Evmos, Swing, Tashi, Wormhole team up to solve Cosmos liquidity problems

September 20, 2023 Coin Telegraph

Tashi and Swing will integrate Wormhole bridged tokens for USDC, USDT, wETH, and others, potentially making Cosmos DeFi easier to use.

A group of decentralized finance (DeFi) protocols have teamed up to solve liquidity problems in the Cosmos ecosystem. The teams involved include cross-chain bridging protocol Wormhole, liquidity aggregator Swing, lending protocol Tashi, and Cosmos network Evmos.

According to statements from two of the teams involved, Wormhole will register five new bridged tokens for use on Evmos: Tether (USDT), USD Coin (USDC), wrapped Ether (wETH), wrapped Bitcoin (wBTC) and Solana (SOL). A Wormhole governance vote on this part of the proposal began on September 19 and currently has near unanimous support.

Once the tokens are launched on Evmos, they will be implemented into Swing protocol, which will allow users to send them to Evmos from any network that Swing supports, including BNB Chain, Polygon, Fantom, and others.

Tashi will also implement Swing into its user interface, allowing users to bridge the coins and deposit them as collateral with a minimum of button clicks. Users will then be able to take out loans of either Cosmos-based or Ethereum-based coins using this collateral, swap the loaned coins for others, deposit them into liquidity pools, or perform other common DeFi actions.

*Caption: Tashi user interface. Source: Tashi.*

According to representatives from both Swing and Tashi, the integrations are ready to go live and are simply waiting for the Wormhole proposal to pass and be implemented. The proposal’s vote will come to an end on September 24, which implies that the new liquidity system should go live soon afterwards.

In a conversation with Cointelegraph, Tashi co-founders Lindsay Ironside and Kristine Boulton claimed that the new system is needed to fix a “crisis” in liquidity within the Cosmos ecosystem. “We’ve got this chain that continues to deliver these amazing opportunities, but nobody’s using it because they can’t get liquidity there,” Boulton stated. But “[Wormhole], they’re on, I think it’s 29 different chains right now [...] so it is an opportunity to fix that crisis.”

Ironside stated that she felt a new system was needed after she first began using the Cosmos ecosystem. She had a bad user experience the first time she attempted to swap USDC for Cosmos (ATOM) and send it to Evmos. In order to obtain the ATOM, she needed to first bridge her USDC to Cosmos Hub. But once the USDC was on the network, she didn’t have the ATOM to pay the gas fee to make the swap.

According to Ironside, this experience caused her to realize that the team needed to focus on this problem. “Coming in as new users [...] and trying to figure out where the solutions to these problems were, [that] was a big deal,” she remarked.

In a separate conversation, Swing CEO Viveik Vivekananthan agreed that the new system will potentially fix these problems. If a user wants to swap USDC for a different coin on Evmos, Swing will convert a small portion of the coins sent into the Evmos native coin, which will then be spent on gas to make the swap. This will allow users to onboard into Evmos using any supported coin, Vivekananthan explained.

In the beginning, Swing will only be able to bridge tokens from mostly non-Cosmos networks into Evmos, he stated, but the team plans to expand its compatibility to allow bridges between different Cosmos networks in the future.

The Cosmos community has been making a concerted effort to attract users with new features in 2023. Cosmos-based chain Noble launched a native version of the USDC stablecoin on March 28, and Cosmos Hub implemented liquid staking on September 13. However, the ecosystem also faces a competitor in the form of the Optimism Superchain, which is attempting to build an interconnected web of blockchains with similar features to Cosmos.

Analyst Nicholas Merten Issues Bitcoin Alert, Says One Factor Is Clouding the Outlook for BTC and Other Cryptos

September 15, 2023 The Daily Hodl

Nima Capital goes dark after dumping 9M SYN tokens, community calls it VC rug

September 5, 2023 Coin Telegraph

Coin Telegraph

The VC firm had received a grant from the project in return for locking $40 million worth of liquidity in SYN.

