DYdX to unlock 6.52M tokens worth $14M for community treasury, rewards

August 29, 2023 Coin Telegraph

DYdX to unlock 6.52M tokens worth M for community treasury, rewards

Out of the lot, 2.49 million DYDX tokens — worth $5.36 million — will be allocated to the community treasury, which funds contributor grants, community initiatives and liquidity mining, among other programs.

Decentralized exchange (DEX) platform dYdX will unlock $14.02 million worth of its native DYDK tokens to be allocated to its community treasury and rewards for traders and liquidity providers.

On Aug. 29, dYdX will release 6.52 million tokens, representing 3.76% of the DYDX circulating supply. Out of the lot, 2.49 million DYDX tokens — worth $5.36 million — will be allocated to the community treasury. The treasury funds contributor grants, community initiatives and liquidity mining, among other programs.

*Upcoming dYdX unlock event. Source: token.unlocks.app*

The remaining 4.03 million DYDX tokens will be split between liquidity provider rewards (1.15 million tokens worth $2.47 million) and trading rewards (2.88 million tokens worth $6.18 million).

*Full funds allocation for dYdX. Source: token.unlocks.app*

DYdX conducted an identical unlock event on Aug. 1 with the same allocation of funds. Data on dYdX’s full allocation from TokenUnlocks suggests that investors hold the highest allocation at 27.7%, followed by trading rewards and community treasury at 20.2% and 16.2%, respectively.

*Total unlock progress for dYdX. Source: token.unlocks.app*

DYDX has a maximum supply of 1 billion tokens, and over 75% are locked, as shown above.

DYdX founder Antonio Juliano recently recommended crypto entrepreneurs explore markets outside the United States.

Crypto is aligned with American values. What could be more American & capitalist than a financial system of the people, by the people, and for the people

That is literally what we’re building here. America will realize that eventually
— Antonio | dYdX (@AntonioMJuliano) August 25, 2023

Juliano emphasized that crypto startups could scale faster overseas in friendlier markets:

“Crypto builders should just give up serving US customers for now and try to re-enter in 5-10 years. It’s not really worth the hassle/compromises. Most of the market is overseas anyways. Innovate there, find PMF [product market fit], then come back with more leverage.”

As the U.S. government continues to drag its heels on establishing crypto regulation, Juliano suggested that the crypto sector needs to grow further to have more sway over U.S. policy.

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dYdX Founder Says Crypto Industry Should Give Up on US Customers As Market Not ‘Worth the Hassle’

August 27, 2023 The Daily Hodl

Magnate Finance on Base rug-pulls users of $6.5M, as predicted by on-chain sleuth

August 25, 2023 Coin Telegraph

BASE

Magnate Finance first deleted its Telegram channel and X account followed by taking down the website before pulling the plug on its TVL.

Magnate Finance, a lending and borrowing platform on Coinbase’s layer-2 protocol, Base, has rug-pulled its users of $6.5 million hours after on-chain sleuths like ZachXBT warned about the possibility of an exit scam due to several actions of the founders of the project.

Earlier on Aug. 25, the Magnate Finance protocol deleted its Telegram group and took its website offline, raising concerns among users of a possible exit scam.

Magnate Finance also deleted its X account and removed all possible social media presence. ZachXBT had notified that the Magnate Finance deployer address is directly linked to the Solfire $4.8-million exit scam.

Community Alert: Magnate Finance on Base will likely exit scam in the near future currently with over $6.4M TVL.

The deployers address is directly linked to the Solfire $4.8M exit scam. pic.twitter.com/mBDUy3D66j
— ZachXBT (@zachxbt) August 25, 2023

Just hours after deleting the Telegram group and taking their website down, the project developers manipulated the price oracle of the protocol and removed all the assets, leading to the collapse of the $6.4 million of total value locked (TVL) in the protocol.

*Magnate Finance TVL collapse. Source: DeFi Lama*

Blockchain analytic firm PeckShield notified that the scammers behind the project transferred $1.34 million worth of Dai (DAI) tokens to a new address starting from 0x0664 and later bridged $1 million of the stolen funds to the BNB Smart Chain. PeckShield also tracked five different wallets linked to the Magnate Finance scammers.

