, and it can be done right, but if done badly it can set us back years.

The Ethena Market: Part 1 This is undoubtedly the most advanced market we have ever designed. It layers exciting new features on top of the battle tested lending and oracle engines in a design that is simply miles ahead of anywhere else. The trade is simple: loop USDe with USDG, pocket the spread for as long as possible and minimise all the other costs: * Bad liquidations due to secondary market volatility * Bad trade economics: high entry costs due to slippage and price impact, interest rate spikes eating up yield * Adverse selection: lending against hacked double/minted tokens, rehypothecation Each of them have layers of measures (some of many): ✅ Liquidations are permissioned ✅ Oracles: USDE is capped at 1, anchored to USDT, floored at 0.98 with circuit breaker when secondary market diverges (hacks, depeg trigger), USDG is capped at 1, floored at 0.97 ✅ Curve is flat and actively managed: rate spikes will not appear in normal course of daily operations. It's critical to understand: **the market setup has to fit the trade**, especially when trade is so custom Bad tooling and you end up overpaying, risk managers cannot operate, users worry. More to come.