Tossed Trader Joe’s lawsuit threatens future legal action against DeFi protocols

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GM, Tim here,

Here’s what caught my DeFi-eye recently:

• The Trader Joe vs. Trader Joe’s lawsuit has concluded
• Claims go live for Starknet’s STRK token
• Puffer Finance hits $1 billion TVL — but depegs

Judge sides with Trader Joe DEX on lawsuit

US entities attempting to take legal action against decentralised protocols — especially those that don’t function like a traditional company — may find it increasingly difficult to get a judge to take them seriously.

That’s the worry after US supermarket giant Trader Joe’s lawsuit against the decentralised exchange of the same name was thrown out by a judge last Friday.

In the suit, filed back in October, the supermarket chain alleged the exchange degraded its “wholesome and high-quality brand,” and infringed on its trademarks.

But on Friday, the judge presiding over the case agreed with the exchange’s request to dismiss it “for failure to state a claim upon which relief can be granted.”

Back when the suit was first filed, lawyers who spoke to DL News warned that even if the supermarket chain were to win the case, it would have difficulty collecting damages because of the decentralised nature of the Trader Joe protocol and its operators.

Starknet airdrop recipients can now claim their tokens

Claims for Starknet’s STRK token airdrop opened as of 12 pm London time today.

The Ethereum layer 2 is distributing more than 700 million STRK to nearly 1.3 million addresses.

Starknet has received fierce criticism over the airdrop’s eligibility criteria and a short token vesting schedule.

Many frequent Starknet users were excluded from the airdrop, while others, who corrected spelling mistakes in Starknet’s GitHub repos, or built software to game the airdrop, received thousands of tokens.

Starkware CEO Eli Ben-Sasson told DL News that another, potentially more inclusive airdrop, was on its way, as well as rebates using the STRK token for network participants.

STRK currently trades at around $2.

Puffer Finance’s pufETH depegs as deposits pass $1 billion

Puffer Finance, a new so-called liquid restaking protocol, has just passed $1 billion of deposits less than three weeks after launch.

But at the same time, the protocol’s liquid restaking token — pufETH — briefly depegged.

Liquid staking tokens that cannot yet be redeemed for their underlying asset — like pufETH — are liable to depeg if a large holder decides to exit their position by selling pufETH on a decentralised exchange.

On February 18, pufETH dropped around 4% below its Ether peg.

However, the price discrepancy was short-lived. Traders betting that they will eventually be able to redeem pufETH for Ether jumped in to buy it at a discounted rate.

Other similar depegs have occurred in the past. Swell, a liquid staking token that is yet to allow stakers to redeem it for Ether, has also lost and regained its peg multiple times since it launched last May.

Check out DL News’ previous coverage for a full explainer on Puffer Finance and the liquid staking and restaking meta.

Data of the week

Smaller liquid staking protocols are seeing big increases to their TVL.

Over the past month, Mantle, Swell, Stader, and Liquid collective have all increased their TVL by more than 50%.

Despite more stakers choosing these smaller liquid staking protocols, the trend hasn’t affected top liquid staker Lido’s dominance. Its share of the staking market has stayed steady at around 31.5%.

This week in DeFi governance

VOTE: LayerZero buddies up to Aptos with new strategic initiative

PROPOSAL: Optimism prepares for Dencun with proposed Ecotone network upgrade

VOTE: Ape DAO chooses Arbitrum for its new Ethereum layer 2

Post of the week

With Bitcoin ETF news dominating crypto headlines, it can be easy to overlook the sillier side of the industry.

Last week, Bored Ape Yacht Club creator Yuga Labs acquired PROOF, along with its Moonbirds NFT collection. Alan Carroll sums it up with a meme featuring SEC Chair Gary Gensler and US Senator Elizabeth Warren.

What we’re watching

With Ethereum’s Dencun upgrade right around the corner, Ethereum co-founder Vitalik Buterin is looking toward the blockchain’s next possible upgrade: Verkle trees.

If you’re not sure what all the fuss is about, DL News has you covered. We spoke to Ethereum devs about Verkle trees, and what they mean for Ethereum, last year at EthCC. Check out the article here.

Got a tip about DeFi? Reach out at tim@dlnews.com.