News of the hack caused the Yearn’s native currency YFI to fall by around 15%, from $35,000 to just under $30,000
On February 5, Yearn Finance confirmed that their V1 yDAI vault has been exploited by a hacker. The DAI vault lost $11M with the hacker making away with $2.8M of this. Yearn has in the last few hours reassured the community that the attack has been mitigated with a full report to follow.
The attack on the Yearn Finance vault was confirmed by Banteg from the Yearn team who posted on Discord. Banteg’s analysis showed that the attacker made away with 513,000 DAI and $1.7 million USDT.
The post reads:
“Attacker got away with 2.8m, dai vault lost 11.1m.”
Deposits of V1 DAI, TUSD, USDT, and USDC remain suspended while the team draws a full picture of the event.
It has thus far been confirmed that the attacker exploited the Aave flash loan protocol to drain the vault. This, according to Aave founder Stani Kulechov, required an intrinsic process that involved more than 160 transactions across multiple Defi platforms and a total cost on gas fees of over $5,000. It’s also been curious that of the drained funds, $3M was deposited in Defi lending platform Curve.
Kulechov, speaking to Coindesk, has also noted that the avenue exploited by the hacker was well known to him. He also confirmed that he had further the same with Yearn’s team. He said:
“That’s a well-known issue (one could have it with Uniswap, too, however, Uniswap is not so popular for yield farming). I’ve expressed my thoughts to yearn team on how this could have been prevented (and similar vulnerabilities, too). But honestly, I didn’t expect them to have such a mistake in the code, that was a surprise to me.”
It is also important to note that the vault attacked was only a few days ago updated to a new investment strategy. The same update could have offered the widow needed by the attacker.
News of the hack, temporarily saw Yearn’s native currency YFI fall by around 15%, from $35,000 to just under $30,000. However, with the severity of the situation looking minimal, the token has been recording a nice rebound.
Yearn Finance is one of the biggest DeFi platforms with a total of over $500M locked. Since the news emerged, there has only been a 4% decrease in these funds. A majority of investors will be far keener on the full report and how the team will respond and prevent future attacks. A quick and efficient response will be welcome and prices will continue rebounding, with uncertainty and hesitation spelling doom for the project.
Ethereum DeFi Trends Set To Dominate 2021
2020 was the year of DeFi, not just in terms of the explosive price increases – but the technological advances and support from public figures.
From the growth of UniSwap, Chainlink, AAVE, and BNB into the top 20 tokens by market cap to tech billionaire Mark Cuban revealing his positions in the aforementioned tokens, one must wonder what comes next.
Improved security and auditing of contracts.
Exploits performed by hackers on vulnerable DeFi smart contracts resulted in the loss of tens of millions of funds throughout 2020 and early 2021.
Flash loan attacks, where hackers can borrow large uncollateralized quantities of ETH and extract funds from exchange through complex arbitrage opportunities between stablecoins or manipulation of price oracles (the price providing part of a smart contract that interacts with market data outside the chain).
Auditing smart contracts before they go live as part of yield farming or lending strategies by third-party firms such as Nexus Mutual is necessary – and becoming the accepted norm for DeFi platforms. Users becoming acquainted with the basics of DeFi development processes and community-led initiatives to ensure complete auditing of contracts are also vital to its long-term resiliency.
DeFi has grown from the Ethereum ecosystem but has reached a point where it is almost impossible to continue in the current Ethereum paradigm. ETH 2.0 promises lower fees – lending itself to the higher scalability that is needed for the financial products of the future. But more than lower fees, ETH 2.0 will hopefully address the first point raised.
As a proof-of-stake chain, Ethereum miners will be unable to modify blocks that have already been validated – ensuring the robustness needed for a secure financial ecosystem. Projects like Binance token (BNB) and Cardano (ADA) plan to capture the DeFi market through their blockchains, but with the overwhelming majority of initial development done on Ethereum, ETH 2.0 would likely place the chain in a dominant position over DeFi.
Regulatory focus on crypto has primarily been placed on tax evasion and other fraudulent activity. DeFi. The regulatory framework for DeFi by the governments of the US, China, Russia is nearly non-existent.
Minimizing exit scams, implementing KYC on DEXs (decentralized-exchanges), and preventing money laundering remain pressing concerns.
Overbearing regulation, including policy, targeted explicitly at obstructing DeFi is a critical macro risk that users and project CEOs must be aware of and account for. Government Policy could ultimately end up much favoring centralized exchanges such as Coinbase – which filed to go public on the 25th.
Featured Image from Unsplash
Cardano Reaches All-Time High, Ahead of Ethereum in Transaction Volume
Today has been a monumental day for Cardano. Caught within the recent crypto bull market, its token, ADA, hit a new all-time high price of $1.38 this evening. This marks an increase of approximately 2600% over the past year, as tracked by Messari.
