Category: DeFi

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CBDCs Coinbase Crypto Exchange Crypto News DeFi Regulation Stablecoins

SEC Chair Confirms It Has ‘No Plan to Ban Crypto’, Leaves It Up to Congress

US Securities and Exchange Commission (SEC) chairman Gary Gensler has confirmed the regulator has no intention of banning digital currencies and adopting a policy akin to the Chinese government’s, instead stating that any such ban “would be up to Congress”.

Gensler was appointed earlier this year, much to the joy of the crypto industry for his pro-blockchain and Bitcoin stance. Until recently he has been quiet regarding his stance on cryptos but has since broken his silence.

CBDC Looking Unlikely

At a hearing before the US House Committee on Financial Services on October 5, Gensler was questioned about whether the regulatory body had any intention of banning cryptos in favour of a prospective central bank digital currency (CBDC).

The chairman indicated that it would be up to Congress to enact such a ban. He added that the focus of the government was to ensure the crypto industry complies with investor and consumer protection, anti-money laundering and tax laws.

It’s a matter of how we get this field within the investor consumer protection that we have, and also working with bank regulators and others. How do we ensure the Treasury department has it within anti-money laundering, tax compliance? Many of these tokens do meet the test of being an investment contract, or a note, or security.

Gary Gensler, SEC chairman

Last month, the SEC issued threats to sue the crypto exchange Coinbase if it were to proceed with launching its Lend program, on the basis that Lend is a security.

Jerome Powell, chairman of the Federal Reserve, similarly stated it had no intention to limit or ban the use of the US$2.2. trillion asset class.

During the house committee hearing, Gensler further addressed questions regarding cryptos, stablecoins, and the regulation of exchanges and decentralised finance (DeFi). The requirement for digital asset firms to sign up with the regulatory body was also discussed, with Gensler hinting that decentralised exchanges (DEXs) could be required to comply with the same rules.

Even in decentralised platforms – so-called DeFi platforms – there is a centralised protocol. And though they don’t take custody in the same way [as centralised exchanges], I think those are the places that we can get the maximum amount of public policy.

Gary Gensler, SEC chairman

The SEC has been “actively investigating” Uniswap Labs, the parent company of the leading DEX, Uniswap.

Stablecoins Are Like “Poker Chips” at the Casino

Gensler consolidated his position on stablecoins, indicating they may prove to be a risk for the economic system. With an estimated US$125 billion tied up in stablecoins, Gensler has described them as “poker chips” in the crypto casino, raising concerns that the market, which has grown tenfold in the past year, might be creating a system-wide risk.

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Crypto Art Crypto News DeFi Investing NFTs

Think the NFT Market is Overheated? Now You Can Short It

Singapore-based decentralised derivatives exchange SynFutures is launching NFTures, a product that will allow users to short, or bet against, the future prices of non-fungible tokens (NFTs) such as CryptoPunks.

Holding NFTs and hoping their value increases so you can resell them for a profit is currently the only way you can make anything out of them. Many are questioning the value of NFTs, with the tokens serving no purpose besides being able to be bought or sold.

SynFutures is looking to change the way we derive profit from NFTs.

The Mania Continues

NFTs have realised immense growth in recent months, generating US$10.7 billion in trading volume during Q3, a staggering increase of 704 percent on the previous quarter. Projects like EtherRock, CryptoPunks, and Bored Ape Yacht Club have generated sales worth millions of dollars. Earlier this month, internet personality and investor Gary “Gary Vee” Vaynerchuk sold a handful of NFT doodles worth more than pieces from famous artists such as Andy Warhol and Jackson Pollock.

SynFutures is getting on the NFT train with NFTures, a product targeted toward retail investors. It uses a similar user interface to dating app Tinder in an effort to streamline the trading process, while at the same time bringing game-like elements and leverage to NFT markets.

NFTures is a decentralised protocol based on SynFutures’ existing synthetic automatic market maker (sAMM) model to match its competitors.

