DeFi

Decentralized applications pause Ledger Connect as exploit fix deployed

Ledger has since attributed the exploit to a phishing attack on a former employee.

More decentralized applications (DApps) have temporarily disabled their front-end user interface for Ledger Connect amid an exploit on Dec. 14.

Developers of the nonfungible token (NFT) platform OpenSea said on Dec. 14 that users should “not connect to any dApps using Ledger Connect until further notice.”

Meanwhile, the decentralized finance (DeFi) protocol Lido Finance stated its “front-ends have been switched off as a precautionary measure whilst the Ledger connect issue is being investigated.”

DeFi protocol Venus seeks to patch $270K hole from oracle incident

The DeFi lending and borrowing protocol has confirmed it was affected by a malfunctioning Binance price oracle but confirmed user funds were safe.

Decentralized finance (DeFi) protocol Venus confirmed it was impacted by an issue with one of its price feed oracles, resulting in borrows totaling around $270,000 on Dec. 11.

However, it has downplayed the incident from being an exploit as described by analysts, and it also vowed to replace funds from the treasury.

On Dec. 10, reports emerged that a malfunctioning price oracle had affected the Binance Smart Chain-based decentralized lending and borrowing marketplace.

What is composability in DeFi?

Composability in DeFi refers to the ability of various protocols and smart contracts to seamlessly connect and interact, akin to building blocks.

Composability acts as a catalyst for growth, propelling decentralized finance’s ongoing development and growth.

In decentralized finance (DeFi), composability refers to the ability of various apps and protocols to seamlessly communicate with each other, allowing their building blocks to be combined and integrated to create new functionalities or financial services. This interoperability is similar to Lego blocks in that different protocols can be assembled and flexibly combined.

DeFi driving zkSync growth as 1inch deploys on Ethereum layer-2 scaling platform

1inch Network is the latest decentralized Finance protocol to deploy on Ethereum layer-2 scaling platform zkSync Era.

Decentralized finance protocol 1inch has deployed its aggregation and limit order protocols on Ethereum layer-2 scaling solution zkSync Era to tap into faster and cheaper transactions.

1inch Network is the latest of a host of Ethereum-based platforms and services deploying on the zero-knowledge proof (zk-proof) based scaling platform. Uniswap, SushiSwap, Maker and Curve Finance are also preparing to launch on the zk-proof roll-up zkSync Era.

1inch Network co-founder Sergej Kunz highlighted the promise of the layer-2 solution as his platform joins a handful of first-movers to integrate with the zk-proof powered protocol:

“As zkSync Era gains steam, 1inch users will benefit from faster and cheaper transactions.”

A statement from Matter Labs CEO Alex Gluchowski, who heads up the zkSync development firm, notes that DeFi protocols have been a major factor in the uptake of zkSync era:

“DeFi has been a driving force behind zkSync Era’s explosive growth that has seen over $200 million in TVL driven to the protocol in just three short weeks, and we expect the deployment of 1inch to contribute to even greater adoption and usage of zkSync Era.”

Gluchowski said that 1inch Network’s position as the largest decentralized exchange aggregator by on-chain volume would provide deeper liquidity to zkSync Era. The deployment is also touted to offer faster trades, better rates and lower transaction slippage.

zkSync is among a number of layer-2 solutions that have pioneered the use of zk-rollups to increase Ethereum’s throughput and scalability. The technology enables layer-2 protocols to move computation and blockchain state storage offchain, allowing these platforms to process thousands of transactions before providing summary data proofs to Ethereum’s mainnet.

Matter Labs secured $200 million during a series-c investment round in November 2022, taking its total fundraising to over $450 million to continue the development of its Ethereum scaling platform.

Other major Ethereum development firms, including Polygon and ConsenSys, have also developed their own zk-proof powered scaling protocols. ConsenSys released its zkEVM rollup to its public testnet on March 28.

Meanwhile, Polygon co-founder Sandeep Nailwal described zk-rollups as “the holy grail of Ethereum scaling” upon the release of its open-source zkEVM Ethereum scaling technology to the mainnet on March 27.

Magazine: ZK-rollups are ‘the endgame’ for scaling blockchains: Polygon Miden founder

Bitcoin and liquid staking protocols lead crypto resurgence in Q1 2023

The first quarter of 2023 saw Bitcoin outperform traditional assets after a 72% quarterly gain in market capitalization.

The cryptocurrency ecosystem has enjoyed a buoyant start to the year as Bitcoin (BTC) and decentralized finance (DeFi) protocols surge in market capitalization through the first quarter of 2023.

