Discover more from WE'VE MOVED TO thedefiant.io
😬 Unsecured DeFi Lenders Look Shaky in Face of FTX Contagion
Hello Defiers! Here’s what we’re covering today:
FTX Crisis: Solana
Trending in The Defiant
Get the 5-minute newsletter keeping 78K+ crypto innovators in the loop.
A word from our wonderful sponsors, who make this newsletter possible:
Aave is the leading decentralized liquidity protocol. Aave governance has greenlighted the development of GHO - a decentralized, collateral-backed stablecoin that will be native to the Aave protocol. Launching on testnets soon!
Lumerin is revolutionizing Bitcoin mining with a decentralized marketplace for buying and selling hashpower. Help us test the network in beta and earn real BTC hashpower to sell, trade, or mine. Find out more!
DeFi should be better - and it’s about to get radically better with Radix. Get your free ticket to join RadFi2022 on December 8 and learn what the future holds for decentralized finance. Find out how!
Metis Andromeda is a permissionless & secure Ethereum Smart Layer 2 creating the decentralized finance foundations for the web3 economy. Bridge Free & explore our ecosystem during our first anniversary!
Alameda Owes DeFi Lenders $13M as TVL Drops for Major Players
By Owen Fernau
EXPOSED The fallout from FTX’s collapse is just starting and within decentralized finance, platforms enabling unsecured loans are the most exposed relative to collateralized counterparts with millions in loans on the line, while total value locked slides.
DeFi Derivatives Surge as Traders Flee Exchanges
RALLY Crypto markets rallied early Monday after Binance CEO Changpeng Zhao (CZ) proposed to create an “industry recovery fund” that would invest in companies struggling to stay afloat in the wake of FTX’s collapse. Major cryptocurrencies spiked after Zhao’s announcement just after 1:30 a.m. New York time, despite few details about the proposed fund.
DeFi Saver is an all-in-one dashboard for creating, managing and tracking positions with automatic liquidation protection and leverage management options for only the most trusted DeFi protocols, Liquity among them.
Liquity, interest-free borrowing protocol built on Ethereum, recently introduced a novel product offering The Defiant wrote about - Chicken Bonds. Chicken Bonds are a new, innovative form of bonding mechanism in DeFi.
Chicken Bonds are an innovative bonding mechanism offering several key benefits to those willing to bond their Liquity native stablecoin LUSD. In exchange for depositing and bonding LUSD, users accrue boosted LUSD (bLUSD), derivative token.
Primary benefit for bonding LUSD instead of supplying to Liquity’s Stability Pool is the amplified yield users get from Liquity’s internal liquidation mechanism as well as from other liquidity sources like the pools in Curve. Alongside improved liquidity for the LUSD stablecoin, the most important benefit to users is bonding with no time commitment or maturity. Users can withdraw principal LUSD fully and chicken out at any time, renouncing the accrued interest. The other option being to chicken in and claim accrued bLUSD, forgoing the initial LUSD deposit.
As the most comprehensive decentralized frontend for Liquity, DeFi Saver continues its devoted support with dedicated Chicken Bonds dashboard and advanced protocol actions and strategies. Alongside basic actions, DeFi Saver offers users options to Claim and Sell bLUSD or Rebond (Claim, Sell and create new bond). DeFi Saver team is even preparing automation options for the new Liquity innovation.
Get the most out of your Liquity experience with DeFi Saver.
FTX Crisis: Solana
Serum DEX Heavily Impacted
BANKRUPT The Solana Foundation and Solana Labs have disclosed their asset exposure and transaction histories linked to bankrupt crypto exchange FTX and its sister trading firm Alameda Research.
Crypto.com’s Vow to Audit Reserves Spurs Scrutiny From Blockchain Sleuths
By Samuel Haig
SHIFT In response to FTX’s bankruptcy, a number of centralized crypto exchanges, including Binance, are racing to publish data on their reserves and ease the worries of investors. Yet the shift has already produced a cautionary tale that shows publishing reserve data may reveal problematic practices.
FTX Appoints Independent Directors to Ensure ‘Proper Governance’
PROBES In the first significant filing of its bankruptcy, FTX confirmed that the U.S. Department of Justice and other federal and state agencies are probing the exchange in connection with its failure last week.
