DeFi Herald: TVL Halved, Anchor Price Dropped 98%
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The decentralized finance (DeFi) sector continues to attract increased attention from cryptocurrency investors. ForkLog has collected the most important events and news of recent weeks in a digest.
Key indicators of the DeFi segment
The amount of funds blocked (TVL) in DeFi protocols fell to $109.5 billion. MakerDAO became the leader with $10.21 billion, while Curve ($8.48 billion) and Lido ($8.47 billion) hold the second and third lines of the rating, respectively. .
Data: DeFi Llama.
TVL in Ethereum applications decreased to $69.3 billion. Over the past 30 days, the indicator has decreased by 41% (April 14, the value was $118 billion).
Data: DeFi Llama.
Trading volume on decentralized exchanges (DEX) over the past 30 days amounted to $91.3 billion
Uniswap continues to dominate the non-custodial exchange market with 61.1% of total turnover. The second DEX in terms of trading volume is Curve (21.4%), the third is Balancer (6.5%), the fourth is SushiSwap (5.1%).
Anchor protocol collapsed by 98% amid the collapse of UST
TVL DeFi protocol Anchor (ANC) fell by 97.83% amid the fall of the algorithmic stablecoin TerraUSD (UST) and the cryptocurrency Terra (LUNA) used to issue it.
On May 7-8, amid a decline in the rate of return on deposits, more than 2.2 billion UST were withdrawn from Anchor, as a result of which the stablecoin briefly lost its peg to the US dollar. Then the situation was stabilized.
On May 11, TerraUSD again lost its peg to the US dollar, and its price fell below $0.2. Against this background, the LUNA token fell by 98% in a day, to a level below $1. At the time of writing, the asset is trading at $0.00038, according to CoinGecko.
After the incident, the Anchor community proposed lowering the target rate of return on UST deposits to 4% per annum. Voting will last until May 18.
Anchor uses a floating interest rate. If the initiative is approved, its minimum value will be reduced to 3.5%, and the maximum value will be increased to 5.5%. At the time of writing, the rate of return in the protocol is 18.13%.
Almost 9.5 billion UST have been withdrawn from Anchor since the crisis in the Terra ecosystem began. The largest outflow of funds was recorded on May 9 – 3.33 billion UST. Project TVL dropped to $355M
How Anchor problems could bring down the Terra economy and the cryptocurrency market
Chainalysis: DeFi protocols accounted for 97% of stolen cryptocurrencies in 2022
According to Chainalysis, the total volume of illegal cryptocurrency transactions has decreased significantly in recent years, however, cybercrime in the DeFi segment has increased.
Among the main reasons for the current situation in Chainalysis are the focus of hackers on stealing funds through DeFi projects, as well as using them to launder funds.
Throughout 2021, decentralized protocols have been a major target for hackers.
Data: Chainalysіs.
As of May 1, DeFi projects accounted for 97% of the total $1.68 billion in cryptocurrencies stolen in 2022, experts calculated.
Most of the funds stolen as a result of attacks on decentralized protocols ended up with hackers associated with the DPRK. Over the current year, they have stolen more than $840 million from similar projects.
Another serious problem is money laundering through the DeFi sector, experts say.
In 2022, decentralized protocols received 69% of all funds sent from addresses associated with criminal activity. Last year, this figure was 19%.
Samson Moe: DeFi protocols are inferior to bitcoin in terms of decentralization
Most DeFi protocols cannot compete with Bitcoin in terms of an efficient monetary network due to lack of decentralization. This was stated by former Blockstream Strategy Director Samson Moe.
According to him, DeFi project teams have the right to adjust the protocol at any time.
“Money at a fundamental level should be unchanged. If you can make changes at will, then this is no better than a central bank-managed fiat currency,” Moe explained.
The decentralized nature of bitcoin does not make it easy to change the protocol, which makes the first cryptocurrency the best candidate for the role of a global monetary system, the expert believes.
He noted that despite the unchanging basis of digital gold, the developers dapps can use layer 2 scaling solutions.
Investing in DeFi
Aurora developers, the Layer 2 (L2) protocol of the NEAR network, launched a fund in AURORA tokens of approximately $90 million to accelerate the development of DeFi applications.
The initiative is implemented in partnership with Proximity Labs, which will manage the fund and provide grants to developers interested in creating dapps on the protocol. Aurora Labs has raised funds from the DAO treasury.
Behind pSTAKE liquid staking solution Persistence Raised an undisclosed amount from the venture arm of Binance as part of a strategic funding round.
Hacks and scams
An unknown person withdrew from the DeFi protocol Rari Capital worth approximately $80 million worth of assets held in its Fuse credit pools.
Smart contract audit firm BlockSec cited a “common reentry vulnerability” in the Fei Protocol code as the cause of the hack.
The developers confirmed the information, suspended loans of cryptocurrencies and offered the hacker a payment of $10 million for the return of the stolen funds.
After the incident, the price of the Rari Governance Token (RGT) fell by 20% to $11.5.
The Deus Finance DAO DeFi protocol was again hacked. According to PeckShield, the attacker withdrew assets worth about $13.4 million from smart contracts, but the project itself “could have lost more.”
The Deus Finance DAO team confirmed the information about the hack. The developers reported that user funds are safe, their positions have not been liquidated. Lending operations with DEI have been suspended, the stablecoin’s peg to the dollar has been restored.
An unknown person hacked the decentralized exchange of stablecoins and wrapped assets Saddle Finance. The hacker mined more than $10 million in Ethereum. The project team said they were investigating the incident. Withdrawal of funds from some pools is suspended.
The first hack was discovered by the cybersecurity company BlockSec, which specializes in the DeFi sector. Its specialists were able to save Saddle Finance funds in the amount of $3.8 million.
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