These are the key takeaways from the “2023 Q1 Crypto Industry Report” published by CoinGecko on April 18. BTC emerged as the best-performing asset of Q1 2023, with gains of 72.4%, outperforming the likes of the Nasdaq index and gold, which marked 15.7% and 8.4% gains, respectively.

The report highlights that all major asset classes saw gains through the first quarter of the year, barring crude oil, which dropped by 6.1%. This decline was attributed to United States inflation data, which cited a reduction in oil demand and the ill effects of the U.S. banking crisis.

*Bitcoin has been the best-performing asset through the first three months of 2023. Source: CoinGecko*

The wider cryptocurrency markets have enjoyed a quarter of resurgence, with the overall market capitalization reaching $1.2 trillion at the end of Q1. CoinGecko highlights a 48.9%, $406 billion gain from the cryptocurrency market cap of $829 billion at the end of 2022.

The DeFi space was another standout performer, rising by $29.6 billion in value through the first quarter. The report cites the impressive performance of liquid staking governance tokens, which saw a 210% increase in market cap since the start of 2023.

Ethereum’s Shapella upgrade played a major role in driving the increase of capital flows into liquid staking pools, with the network’s upgrade finally unlocking ETH staking reward withdrawals. The report notes that liquid staking is now the third-largest category in the DeFi sector.

While Bitcoin and DeFi have been major movers thus far this year, the top 15 stablecoins saw their market cap drop by $6.2 billion. CoinGecko attributes this 4.5% drop in market cap to the shutdown of Binance USD (BUSD) by Paxos and the temporary depeg of USD Coin (USDC) during the collapse of Silicon Valley Bank in March 2023.

Tether (USDT) strengthened its position as the largest stablecoin by market cap in 2023, adding $13.6 billion since the start of the year, while USDC and BUSD recorded market cap losses of 26.9% and 54.5%, respectively.

Nonfungible token trading volume has also surged again in 2023, marking a 68% rise from Q4 2022 to $4.5 billion during the first quarter of 2023. NFT marketplace newcomer Blur accounted for the majority of NFT trading volume since its launch in October 2022, accounting for 71.8% of the market share in March 2023.

Magazine: Bitcoin in Senegal: Why is this African country using BTC?

Symbiosis integrates zkSync: ‘Natural evolution’ of scaling solutions

Cross-chain DeFi platform Symbiosis has integrated zkSync to improve transaction speed and reduce fees on its automated market-making protocol.

Cross-chain automated marker maker Symbiosis has onboarded layer-2 scaling protocol zkSync to improve speed and reduce fees of token swaps on its platform.

The decentralized exchange (DEX) was launched in March 2022. It provides single-sided stablecoin pools that deliver zero impermanent loss to liquid providers. It also facilitates “any-to-any” native asset swaps on its platform across Ethereum Virtual Machine (EVM) and non-EVM networks.

Nick Avramov, a co-founder of Symbiosis, told Cointelegraph that the integration of zkSync will provide one-click swaps from Ethereum, Polygon, Avalanche, BNB Chain, Telos and other blockchains to zkSync and back.

The additional functionality also removes the need for users to switch between different wallets and interfaces. Avramov also confirmed that the integration improves the variety of token swaps through its DEX, supporting any-to-any native swaps to and from zkSync.

The integration of zkSync is also aimed at making liquidity transition to and from zkSync “secure, fast and cheap.” Avramov highlighted the importance of layer-2 scaling protocols to various decentralized finance (DeFi) platforms and services.

“Scaling layers like Optimistic and ZK-rollups are extremely important for the next big wave in Web3, mostly because they’re lowering entry barriers both in terms of the price per swap and user experience of value-added services built on top.”

The Symbiosis co-founder also highlighted his personal view that zero-knowledge rollups could outcompete Optimistic Rollup solutions like Arbitrum and Optimism. Avramov also believes it is crucial for cross-chain players and interoperability layers to support zero-knowledge solutions as soon as possible.

“ZK represents an inevitable and natural evolution among scaling solutions.”

Symbiosis has processed over $100 million in total transaction volume in stablecoins, serves over 12,000 unique wallet addresses, and has an average of 3,000 daily transactions.

Ethereum-scaling ZK-rollups continue to grab headlines in 2023. As previously reported by Cointelegraph, Ethereum layer-2 scaling platform Polygon released its zkEVM to mainnet beta, allowing developers to deploy smart contracts with increased finality and lower costs.

The scaling technology is not only limited to Ethereum or other smart contract blockchains. Swiss-based nonprofit ZeroSync Association is currently developing zero-knowledge proof tools that will allow Bitcoin (BTC) users to expedite the process of verifying individual blocks and, eventually, the entire blockchain.

