Hacker botches DeFi exploit, dYdx decentralization goals and more

The decentralized finance (DeFi) ecosystem has been filled with ups and downs — mostly the latter — this week, with two very different hack attempts and a heartbreaking departure from a DeFi veteran.

In this week’s newsletter, we’ll also look at derivatives exchange dYdX’s plans to become fully decentralized by the end of the year. DeFi token price momentum remained neutral, with several tokens showing bullish trends. However, market volatility meant many of them were unable to hold on to those gains.

Hacker botches DeFi exploit: Leaves behind stolen $1M contract designed to self-destruct

In a rare comedic bungle among DeFi exploits, an attacker screwed up his heist at the finish line, leaving behind over $1 million in stolen crypto. Blockchain security and analytics firm BlockSec said Thursday that it had discovered an attack on a little-known DeFi lending protocol called Zeed, which bills itself as a “decentralized financial integrated ecosystem.”

The attacker exploited a vulnerability in the way the protocol distributes rewards, allowing them to mint additional tokens which were then sold, bringing the price down to zero but earning the exploiter just over $1 million .

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Derivatives exchange dYdX will be “100% decentralized by EOY”

Ethereum’s Layer 2-based crypto derivatives trading platform, dYdX, has vowed to become “100% decentralized by EOY” via the protocol’s v4 update.

Currently only certain components of dYdX are decentralized, including the Ethereum smart contracts, governance and staking. However, the “order book and matching engine” is managed by dYdX Trading Inc. – the team that developed the platform.

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Andre Cronje sees a “need for regulation” ahead of the new crypto era.

Andre Cronje, former Fantom Foundation technical advisor and founder of Yearn.finance, resurfaced via Medium on Monday after announcing his departure from the DeFi and crypto space last month. In a post titled “The Rise and Fall of Crypto Culture,” Cronje voiced his grievances about crypto culture as he called for more regulation and legislation in the industry.

The top highlight in the post is the phrase, “Cryptoculture has strangled the crypto-ethos.” According to Cronje, he has a “disdain” for crypto-culture but a “love” for the crypto-ethos. He explained that the culture which prioritizes “wealth, entitlement, enrichment and ego” has suppressed the principles of “autonomous rights, self-custody and self-empowerment”.

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Beanstalk Farms Loses $182M in DeFi Governance Exploit

Loan-based stablecoin protocol Beanstalk Farms lost its entire $182 million in collateral in a security breach caused by two sinister governance proposals and a flash loan attack.

The problem with the protocol was seeded by suspicious governance proposals BIP-18 and BIP-19 issued on Saturday by the exploiter who asked for the protocol to donate funds to Ukraine. Attached to these proposals, however, was a malicious tab which, according to intelligent contract auditor BlockSec, ultimately created the hole of funds from the protocol.

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Overview of the DeFi market

Analytical data shows that DeFi’s total locked value was almost flat compared to last week, registering a marginal drop from $200 million to around $124.8 billion. Data from Cointelegraph Markets Pro and TradingView shows that DeFi’s top 100 tokens by market cap enjoyed a week of volatile price action, with many returning to the green.

The weekly performance of several tokens saw double-digit uptrends apart from a few tokens that stayed in the red. In the top 100 DeFi list, 0x (ZRX) was the biggest gainer with a 22.5% surge over the past week, followed by PancakeSwap (CAKE) with a 16.85% surge. Terra (LUNA) bulls also made a comeback over the past week, up 15%.

Before you go!

Another update on Axie Infinity’s stolen funds: Binance has frozen nearly $5.8 million of stolen funds after the hacker group attempted to move them across 86 accounts. Binance CEO Changpeng Zhao wrote earlier today:

“DPRK hacking group started moving their stolen Axie Infinity funds today. Part of that went to Binance, spread across 86+ accounts. $5.8 million was recovered. we [have] I’ve often done this for other projects in the past.”

Thank you for reading our roundup of this week’s most influential DeFi developments. Join us next Friday for more stories, insights and information in this dynamically evolving space.