The decentralized finance (DeFi) sector continues to attract heightened attention from crypto investors. ForkLog has gathered the most important events and news of the past weeks in this digest.
Key metrics for the DeFi segment
Total value locked (TVL) in DeFi protocols rose to $181.88 billion. The first, fourth and sixth places are held by lending protocols Aave ($14.4 billion), Compound ($11.53 billion) and MakerDAO ($9.96 billion).
DeFi Llama includes in the final figure a group of tokenised bitcoins. WBTC with $10 billion took fifth place. hBTC with $1.94 billion ranked 20th.
TVL in Ethereum applications rose to $127 billion. Over the last 30 days the figure rose 9%.
TVL in the Solana network reached $10.22 billion. Over the last 30 days the figure increased by 335%.
Trading volume on decentralised exchanges (DEX) over the last 30 days stood at $76.2 billion.
62% of the total turnover of non-custodial exchanges is accounted for by Uniswap. The second DEX by volume — SushiSwap (16.4%), the third — Curve (8.6%).
TVL of projects on Binance Smart Chain (BSC) stood at $17.88 billion.
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Media: SEC is pursuing investigations into several DeFi-sector companies
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According to The Defiant, citing a source, the SEC investigation into Uniswap Labs is part of a broader initiative aimed at the DeFi sector.
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According to WSJ, SEC officials are examining information about Uniswap and how investors interact with it. The publication suggested the investigation is in its early stages and there are currently no charges.
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However Uniswap Labs is reportedly not the only sector company under regulator scrutiny. The source noted that the Commission is conducting a wide-ranging investigation into a number of DeFi platforms.
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According to the NYT, similar actions were undertaken by the SEC in 2017-2018 against organizers of initial coin offerings. In those cases, within a few months the regulator sought information from \”dozens of people and companies\” connected with public offerings.
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Venus Project developers cancelled the vote results to reclaim control of the project
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The developers of the lending protocol Venus Project with a decentralised governance model on BSC cancelled the vote results on handing the project to a third-party development team.
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The Team Bravo group held a vote to transfer powers to develop the protocol and to distribute tokens. The organisers sought 1.9 million XVS (~$60.8 million) in funding, of which 900 000 XVS (~$29 million) were promised to be distributed among supporting users.
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The proposal attracted 1.29 million votes in favour and 1.19 million against. Team Bravo pledged to \”increase and sustain a high price for XVS for investors.\”
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The address used to deploy the Venus Project contract cancelled the vote results. The decision demonstrated control over the protocol by its creators, despite the decentralised governance model.
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Hackers withdrew over $18 million from Cream Finance DeFi protocol, but later returned most of the funds
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The DeFi protocol Cream Finance came under attack via a flash loan and lost more than $18 million. The attackers used a re-entrancy vulnerability in the AMP token contract to withdraw 462 079 976 AMP and 2 804 ETH.
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The developers promised to compensate affected users and to pay 10% of the stolen amount to the hacker if he returns the funds.
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Subsequently the hacker reimbursed most of the stolen amount, amounting to 5 152.6 ETH. The funds were credited to the project’s multisig wallet.
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Investments in DeFi
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The Polkadot-based DeFi protocol Parallel Finance closed a Series A round at $22 million. The project valuation reached $150 million.
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The round was led by Polychain Capital. Other participants included Lightspeed, Slow Ventures, Blockchain Capital and Alameda Research.
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Parallel currently has 3,000 users. The project plans to expand its base severalfold within a year and hire new staff.
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The developers of the DeFi project Syndicate raised $20 million in a Series A financing round. It was led by leading Silicon Valley venture firm Andreessen Horowitz.
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More than 150 investors participated, including Coinbase Ventures, Table Management by Bill Ackman, Alexis Ohanian, Ashton Kutcher and Snoop Dogg Ventures.
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The team will allocate the raised funds to accelerate development of technologies based on a decentralised autonomous organisation, integrate with Web3 and fintech startups, and support various communities.
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The startup Evrynet raised $7 million to build a DeFi application aimed at institutional investors.
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The private round was led by Singaporean venture capital firm Signum Capital. Participants included Petrock Capital, Ellipti Ventures and existing investors, including HashKey Capital, Everest Ventures, Hanhwa Investments and Securities, Seven Bank, UOB Venture Management, Uni-President Asset Holdings, Hopeshine Ventures, and Du Capital.
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The raised funds will be used to develop Evry.Finance, which will provide exchange services, liquidity pools and a staking platform.
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Evrynet aims to provide infrastructure to facilitate interaction between centralised and decentralised finance.
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Hacks and scams
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The DeFi protocol xToken reported a hack. User losses are estimated at $4.5 million.
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The hacker exploited a vulnerability in the xSNX product, which allows access to Synthetix-based assets without directly interacting with the protocol’s complex smart contracts.
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Founder Michael Cohen described the attacker’s actions in a blog post:
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- The hacker took a flash loan of 25 000 ETH on the dYdX platform;
- used these funds as collateral to borrow about 1 million SNX tokens in the Aave protocol;
- also swapped 6 800 ETH for 519 000 SNX on the Bancor DEX;
- exchanged the SNX for 6.5 million USDC on the Kyber protocol, driving down the price of the Synthetix governance token;
- bought 6.5 million sUSD on Curve for 6.5 million USDC;
- transferred about 2 million sUSD to the xSNXAdmin contract with the aim of repaying the debt in the stablecoin to unlock SNX;
- invoked the callFunction function in xSNXAdmin, burned the outstanding debt and additionally purchased 614,000 SNX for 811,000 sUSD at an artificially depressed price.
- exchanged 811 000 sUSD for 811 000 USDC, which remained in the contract;
- carried out reverse transactions, moved assets to ETH and repaid the loan.
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Cohen said that, by error, the developers left the callFunction function publicly accessible, whereas it should have been callable only from the dYdX instant loan smart contract.
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The hacker exploited the vulnerability to pressure the SNX price via xSNX assets and profit from external arbitrage, the project founder noted.
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After the attack, xToken decided to discontinue the xSNX product. The team is devising a compensation plan for users using its own token, XTK.
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The DeFi protocol Zabu Finance on the Avalanche blockchain announced a hack. The attacker withdrew crypto assets worth about $3.2 million. The price of the project’s native token ZABU collapsed to zero after the incident.
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Investigations showed that the attacker stole assets from the Spore pool. According to a blockchain explorer, they included:
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- 402.9 WETH;
- 23,157 WAVAX;
- 21,501 PNG;
- 106,848 AVE;
- 361,267 USDT;
- 23,958.93 JOE.
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At Zabu Finance they discovered that the hacker exploited a vulnerability in a smart contract and successfully withdrew 4.5 billion ZABU, which were sold on Pangolin and Trader Joe, fetching around $600,000.
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Immediately after the hack, the project team urged investors to promptly withdraw assets to avert losses. Zabu Finance plans to compensate users based on a snapshot of balances before and after the attack.
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The protocol also burned 93.12 million ZABU remaining in the team and treasury wallets.
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Also on ForkLog:
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- Aave, Curve and Sushi joined an initiative for the global rollout of DeFi.
- DeFi protocol Cover Protocol announced its closure after developers left.
- Opinion: The DeFi sector has weathered volatility as of September 7.
- Avanti head Caitlin Long criticised a New York Times article on the crypto industry and DeFi.
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