Magazine: Crypto audits and bug bounties are broken: Here’s how to fix them

North Korea and criminals are using DeFi services for money laundering — US Treasury

Despite the warnings on DeFi, the Treasury noted that “most money laundering, terrorist financing, and proliferation financing” occurred using fiat or outside the crypto ecosystem.

A new report from the United States Treasury Department analyzing decentralized finance concluded that actors from the Democratic People’s Republic of Korea, as well as other scammers, are able to exploit vulnerabilities to facilitate money laundering.

In its “Illicit Finance Risk Assessment of Decentralized Finance” report released on April 6, the U.S. Treasury said many groups engaged in illicit activity from North Korea benefited from some DeFi platforms’ non-compliance with certain Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations. According to the report, insufficient AML/CFT controls and other shortcomings in DeFi services “enable the theft of funds.”

“Illicit actors, including criminals, scammers, and North Korean cyber actors are using DeFi services in the process of laundering illicit funds,” said Brian Nelson, under secretary of the Treasury for Terrorism and Financial Intelligence. “Capturing the potential benefits associated with DeFi services requires addressing these risks.”

The @USTreasury just released a risk assessment on #DeFi illicit finance risk. A risk assessment is a study that is often the first step to regulation. Any regulation on #crypto must be compatible with the technology. https://t.co/iag84fJ67G

— Perianne (@PerianneDC) April 6, 2023

The report noted that some projects had “affirmatively touted a lack of AML/CFT controls as one of the primary goals of decentralization,” noting that actors were often able to circumvent sanctions from the U.S. and United Nations. However, the Treasury reiterated that “most money laundering, terrorist financing, and proliferation financing” occurred using fiat currency or was otherwise outside the digital asset ecosystem.

Officials recommended an increase in the regulatory supervision of AML/CFT for platforms offering DeFi services, guidance to DeFi platforms with respect to AML/CFT, and addressing any regulatory gaps.

“DeFi services at present often do not implement AML/CFT controls or other processes to identify customers, allowing layering of proceeds to take place instantaneously and pseudonymously, using long strings of alphanumeric characters rather than names or other personally identifying information.”

The assessment was in accordance with the executive order on digital assets signed by President Joe Biden in March 2022. Since the implementation of the executive order, many U.S. government agencies have begun investigating the potential impact of aspects of the digital asset space on the country’s financial system and existing payment infrastructure. In September 2022, the Treasury released a report that included countering illicit finance risks from crypto assets.

Magazine: DeFi abandons Ponzi farms for ‘real yield’

Arbitrum poses new governance proposals after community furor

The Arbitrum Foundation has made a couple of new governance proposals following the fracas that occurred over its first attempt.

The Arbitrum Foundation has released a raft of new improvement proposals following the fracas that ensued after its first failed attempt at governance.

On April 5, Ethereum layer-2 solutions provider Arbitrum posted new Arbitrum Improvement Proposals (AIPs) for the governance of the network.

The new proposals include AIP-1.1, which covers a smart contract lockup schedule, spending, budget and transparency. The other, AIP-1.2, tackles amendments to current founding documents and lowers the proposal threshold from 5 million Arbitrum (ARB) tokens to 1 million ARB “to make governance more accessible.”

In an April 5 tweet, it confirmed the Arbitrum DAO came to a consensus against its first proposal, AIP-1.

1/10 With the ArbitrumDAO reaching consensus against AIP-1, it’s now time to incorporate community feedback, and move forward with new AIPs and documentation that address key areas of concern.

Details below

— Arbitrum (,) (@arbitrum) April 5, 2023

On April 2, the Arbitrum Foundation stated AIP-1 “likely will not pass” due to community backlash. Tokenholders objected to the proposal, arguing that it encompassed too many topics, and decried granting around $1 billion worth of ARB tokens to the foundation.

The foundation then backtracked, stating in an April 5 tweet that it would not take control of the tokens:

“The Foundation will not move any of the remaining 700M tokens in the Administrative Budget Wallet until an acceptable budget and smart contract lockup schedule have been approved by the DAO.”

The foundation also issued a transparency report that “describes actions taken to get the DAO up and running.”

“We have heard the feedback,” it stated, before adding that it has “worked diligently to address it and make sure the Foundation can represent, and serve the DAO’s best interests with their support.”

The two new AIPs were posted on the Arbitrum community forum and will be available for feedback for at least 72 hours before a planned week-long snapshot vote.