The price of the native token of the decentralized finance (DeFi) cross-chain bridge Synapse (SYN) plummeted on Sept. 5 after an unknown liquidity provider on the platform dumped nearly 9 million SYN tokens and pulled all stablecoin liquidity from the bridge.

The official X account for Synapse acknowledged the liquidity rug by an “unknown liquidity provider,” while clarifying that the Synapse bridge didn’t face any security breach.

A Synapse liquidity provider sold their SYN tokens and removed liquidity today. We're investigating unusual activity on their wallets and are working to get in touch with them. Will update once there is more info.

There was no security breach of the protocol or bridge.

4
— Synapse Labs (@SynapseProtocol) September 5, 2023

The unknown liquidity provider in question was traced to Nima Capital, one of the long-term capital partners of the project. The venture capital firm had received a grant from the project in return for locking $40 million worth of liquidity in SYN. Etherscan data suggests the unknown whale that dumped the SYN token received 10 million SYN ($3.4 million) from the “Synapse: Executor 2” wallet on April 5 and currently holds no SYN tokens in the wallet.

The VC firm rug pulled its users just eight months before the agreed governance proposal. This became evident after the Nima Capital website went offline and the project also locked its X (formerly Twitter), going dark online, prompting many to call it a VC rug.

Even VCs are rugging now @NimaCapital dumped 9M $SYN and removed all stablecoin liquidity 8 months before the agreed gov proposal

Their site went offline and twitter protected too https://t.co/ShlYcZhFbz pic.twitter.com/1ncxP13XYV
— Wazz (@WazzCrypto) September 4, 2023

Rug pulls are quite a common form of scam in DeFi ecosystems, where the project creators or developers often change the code or pull the plug on the project after the native token of the project reaches a certain price threshold. However, a rug pull by a VC firm is uncommon.

The price of SYN fell more than 20% as a result of the token dump, registering a multi-week low of $0.30 before recovering to above $0.35 later in the day.

While DeFi bridges make interoperability easier among different protocols, they are often the primary target of exploiters, with some of the biggest DeFi hacks taking place on these cross-chain bridge protocols.

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Magazine: Should crypto projects ever negotiate with hackers? Probably

Top UK university partners with AI startup to analyze crypto market

August 21, 2023 Coin Telegraph

Coin Telegraph

Imperial College London announced a collaboration with AI startup FluidAI to tackle major issues in the crypto market such as liquidity aggregation.

Imperial College London announced a partnership with the artificial intelligence (AI) startup FluidAI on Aug. 21 to help troubleshoot issues in the digital asset market using emerging technologies.

The university’s AI lab I-X will be working alongside FluidAI to improve the “tokenized market” for institutions, trading platforms and retail investors. Particularly, FluidAI says the crypto space’s issue of liquidity aggregation is of top priority.

Ahmed Ismail, the CEO of FluidAI, told Cointelegraph that solving liquidity issues in the industry was a primary motivator to start the company.

“Traditional Finance solutions tackling market aggregation use low-latency technology, so it's very fast to deliver the best prices. In crypto, that doesn't exist due to its cloud-based, decentralized nature."

He said the use of AI then helps to “eliminate the latency through prediction,” which could help provide “the best bid and ask prices in the market” from platforms to the liquidity providers or exchanges.

Imperial College London is one of the top-ranking universities in the United Kingdom and is also home to the Centre for Cryptocurrency Research and Engineering for research and application activity relating to cryptocurrencies and blockchain technology.

Cointelegraph reached out to the I-X team at Imperial College London for further information on the partnership.

The U.K. has been slowly pivoting itself to be ready for the penetration of AI-powered tools to hit its local industries.

On Aug. 21 the government announced that it plans to spend $130 million on AI chips in order to set up an AI resource.

This comes as many countries around the world scramble for resources to sustain and develop AI. A recent report claimed nearly 20% of firms don’t have access to enough computing power to power AI.

In June the British Prime Minister Rishi Sunak said that Google, OpenAI and Anthropic have all agreed to provide the U.K. with early access to their AI models.