NFTures user interface. Source: SynFutures

Allowing Users to Maximise Profits

Rachel Lin, CEO and co-founder of SynFutures, said of the new venture:

Every healthy financial market needs a way for participants to take both sides of the market, and NFTs are no exception … By providing a way for users to take long or short positions in NFTs, we’re enabling more robust trading strategies that allow users to maximise profit opportunities while hedging risk and exposure.

Rachel Lin, CEO and co-founder, SynFutures

The company explained further in a statement that: “Those who wanted to speculate on downward trends had to bet against entire markets, shorting the native tokens of NFT-centric products like Axie Infinity ($AXS) and SupeRare ($RARE).

“With NFTures, SynFutures has created an intuitive platform for traders to long or short specific NFTs at any time and take advantage of better price discovery.”

The Risk Remains as NFT Market Continues to Grow

NFTures’ contracts are based on spot price oracles from decentralised exchanges such as SushiSwap and Uniswap, along with NFT fractionalisation protocols including Fractional and Unic.ly.

As with traditional futures markets, the spot and futures prices converge on a set periodic schedule.

Risks of oracle price manipulation remain a concern for many as the budding NFT market continues to grow in size and liquidity. Product designer and Coinbase investor Bobby Goodlatte took to Twitter to provide his take on the future of NFTs:

Albeit with some concerns, NFTures highlights the renewed interest in NFT-related DeFi projects, including the tokenisation of physical assets and NFT-backed collateralised lending. As the popularity of DeFi increases, investors are looking to seize niche markets within the industry.

Earlier this year, SynFutures raised US$14 million in a Series A funding round led by Polychain Capital. Investors included Pantera Capital, Bybit, Framework Ventures, Kronos, and IOSG Ventures. SynFutures indicated that it aims to focus its entire platform on derivatives and wants to eliminate the barriers to entry to the derivatives market.

Lin has stated that SynFutures’ overall goal is to “democratise the futures market”, and added:

We’re aiming to level the playing field for the average investor by cultivating a free and open market for derivatives trading.

Lauren Stephanian of Pantera Capital also said:

NFT-specific derivatives products will add more depth to the nascent NFT market, just as options and futures contracts play an important role in established financial markets.

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Crypto News DeFi Hackers

DeFi Deja Vu: $160 Million at Risk in Another Compound Finance Bug

Compound Labs has suffered a second major blow after another bug in the system was discovered. About US$162 million is up for grabs in what is being called the “biggest-ever fund loss in a smart contract incident”.

The Hits Just Keep Coming

The hits just keep coming for popular DeFi staking protocol Compound (COMP) after what was supposed to be a routine upgrade went horribly wrong.

This is the second in just a few days to rock the protocol after a bug in COMP’s new Proposal 062 led to an over-distribution of around US$80 million worth of COMP to some of its users. Compound founder Robert Leshner asked users to give the funds back and thanked those who did.

On October 3, somebody exploited a bug in Compound’s Comptroller contract, part of the protocol that distributes yield farming rewards to users. After calling Compound’s drip () function, the attacker had transferred 202,472 COMP, worth US$68 million, from Compound’s reservoir to its Comptroller.

Since a tweet about the bug by Banteg, a core developer at Yearn.Finance, the Comptroller pool has been drained of about 64,997 COMP (US$21.5 million).

Bug Takes Seven Days to Correct

On October 1, Leshner tweeted that the amount of COMP tokens that could be accidentally distributed would be limited to 280,000 comp tokens, worth about US$92.6 million, but revealed on Sunday that more were at risk.

Leshner revealed that the Comptroller pool, already emptied once, had been replenished, thereby exposing a further 202,472.5 COMP tokens worth around US$66.9 million.

Total carnage has been avoided as the pool of cash exposed has a limited amount of tokens. The problem, however, is that the pool is replenished with cash at a rate of 0.5 comp tokens added every 15 seconds.