*Magnate Finance stolen fund movement. Source: Peckshield*

The scammer behind the rugpull has bridged the majority of the profits to Ethereum L2 platforms Arbitrum and Optimism, along with the BNB Smart Chain through Stargate. Currently, around 295 Ether (ETH) and 1.3 million DAI are still held on the Base chain.

Exit scams and rugpulls have become a very common tactic of scammers, especially in the decentralized finance ecosystem due to the added convenience of decentralization. This is evident from the fact that the total value of cryptocurrencies lost in exit scams and hacks amounted to $656 million during the first half of 2023.

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Curve liquidation risk poses systemic threat to DeFi even as founder scurries to repay loans

August 1, 2023 Coin Telegraph

Coin Telegraph

A Curve Finance hack sparked a sharp sell-off, and while DeFi traders stepped in to support CRV, the possibility of a contagion-level event remains.

On July 30, Curve Finance, a decentralized exchange on Ethereum, suffered a hack due to a vulnerability in certain pools built using the Vyper programming language.

The price of Curve DAO (CRV) dropped 20.91% on the day of the hack, falling to a two-month low of $0.58.

The next day, the decline in CRV continued to a seven-month low of $0.48 amid fears of liquidation of hefty loans worth $100 million taken by Curve Finance founder Michael Egorov against CRV as collateral.

However, positive developments such as partial repayment of loans and significant negative bets in the derivatives market suggest that CRV may rally in the short term.

The DeFi community comes to save CRV

On Aug. 1, Egorov sold 39.25 million CRV tokens for stablecoins to a number of notable decentralized finance investors like Justin Sun, Machi Big Brother and DWF Labs for a total of $15.8 million, according to Lookonchain data.

More and more institutions and investors bought $CRV via OTC!

Machi Big Brother bought 3.75M $CRV.
DWF Labs bought 2.5M $CRV.https://t.co/MQg382LigF bought 2.5M $CRV.
...

Michael Egorov has sold a total of 39.25M $CRV via OTC and received 15.8M $USDT.https://t.co/hQBlW5WG6J pic.twitter.com/NMIQ2p05ZL
— Lookonchain (@lookonchain) August 1, 2023

The buyers purchased CRV at $0.40 per token, a 25% discount to the market price at the time.

Egorov also partially paid his Tether (USDT) loans on Aave, reducing the principal from $63.20 million to $54.1 million, per DeBank data. The partial repayment of the loan comes as a positive step in reducing the liquidation risk.

Currently, Egorov’s loans on Aave will be liquidated if the CRV price falls to $0.36 or lower, per DefiLlama.

CRV price analysis

The derivatives position of CRV traders suggests that the token may rally in the short term as a contrarian bet.

The funding rate for CRV perpetual swaps, which represents the relative demand for long or short positions, shows traders are actively shorting CRV, as its funding rate fell to -0.1% for eight-hour intervals, per CoinGlass data.

It raises the possibility of a short squeeze in the market, where short holders are forced to buy CRV as its price rallies.

The CRV/USD pair is trending near multiyear lows at around $0.50. If buyers are able to build support at this level, the price can rally in the short to medium term toward the horizontal resistance levels of $0.78 and $1.23.

*CRV/USD price analysis. Source: TradingView*

A long trade definitely comes with risks, as the hackers are still sitting on 7.1 million CRV tokens worth $4.5 million. If the attackers convert their holdings into stablecoins or more liquid tokens such as Bitcoin (BTC) or Ether (ETH), the price may revisit this week’s low, around $0.48.

Moreover, while Egorov has lowered the liquidation risk slightly, the risk is still not eliminated completely.

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.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Base’s largest DEX LeetSwap halts trading amid exploit concerns

August 1, 2023 Coin Telegraph

BASE

Some analysts have provided possible ways the exchange was exploited and pinned potential initial losses at over $600,000.

Decentralized exchange LeetSwap, which operates on Coinbase’s Base network has announced a pause on trading, citing concerns of a potential exploit.

LeetSwap tweeted on Aug. 1 that it noticed some of its liquidity pools may have been compromised and temporarily stopped trading to investigate. In a subsequent update, the exchange said it is working with on-chain security experts to try to recover locked liquidity.