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Bitcoin, Ether price slump leads to crypto bloodbath with $1B in liquidations

August 18, 2023 Coin Telegraph

Bitcoin, Ether price slump leads to crypto bloodbath with B in liquidations

Bitcoin Price

The liquidation event saw one trader lose $55.9 million, while another saw $10 million worth of hedged positions get liquidated.

The Bitcoin (BTC) and Ether (ETH) price slump on Aug .18 saw the top two cryptocurrencies fall to a 2-month low and triggered a series of liquidations for thousands of derivative traders.

The crypto bloodbath led to billions of dollars worth of hedged positions being liquidated and several traders lost millions of dollars in a single trade.

According to Coinglass data, a total of 176,752 traders got liquidated over the past 24 hours. 90% of these liquidations took place within the last 12 hours, indicating a rapid rise in price volatility just days after BTC and ETH recorded their lowest daily volatility in several years.

*Crypto market liquidation data. Source: Coinglass*

Among a sea of traders that lost a significant chunk of their derivative positions, two particular liquidations caught the crypto community’s eye for the sheer scale of it. During the price slump, an investor on Binance’s ETHBUSD contract was liquidated at $1,434.37 losing $55.9211 million, making it the largest liquidation for the day. Another Binance trader on the BTCUSDT contract lost nearly $10 million in liquidations.

The billion-dollar liquidation is the biggest liquidation event in crypto in the past 8 months, after the last such event during the FTX collapse.

*Biggest liquidation event of 2023. Source: TradingView*

The price function in the crypto market was attributed to several factors including the SpaceX Bitcoin write down, the macroeconomics, where BTC and ETH have been trading in a range for the past couple of months.

BTC held onto the key $28,000 support for a couple of months while ETH held the $1,500 support before giving in yesterday. The liquidity in the crypto market has been on the lower side, and prominent crypto exchanges like Coinbase had seen a significant decline in their trading volume.

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Magazine: Deposit risk: What do crypto exchanges really do with your money?

Huobi’s TVL drops to $2.5B amid rumors of insolvency, investigations in China

August 6, 2023 Coin Telegraph

China

The exchange faces ongoing rumors about its stablecoins reserves and an alleged investigation by Chinese authorities.

Cryptocurrency exchange Huobi has seen outflows worth $64 million between Aug. 5-6, amidst ongoing rumors about its solvency and that Chinese authorities were investigating its executives. Outflows over the weekend resulted in the exchange's total value locked (TVL) falling to $2.5 billion at the time of writing, down from $3.09 on July 6.

Rumors that the exchange's leadership had been arrested in China first surfaced on Aug. 4, as part of an alleged investigation about the exchange's dealings with gambling platforms. Speaking to Cointelegraph, a Huobi spokesperson labeled the claims as fake news. Rumors surface as authorities are reportedly tightening up control over cryptocurrency exchanges in mainland China.

Cointelegraph has learned that at least one C-level executive has left Huobi over the past few weeks, although it's unclear whether the departure is connected to investigations in China. On social media platform X (formerly Twitter), Huobi's head of social media said the rumors are untrue and that the exchange is "currently doing well".

The source has been verified as a senior executive at Tron who has first hand knowledge of the investigation and has been at Tron for many years.

Whether you’ve been informed or not, your colleagues are currently under criminal investigation.
— Adam Cochran (adamscochran.eth) (@adamscochran) August 6, 2023

The crypto exchange allegedly faces solvency issues as well. Fintech executive and angel investor Adam Cochran noted in a series of posts that the firm could be insolvent due to inconsistencies in its Tether (USDT) holdings.

Supported by on-chain data available on DeFiLlama, Cochran pointed out that across USDT and USD Coin (USDC) combined, Huobi held less than $90 million of assets on Aug 5. The exchange's latest 'Merkle Tree Audit', however, lists that "Huobi users have $630M in USDT held and a wallet balance of $631M USDT," reads the thread. According to Cochran, "Huobi is deeply insolvent."