In fact, this milestone brings with it more good news for the smart contract platform. Over the past 24 hours, the surge of interest in Cardano has brought its on-chain transaction volume to $19.8 Billion, soaring past Ethereum’s $13.2 billion and second only to Bitcoin at $27.2 billion.
All this activity has brought ADA’s market cap has exceeded both BNB and USDT to the third highest in the market, behind Bitcoin and Ethereum.
Initially released in 2017, Cardano was created by Ethereum Co-Founder Charles Hoskinson, through his company Input Output Hong Kong (IOHK) and the Cardano Foundation. Although he had previously expressed apathy towards the value of ADA, Hoskinson appears to be celebrating Cardano’s achievements on Twitter:
One of these nights https://t.co/pPNmIHo0os
— Charles Hoskinson (@IOHK_Charles) February 27, 2021
Cardano as a Smart Contract Platform
Cardano’s recent success comes as a surprise given its lack of major projects utilizing the blockchain. Although it has surpassed Ethereum in terms of transaction volume, Ethereum remains far more popular with regard to blockchain-based applications. This raises the question, will Cardano be able to maintain this success without dApps to legitimize it as a platform for developers?
However, Cardano’s lack of major applications may eventually change due to the publicity of ADA’s recent bull run. Cardano’s previous lack of volume may have acted as a deterrent to developers looking for a platform for their application, ultimately attracted by the ensured popularity of the Ethereum network.
Alternatively, a developer might also consider the EVM-compatible Binance Smart Chain (BSC), which has found recent success in the realm of smart contracts. BSC remains noteworthy due to its popularity with recent larger applications despite a far lower market cap than Cardano.
This incredible surge of price may act as a resolution to the “chicken and the egg” scenario of lacking dApps due to lower volume and popularity, and lacking volume and popularity due to the lack of major dApps on the Cardano network. This bull market may very well put not only ADA’s future value in question, but Cardano’s future usage as a smart contract platform.
At the timing of writing, ADA remains just beneath its ATH and is holding steady, up 34% over the past 24 hours. Transaction volume continues to grow as ADA shows no signs of backing down.
Featured Image from Unsplash
DeFi Alliance Announces New Investment Fund to Fuel Growth in DeFi Space
The newly launched DeFi Alliance Fund aims to help early-stage DeFi startups by offering them financial and regulatory guidance as well as helping them connect with institutional players to fuel growth.
The crypto DeFi market has seen explosive growth this year in 2021 surging more than 350% year-to-date. As the DeFi projects continue to gain strength, big players are coming together to take the industry further. To fuel the growth of DeFi space further, investors and DeFi experts have announced a proactive collaboration thereby announcing the first DeFi Alliance Fund. The DeFi Alliance came into existence with some of the big industry players joining hands. Popular personalities from the DeFi space like Aave‘s Stani Kulechov and Compound Finance’s Robert Lashner are part of the alliance.
The DeFi Alliance has more than 60 member companies and over 28 DeFi projects including dYdX, 0x, Kyber Network, IDEX, Synthetix, and much more. The newly announced DeFi Alliance Fund I has been seeded by Alliance members, its founding members, as well as popular investors like Mark Cuban. These players have raised an initial corpus of $15 million.
1/ The DeFi Alliance launched with a mission to grow DeFi to 1b users by 2025.
— DeFi Alliance (@defialliance) February 25, 2021
The official announcement further notes:
“The fund is designed to be collaborative and distribute capital broadly across the DeFi startup ecosystem and adjacent industries (such as NFTs). We will invest in several dozen early stage startups each year, which will allow the DeFi Alliance to formalize and fuel our accelerator program. We will distribute capital across the DeFi and adjacent industries (such as NFTs) investing in several dozen startups each year.”
DeFi Alliance Fund: Growth Plans for 2025
The DeFi Alliance has set some major goals and targets itself for the next five years. The Alliance plans to have over one billion users globally directly associated with the DeFi developments.
The latest funding introduced will help the alliance members to further formalize and fuel its accelerator program. This will thus provide necessary resources to DeFi startups to build, deploy, and grow their platforms. Besides, the alliance also plans to offer DeFi-focused ‘tracks’ in addition to the existing ones.
This will provide startups additional assistance with regulations, institutional liquidity, recruiting, and growth. These new ‘tracks’ will be specifically for Asian DeFi startups, NFTs, and other institutional educational platforms. Synthetix founder Kain Warwick has acknowledged this new financial support for DeFi startups. He wrote:
“Being part of the first cohort had such a huge impact for us, helping for several key strategic partnerships that wouldn’t have happened otherwise. The impact they have on early stage projects is even larger. Excited to see all the new projects they fund”.
Other news of the crypto-related world can be found here.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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