Leshner tweeted that when the drip () function was called on October 3, it sent a backlog of 202,472.5 COMP (about two months of COMP since the function was last called) into the protocol to distribute to users.

The community developers were hoping that Proposals 63 or 64 would go into effect before that happened, but because of the way in which Compound’s governance is structured the bug would take seven days to correct.  

Bugs, Bugs and More Bugs

For many crypto users, DeFi is becoming synonymous with bugs and hacks. Recently a bug was found on NFT marketplace OpenSea which destroyed 42 NFTs worth an estimated US$130,000. The bug was discovered when Nick Johnson, lead developer of Ethereum Name Server (ENS), tried to transfer an ENS name to one of his personal accounts, but it ended up in an unused burn address.

Earlier this month, the Avalanche blockchain also suffered its first hack. Zabu Finance, a DeFi project that runs on the chain, was exploited for US$3.3 million after a hacker identified a bug in the contract used by yield farms to distribute rewards. Zabu’s price quickly plummeted to zero.

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Crypto News DeFi Giveaways Tokens

DeFi Protocol Bug Mistakenly Rewards Users $80 Million in COMP Tokens

A bug in Compound (COMP) protocol’s new Proposal 062 has led to an over-distribution of at least US$80 million worth of COMP to some of its users.

Compound Finance (COMP), the lending protocol, reported an incident on September 30 regarding some “unusual activity” with its token distribution after executing Protocol 062, a community-driven update:

According to Protocol founder Robert Leshner, a bug in the update resulted in excessive amounts of COMP being distributed to several users, some of whom were able to claim millions of dollars’ worth of tokens.

The upgrade was designed to “split COMP rewards distribution” from the previous set 50/50 share model, and was fully verified by the community without issues.

Culprit Was Likely a Single Letter Bug

Mudit Gupta, a programmer from SushiSwap, explained that a single letter bug was responsible for the error, causing a reverse rug pull and paying out more rewards than it was supposed to.

Leshner also stated that “the impact is bounded, at worst, 280,000 COMP tokens”, worth over US$85 million at the time of writing. The impacted contract contained only a limited amount of rewards, with the majority sitting in a different reservoir contract.

Patching Under Way, Optional White Hat Rewards

Since COMP aims to run as a decentralised autonomous organisation (DAO), any changes made to the protocol have a seven-day governance process before it can make its way to production. In the meantime, Compound Labs and community members are “evaluating potential steps to patch the COMP distribution”.

Users who return the assets can keep 10 percent as a white hat reward, Leshner added, but whether the lucky recipients choose to return a few million dollars to the platform remains to be seen – although if history is any indication, it is certainly possible.

The Bigger the Jungle, the More Bugs You’ll Find

Since the DeFi boom, one of the major issues protocols have been facing are bugs in the code causing havoc in unexpected ways. In early September, a bug in OpenSea destroyed US$130,000 worth of NFTs on the marketplace.

With code in smart contracts, sometimes the simplest errors can translate into massive problems. Recently, the decentralised exchange DeversiFi had an error in a library that processes decimals, the result of which was paying US$22 million for a $100k deposit transaction.

As the DeFi industry grows and more smart contracts are created as vehicles for both simple and complex transactions, it’s important to remember that some programmer somewhere in the world sat and wrote that code. Using projects with qualified teams, and code audited by a verified third party, is something to look out for, but since the space is so new there will most certainly be kinks to iron out.

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Crypto News DeFi Ethereum Gas Mining

Ethereum Miner Returns $22 Million After DeversiFi’s Erroneous Gas Fee

The decentralised exchange (DEX) DeversiFi mistakenly paid a fee of US$22 million for a transaction that should have been a fraction of the cost. The miner altruistically returned the funds seeing it was accidental, showing the cooperative side of the crypto community.

On September 27, “a deposit transaction was made by a DeversiFi hardware wallet from the main DeversiFi user interface with an erroneously high gas fee”, the exchange tweeted. The transaction was done through DeversiFi for Bitfinex in order to save on transaction fees.