According to DefiLlama data on Aug. 6, Huobi wallets held only $72 million in USDT and USDC combined.

*Huobi's reserves of USDT, USDC on Aug. 6. Source: DefiLlama.*

Huobi did not immediately respond to Cointelegraph's request to clarify rumors of insolvency and discrepancies between on-chain data and its audit report.

Huobi faces challenges in other jurisdictions as well. An enforcement action by the Malaysian securities regulator forced the exchange to close its operations in the country in May.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

Aave Chan founder proposes buying $2M CRV from Curve founder

August 3, 2023 Coin Telegraph

Aave

The proposal drew mixed reactions from the community where some criticized the strategy for buying more CRV even as others are looking to shed exposure.

Amid growing uncertainty around Curve exposure for many decentralized finance protocols, Aave Chan founder Marc Zeller has proposed that Aave Treasury buy $2 million worth of CRV tokens in USDT from Curve Founder Michael Egorov.

The proposal noted that the $2 million worth of Curve DAO Tokens (CRV) acquisition would send a strong signal of DeFi supporting DeFi while allowing the Aave DAO to strategically position itself in the Curve wars and help Aave’s decentralized multi-collateral stablecoin GHO’s liquidity.

At the current price, $2 million worth of USDT would net 5 million CRV tokens and Zeller suggested these newly bought curve tokens could be locked as veCRV for four years. These tokens could then be used for voting rights on the Curve platform where Curve users would be able to use it to provide liquidity for token pairs that involve GHO.

“The treasury balance and the predicted lower costs for service providers for the 2023-2024 budget would allow this strategic acquisition while maintaining a conservative stance with DAO treasury holdings," the proposal noted.

The proposal garnered mixed reactions from the Aave community where some claimed that the DeFi protocol should look for ways to reduce its exposure to the risk of CRV liquidation while adding:

“This is a joke and goes against the best interest of both Aave stakeholders and Aave lenders, just to help a user who took too much leverage. How is this decentralized finance?”

A few others lauded the proposal claiming it would help the protocol to de-risk the current CRV over leverage and also help the GHO stablecoin growth.

Separately, Huobi's co-founder Jun Du also purchased 10 million CRV tokens for $4 million from Curve Finance founder.

Michael Egorov, the Curve founder, has total outstanding loans of over $100 million from various lending protocols. Out of this $70 million loan in USDT is on Aave v2, using CRV as collateral. Aave's risk parameters state that CRV will be at risk of liquidation if its price falls to around $0.32.

CRV is currently trading at $0.59 and a price decline of nearly 60% would lead to liquidation. In this case, the borrower's deeded collateral will be liquidated to pay back the borrowed asset. This means that CRV will be sold for USDT, resulting in bad debt.

Egorov has been on a CRV selling spree to manage his multi-million loan positions. Ever since the exploit on the Curve protocol, its founder has sold millions worth of CRV tokens through over-the-counter trades.

Magazine: Should crypto projects ever negotiate with hackers? Probably

Abracadabra proposes hiking loan interest rate by 200% to manage Curve risk

August 2, 2023 Coin Telegraph

Coin Telegraph

The Curve Finance exploit has created a liquidity crisis in the DeFi ecosystem, with several lending protocols rushing to minimize their exposure.

Abracadabra Money, a cross-chain lending platform, has proposed increasing the interest rate on its outstanding loans to manage risks associated with its exposure to Curve DAO (CRV). The proposal drew mixed reactions from the community, with several questioning the modification of loan terms, while others called it a great plan to cut down exposure to CRV.

Abracadabra protocol allows users to earn money by using interest-bearing assets such as CRV, Convex Finance (CVX) and Yearn.finance (YFI) as collateral to mint Magic Internet Money (MIM) — a United States dollar-pegged stablecoin. Spell Token (SPELL) is the native governance and staking token of the Abracadabra platform.

Curve Finance founder Michael Egorov has nearly $100 million in loans across various lending protocols backed by 427.5 million CRV, which is 47% of the total circulating supply of CRV tokens. The Curve founder has 51.65 million CRV collateral and 14 million MIM debt positions on Abracadabra.