As our DEX is forked from Solidly, our factory had a security pause function.

We noticed that some pool liquidity might have been compromised and we temporarily stopped the trading to investigate.
— LeetSwap (@LeetSwap) August 1, 2023

While the exchange did not share many details, a number of blockchain sleuths have since provided some commentary about how the exploit is likely to have taken place.

Algorithmic market maker Wintermute’s research head Igor Igamberdiev believes the attacker used an exposed smart contract function, allowing them to increase the price of a token which would then allow them to drain wrapped Ether (ETH) from LeetSwap's liquidity pools.

It was easy:

- swap a bit of WETH for X tokens (should have fees)
- call _transferFeesSupportingTaxTokens(address, uint256) to move token to a Fees contract
- call sync()
- swap X tokens for all WETH from the pool

Don't think that this function should be public

GG WP pic.twitter.com/a7vXvWf0HY
— Igor Igamberdiev (@FrankResearcher) August 1, 2023

Igamberdiev added the potential exploit has seemingly netted the attacker 342.5 ETH worth over $630,000.

Multiple blockchain security firms including PeckShield, Beosin, BlockSec and CertiK confirmed Igamberdiev's theory and the amount exploited in separate tweets.

In an update by LeetSwap roughly an hour and a half after it notified of the trading halt, it said it's working with security experts to find a way to recover liquidity locked on the platform.

We are working with on-chain security experts to try and find a way to recover the locked liquidity.

If you did not lock your liquidity you are free to remove it from the pools.
— LeetSwap (@LeetSwap) August 1, 2023

It's the second Base-related controversy in a day. Earlier, the developer for a Brian Armstrong-themed memecoin called BALD removed liquidity from the token causing its price to drop.

Allegations flew that the project was an exit scam which the project developer denied.

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Centralized exchanges will become gateways for DeFi — dYdX Foundation CEO Charles d’Haussy

July 18, 2023 Coin Telegraph

Coin Telegraph

CEO Charles d’Haussy doesn’t view centralized exchanges as competitors for dYdX.

Decentralized finance (DeFi) organization dYdX Foundation, an independent nonprofit founded to support the dYdX protocol, recently launched a public testnet for its latest version, v4. According to the foundation, this puts them ahead of schedule for the impending launch of the v4 mainnet, something they claim represents complete decentralization for dYdX.

As Cointelegraph recently reported, the July 5 testnet launch represented the fourth of five milestones dYdX Foundation laid out in a roadmap towards decentralization last year.

In its current live version, dYdX is still considered partially centalized. While it doesn’t actually take custody of any user assets, it still uses a centralized book order and matching system. The newest version, once fully-launched, is purported to solve this issue.

Currently, dYdX moves a little more than $1 billion in funds daily and is considered the world’s largest decentralized exchange for perpetuals — bonds with no maturity date.

In an interview with Cointelegraph at the EthCC conference in Paris, France, dYdX Foundation CEO Charles d'Haussy discussed the move towards total decentralization and what that would mean for centralized providers of perpetuals.

“They are not the competitors of the dYdX protocol, honestly,” said d’Haussy, adding “I think they do their job well, they have been supporting the market early on. We should not forget that perpetuals were invented by BitMex which is a centralized entity.”

The CEO described the current state of the industry as transitional, saying it was headed towards “decentralized disruption.”

However, he was quick to point out that this didn’t necessarily put centralized organizations in competition with DeFi. In his view, there’s room not only for both sides to co-exist, but opportunities for collaboration that could benefit crypto customers in general.

He added that, whether in the coming months or the next few years, he expects centralized exchanges to serve as gateways to decentralized exchanges.

“I can definitely imagine a world where maybe a centralized entity with KYC (know-your-customer) and risk profiles on customers […] Will offer spots trading in-house. Maybe they will offer their customers a better experience [compared] to DeFi, with a more simple integration and connecting from the centralized exchange to DeFi."

The CEO explained that the proposed situation wouldn’t be out of the ordinary, using the idea of multi-service traditional financial banking institutions as an example.

“If you think about this in your bank today, the core business of your bank is your deposit. And your bank sells you insurance, your bank sells you mortgages, your bank sells you different things.”