This transaction was to deposit funds on the DeversiFi L2 solution. These transactions are extremely rare and third-party companies [usually] cover the costs of such integrations.

Bitfinex representative
The erroneous transaction: Etherscan

The details of the transaction can be seen on Etherscan where block 13307440 had a transaction fee of over $22 million for a $100,000 deposit transaction.

All You Need To Do Is Ask

While working on discovering the cause, the DeversiFi team said it reached out to Binance. The miner’s address continually routes funds to the centralised exchange; this is generally done to sell mined ETH.

Binance agreed to give the miner DeversiFi’s contact information, and the miner agreed to return the funds “after a few emails back and forth”. DeversiFi pushed for the miner to keep 50 ETH as a reward.

This was a show of crypto community spirit, given that because of the nature of the blockchain the miner could have kept the funds, and it’s unlikely any legal proceedings could have compelled him to return them.

While the mining pool that received the gas fee is anonymous, it is currently ranked ninth among the largest Ethereum miners and is responsible for roughly 3.1 percent of the network’s hash rate, according to Etherscan.

What Caused the Problem?

In a postmortem blog post on September 28, DeversiFi said that the exceedingly high gas fee was due to an error caused by a calculation mess-up in how the EthereumJS library processes decimals.

The team also said it worked with hardware wallet provider Ledger on a bug patch, and that the bug could only apply to large wallets such as theirs.

The team also wrote that DeversiFi has implemented “additional safety and sanity checks to ensure gas fees associated with transactions could not exceed unrealistic thresholds”. The new checks aim to “protect against user error, extreme network fee spikes” to serve as “an additional layer of protection against any future coding error”.

No customer funds on DeversiFi are at risk and this is an internal issue for DeversiFi to resolve, and operations are running as usual.

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China Crypto News DeFi

UNI Token Leads DEX Gains Amid China Exchange Ban, Up Nearly 50% in 24 Hours

Huge interest is flowing into the decentralised market, much of it from local investors following the intense crackdown on the Chinese crypto market. Led by Uniswap (UNI), tokens from decentralised exchanges (DEX) gained an uptick in the past few days, while centralised exchange tokens barely increased. 

UNI is the native and governance token of the Ethereum-based decentralised exchange, Uniswap. The price of UNI rebounded from a low of US$17.77 on September 26 to over US$45, making a quick return of about 47 percent within 24 hours. At the current price of US$24.40, UNI is still up by over 20 percent in the past seven days: 

A few other DEX tokens, including the SushiSwap token, also noted an increase. SUSHI posted a 37+ percent increase within the same period as UNI, although the price had retraced back to US$9.80 at the time of writing. An index from Messari showed that 60 DEX tokens gained 10.27 percent combined, while 13 CEX tokens gained 0.77 percent at the same time. 

How China Crackdown is Benefiting DeFi 

The Chinese government took heated measures to crack down on the local crypto market following the recent pronouncement by the People’s Bank of China that cryptocurrency trading is illegal. Consequently, many exchanges that operated in the country have either closed or migrated to other regions. Major exchanges Binance and Huobi have also said they will prohibit users from Mainland China.

Many argue that Chinese traders can still find their way around via the decentralised market, which constitutes crypto protocols operated without any central body. This could be the reason behind the uptick in the price of DEX tokens, and more DeFi tokens may again outperform Bitcoin and other major altcoins if more traders continue to flood into the DeFi market.

The great rotation into everything decentralised is upon us and all thanks to the latest and undoubtedly most aggressive crypto ban by China.

Denis Vinokourov, head of research, Synergia Capital
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Crypto News DeFi NFTs Trading

New Decentralised NFT Platform Artion Launched in Response to NFT Insider Trading

The renowned creator of Yearn.Finance, Andre Cronje, has launched a rival non-fungible token (NFT) marketplace to OpenSea, which earlier this month came under criticism amid accusations of insider trading. 