ARB prices have dropped 4% over the past 24 hours, falling to $1.22. The layer-2 token was dumped heavily following its airdrop on March 23 and is down 86% from its peak price of over $8.50 on that day.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Ethereum price turns bullish ahead of next week’s Shanghai and Capella upgrades

ETH price found news bullish momentum as traders gear up for next week’s major network upgrades.

With one week to go until the Ethereum Shanghai and Capella upgrades on April 12, all eyes are on Ether(ETH). The second-largest cryptocurrency by market capitalization shrugged off rumors and regulatory action against exchanges to hit a seven-month high of $1,922 on April 5.

Ether price has momentum, and here are three strong reasons why.

Multiple positive price achievements

According to data from Cointelegraph Markets Pro and TradingView, Ether price has posted gains on the seven-day, one-month and three-month timeframes despite market volatility. Ether price gains are also notable from the year-to-date perspective, showing 59% growth.

*ETH/USD price chart. Source: Cointelegraph Markets Pro*

Ether’s ability to break resistance levels is leading some analysts to believe a $3,000 price target is on the horizon in Q2 2023. The trend shows that whale accumulation remains strong, growing by 0.5% in March, according to data from analytics provider Santiment.

The bullish buying activity may prove on-chain data correct that Ether sell pressure after the Shanghai hardfork will be a non-event.

The uptick in proof-of-stake validation by placing Ether in staking contracts is bullish for the Ethereum ecosystem. Since launching on Aug. 4, 2021, the Ethereum network has witnessed over 18 million ETH staked on the blockchain.

*Total Ether staked. Source: TradingView*

The emergence of liquid staking derivatives has reduced the barrier to entry to participate in Ether staking. Lido, the leader in LSDs and the largest single entity by value, has close to one-third of all staked EtTH. Including interest received, Lido contracts hold 5.9 million ETH from 137,000 unique depositors.

*Lido Ether deposits overview. Source: Nansen*

Ethereum network TVL surges

The total value locked in the Ethereum network is also rising, partially as a result of Lido’s protocol comprising 22.4% of the TVL on the Ethereum network. Despite the TVL starting to drop on March 10 due to regulatory and macro headwinds, the decentralized finance market seems to be recovering.

On April 5, TVL reached $50.8 billion, nearly reaching the yearly high of $51.4 billion from Feb. 21.

The strength of Ether price ahead of the Shanghai and Capella upgrades is visible on-chain through increased usage, whale accumulation and a steady uptick in staking. With only seven days remaining until the upgrade, traders expect continued volatility in Ether price.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

PancakeSwap changes its recipe with the launch of Version 3

PancakeSwap has released version 3 of its BNB Chain, Aptos and Ethereum-based DeFi platform, touting improved performance and lower fees.

Decentralized finance (DeFi) protocol PancakeSwap has launched version 3 of its automated market maker platform on BNB Chain and Ethereum, with the upgrade encompassing performance improvements and lower fees.

Enhanced capital efficiency is cited as a key aspect of the upgrade, with a change in how liquidity providers can allocate capital on specific price intervals. In the previous version of PancakeSwap, liquidity from providers (LPs) was distributed uniformly along the price curve of trading pairs, which the platform notes was inefficient given that assets typically trade within certain ranges.

V3 allows liquidity providers to select a custom price range to provide liquidity, allowing specific control over capital investments to higher volume trading ranges. The release also touts the provision of four new trading fee tiers from 0.01%, 0.05%, 0.25%, and 1%, which is a change from V2’s standard 0.25%.

Every token pair can have liquidity pools for each tier. PancakeSwap expects asset pairs to be drawn to tiers where incentives for LPs and traders align, with the approach an effort to balance between traders targeting the lowest fees while still incentivizing LPs.

The PancakeSwap team unpacked the different trading fee tiers in correspondence with Cointelegraph. Assets such as stable pairs where impermanent loss is low (price changes after depositing to a liquidity pool) and prices typically match fall into the 0.01% tier.

The higher percentage trading fee tiers cater to assets that have higher impermanent loss or lower liquidity. This mechanism intends to provide more fee revenue and incentive for LPs.

PancakeSwap caters to a broad DeFi user base, accounting for over $2.5 billion of total value locked and serving over 1.5 million unique users.

The platform also revealed upcoming features that are still in development, including a trading rewards program incentivizing traders with exclusive benefits, while a position manager feature aims to improve user experience when depositing tokens as liquidity.

Arbitrum (ARB) has been front and center in DeFi-related news in March, with its highly-anticipated airdrop seeing around $3.3 million consolidated from over 1,400 addresses into two controlling wallets.

Magazine: 4 out of 10 NFT sales are fake: Learn to spot the signs of wash trading