The pattern in finance, according to d’Haussy, is to begin with a core business, “your bread and butter,” and then find relevant services to bundle alongside it.

He calls this “a positive for the ecosystem,” as long as it empowers people to adopt crypto services in a method that works for them.

According to d’Haussy, “People want to consume things in different ways. And if it's easier for you or if you feel more comfortable with one entity helping you to manage your crypto experience, and this entity provides you access to Defi, I think that’s great.”

Arbitrum-based Rodeo Finance exploited for second time, $1.5M stolen

July 11, 2023 Coin Telegraph

Arbitrum-based Rodeo Finance exploited for second time, .5M stolen

Coin Telegraph

The exploiter manipulated price oracles to gain the upper hand on trades executed using the manipulated price.

Arbitrum-based decentralized finance (DeFi) protocol Rodeo Finance was exploited for $1.53 million on July 11. The DeFi protocol was exploited using a code vulnerability in its Oracle, leading to a loss of over 810 Ether (ETH).

According to data shared by blockchain analytic firm PeckShield, the exploiter later bridged the stolen funds from Arbitrum to Ethereum and swapped 285 ETH for unshETH. The exploiter then deposited the ETH on Eth2 staking. Finally, the exploiter routed the stolen ETH using the popular mixer service Tornado Cash, which exploiters often use as an exit route to obscure the transaction’s footprint.

*Movement of funds from Rodeo exploiter. Source: PeckShield*

The exploiter used time-weighted average price oracle manipulation, which is used by DeFi protocols to calculate the average price of an asset for a specific time frame and mitigate price fluctuation due to market volatility.

However, it offers a vulnerability for exploiters to manipulate these oracles by artificially skewing the calculated average price of an asset. This allows them to gain the upper hand and exploit the protocol during a transaction.

An exploiter first borrows a large sum of an asset and then artificially manipulates the price to buy the same asset at a deflated price. Later, the exploiter returns the loan and makes a profit based on the low price managed by manipulations.

The exploiter wallet address still holds over 374 ETH, and Etherscan has marked the address as linked to the Rodeo exploit. The DeFi protocol had $20 million in total value locked (TVL), falling below $500 after the exploit.

*Rodeo Finance TVL post exploit. Source: DefiLlama*

The exploit also tanked the price of the native token of the DeFi protocol, dropping over 53% in the past 24 hours.

*Rodeo Finance token price tumble post exploit. Source: CoinGecko*

In 2023 alone, there have been 21 recorded incidents of some form of exploit on the Arbitrum Network, with a combined loss of over $20 million. The latest exploit of $1.53 million makes it the fifth largest recorded on Aribitrum in 2023. Rodeo Finance was also exploited on July 5 for around $89,000 due to a vulnerability in their mintProtocolReserves function.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

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Requiring DEXes to register with SEC like other exchanges is ‘impossible’, says Coinbase CLO

June 14, 2023 Coin Telegraph

Coin Telegraph

“The SEC is attempting to front run Congressional action by baking unsupported assumptions about its crypto jurisdiction into the proposed rules," said Paul Grewal.

Paul Grewal, chief legal officer of United States-based cryptocurrency firm Coinbase, has pushed back against a proposed rule change from the Securities and Exchange Commission (SEC) which could change the definition of an exchange and how digital assets are regulated.

In a June 14 Twitter thread, Grewal said the SEC proposal “tries to fit a square peg in a round hole” and was “too flawed on process and substance to move forward”. He was referring to the SEC extending the comment period for a proposed rule change in the Securities Exchange Act of 1934 which could have securities laws apply to decentralized exchanges in the same way they currently apply to securities exchanges.

“Requiring a DEX to register in the same way as a national securities exchange is impossible,” said Grewal. “Requiring the impossible violates the [Administrative Procedure Act]. And simply saying there is no economic data doesn’t absolve the SEC from conducting economic analysis, especially when that data exists.”

He added:

“The SEC is attempting to front run Congressional action by baking unsupported assumptions about its crypto jurisdiction into the proposed rules.”

