Olivia Capozzalo & Camila Russo
November 06, 2025

gm, Defiers

Today’s big story:

After a controversial first deposit campaign, Stable’s second one saw many would-be investors struggle to participate amid UI and other technical issues.

In other news:

New Hyperliquid proposal meets backlash
Ripple reveals stablecoin partnerships
Ethereum protocols launch alliance
Stream Finance fallout continues
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📈 Markets in the Past 24 Hours

TICKER	VALUE	24H
Bitcoin	$101,735	-2.03 %
Ethereum	$3,327.61	-3.10 %
XRP	$2.24	-1.71 %
BNB	$944.22	-1.78 %
Solana	$157.27	-2.85 %

Today’s Big Story

Tether-Backed Chains Are Off to a Rocky Start

Stable, the Bitfinex-backed “stablechain,” has hit pause on deposits for its highly anticipated Phase 2 pre-deposit campaign, after a chaotic launch that saw website crashes, failed sign-ins, and rejected onchain deposits. It’s the second major stumble in as many weeks, and it’s raising eyebrows about whether the blockchain backed by the world’s most traded stablecoin can deliver on its ambitions.

Phase 2 of Stable’s rollout was supposed to open Tuesday at 9 a.m. EST, in partnership with yield protocol Hourglass. But within minutes, users were posting screenshots of repeated terms-of-service prompts, failed transactions, and an Hourglass website that buckled under “exceptionally high traffic,” which of course was to be expected.

As a side note, the ToS are not for the faint of heart:

“Any Accepted Tokens you send to the Hourglass Smart Contract may be loaned to [“Vault Operators"] who may deposit such Vaulted Tokens to third-party decentralized finance protocols (“DeFi Protocols”) or loan (them) to institutional counterparties (“Lending Counterparties”) and may earn yield during the Acceptance Period. The Vault Operators will control this process in their sole discretion. (...) the Company is not obligated to make any rewards available during the Vault Term or otherwise.”

So essentially, Stable can deposit the funds sent to Hourglass in DeFi, or lend them out at their own discretion, and they don’t have to share that yield with TGE participants.

Deposits Paused

When the front end went down, many DeFi veterans did what DeFi veterans do, they went straight to the contract. But that backfired too. Hourglass later confirmed that any direct smart contract deposits would not be accepted, and that users would have to redeem those funds.

Three hours later, Stable announced it was pausing deposits altogether, citing “ongoing technical issues” and promising to “share the updated path forward tomorrow.”

Phase 1 didn’t go much smoother.

Less than two weeks ago, Stable’s first pre-deposit vault drew widespread backlash after it was discovered that insiders had pre-filled the vault roughly 20 minutes before the public announcement. Onchain sleuths found that nearly $500 million of the $800 million raised in Phase 1 came from wallets directly linked to the vault owner.

“Stable phase 1 & 2 were executed so poorly it genuinely makes me wonder if these guys can even deploy a blockchain,” wrote DeFi whale CBB, who said he deposited over $15 million in Phase 1 by tracking onchain activity.

The Bigger Picture: Two Chains, One Problem

The stumble comes as Plasma, another Tether-linked blockchain project, faces its own growing pains. Plasma, pitched as a “Bitcoin L2 with USDT-native payments,” launched last month with much fanfare, but has struggled to attract real usage or developer interest since.

Plasma Chain Metrics. Source: DeFiLlama

Both chains share a similar pitch: a stablecoin-centric network promising scalability, composability, and yield, built atop Tether’s massive liquidity base.

But so far, both have been defined more by controversy than competence, raising questions on whether the world’s largest stablecoin issuer should be backing (and implicitly controlling) the rails it circulates on.

Together, the two projects hint at a new chapter in the Tether empire: from being the plumbing of crypto markets to trying to own the pipes outright. Yet early execution suggests that the company’s expertise in liquidity management may not translate so smoothly to blockchain development.

With love,

Cami, founder of The Defiant

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Top News in the Past 24 Hours

Controversial Hyperliquid HIP-5 Proposal Leaves Community Split The Hyperliquid community is considering a new proposal, dubbed HIP-5, that would establish a secondary assistance fund to support Hyperliquid ecosystem projects using a portion of the decentralized exchange’s revenue. Why it matters: Many in the community are coming out against the idea of altering Hyperliquid’s fee buyback mechanism.
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