FTX Crisis: FTT Tokens
Regulator Denies Instructing Exchange to Process Bahamian Withdrawals
TRANSFER Bankrupt crypto exchange FTX transferred nearly $400M worth of newly created FTT tokens to a yet-to-be-identified wallet Saturday night, sending the price of the token crashing to new lows.
FTX Crisis: Solana
soBTC Is Trading at a 50% Discount
PEG Wrapped versions of Bitcoin and Ether on the Solana blockchain have lost their peg to the underlying assets in the wake of FTX’s bankruptcy filing. Bitcoin on Solana, or soBTC, was trading at $8,000, less than half the price of native Bitcoin. At one point, it fell as low as $4,000 per token.
Hackers drained hundreds of millions of dollars from insolvent crypto exchange FTX Friday night
HEISTS Hackers drained hundreds of millions of dollars from insolvent crypto exchange FTX Friday night, just hours after it declared bankruptcy, in one of the largest heists in crypto history.
WALLETS There are five known wallet addresses involved in the exploit. One hacker made off with about $450M in cryptocurrencies, according to crypto sleuth ZachXBT, while about $200M went to another pair of wallets. The total amount drained from the failed exchange is at least $650M, according to estimates from ZachXBT.
Market Manipulators Must be Stopped — Here’s How
STABILITY The world of decentralized lending has been rightly referred to as the “Wild West” more than once. By removing human oversight, new protocols have been able to offer impressive yields on many of their services, but at the huge cost of lowered stability.
MANIPULATORS Many are waking up to the fact that this is unsustainable and unnecessary, as market manipulators are crushing retail investors on a regular basis. New mechanisms for tapping into legacy credit may restore balance while decentralized and cryptographic proofs can ensure that honest actors run the show.
MIDAS is an internal token of Midas.Investments — a custodial staking platform that offers market-leading yields on an array of cryptocurrencies, including BTC, ETH, and USDC. Unlike other industry players, Midas has been exceptionally successful in weathering the crypto winter, avoiding liquidity issues while its native token reaches new ATH.
After the announcement of the upcoming swap to Ethereum last week, the MIDAS token has hit a new ATH of $43.65. Currently, there are more than $70 million staked in MIDAS tokens on the platform by more than 6,000 users. Stake MIDAS with 22.2% APY.
Trending in The Defiant
Crypto Lender BlockFi Suspends Withdrawals BlockFi, a centralized crypto lender which pays users a return on deposits of digital assets, has paused withdrawals on its platform.
SBF Surfaces With Apology and Details on FTX’s Condition Breaking his silence during a two-day period when the crypto market erased $131B in value, Sam Bankman-Fried finally offered up a mea culpa for the damage wrought by the murky practices at his exchange FTX, and the hedge fund he controls, Alameda Research.
Investors Bargain Hunt as Inflation Report Spurs Market Rally Well that’s a relief. The crypto market rallied on Thursday after the U.S. government released data that shows inflation cooled in October to its lowest level since January.
During the events of the past week, the Solana network has not experienced any notable performance or uptime issues.
I’m not going to mince words. The fraud-driven collapse of FTX and Alameda Research is, in my estimation, the worst single event in the crypto industry since its inception.
🧑💻 ✍️ Stories in The Defiant are written by Owen Fernau, Aleksandar Gilbert, Samuel Haig, and yyctrader, and edited by Edward Robinson, yyctrader and Camila Russo. Videos were produced by Alp Gasimov. Podcast was led by Camila, edited by Alp.
Free subscribers to the newsletter get:
Daily news briefings
Sunday Weekly recap
General chat on The Defiant’s Discord server
👑 Prime defiers get:
Full transcript of exclusive podcast interviews
DeFi Alpha weekly newsletter on how to put your money to work in DeFi by yyctrader and DeFi Dad
Weekly live DeFi Alpha call with yyctrader
Inbox Dump edition of The Defiant newsletter every Saturday with all the PR that didn’t make it to our content channels
Exclusive community calls with the team
Subscriber-only chats on The Defiant Discord server
Full access to The Defiant’s content archive
Click here to pay with DAI (for $100/yr) or sub with fiat by clicking on the button below ($15/mo, $150/yr).
You can start a prime membership for free right now with this link. You’ll get full access for 7 days. It’s 100% risk-free.