Some U.S. lawmakers and crypto advocacy groups including the Blockchain Association have also criticized the SEC proposal, claiming the rule change would allow the commission to exceed its authority and expand its purview to a range of financial products not equipped to handle such regulatory requirements. According to the Coinbase CLO, there was a path forward with the proposed rule change, requiring “robust consideration of the profound differences between a DEX and a traditional exchange”.

Yesterday we filed a comment letter on the @SECGov proposed rule that seeks to expand the definition of exchange to include DEXs. Tl; dr: this proposal should NOT be adopted, and certainly not before completing the threshold steps for any rulemaking. 1/11 https://t.co/fBXAYiWb4W
— paulgrewal.eth (@iampaulgrewal) June 14, 2023

Coinbase’s comments came amid the SEC being at the forefront of attention in the U.S. concerning the regulation of cryptocurrency. The commission has filed separate lawsuits against Binance and Coinbase for alleged violations of securities laws, prompting backlash from lawmakers calling for SEC chair Gary Gensler’s removal.

Prior to the SEC lawsuit — but following a Wells notice suggesting a potential enforcement action — Coinbase filed a reply in support of its July 2022 petition for a writ of mandamus in an attempt to force the commission to provide regulatory clarity for firms seeking to register. As of June 13, the SEC was awaiting the results of an appeal filed in federal court requesting 120 days to respond to Coinbase’s request.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

Uniswap releases version 4 code, allowing for new types of liquidity pools

June 13, 2023 Coin Telegraph

Automated Market Maker

The new version features “hooks” that will allow for more customized options, but it will not be implemented until more feedback is obtained from the community.

Uniswap Labs has released a draft of the code for Uniswap V4, according to a June 13 blog post from Uniswap’s Founder, Hayden Adams. The new code features “hooks” or plugins that allow developers to create custom liquidity pools.

Uniswap is the largest decentralized crypto exchange in the world by volume. Its latest version is V3 and was deployed on May 4, 2021.

*Uniswap's official user interface. Source: Uniswap*

According to the post, V4’s “hooks” feature will allow future developers to create on-chain limit orders, automatic deposits to lending protocols, auto-compounded liquidity provider (LP) fees, and many other innovations to the exchange once it is implemented.

Releasing the source code is the first step to launching a new version of Uniswap. The team now plans to converse with members of the Uniswap community and iterate on this base code over time. Once enough consensus has been built around a final version of it, V4 will go into a formal proposal and be placed before Uniswap’s governing body, UniswapDAO.

According to Adams’ post, Uniswap V4’s purpose is to “create a way for pool deployers to introduce code that performs a designated action at key points throughout the pool’s lifecycle – like before or after a swap, or before or after an LP position is changed.”

For example, deployers will be able to create time-weighted average market makers (TWAMMs) that allow users to sell large amounts of crypto in small batches over time. This may help traders to avoid being frontrun by EVM bots or to suffer adverse price movements. On-chain limit orders will also be possible, as pools will be able to incorporate logic that lets them fulfill an order only when a token hits a particular price.

Some other examples of “hooks” include code which can redeposit fees back into an LPs pool or lend out inventory when a particular pool isn’t being used.

In a conversation with Cointelegraph, Uniswap Labs Engineer Sara Reynolds said the new version will allow automated market maker (AMM) exchanges like Uniswap to develop more rapidly than ever before, thanks to the inherent customizability it allows:

“In V4 what we really start to see is sort of this ‘primitive’ for customized logic[…]and that’s really exciting because I think it will really start to evolve AMM innovation quite fast.”

Uniswap Labs Head of Comms Bridget Frey echoed this sentiment, stating “Right now, other people have to build new AMMs to do a lot of this work. Now, what you’ll be able to do is to build your project with a hook contract on top of Uniswap’s security and liquidity in ways that hopefully make the innovation faster and easier to do for all sorts of projects.”

Decentralized exchanges have seen an influx of new users recently. The top three DEXs experienced a 444% surge in volume after the United States Securities and Exchange sued their centralized competitors, Binance and Coinbase, for allegedly violating securities regulations. This surge occurred even though the SEC has also tried to change the definition of “exchange” to include decentralized ones. Crypto venture capital firm Paradigm has argued that decentralized exchanges do not fit the definition of an “exchange” found in securities laws.

Decentralized Exchange