The decentralized finance (DeFi) sector continues to attract heightened attention from crypto investors. ForkLog has compiled the most important events and news of the past weeks into a digest.
Key DeFi Metrics
Total value locked (TVL) in DeFi protocols barely budged — $38.5 billion. Lido leads with $14.6 billion, followed by AAVE ($4.86 billion) and JustLend ($4.69 billion) respectively.
TVL in Ethereum applications fell to $21 billion. Trading volume on decentralized exchanges (DEX) over the last 30 days stood at $35.4 billion.
Uniswap continues to dominate the non-custodial exchange market — accounting for 57.9% of total turnover. The second DEX by volume is PancakeSwap (15.1%), the third is Dodo (8.3%).
Mixin Network hacked for $200 million
On 23 September an unknown actor breached the cloud service provider Mixin Network and withdrew around $200 million in digital assets.
Following Slow Mist analysts’ report, the protocol’s representatives confirmed the incident. According to the statement, the exploit targeted the network’s database. The developers temporarily paused deposits and withdrawals.
BlockSec analysts said the breach could have stemmed from an attack on cloud services where the protocol stored private keys for custodial addresses. As a result, the attacker withdrew funds from around 10,000 wallets, in descending order of balances.
The protocol’s developers proposed a bounty of 10% of the stolen funds for their return.
Mixin Network is a peer-to-peer trading network for cryptocurrencies, designed to scale and speed up transactions. The protocol supports Bitcoin, Ethereum and several other popular coins.
CFTC Chair reminds of the need for oversight of DeFi projects
The chairman of the U.S. Commodity Futures Trading Commission, Rostin Behnam stated the case for regulating DeFi protocols. He compared the sector to receiving treatment from an unlicensed doctor.
“We must not wait for victims to appear. We must act proactively and provide critical market oversight, robust cybersecurity and systemic safeguards, as well as client protection. In this, our mission is […]. If you need an analogy, imagine: would you feel comfortable on the road if only some people were required to have a driving licence? Or, if you had a choice, would you trust an inexperienced or an unlicensed doctor?” — Behnam.
Elliptic: criminals laundered $7 billion via cross‑chain solutions
The volume of illicit crypto assets laundered using cross‑chain operations reached a record $7 billion over the year. Elliptic’s researchers identify three categories of activity:
- decentralized exchanges that enable on‑chain swaps as well as intra‑chain exchanges;
- cross‑chain bridges through which coins move between networks;
- crypto‑exchange services that do not comply with KYC.
In Elliptic’s October 2022 report, the first State of Inter‑Network Crime, analysts counted $4.1 billion laundered via these means. They estimated that by the end of 2023 the figure would reach $6.5 billion.
“However our latest estimates at $7 billion demonstrate that cross‑network crime is growing faster than projected,” the analysts stated.
Their view is that the popularity of laundering by such means stems from:
- shifting criminal activity from Bitcoin to other coins with attractive properties like privacy (Monero, etc.) or stable value (stablecoins USDT, DAI, etc.);
- generating illicit proceeds in tokens other than digital gold, for example as a result of DeFi protocol hacks;
- lack of verification for cross‑chain services, unlike centralized platforms;
- deficient analytic tools to reliably track cross‑chain transactions;
- law enforcement measures against mixers and KYC‑noncompliant exchanges, driving the search for alternatives.
Only via decentralized exchanges did criminals launder $3.9 billion in the 12 months to July 2023. Compared with the previous period, the figure rose by 82%.
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