Although OpenSea claims to be a decentralised marketplace, it actually operates under a centralised manner of authority, which consequently enabled an employee, Nate Chastain, to trade some NFTs based on insider information, according to reports. This meant that Chastain knew which NFTs would list on OpenSea and bought them ahead of listing for quick profits – making up to US$65,000. 

The development rattled NFT traders, causing many to seek decentralised alternatives. 

Decentraland NFT Marketplace Artion Debuts on Fantom

Just in time, Cronje unveiled Artion, which is similar to OpenSea but fundamentally different. Based on Fantom, Artion is an open-source and decentralised marketplace for NFT trading. It currently supports four Fantom-based ERC20 tokens, which include fUSDT, USDC, DAI, and wFTM. It will also support the ERC721 NFT token standard in the beta release.

Artion runs with Chainlink price feeds to source for real-time exchange rates.

Yearn Finance Creator Launches Vampire Attack on OpenSea

While commenting on a tweet about Artion, Cronje shared a GIF saying, “It’s not about the money, it’s about sending a message”. However, there are people who believe Artion marks the beginning of rip-offs for OpenSea.

Firstly, NFT minting fees at Artion have been reduced to 1 FTM (currently at US$1.30), which is cheaper compared to OpenSea. Additionally, the decentralised platform will charge no commission fees on sales. The fact that Artion is open-source means anyone can replicate the protocol, resulting in more rivals to OpenSea, which holds a significant trading volume in the NFT marketplace. 

SushiSwap is a typical example of a successful “vampire attack” on the DeFi space, and many people speculate this will repeat with OpenSea in the NFT market.

Earlier this month, an OpenSea bug destroyed US$130,000 worth of NFTs, as reported in Crypto News Australia. OpenSea users have also been victims of phishing attacks from scammers posing as support staff on the Discord server.

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Crypto News DeFi eToro Investing

eToro Launches Top DeFi Index to Help Customers ‘Spread the Risk’

Copy trading service eToro now offers investors an easy way to diversify their cryptocurrency holdings without having to spend hours on research by offering an out-of-the-box style top-performing DeFi portfolio.

The DeFi portfolio eToro has created includes 11 DeFi crypto assets including Ethereum (ETH), Uniswap (UNI), Chainlink (LINK), Aave (AAVE), Compound (COMP), Yearn.finance (YFI), Decentraland (MANA), Polygon (MATIC), Algorand (ALGO), Basic Attention Token (BAT), and Maker (MKR).

DeFi is one of the most talked-about innovations in finance, with thousands of new crypto assets emerging in recent months. But for people who don’t have the time to research every asset’s whitepaper, the market may seem like a minefield. By packaging up a selection of crypto assets in a DeFi CopyPortfolio, we’re doing the heavy lifting and enabling our customers to gain exposure and spread the risk across a variety of cryptos.

Dani Brinker, head of portfolio investments, eToro.com

eToro’s @DeFiPortfolio CopyPortfolio is available now for a minimum investment of US$1,000. Users can follow developments in the DeFi sector through eToro’s social network and also track their portfolio’s performance and keep up-to-date with access to charts and other tools.

Cryptocurrencies Available on eToro

Crypto News Australia recently reported the 29 new cryptos now available for trading on eToro Australia. They are: BTC, ETH, BCH, XRP, DASH, LTC, ETC, ADA, MIOTA, XML, EOS, NEO, TRX, ZEC, BNB, XTZ, MKR, COMP, LINK, UNI, YFI, DOGE, AAVE, ALGO, MANA, ENJ, BAT, MATIC, FLR and SHIB.

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Crypto Exchange Crypto News DeFi Hackers

Avalanche DeFi Project Vee Finance Loses Over $35 Million in Hack

A day after Vee Finance announced it had more than US$300 million total value locked on the protocol, it was hit by an attack draining an estimated US$35 million.