Abracadabra is exposed to significant amounts of CRV risk due to recent exploits on the decentralized finance (DeFi) protocol, leading to a liquidity crisis. The incident changed the liquidity conditions that led to the listing of CRV as collateral on Abracadabra.

In order to address the issue, a new proposal has been made to apply collateral-based interest to both CRV cauldrons. Cauldrons allow users to borrow MIM using another asset as collateral, with each cauldron being collateral specific.

The improvement proposal called for an increase in the interest rate to reduce Abracadabra’s total CRV exposure to around $5 million in borrowed MIM.

The proposal aims to apply collateral-based interest similar to what the decentralized autonomous organization (DAO) did with the Wrapped Bitcoin (WBTC) and Wrapped Ether (WETH) cauldrons. All interest will be charged directly on the cauldron’s collateral and will immediately move into the protocol’s treasury to increase the reserve factor of the DAO.

The DeFi protocol proposal estimated that for an $18 million principal loan amount, the base rate would be 200%. At this interest rate, the loan would be fully covered within six months. The proposal noted that the base rate would decrease as the principal is repaid.

*Interest rate hike proposal. Source: Abracadabra*

Voting for the proposal opened on Aug. 1 and will last until Aug. 3, with 99% of the votes cast in favor of the proposal by publication.

*Abracadabra improvement proposal voting snapshot. Source: Abracadabra*

The proposal also drew various reactions from the crypto community, including Frax Finance executive Drake Evans who called it a governance rug.

I'm sorry but jacking interest rates to 200% via governance is a rug. Changing the fundamental terms of a loan (10x interest rate) in a single transaction is very bad and we should call it out.

Very sympathetic to protecting protocol integrity but rugging is not the way https://t.co/sqWy7R0YPq
— Drake Evans (version 3) (@DrakeEvansV1) August 2, 2023

Others supported the proposal, claiming it could help the lending protocol eliminate CRV exposure.

If @MIM_Spell really tries this, I'd say there's a good chance $MIM loses all $CRV gauges fairly quickly.

41m MIM (61% of total mcap) is on Curve!$SPELL #DeFi https://t.co/vpm3bH4xct
— DefiMoon (@DefiMoon) August 2, 2023

With the price of CRV experiencing a stress test, the risk of a token dump has increased. In the meantime, many lending protocols are looking for ways to clear their CRV exposure.

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Magazine: Should crypto projects ever negotiate with hackers? Probably

CEX price feed prevents Curve price from collapsing amid $100M vulnerability

July 31, 2023 Coin Telegraph

CEX price feed prevents Curve price from collapsing amid 0M vulnerability

Coin Telegraph

A vulnerability in the Vyper programming language widely used by DeFi protocols like Curve Finance led to the exploit of multiple Curve liquidity pools on Sunday, July 30.

Several Curve Finance liquidity pools were attacked on July 30 due to a vulnerability found in the Vyper programming language. Vyper is a contract programming language created for the Ethereum Virtual Machine (EVM).

Curve Finance is one of the key decentralized finance (DeFi) protocols due to its key liquidity services, and the code vulnerability has put nearly $100 million worth of digital assets at risk.

The vulnerability was found in the version 0.2.15, 0.2.16 and 0.3.0, leading to a malfunctioning reentrancy lock. As a result, millions were drained from four Curve pools, namely aETH/ETH, msETH/ETH, pETH/ETH and CRV/ETH. The flaw in three of its variants may have an effect on a number of other protocols.

Please note that this reentrancy issue is associated with the use of 'use_eth', which could potentially place the WETH-related pools in jeopardy! @CurveFinance , please DM us if you need any help. https://t.co/vjc1RRce7w pic.twitter.com/Wz8DXJZK7Y
— BlockSec (@BlockSecTeam) July 30, 2023

The price of the native token of Curve Finance (CRV) collapsed on the DeFi market due to the significant draining of several pools; however, it was eventually saved by the centralized exchange price feed. The CRV price hit $0.086 on decentralized exchanges but traded at $0.60 on centralized exchanges (CEXs), preventing the token’s price from collapsing to zero.

