Finance redefined: Hacker shakes up DeFi exploit, dYdx’s decentralization goals, and more
The decentralized finance (DeFi) ecosystem has been filled with ups and downs – mostly the latter – this week, with two very distinct hacking attempts and a heartbreaking departure from a DeFi veteran.
In this week’s newsletter, we’ll also be looking at derivatives exchange dYdX’s plans to become fully decentralized by the end of the year. DeFi token price momentum remained neutral, with several tokens seeing a bullish push. However, market volatility meant that many of them could not hold onto those gains.
Hacker misses DeFi exploit
In a rare comedic mess among DeFi exploits, an attacker fumbled his heist at the finish line, leaving behind over $1 million in stolen crypto. Blockchain security and analytics firm BlockSec shared on Thursday that it detected an attack on a little-known DeFi lending protocol called Zeed, which bills itself as an “integrated decentralized financial ecosystem.”
The attacker exploited a vulnerability in the way the protocol distributes the rewards, allowing them to TBEN additional tokens which were then sold, dropping the price to zero but earning just over a million dollars at the exploiter.
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Derivatives trade dYdX to become “100% decentralized by EOY”
Ethereum’s Layer 2-based crypto derivatives trading platform, dYdX, has pledged to become “100% decentralized by EOY” via the v4 protocol update.
Currently, only certain components of dYdX are decentralized, including its Ethereum smart contracts, governance, and staking. However, its “order book and matching engine” is managed by dYdX Trading Inc. – the team that developed the platform.
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Andre Cronje Sees a “Need for Regulation” Ahead of New Crypto Era
Andre Cronje, former technical adviser to the Fantom Foundation and founder of Yearn.finance, resurfaced via Medium on Monday after announcing his departure from the DeFi and crypto space last month. In an article titled “The Rise and Fall of Crypto Culture,” Cronje expressed his laments over crypto culture as he called for increased regulation and legislation in the industry.
The highlight of the message is the sentence: “Crypto culture has strangled the crypto ethos.” According to Cronje, he has a “contempt” for crypto culture but a “love” for the crypto ethos. He explained that the culture, which prioritizes “wealth, entitlement, enrichment and ego”, has suppressed the principles of “sovereign rights, self-care and empowerment”.
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Beanstalk Farms loses $182 million in DeFi governance exploit
Credit-based stablecoin protocol Beanstalk Farms lost its entire $182 million collateral following a security breach caused by two sinister governance proposals and a flash loan attack.
The problem with the protocol was sown by the suspicious governance proposals BIP-18 and BIP-19, which were issued on Saturday by the exploiter, who requested the protocol to donate funds to Ukraine. However, these proposals came with a malicious addendum that ultimately drained the protocol’s funds, according to smart contract auditor BlockSec.
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DeFi Market Overview
Analytical data reveals that the total value locked in DeFi remained almost unchanged from last week, registering a slight decrease of $200 million to around $124.8 billion. Data from TBEN Markets Pro and TradingView reveals that the top 100 DeFi tokens by market cap saw a week filled with volatile price action, with plenty back in the green.
The weekly performance of several tokens saw a double-digit bullish surge, except for a few tokens that remained in the red. In the DeFi Top 100 list, 0x (ZRX) was the biggest gainer with a 22.5% increase over the past week, followed by PancakeSwap (CAKE) with a 16.85% increase. Terra bulls (LUNA) also made a comeback with a 15% increase last week.
Before you leave!
Another update on stolen funds from Axie Infinity: Binance has frozen nearly $5.8 million in stolen funds after the hacker group attempted to move them using 86 accounts. Binance CEO Changpeng Zhao wrote earlier today:
“The DPRK hacking group began moving their stolen funds Axie Infinity today. A portion was paid to Binance, spread across more than 86 accounts. $5.8 million has been recovered. We [have] done this many times for other projects in the past too.
Thanks for reading our roundup of this week’s most impactful DeFi developments. Join us again next Friday for more stories, ideas and education in this dynamically evolving space.