By September 21, a total of 8,804.7 ETH and 213.93 in bitcoin had been stolen by attackers. Vee Finance is a lending and borrowing protocol built on the Avalanche blockchain that offers both flexible and fixed returns on crypto deposits.

Since its launch on September 14, the platform boasted that the total value of assets locked surpassed US$300 million, drawing the eyes of potential attackers.

The perpetrators found an exploit in the process of creating an order for leveraged trading, where only the price of the Pangolin pool was used by the oracle as the source of price feed.

When price fluctuates more than 3 percent, the oracle needs to be refreshed, in this case opening a window for the attacker to manipulate the price of the Vee Finance oracle machine.

The attacker manipulated the number of Pangolin’s tokens to make Vee Finance’s oracle machine refresh the price. This directly caused the contract to obtain the wrong price from the oracle during the slippage check, which caused it to be bypassed. A detailed attack analysis can be found on Vee’s official Medium blog.

Only ETH and BTC Stolen

As this incident occurred in the pending contract, the assets on the Stable Coin sector were not affected by the attack. So far, USDT.e, USDC.e and DAI.e assets in the Stable Coin sector have not been attacked. All pending orders were suspended, meaning that no new pending orders could be created, and existing pending orders could not be executed.

The company said it had located the address that collated US$35 million worth of crypto and suspended it.

According to address monitoring, the attacker has not yet transferred, or processed, the attacked assets any further. We are actively dealing with it and have proactively communicated [with] the attacker on the chain.

Vee Finance

According to Vee Finance, “The company, whose partners include the Avalanche blockchain and Chainlink, a platform that creates DeFi applications, said it had contacted the hacker and was trying to negotiate a solution.”

The problem has been fixed in the meantime and the Pangolin.Exchange has not been affected and is still safe to use, stated the report. Vee Finance posted it had made the white hat bounty available to the hacker if the funds were returned.

This is the second major hack on an Avalanche-based platform in a week. The first was on Zabu Finance, a DeFi protocol that supports peer-to-peer activity without a central player such as a bank or broker. Zabu revealed it had lost US$3.2 million to an attack on September 13, also resulting in a 99 percent price drop.

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Blockchain Crypto News DeFi Tokens

ATOM Token Surges 25% in a Week Through Inter-Blockchain Growth

While the crypto market has been stagnating for the past couple of days, ATOM – Cosmos Network’s native token – reached new all-time highs overnight. 

ATOM Blowing Up

The ATOM/USDT pair had a 10 percent increase over the weekend and crossed the US$40 mark, making it one of the top-performing coins in the market – US$10 up in a single week and a 180 percent increase from a low of $8 on July 20. The token was trading $34 per coin at the time of writing. 

Source: Binance

Bulls are now in control of the Cosmos market, and some of the hype comes after numerous DeFi project integrations and other novelties, such as the launch of Sifchain, a decentralised exchange (DEX) that allows users to exchange assets between Cosmos and Ethereum.

Another boost for the ATOM token came after the recent launch of Emeris, Cosmos’s first functioning user interface for DeFi, introducing cross-chain exchange capabilities.

What is Cosmos Network?

Cosmos is usually called “the internet of blockchain” as it allows different blockchains to interact, share data, and transact tokens with each other. Every blockchain freely interacts and operates in the network through the Inter-Blockchain Communication (IBC) protocol. This mechanism allows information to flow through the network and reach its destined blockchain.

At its core, IBC is a method of securely exchanging data between two independent [sovereign] blockchains. This means that any two blockchains that support IBC can send communication back and forth in a permissionless manner. Previously, ATOM was relegated to the Cosmos Hub with regard to its utility as a governance token. It is now transferable and interoperable with all blockchains that support IBC.

Zarko Milosevic, chief scientist, Informal Systems

Since its debut, Cosmos has set itself apart from its competitors for its innovative approach to interoperability and blockchain customisation. Cosmos Hub is the first blockchain launched on the Cosmos Network, designed to act as a bridge and facilitate communication between different blockchains, called zones, by keeping track of their states.