Curve pools use Chainlink’s oracle system that incorporates several price feeds, including centralized exchanges. If not for the CEX price feed, Curve Finance would have collapsed. This ironic incident drew the attention of Binance CEO Changpeng Zhao, who chuckled at the fact that, in the end, it was a CEX price feed that saved the DeFi protocol.

Zhao noted that the Vyper vulnerability did not impact Binance, as the crypto exchange has updated the code to the latest version. He also reminded everyone of the importance of code library upgrades.

CEX price feed saves DeFi. ‍♂️

Binance users are not affected. Our team checked on the Vyper Reentrant Vulnerability. We only use version 0.3.7 or above.

It's important to stay up-to-date with code libraries, apps and OS. And stay #SAFU https://t.co/0GFv86KP9R
— CZ Binance (@cz_binance) July 31, 2023

The bug in the earlier versions of the Vyper code is believed to be at least 1.5 years old, and the exploiter is believed to have dug deep in the release history to find an exploitable issue for a large protocol with millions of dollars at stake. A Vyper program contributor on X (Twitter) suggested the amount of time and resources put into the exploit indicates it might be a state-sponsored attack.

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Magazine: Should crypto projects ever negotiate with hackers? Probably

DeFi options platform uses social logins, margin trading to draw in liquidity

June 14, 2023 Coin Telegraph

Coin Telegraph

Developers claim Synquote handled one single trade of over $1 million of notional volume with no detectable slippage in its beta period.

A DeFi options platform using social logins and undercollateralized trading to draw in liquidity providers just launched, according to a June 15 announcement. The protocol, called “Synquote,” is capable of handling large trades with much less slippage than previous options platforms, the team claims.

*Synquote user interface. Source: Synquote*

According to the announcement, Synquote did over $25 million of notional volume in its beta period, which began on March 17. The largest trade during this period was for $1 million in notional volume, which was executed without any detectable slippage, developers told Cointelegraph.

In a conversation with Cointelegraph, Synquote founder Ahmed Attia explained the strategy the protocol uses to attract liquidity. First, it doesn’t use an automated market maker to determine prices. Instead, an off-chain, peer-to-peer request-for-quote protocol matches buyers and sellers, helping to allow greater flexibility in terms of the types of orders that can be placed by market makers.

Second, the protocol allows liquidity providers to make undercollateralized trades. For example, they can issue or sell options with “as little USDC [USD Coin] as one-tenth of the underlying asset’s value if [they’re] selling a short-dated naked call.” Attia argued that allowing undercollateralized trades is the only way to attract large institutions to the DeFi space, stating:

“We launched a fully collateralized platform before, and we saw that activity was limited by the amount of size market makers were willing to trade on-chain with a fully collateralized [position]. So this is a huge improvement that unlocks the ability for them to trade with size and have capital efficiency on-chain.”

Social logins have also been implemented as part of the public launch, the Synquote founder stated. Both market makers and traders can now log in using their Google credentials without needing to download a wallet or copy down seed words. This is possible because of the Web3Auth platform, a type of new wallet tech that allows for seedless wallets.

In the past, some undercollateralized platforms have suffered liquidity crises during large swings in the market. For example, the Vires.Finance lending app on Waves suffered frozen withdrawals in April 2022, as its liquidation mechanism was unable to cope with the rapidly escalating fall of crypto prices during that time period. The app was later recapitalized through a “revival plan.”

Attia stated that the Synquote team is well aware of this risk and has implemented very conservative risk-management practices in order to help prevent such a crisis from occurring on Synquote.

“Our margin requirements are actually pretty conservative still,” he said. “We’ve done a lot of backtesting with historical data, and we’ve seen that even the biggest market moves […] even on the day FTX went bankrupt and the market was absolutely plummeting, even on those black swan days, the system is safe, with the liquidation system responding in an appropriate amount of time.”

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Liquidity