Finance redefined: Hacker shakes up DeFi exploit, dYdx’s decentralization goals, and more

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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.

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