The decentralized finance (DeFi) sector continues to attract heightened attention from cryptocurrency investors. ForkLog has gathered the most important events and news of the past weeks in this digest.
Key metrics for the DeFi sector
Total value locked (TVL) in DeFi protocols rose to $206.6 billion. In the lead by this metric is Curve Finance ($15.96 billion). Aave ($15.04 billion) took second, MakerDAO ($13.79 billion) third.
Defi Llama includes in its final value a group of tokenized bitcoins. WBTC at $11.49 billion took the fifth spot. hBTC with $2.2 billion ranked 21st. The aggregate value of “Bitcoin on Ethereum” amounted to $15.2 billion.
TVL in Ethereum applications rose to $142.23 billion. Over the last 30 days the figure rose 27% (on September 10 the value was $112 billion).
Trading volume on decentralized exchanges (DEX) over the last 30 days amounted to $69.5 billion.
Uniswap continues to dominate the non-custodial exchange market — accounting for more than 65% of total turnover. The second DEX by trading volume is SushiSwap (16.5%), the third Curve (5.9%).
Compound project incurs multi-million losses due to protocol update error
On September 30, the developers of the lending protocol Compound announced a fault in the governance token distribution process, arising after the activation of RFP-062.
The update changed the previous COMP distribution model (50/50). Now liquidity providers and borrowers receive tokens based on special coefficients.
RFP-062 was also intended to fix minor bugs, but it itself contained a serious vulnerability — users were paid tokens beyond the amount set by the rules. As a result, the project lost $82 million.
On October 3, the lead yEarn.Finance developer, going by the handle banteg, said that an unknown party or group exploited the vulnerability to transfer additional tokens to the Comptroller smart contract address, which had been drained in the previous incident.
Founder Robert Leshner then stated that 490,000 COMP were at risk (~$161.7 million at the time).
On October 7, community members unanimously approved the activation of REP-064. It is intended to fix the error in the governance token distribution process. The proposal does not fully solve the problem, but prevents users from obtaining unjust profits.
Bank of America analysts bullish on DeFi and NFT prospects
The digital asset industry could become “one of the most exciting markets” in the coming years. This assessment was offered by analysts from Bank of America's financial division.
The most innovative directions identified were DeFi and NFTs. Thanks to dapps, the DeFi sector could provide financial services to the majority of the world's 1.7 billion unbanked people simply through a smartphone.
dYdX DeFi platform edges Coinbase in trading volume
The DeFi derivatives platform dYdX for the first time surpassed Coinbase’s spot markets in trading volume. The sharp rise in platform trading volumes came amid a recent negative statement by the People's Bank of China about cryptocurrencies and stablecoins.
On September 27, the daily derivatives trading volume on dYdX was $5.646 billion. The corresponding Coinbase spot-market figure was $3.675 billion.
Charles Hoskinson warns of bubbles forming in DeFi and NFT markets
The DeFi and NFT sectors are at a development stage where the market finds it difficult to assess their fair value, said Charles Hoskinson, the head of IOHK, the company behind Cardano.
Hoskinson compared the DeFi situation to the 2017 ICO market. He stressed that bubble formation is not necessarily bad. In his words, DeFi is the “logical next step” for cryptocurrency investors.
In his view, wider adoption of DeFi will be aided by the emergence of “decentralized application stores” and the deployment of cross-chain solutions.
1inch begins blocking US users ahead of launch of new product
The liquidity aggregator from decentralized exchanges began blocking access by U.S. users based on IP addresses. According to the company's PR director Sergei Maslennikov, the project is laying the groundwork for launching a new product in the United States.
Participation by U.S. customers in the platform's terms of use had been restricted in April, but only now were those restrictions implemented at the technical level.
1inch is the largest DEX liquidity aggregator. In September, platform users executed trades totaling more than $7 billion. At its peak in May 2021 this figure reached $9.8 billion.
THORSwap, a THORChain-based DEX, attracted $3.75 million
THORSwap, a cross-chain THORChain-based exchange, raised $3.75 million in a private token sale led by IDEO CoLab Ventures. The DEX will use the funds to scale the platform, launch new products, and expand the decentralized liquidity network.
Cream Finance reports return of 5,152.6 ETH after hack. Hacker received 10% of the amount
A month after the hack Cream Finance developers confirmed that the project had managed to return 5,152.6 ETH (roughly $16.7 million at the time of publication), identifying the hacker with the help of the community.
Two security researchers under the handles losslessdefi and pcaversaccio helped Cream Finance track and identify the hacker. Under the ongoing bounty program they received the equivalent of 50% of the stolen amount – 2,576.3 ETH ($8.3 million).
To ensure full restitution, project representatives allowed the hacker to keep 10% of the stolen funds – about 515 ETH (around $1.6 million) as a reward for the discovered flaw.
Hacks and scams
An unknown attacker hacked the lending platform Vee.Finance. The total value of stolen assets exceeded $35 million (8,804.7 WETH and 213.93 WBTC).
The attacker exploited a code vulnerability and withdrew 277 BTC (~$12.7 million) from the cross-chain DeFi protocol pNetwork.
“The attacker was able to exploit an error in our codebase and attack pBTC on BSC, stealing 277 BTC (the majority of the collateral). Other bridges were not affected. All other funds in pNetwork are safe,” the project team said.
Developers offered the hacker a $1.5 million reward for return of funds, though they deemed such an outcome unlikely. Later they said they had prepared a fix for the vulnerability.
Also see:
- Solana: Solana — a blockchain for DeFi or yet another Ethereum killer?
- Arbitrum: DeFi reboot: how Arbitrum became the leading Ethereum layer-2 solution
- cross-chain bridges?
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